The Philippine Supreme Court has declared unconstitutional an agreement on oil exploration in the South China Sea concluded in 2005 by the Philippines, China and Vietnam.
State-owned companies from the three nations signed the Joint Marine Seismic Undertaking, which allowed them to jointly explore for oil in waters surrounding the disputed Spratly Islands.
The pact expired in 2008, but some opposition lawmakers in the Philippines took the case to court, saying the project was unconstitutional as the Constitution does not allow foreign entities to explore natural resources.
The Supreme Court on Tuesday ruled that the tripartite agreement violated the Constitution as it allowed foreign corporations to take part in the exploration of oil resources within Philippine waters.
The ruling comes as Chinese President Xi Jinping expressed readiness to seek petroleum and natural gas development in non-disputed waters by resuming negotiations when he met with Philippine President Ferdinand Marcos Jr. last week.
Marcos also responded by expressing willingness to revive failed negotiations for joint oil exploration with China.
The ruling, however, will restrict joint exploration projects in the Philippines' exclusive economic zone and may impact negotiations for that purpose.