SC denies Palawan claim to 40% of Malampaya funds

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THE Supreme Court (SC) voted unanimously, 13-0, to reject a claim by Palawan province for 40% of the royalties of the Malampaya natural gas project, according to a Supreme Court source who asked not to be identified.

The source said that the court ruled that the Malampaya field was outside the province’s territory.

The ruling has yet to be officially released.

The case stemmed from a February 2009 petition which questioned the legality and constitutionality of Executive Order (EO) 683-issued by former President and now Speaker Gloria Macapagal-Arroyo in 2007 ordering the release of half of the disputed 40% share of Palawan — claiming that it violates Republic Act No. 7169 or the Local Government Code of 1991 and the Constitution’s guarantee of equitable sharing of wealth.

The petitioners claimed that neither the governor, congressmen, nor the Puerto Princesa mayor is authorized to sign on behalf of the local government units (LGU) in the province as the EO directs the release of the shares to the province and congressional districts of Palawan as well as Puerto Princesa City.

They also argued that the provisional implementation agreement (PIA), which will authorize the release of the shares as stated in the EO, only discussed “net proceeds” but the law stated that the shares of LGUs should be based on “gross collection.”

They claimed that the local government code provides that any proceeds from national government income should be directly released to the LGUs.

The national government, through the Department of Energy, entered a service contract in 1990 with Shell Philippines Exploration B.V. and Occidental Philippines, Inc. for what was thought to be the largest single investment in the country.

The project is expected to raise $8 billion to $10 billion for the government.

The Malampaya gas field is around 80 kilometers from the Palawan coastal.

The Palawan government claims 40% of the proceeds of the project, citing the Local Government Code of 1991.

Ms. Arroyo in 2007 issued EO 683 which directed the release of half of the 40% of the funds to the province and congressional districts of Palawan and Puerto Princesa City through a PIA on condition that the funds are used immediately for development projects in Palawan.

The petitioners questioned the EO in the Court of Appeals but lost in 2008. They then elevated the case to the SC in the following year. — Vann Marlo M. Villegas