Resolved that PH should enter into a joint exploration with PRC in the West Philippine Sea:

ARGUMENTS

1. Duterte offers 60-40 deal to China in West PH Sea joint exploration

Under Republic Act 7042 or the Foreign Investment Act of 1991, foreign equities may invest up to 40
percent on the exploitation of natural resources and utilization of land ownership. According to a social
news network (www.rappler.com) published on April 28, 2018; President Rodrigo Duterte proposed to
forge a “60-40” sharing deal with China on the two countries’ planned joint exploration of the West
Philippine Sea. The Philippine President made the proposal in a speech delivered on Thursday, April 26, at
the 102nd Annual Communication of the Most Worshipful Grand Lodge of Free and Accepted Masons of
the Philippines in Davao City. According to GMA News Online (www.gmanetwork.com) published on July
31, 2018; Foreign Affairs Secretary Alan Peter Cayetano said the 60 percent would be for the Philippines
while the remaining will be for China. Cayetano said in a 24 Oras report by JP Soriano. "That's our starting
proposition and our Chinese counterparts are open to it."

The GMA News Online, published on August 1, 2018 states that at least three senators (Senate President
Vicente Sotto III, Senator Panfilo Lacson, Senator Ralph Recto) welcomed Wednesday the willingness of
China to conduct a 60-40 joint exploration of natural resources with the Philippines in the West Philippine
Sea as announced by Foreign Secretary Alan Peter Cayetano. “More than acceptable as the 60-40 ratio
complies with the requirements of the Philippine Constitution on foreign investment. It is practical and
sensible to enter into a joint exploration with China,” Cayetano said. He said, first, the Philippines does
not have the resources nor the technology to do the exploration alone. Lacson added that the West
Philippine Sea is so rich in oil and natural gas and “it is time to make use of these natural resources to
uplift the lives of our people.” “It could also provide us the wherewithal to pursue massive infrastructure
development to further enhance investments,” Lacson further said.

2. Resource cooperation in disputed waters can be a win-win for China and the Philippines

Given the Philippine economy’s growing demand for power and the projected depletion of the natural
gas supply in the Malampaya facility by 2030, the government must now redouble its efforts in finding
new energy sources. We should, therefore, be able to tap what is believed to be rich oil and gas deposits
in the West Philippine Sea for our own benefit. A joint exploration arrangement between the Philippines
and China, so long as this is covered by commercial agreement, is legally acceptable.

The Constitution allows the government to jointly explore and develop our natural wealth with foreign-
owned corporations provided that it retains full control and supervision of these resources.

Section 2, paragraph 1 of Article XII of the 1987 Constitution provides that “the exploration, development
and utilization of natural resources shall be under the full control and supervision of the State.” It says
the government “may directly undertake such activities, or it may enter into coproduction, joint venture,
or production-sharing agreements with Filipino citizens, or corporations or associations at least 60 percent
of whose capital is owned by such citizens…. Such agreements may be for a period not exceeding 25 years,
renewable for not more than 25 years, and under such terms and conditions as may be provided by law.”
Further on, the Constitution allows the President to “enter into agreements with foreign-owned
corporations involving either technical or financial assistance for large-scale exploration, development,
and utilization of minerals, petroleum, and other mineral oils according to the general terms and
conditions provided by law, based on real contributions to the economic growth and general welfare of
the country. In such agreements, the State shall promote the development and use of local scientific and
technical resources.”

3. Joint Exploration in West PH Sea is legal

According to The Manila Times published on March 2, 2018, the joint exploration in the West Philippine
Sea (South China Sea) with China is in accordance with the 1987 Constitution, Malacañang insisted on
Thursday, after President Rodrigo Duterte likened China’s offer of joint exploration to “co-ownership” of
the disputed area. “The idea of coming to mutual agreements over natural resources is constitutional and
has been beneficial in the past. Article XII, Sec. 2 of the 1987 Constitution provides that ‘[t]he President
may enter into agreements with foreign-owned corporations involving either technical or financial
assistance for large-scale exploration, development, and utilization of minerals, petroleum, and other
mineral oils according to the general terms and conditions provided by law, based on real contributions
to the economic growth and general welfare of the country,’” Roque said. According to the Business
Mirror published on August 31, 2018, THE Department of Foreign Affairs (DFA) on Thursday gave
assurances of the constitutionality of a planned joint exploration agreement between the Philippines and
China in the West Philippine Sea (South China Sea).
 Most claimants in the disputed South China Sea have shown interest and willingness to engage in
joint resource development with co-claimant countries, especially on oil and gas. The benefits of joint
exploration for a resource-rich but capital- and infrastructure-deficient country like the Philippines
includes attracting much needed investment and obtaining the necessary technologies to fully exploit its
resources. Joint exploration and resource development could mitigate conflict and reduce tensions, and
so diminish the pressure to expand national defense capabilities. The Duterte administration has been
discussing a possible joint exploration with Beijing in the disputed West Philippine Sea.

Joint exploration will be a benefit for our country. First, Duterte offers 60-40 deal to China in West
PH Sea joint exploration. Under Republic Act 7042 or the Foreign Investment Act of 1991, foreign equities
may invest up to 40 percent on the exploitation of natural resources and utilization of land ownership.
According to a social news network (www.rappler.com) published on April 28, 2018; President Rodrigo
Duterte proposed to forge a “60-40” sharing deal with China on the two countries’ planned joint
exploration of the West Philippine Sea. According to GMA News Online published on July 31, 2018; Foreign
Affairs Secretary Alan Peter Cayetano said the 60 percent would be for the Philippines while the remaining
will be for China. Second, resource cooperation in disputed waters can be a win-win for China and the
Philippines. Given the Philippine economy’s growing demand for power and the projected depletion of
the natural gas supply in the Malampaya facility by 2030, the government must now redouble its efforts
in finding new energy sources. We should, therefore, be able to tap what is believed to be rich oil and gas
deposits in the West Philippine Sea for our own benefit. A joint exploration arrangement between the
Philippines and China, so long as this is covered by commercial agreement, is legally acceptable. Third,
joint exploration in West PH Sea is legal. According to The Manila Times published on March 2, 2018, the
joint exploration in the West Philippine Sea (South China Sea) with China is in accordance with the 1987
Constitution. Article XII, Sec. 2 of the 1987 Constitution provides that ‘’the President may enter into
agreements with foreign-owned corporations involving either technical or financial assistance for large-
scale exploration, development, and utilization of minerals, petroleum, and other mineral oils according
to the general terms and conditions provided by law, based on real contributions to the economic growth
and general welfare of the country’’.

In conclusion, joint exploration is a good way for Manila and Beijing to resolve their territorial
disputes. Energy security, harmonious relations, good international image and overall peace and stability
in one of the world’s busiest sea lanes are all at stake. The Philippines and China could prove that
neighbors can peacefully resolve their differences, and though the decision may face short-term domestic
opposition, it stands to improve regional stability in the long-run.