January 29th, 12:20am January 28th, 8:45pm Harry RoqueBriefing Room

In 2009, I filed a case before the Supreme Court (SC) on behalf of Kilusan Love Malampaya (KLM) to petition for the 40 percent share – equivalent to P35 billion then – of the Province of Palawan from the earnings of the national government in the Malampaya natural gas project.

To understand the case, we have to go back to 1990, when the Department of Energy entered into Service Contract 39 with Shell, which eventually became a consortium made up of Shell Philippines Exploration, Chevron Malampaya LLC and Philippine National Oil Company-Exploration Corporation (PNOC-EC). The government and the Shell-Chevron-PNOC consortium was to explore the Camago-Malampaya reservoir for gas. Under Service Contract 39, the national government was entitled to 60 percent of the net proceeds from sale. The province of Palawan claimed that under the Local Government Code and the 1987 Constitution, it was entitled to 40 percent of the proceeds of the national government. In 2001, the national government did not give Palawan its share from the project’s gross proceeds, claiming the Malampaya gas project was not within the territorial waters of any municipality of Palawan.

The argument in Palawan’s favor is that Palawan possesses a continental shelf and the Camago-Malampaya fields are a natural prolongation of Palawan’s landmass. Denying the province its rightful share is tantamount to bargaining away the Filipino people’s rightful claim to the rich marine resources in the region. In 2007, the national government appeared to find some merit in this argument, since President Arroyo signed Executive Order (EO) 683. This EO allowed Palawan “to securitize their respective shares in the 50 percent of the disputed 40 percent of the net government share in the proceeds” while cases were ongoing. Nonetheless, the EO did not translate into Palawan receiving its share.

The case I filed was originally raffled to then Associate Justice Ma. Lourdes Sereno. Last year, KLM filed a motion asking the court to finally resolve the petition. However, the resolution was delayed by the ouster of Sereno. The case was eventually raffled off to Associate Justice Noel Tijam when Chief Justice Sereno was sacked.

Last week, the High Court released its decision in the case. Voting 12-0, the SC en banc decided to grant the petition of the national government and denied the petitions for Palawan. The Court ruled that unless clearly expanded by Congress, the Provincial Government of Palawan’s territorial jurisdiction refers only to its land area.

To say that I was disappointed with the decision would be an understatement. And with all due respect to the SC, I believe they erred in their decision denying the local government of Palawan its 40 percent of the national government’s 60 percent share in the Malampaya natural gas project.

First, the 1987 Constitution itself provides that the concept of territory encompasses waters, hence the Court’s ruling that territory be limited to land mass is puzzling.

Second, since we are under a unitary system of government and not a federal system, there can be no strict separation between resources that the national government can develop and the local government units (LGU) that have control over these resources. What belongs to the national government belongs as much to the LGU where the resource is found.

Finally, the decision ignores the mandate of the 1987 Constitution that LGU be given a share in natural resources and wealth. The means by which local governments can achieve fiscal autonomy and develop are clearly stated in the Constitution and the Local Government Code: 40 percent share from the government’s utilization of their resources. Hence, there is no textual basis or just basis for any other conclusion than that Palawan deserves 40 percent of the revenues from Malampaya.

This decision is a huge step backwards, not only for the people of Palawan, but for all LGU empowered under the 1987 Constitution and the Local Government Code. As one of the lead counsels of the KLM, I will certainly join the effort to appeal this decision so that Palawan receives its just share. The people of Palawan deserve no less than 40 percent of the share of the national government in the billion-peso Malampaya gas project.