SC Declares Unconstitutional the Joint Marine Seismic

Undertaking Among Philippine, Vietnamese, and Chinese Oil

Firms
January 10, 2023
The Supreme Court En Banc, voting 12-2-1, today 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”).

The Court ruled that the JSMU is 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.

The case stemmed from the original action for certiorari  and prohibition assailing the constitutionality of the
JMSU filed by petitioners Bayan Muna Party-List Representatives Satur C. Ocampo and Teodoro A.
Casiño, et al.

The constitutionality of the JMSU, which was signed on March 14, 2005, was assailed on the ground that it
violated Section 2, Article XII of the 1987 Constitution which mandates that the exploration, development, and
utilization (EDU) of natural resources shall be under the full control and supervision of the State.

Petitioners argued that the JMSU was illegal as it allowed foreign corporations wholly-owned by China and
Vietnam to undertake large- scale exploration of the country‟s petroleum resources, in violation of the
Constitutional provision which reserves the EDU of natural resources to Filipino citizens, or corporations or
associations at least sixty (60%) percent of whose capital is owned by such citizens.

Respondents, on the other hand, maintained that Section 2, Article XII of the Constitution was inapplicable as
the said provision contemplates EDU of natural resources, whereas the JMSU only involves pre-exploration
activities.

The Court, noting that the term “exploration” pertains to a search or discovery of something in both its
ordinary or technical sense, ruled that the JMSU involves the exploration of the country‟s natural resources,
particularly petroleum.

Citing the text of the fifth whereas clause of the JMSU, which states  the  Parties‟  “expressed  desire  to
engage  in  a  joint  research  of petroleum resource potential of a certain area of the South China Sea as a pre-
exploration activity,” the Court said that it is clear that the JMSU was executed for the purpose of determining
if petroleum exists in the Agreement Area.

“That the Parties designated the joint research as a „pre- exploration activity‟ is of no moment,” said the Court.
“Such designation does not detract from the fact that the intent and aim of the agreement is to discover
petroleum which is tantamount to „exploration.‟”
The Court further held that as the JMSU involves the exploration of the country‟s petroleum resources, it falls
within the ambit of Section 2, Article XII of the 1987 Constitution.

Associate Justice Samuel H. Gaerlan wrote the Decision, which was concurred in by Chief Justice Alexander
G. Gesmundo and 10 other Associate Justices. Associate Justice Amy C. Lazaro-Javier and Associate Justice
Rodil V. Zalameda dissented, while Associate Justice Ramon Paul L. Hernando was on leave and did not take
part.

The SC Public Information Office will upload in the SC website a copy of the Decision once
available. (Courtesy of the Supreme Court Public Information Office)