The Supreme Court declared the Tripartite Agreement for Joint Marine Seismic Undertaking (JMSU) between the Philippines, China, and Vietnam as unconstitutional. This decision underscores the principle that the exploration, development, and utilization of natural resources must remain under the full control and supervision of the Philippine State. It clarifies that any agreement allowing foreign entities to participate in these activities must strictly adhere to constitutional safeguards, ensuring the nation’s patrimony is protected.

South China Sea Seismic Deal: Sovereignty Compromised?

At the heart of the controversy was the JMSU, an agreement among the Philippine National Oil Company (PNOC), China National Offshore Oil Corporation (CNOOC), and Vietnam Oil and Gas Corporation (PETROVIETNAM) to conduct joint marine seismic activities in a defined area of the South China Sea. Petitioners argued that this agreement violated Section 2, Article XII of the 1987 Philippine Constitution, which mandates state control over the exploration, development, and utilization of natural resources. This case presented the critical legal question of whether the JMSU, framed as a pre-exploration activity, effectively circumvented constitutional restrictions on foreign involvement in the country’s natural resource sector.

The Supreme Court, in its analysis, emphasized the Regalian doctrine, which asserts the State’s ownership of all natural resources. The Court then delved into defining “exploration,” referencing both ordinary and technical meanings, including those outlined in the Philippine Mining Act of 1995 and the Petroleum Act of 1949. Applying these definitions, the Court concluded that the JMSU’s “seismic work” constituted exploration, as its intent was to discover petroleum resources, regardless of being labeled a “pre-exploration activity.” This determination was crucial because it triggered the constitutional requirements for agreements involving foreign entities.

Building on this principle, the Court scrutinized whether the JMSU complied with the constitutionally prescribed modes for the exploration, development, and utilization of natural resources. These modes include direct state undertaking, co-production or joint venture agreements with Filipino citizens or corporations with at least 60% Filipino ownership, small-scale utilization by Filipino citizens, or agreements with foreign-owned corporations involving technical or financial assistance. The Court found that the JMSU did not fit into any of these categories, particularly the last one, as it did not involve the necessary safeguards, such as being signed by the President and reported to Congress within thirty days of its execution.

Furthermore, the Court addressed the sharing of information acquired from the seismic survey. It ruled that the PNOC’s agreement to jointly own the data with CNOOC and PETROVIETNAM illegally compromised the State’s control and supervision over such information. It is apparent from the foregoing that the PNOC bargained away the State’s supposed full control of all the information acquired from the seismic survey as the consent of CNOOC and PETROVIETNAM would be necessary before any information derived therefrom may be disclosed. The Court emphasized that even if the JMSU aimed to foster international cooperation, it could not supersede constitutional requirements.

The Court also addressed the issue of mootness, acknowledging that the JMSU had already expired. However, it invoked exceptions to the mootness principle, citing the grave constitutional violation, the paramount public interest involved, the need to formulate controlling principles, and the possibility of similar agreements being entered into in the future. The Court also held that the petitioners, suing as legislators, taxpayers, and citizens, had the requisite legal standing to bring the suit. They demonstrated a direct interest in safeguarding the country’s natural resources and ensuring compliance with the Constitution.

This approach contrasts with the dissenting opinions, which argued for judicial restraint, highlighting the lack of a certified copy of the JMSU and the potential impact on the country’s foreign relations. Justice Lazaro-Javier stressed that the petitioners chose to file directly to the Supreme Court, rather than taking it to the trial court. Justice Zalameda highlighted that since the JMSU has already expired, there is simply no practical value to adjudicating the issues concerning a lifeless agreement.

Ultimately, the Supreme Court’s decision in this case reaffirms the Philippines’ commitment to protecting its natural resources and upholding its constitutional principles. The Court has established boundaries that guide future agreements related to the exploration, development, and utilization of resources within its territory and exclusive economic zone. By declaring the JMSU unconstitutional, the Court underscored the importance of maintaining state control and supervision over these activities, ensuring that any foreign involvement aligns strictly with constitutional safeguards. While the decision resolves the immediate controversy surrounding the JMSU, its long-term impact lies in setting a precedent for future agreements and reinforcing the Philippines’ sovereign rights over its natural resources.

FAQs

What was the key issue in this case?	The key issue was whether the Tripartite Agreement for Joint Marine Seismic Undertaking (JMSU) violated Section 2, Article XII of the 1987 Constitution, which mandates state control over the exploration, development, and utilization of natural resources.
What is the Regalian Doctrine?	The Regalian Doctrine, embodied in the Constitution, asserts that all natural resources within the Philippine territory are owned by the State. This principle underpins the State’s right to control and supervise the exploration, development, and utilization of these resources.
What is seismic work according to the JMSU?	According to the JMSU, seismic work involves collecting and processing 2D and/or 3D seismic lines. The seismic work shall be conducted in accordance with the seismic program unanimously approved by the Parties taking into account the safety and protection of the environment in the Agreement Area.
Why did the Supreme Court declare the JMSU unconstitutional?	The Supreme Court declared the JMSU unconstitutional because it allowed foreign-owned 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.
What are the allowable modes for the State to exploit natural resources?	The State may undertake such activities through (1) directly; (2) co-production, joint venture or production-sharing agreements with Filipino citizens or qualified corporations; (3) Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens; and (4) for the large-scale exploration, development and utilization of minerals, petroleum and other mineral oils, the President may enter into agreements with foreign-owned corporations involving technical or financial assistance.
Why was the President required to be the signatory in such agreements?	The Constitution vests upon the President alone the power to enter into such agreements. Hence, in this case, the signatory to the JMSU is not the President of the Philippines but the PNOC, through its President and Chief Executive Officer
Did the sharing of information acquired from seismic survey contributed to its unconstitutionality?	Yes. The Court ruled that the PNOC and/or the government, in agreeing that the information about our natural resources shall be jointly owned by CNOOC and PETROVIETNAM, illegally compromised the control and supervision of the State over such information.
What is the ‘capable of repetition yet evading review’ exception?	The ‘capable of repetition yet evading review’ exception is one of the exceptions to the mootness principle. This means that that there must be a ‘reasonable expectation’ or a ‘demonstrated probability’ that the same controversy will recur involving the same complaining party.
What international document was heavily discussed in this case?	The Court referred to the United Nations Convention on the Law of the Sea (UNCLOS) as it defines the rights and obligations of states within their maritime zones.

The JMSU case serves as a potent reminder of the judiciary’s role in safeguarding the nation’s patrimony and upholding constitutional principles. This decision will shape the framework for future engagements with foreign entities in the exploration, development, and utilization of the Philippines’ natural resources, ensuring that the country’s interests remain paramount.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: BAYAN MUNA PARTY-LIST REPRESENTATIVES VS. PRESIDENT GLORIA MACAPAGAL­-ARROYO, G.R. No. 182734, January 10, 2023