The US did not anticipate China to emerge as a global power to reckon with in the next century.
It took much time for the US to analyze the strategic value of the islands like the Spratly Group of Islands that deprived the Philippines of its 12-nautical mile-limit on the territorial waters under international law.
The 12-nautical mile-limit was superseded by the grant of 200-nautical-mile exclusive economic zone under UNCLOS.
This includes the sovereign right to exploit, develop and harvest the mineral resources within the EEZ.
Previous to this, then senator Arturo Tolentino sponsored in 1973 the archipelagic doctrine paraphrased in the 1973 constitution, to quote in part Article I:
“The national territory comprises the Philippine archipelago with all the islands and waters embraced therein, and all other territories over which the Philippines has sovereignty or jurisdiction, consisting of its terrestrial, fluvial and aerial domains, including the territorial sea, the seabed, the subsoil, the insular shelves, and submarine areas. The waters, around and connecting the islands of the archipelago, irrespective of their breadth and dimensions, form part of the internal waters of the Philippines.”
We opted to demarcate our boundary because many of boundaries were so wide that it allowed foreign ships to traverse our internal waters, thinking that they form part of our open sea.
Indonesia is another country that adopted the archipelagic doctrine, and, just like the Philippines, also ratified the UNCLOS.
Today, the value of these resources has become and strategic, reason why the Philippines found so many claimants that were never anticipated.
These countries include Vietnam, Malaysia, Brunei, and Taiwan.
The mad scramble to secure ownership in the South China Sea became complicated after the UNCLOS was ratified in 1984.
Existing boundaries and treaty limitations were likewise altered.
The discovery of oil and natural gas is the single factor that influenced a change of position of many countries having claims in the South China Sea.
They do not only use it as passageway to cross the Strait of Malacca but also to secure to secure their trade.
The problem of expanding every country’s exclusive economic zone visibly influenced the decision of the Philippines to grant license to service contractors to exploit mineral resources found within our EEZ.
The grant of service contract at 60-40 proposition is in accordance with Section 2, Article XII of the Constitution, and to quote a portion:
“Section 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State. With the exception of agricultural lands, all other natural resources shall not be alienated. The exploration, development, and utilization of natural resources shall be under the full control and supervision of the State. The State may directly undertake such activities, or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least sixty per centum of whose capital is owned by such citizens. Such agreements may be for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and under such terms and conditions as may be provided by law. In cases of water rights for irrigation, water supply for fisheries, or industrial uses other than the development of water power, beneficial use may be the measure and limit of the grant.
“The State shall protect the nation’s marine wealth in its archipelagic waters, territorial sea, and exclusive economic zone, and reserve its use and enjoyment exclusively to Filipino citizens. x x x“
Service contracts, strictly speaking, are demarcated outside the Treaty of Paris signed between the US and Spain.
China is aware of this situation but refused to make an issue over this area and is possibly wondering why the Philippines granted the exploration to foreign oil companies to which it has no claim over the area except as member of UNCLOS.
This explains why China was generous to sign the 60-40 agreement because their claim is only on the basis of the Nine Dash Line which was rejected by the Permanent Arbitration Court but violates our contract with China’s CNOOC.
China has yet to question our awarding of the service contracts entered into with those private foreign oil contractors.
CNOOC would have ignored our contract with those private oil companies.
The benefits they enjoy today are merely derived from those granted to PNOC by China’s CNOOC, and not that CNOOC directly negotiated with these foreign oil companies, contrary to the substance of a government-to-government contract agreed on by PNOC and CNOOC.
Thus, when we entered into a joint exploration agreement with China, we insisted in concluding an agreement based on our Constitution on a 60-40 basis.
We managed to negotiate this agreement with China despite questionable location of the area known as the Reed Bank.
We insisted that the area is within our EEZ.
Nonetheless, China did not make a fuss out of the issue for the fact that it is outside both countries’ EEZ and both ratified the UNCLOS agreement.
Foreign oil companies cannot take this position because the 60-40 oil agreement applies to the government.
Our joint exploration agreement with China was a government-to-government basis, meaning it will be our Philippine National Oil Company that will enter into contract with China’s National Offshore Oil Corporation (CNOOC).
China’s decision to agree to a 60-40 partition was with the thought they were dealing with a government-owned entity.
Unlike our previous agreements with the two foreign oil companies, Chevron and Shell, they granted them a 90 percent share, and the Philippines, through PNOC, got a measly share of 10 percent including the payment of tax for the project.
Our joint oil exploration with China was equitable and complies with our Constitution.
Note that our ratification of UNCLOS allowed us to lay our claim in the South China Sea.
Many countries, even if they were outside the South China Sea, practically amended their territorial seas to avail themselves of the new provision of the EEZ.
Only landlocked states today could not avail themselves of this extended right including right of aerial overflight with permission from host countries.
This also exposed the truth that the so-called “Freedomland” allegedly discovered by Tomas Cloma turned out to be ancient historical islets long in the possession of Chinese fishermen.
Moreover, the standoff between our navy and elements of China’s coast guard at the Scarborough Shoal proved that the area is outside of the country’s exclusive EEZ’s 200 nautical miles.
Scarborough Shoal is about 230 nautical miles from out nearest town of Botolan in Zambales, and about 650 kilometres from the nearest land mass in China.
Many do not understand why we have to wait until such time that China would lay claim to Scarborough or specifically after the Philippines formally filed a case before the Permanent Arbitration Court in 2014.
The Philippines should have asserted jurisdiction over the area when the US was using the Shoal as gunnery range for its aircraft and naval ships operating from Clark and Subic.
The US could have asserted its preponderance in the area when the US bases were still operating them.
Similarly, the US should have revoked the Sibutu Strait as an international passage in 1900.
Alas, the US slept on it rights.
We even lost an island in near the Kalayaan. The largest in the Spratly is about 22 miles (35 km) south-southwest of Philippine-occupied Loaita (Kota) Island and is about 6 miles (10 km) west of Vietnam-occupied Sand Cay.