Justice Antonio T. Carpio

15 March 2013

President Alfredo Pascual, Dean Danilo Concepcion, Atty. Estelito Mendoza, Prof. Jay Batongbacal, other officials of the University, members of the U.P. Law Faculty, fellow students of the law, friends, good afternoon to everyone.

Let me congratulate the University of the Philippines and the U.P. College of Law for creating the Institute for Maritime Affairs and Law of the Sea. In fact, this Institute is long overdue.

The Institute is something that our nation needed more than 7 years ago, before China made its 2006 reservation under UNCLOS, excluding China from compulsory arbitration on maritime boundary delimitation disputes with other states. The Philippines had a 10-year window of opportunity, from 1996 when China ratified UNCLOS to 2006 when China made its reservation, to bring China to a compulsory arbitration. But we did not have an Institute to tell us that. This window of opportunity closed on us without our Government probably even realizing it.

Last November 2012, when China permanently occupied Scarborough Shoal, we were almost at a loss how to respond to the Chinese occupation of a few rocks above water at high tide that the Baselines Law expressly declares as part of the national territory. There was no Institute to tell us what to do. The Philippines’ response was to assail China’s 9-dash line claim before an Annex VII UNCLOS arbitration tribunal. This was the correct response. But had an Institute advised the Government to file such action in the early part of 2012, China might not have occupied Scarborough Shoal because of the pendency of the case.

The creation of the Institute, though belated, is nevertheless vital and important for two reasons. First, the most important foreign policy issue that the Philippines will face in the next 25 years or more will be the maritime boundary dispute with China in the West Philippine Sea (WPS). This will be a long-running battle between David and Goliath, and the Philippines as David will have to creatively use international law to level the battlefield. We cannot win over China in a military, diplomatic or economic battle, but we can win over China in the legal battle. International law, particularly UNCLOS, does not consider nuclear bombs, aircraft carriers, or stealth missile frigates in the resolution of maritime disputes.

If China succeeds in enforcing its 9-dash line claim, the Philippines will lose practically its entire EEZ in the WPS. This will be a national catastrophe. Recently, the U.S. Energy Information Administration, citing a U.S. Geological Survey, reported that the bulk of the “proved and provable” fossil fuel resources in the South China Sea are found in the Reed Bank. The estimate is that Reed Bank holds 5.4 billion barrels of oil out of a total of 11 billion barrels of oil for the entire South China Sea, and 55.1 trillion cubic feet of gas out of a total of 190 trillion cubic feet of gas for the entire South China Sea. Reed Bank is well-within the Philippines’ EEZ in the WPS. Needless to say, Reed Bank is also within China’s 9-dash line claim.

We are talking only of fossil fuel resources, not counting the fishery resources in our EEZ in the WPS, where at least a quarter of our fishery resources are found. The islets, reefs and shoals in the WPS are the breeding ground of many of the fish that thrive within the 24 NM territorial sea and contiguous zone of the Philippines facing the WPS.

Second, the mineral resources in our EEZ will be our only remaining natural resources, after squandering our inland natural resources above and below the ground. We allowed loggers to denude our forests in exchange for negligible forest fees. We are allowing our inland mineral resources to be extracted for a pittance. In the words of the 1995 Mining Act, “the total government share in a mineral production agreement shall be the excise tax on mineral products.” Under the Tax Code, the excise tax is a mere 2% of the market value of the mineral ore at the time of removal from the mine site. We are the only country in the world giving away our mineral resources almost for free.

That is why this Institute we inaugurate today is important – first, to craft the legal strategy to protect our EEZ from encroachment by foreign countries, and second, to craft a fair and reasonable profit-sharing formula between the State and the private companies that will exploit the mineral resources in our EEZ. We cannot afford a repeat of what happened to our forests, and what is happening now to our inland mineral resources. Of what use is protecting, at great effort and expense, our EEZ from foreign encroachment if it will not benefit the Filipino people?

There are more than two dozen Chinese or Chinese-affiliated mining companies all over the Philippines, operating as small-scale mining companies. The Chinese are taking our mineral resources for a song, and they are using these mineral resources to build the warships and warplanes that ironically allow them to grab our reefs and shoals in the WPS.

Our Government says we do not have the money to buy the warships and warplanes to counter the Chinese military might in the WPS. We can have all the money we need if only we have one thing – political will. All we have to do is to amend our 1995 Mining Act to require a fair share for the State – from 2% to 10% – which is the international norm, in the extraction of our inland mineral resources. Then we can have the money to buy all the warships and warplanes we need in the WPS.

As believers in the rule of law, we naturally invoke international law in the settlement of disputes between states. Still, we need a minimum credible self-defense force, like any other state that wishes to remain free, independent and sovereign. This is particularly true to small coastal countries with EEZs claimed by China – a rising military and economic power that is aggressively flexing its naval might. If we keep on senselessly squandering our natural resources, and fail to summon the political will to generate the resources needed to acquire and maintain a credible self-dense force, then even as international law and world opinion may be on our side, we may still lose our EEZ in the WPS.

I am pleased that Prof. Jay Batongbacal has been chosen to lead this Institute. I discuss regularly with Prof. Jay, together with other young Filipino legal scholars on the Law of the Sea, developments on the WPS. I am confident that the Institute under Prof. Jay will craft an effective legal strategy to protect our EEZ from foreign encroachment. I am also confident that the Institute under Prof. Jay will craft a reasonable profit-sharing formula for the extraction of mineral resources in our EEZ, a profit sharing that for once will be fair to the owners of these mineral resources – the Filipino people.

Finally, I wish to thank the visionary Senator Edgardo Angara, who is an ex-officio member of the U.P. Board of Regents, for strongly endorsing the creation of this Institute.

Thank you and a pleasant afternoon to all.