SC Affirms Unconstitutionality of JMSU Among Philippine, Vietnamese, and Chinese Oil Firms
July 5, 2023
The Supreme Court En Banc has denied with finality due to lack of merit the Motion for Reconsideration of its January 10, 2023 Decision that declared unconstitutional and void the Tripartite Agreement for Joint Marine Seismic Undertaking (JMSU) by and among China National Offshore Oil Corporation (CNOOC), Vietnam Oil and Gas Corporation (PETROVIETNAM), and Philippine National Oil Company (PNOC) involving an area in the South China Sea covering 142,886 square kilometers (“Agreement Area”).
In a Resolution in Bayan Muna Party-List Representatives Satur C. Ocampo and Teodoro A. Casiño, et al. [Petitioners] v. President Gloria Macapagal-Arroyo, et al. [Respondents] (G.R. No. 182734), the Court held that the motion for reconsideration merely repleaded the issues raised in the comment and memorandum, which the Court had already passed upon in the assailed Decision.
The assailed Decision declared the JMSU unconstitutional for allowing wholly-owned foreign corporations to participate in the exploration of the country’s natural resources without observing the safeguards provided in Section 2, Article XII of the 1987 Constitution.
In denying the Motion for Reconsideration, the Court reiterated that the JMSU is unconstitutional as it involves the exploration of natural resources. It noted that since the objective of the JMSU as stated in its Fifth Whereas Clause is “to engage in a joint research of petroleum resource potential” in the Agreement Area, the agreement clearly involved exploration.
The Court dismissed the contention of Respondents who insisted that JMSU does not involve exploration by attacking the definition of the term “exploration” under R.A. No. 387, arguing that it was already repealed by Presidential Decree (PD) No. 87 or the Oil and Exploration and Development Act of 1972, among others.
The Court held that PD No. 87 does not provide a contrary definition for the term “exploration” and does not at all define “exploration.”
The Court reiterated its pronouncement in its January 10, 2023 Decision that for the JMSU to be valid, it must be executed and implemented under any of the following modes under Section 2, Article XII of the Constitution: (1) directly by the State; (2) through co-production, joint venture or production-sharing agreements with Filipino citizens or qualified corporations; (3) through small-scale utilization of natural resources by Filipino citizens; and (4) through agreements entered into by the President with foreign-owned corporations involving technical or financial assistance for large-scale exploration, development, and utilization of minerals, petroleum, and other mineral oils.
The JMSU, the Court held, does not fall into the first three modes since it involves foreign-owned corporations. For an agreement/contract under the fourth mode to be valid, it must foremost be entered into by the President himself or herself. In the case at bar, the President is neither a party nor a signatory to the JMSU and the contracting party is PNOC.
The Court further held that the State has no full control and supervision under the JMSU. Under Articles 11.2 and 11.4 of the JMSU, the PNOC illegally allowed joint ownership of information about our natural resources in the Agreement Area with CNOOC and PETROVIETNAM.
The Court said that Respondents’ claim that the State did not lose control and supervision over information about our natural resources crumbles in light of JMSU’s provision stating that the parties to the agreement shall have equal rights, interest, and obligations. It noted that under JMSU, the PNOC and/or the Government would even need the prior written consent of CNOOC and PETROVIETNAM before it could disclose any of the information acquired.
Furthermore, the Court held that it correctly took cognizance of the petition; hence, there was no violation of the hierarchy of courts. It added that Petitioners have legal standing to assail the legality of the JMSU. As then-incumbent members of the House of Representatives, petitioners have standing to sue as legislators, more so as taxpayers and concerned citizens given the transcendental importance of the case.
Associate Justice Samuel H. Gaerlan wrote the Resolution, which was concurred in by 11 other Associate Justices. Associate Justice Amy C. Lazaro-Javier and Associate Justice Rodil V. Zalameda maintained their dissent, while Chief Justice Alexander G. Gesmundo was on official leave and did not take part.
The SC Public Information Office will upload in the SC website a copy of the Resolution once it receives the same from the Office of the Clerk of Court En Banc. (Courtesy of the Supreme Court Public Information Office)