REPUBLIC OF THE PHILLIPINES vs.

PROVINCE OF PALAWAN
G.R. no. 170867, January 21, 2020
Leonen, J:

FACTS:
In 1990, the Department of Energy entered into Service Contract No. 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 consortium was to explore the Camago-Malampaya reservoir
for gas.
Under the contract, the national government is entitled to 60% of the net proceeds from
sale. The province of Palawan claimed that under the Local Government Code and the
1987 Constitution, it is entitled to 40% of the national government’s 60%.
Here are the relevant legal provisions they attached to their claim:
 “LOCAL GOVERNMENT CODE: Section 290. Amount of Share of Local
Government Units. – Local government units shall, in addition to the internal
revenue allotment, have a share of forty percent (40%) of the gross collection
derived by the national government from the preceding fiscal year from mining
taxes, royalties, forestry and fishery charges, and such other taxes, fees, or
charges, including related surcharges, interests, or fines, and from its share in
any co-production, joint venture or production sharing agreement in the utilization
and development of the national wealth within their territorial jurisdiction.”

 “CONSTITUTION: SECTION 7, ARTICLE X. Local governments shall be entitled

to an equitable share in the proceeds of the utilization and development of the
national wealth within their respective areas, in the manner provided by law,
including sharing the same with the inhabitants by way of direct benefits.”

In 2007, former president Gloria Macapagal Arroyo signed Executive Order No. 683 that
allowed Palawan "to securitize their respective shares in the 50% of the disputed 40%
of the Net Government Share in the proceeds" while cases were ongoing.
Palawan never received any amount despite Arroyo's EO, said Harry Roque, who
represented a group from Palawan that petitioned the Supreme Court for the 40%
share.

ISSUE:
Whether or not the Province of Palawan is entitled, under Article X, Section 1 of the
Constitution and Section 290 of the Local Government Code, to a 40% equitable share
in the proceeds from the Camago-Malampaya Natural Gas Project

RULING:
No, the