Carpio schools Panelo: 1972 law converted oil, gas in Reed Bank into patrimonial assets

Mike Navallo, ABS-CBN News

Posted at Mar 26 2019 09:36 PM | Updated as of Mar 27 2019 05:19 AM

MANILA - Supreme Court Senior Associate Justice Antonio Carpio on Tuesday night hit back at Presidential Spokesperson Salvador Panelo's statements that concerns the Supreme Court associate justice had raised about the possibility of China seizing the gas fields in Reed Bank are "misplaced."

Carpio warned on Friday that China could seize the country's gas reserves in Reed Bank if it is unable to pay its US$62-million loan for the Chico River Pump Irrigation Project. 

Carpio cited a provision in the loan agreement wherein the Philippines waived its immunity to its patrimonial assets and assets dedicated to commercial use. 

Patrimonial assets refer to properties owned by the Philippines in its private capacity and not for public use, public service or intended for development of national wealth.

These, Carpio said, include the oil and gas in the Philippine exclusive economic zone (EEZ) in the West Philippine Sea, including the rich gas fields in the Reed Bank.

Allaying fears raised by Carpio, Panelo on Tuesday called his concerns "misplaced," saying that public property like the Reed Bank could not be sold or given away unless it is first converted to patrimonial property through a law.

He even cited a 2002 resolution penned by Carpio himself which declared that a public property cannot just be converted to patrimonial property.

"We will not do that. Why will he (Duterte) do that? What will be your purpose in declaring that?" he asked.

In a text message to ABS-CBN News Tuesday night, Carpio said a 1972 law had already converted the oil and gas in the Reed Bank into patrimonial property.

He pointed to the Oil & Exploration Development Act of 1972, as amended, which was the basis for the DOE granting a service contract to Forum Energy to exploit the gas in Reed Bank.

Section 8 of the law states:

"The (service) contract may authorize the Contractor to take and dispose of and market either domestically or for export all petroleum produced under the contract subject to supplying the domestic requirements of the Republic of the Philippines on a pro-rata basis."

"This law proclaims the oil and gas covered by a service contract as subject to sale to the market - which makes such oil and gas patrimonial," he said.

The second highest magistrate in the country explained that "the power to reclassify from public domain to patrimonial is a legislative power" and that "the president's power to so reclassify was merely delegated by Congress."

A 2013 report from the United States Energy Information Administration claimed Reed Bank could hold up to 5.4 billion barrels of oil and 55.1 trillion cubic feet of natural gas.

Concerns had long been raised about allegedly onerous loans from China not only because of high-interest rates but also because of the collateral involved -- patrimonial assets of the country.

Carpio earlier warned the loan agreement over the Chico River project could serve as the template of other loan agreements. 

These loan agreements, however, were not made public because of confidentiality clauses, which according to Carpio, violate the Constitution.