G.R. No. 170867 & G.R. No. 185941, December 4, 2018
Republic of the Philippines, et al. vs. Provincial Government of Palawan, et al.

FACTS

The consolidated cases concern the entitlement of the Province of Palawan to a share in the proceeds from the Camago-Malampaya Natural Gas Project. The national government, through the Department of Energy, entered into Service Contract No. 38 for the project, located approximately 80 kilometers offshore from mainland Palawan. Administrative Order No. 381, issued in 1998, recognized that Palawan was expected to receive a share from the government’s net proceeds, referencing the Local Government Code. However, a dispute arose regarding whether the gas field was within Palawan’s “territorial jurisdiction” as required by Section 290 of the Local Government Code for a local government unit to claim a 40% share in national wealth proceeds. The national government, through the Department of Finance, took the position that a province’s jurisdiction is limited to its land area and a narrow band of coastal waters, excluding the project site.
The Province of Palawan filed a Petition for Declaratory Relief before the Regional Trial Court, which ruled in its favor, declaring the project within its territorial jurisdiction. This decision was affirmed by the Court of Appeals. The national government elevated the case to the Supreme Court, arguing that the project, being located in the continental shelf, is outside provincial territorial jurisdiction. The petitioners in G.R. No. 185941, concerned citizens, also intervened, raising issues of public interest and environmental accountability.

ISSUE

Whether the Camago-Malampaya Natural Gas Project is located within the territorial jurisdiction of the Province of Palawan, thereby entitling it to an equitable share in the national wealth pursuant to Section 290 of the Local Government Code.

RULING

The Supreme Court, in its Decision, denied the petitions and affirmed the lower courts’ rulings, holding that the Province of Palawan is entitled to its share. Justice Leonen, in a Separate Concurring Opinion agreeing only in the result, provided a distinct legal rationale. He concurred that Palawan should receive an equitable share due to its unique archipelagic nature, arguing that a province’s territorial jurisdiction for the purpose of the national wealth share should not be confined to its land mass but should logically include its coastline, subsoil, and seabed to give substantive effect to constitutional and statutory mandates on equitable distribution. However, Justice Leonen pointed out a critical evidentiary gap: the maps and data submitted to the Court failed to substantially prove that the specific coordinates of the Camago-Malampaya reservoir fell within the area of responsibility of the Province of Palawan as legally defined. Despite this lack of conclusive proof on location, he concurred in the result, emphasizing the constitutional imperative for local governments to benefit from the development of resources in their vicinity and the principle that doubts in the interpretation of laws on local autonomy should be resolved in favor of devolution. His opinion underscores that the entitlement stems from a broad constitutional principle of equity and local development, even as he noted the factual record was insufficient to definitively establish the technical boundaries of Palawan’s jurisdiction under the law.