tag:blogger.com,1999:blog-55812980772383311482024-03-12T18:36:36.326-07:00Philippine Legal GuidePhilippine Legal Guide is your ultimate Philippine Legal Resourceatty. stacyhttp://www.blogger.com/profile/01086234062798435600noreply@blogger.comBlogger939110tag:blogger.com,1999:blog-5581298077238331148.post-10776377370527894082021-12-09T06:33:00.003-08:002021-12-09T06:33:40.968-08:00Jurisprudence: G.R. No. 185941. December 4, 2018.<p>Jurisprudence: Republic v. Provincial Government of Palawan G.R. No. 185941. December 4, 2018<br /><!--[if gte mso 9]><xml>
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</p><p class="MsoNormal">EN BANC</p>
<p class="MsoNormal">[G.R. No. 170867.<span style="mso-spacerun: yes;">
</span>December 4, 2018.]</p>
<p class="MsoNormal">REPUBLIC OF THE PHILIPPINES, REPRESENTED BY RAPHAEL P.M.
LOTILLA, SECRETARY, DEPARTMENT OF ENERGY (DOE), MARGARITO B. TEVES, SECRETARY,
DEPARTMENT OF FINANCE (DOF), AND ROMULO L. NERI, SECRETARY, DEPARTMENT OF BUDGET
AND MANAGEMENT (DBM), petitioners, vs. PROVINCIAL GOVERNMENT OF PALAWAN,
REPRESENTED BY GOVERNOR ABRAHAM KAHLIL B. MITRA, respondent.</p>
<p class="MsoNormal">[G.R. No. 185941.<span style="mso-spacerun: yes;">
</span>December 4, 2018.]</p>
<p class="MsoNormal">BISHOP PEDRO DULAY ARIGO, CESAR N. SARINO, DR. JOSE ANTONIO
N. SOCRATES, PROF. H. HARRY L. ROQUE, JR., petitioners, vs. HON. EXECUTIVE
SECRETARY, EDUARDO R. ERMITA, HON. ENERGY SECRETARY ANGELO T. REYES, HON.
FINANCE SECRETARY MARGARITO B. TEVES, HON. BUDGET AND MANAGEMENT SECRETARY
ROLANDO D. ANDAYA, JR., HON. PALAWAN GOVERNOR JOEL T. REYES, HON.
REPRESENTATIVE ANTONIO C. ALVAREZ (1st District), HON. REPRESENTATIVE ABRAHAM
MITRA (2nd District), RAFAEL E. DEL PILAR, PRESIDENT AND CEO, PNOC EXPLORATION
CORPORATION, respondents.</p>
<p class="MsoNormal">DECISION</p>
<p class="MsoNormal">TIJAM, J p:</p>
<p class="MsoNormal">G.R. No. 170867 is a petition for review on certiorari 1
under Rule 45 of the Rules of Court assailing the Decision 2 dated December 16,
2005 of the Regional Trial Court (RTC) of Palawan, Branch 95 in Civil Case No.
3779 which declared the Province of Palawan entitled to forty percent (40%) of
the government's earnings derived from the Camago-Malampaya natural gas project
since October 16, 2001. The petition also seeks ad cautelam to nullify the RTC
Amended Order 3 dated January 16, 2006 which directed the "freezing"
of said 40% share under pain of contempt.<span style="mso-spacerun: yes;">
</span></p>
<p class="MsoNormal">G.R. No. 185941 is a petition for review on certiorari 4
under Rule 45 of the Rules of Court assailing the Resolution 5 dated May 29,
2008 of the Court of Appeals (CA) in CA-G.R. SP No. 102247 which dismissed the
certiorari petition questioning the constitutionality of Executive Order (E.O.)
No. 683, 6 and the CA Resolution 7 dated December 16, 2008 which denied the
motion for reconsideration.</p>
<p class="MsoNormal">The Antecedents</p>
<p class="MsoNormal">The Camago-Malampaya Natural</p>
<p class="MsoNormal">Gas Project</p>
<p class="MsoNormal">On December 11, 1990, the Republic of the Philippines
(Republic or National Government), through the Department of Energy (DoE),
entered into Service Contract No. 38 with Shell Philippines Exploration B.V.
and Occidental Philippines, Incorporated (collectively SPEX/OXY), as
Contractor, for the exclusive conduct of petroleum operations in the area known
as "Camago-Malampaya" located offshore northwest of Palawan.
Exploration of the area led to the drilling of the Camago-Malampaya natural gas
reservoir about 80 kilometers from the main island of Palawan and 30 kms from
the platform. 8 </p>
<p class="MsoNormal">The nearest point of the Camago-Malampaya production area is
at a distance of 93.264 kms or 50.3585 nautical miles to the Kalayaan Island
Group (Kalayaan); 55.476 kms or 29.9546 nm to mainland Palawan (Nacpan Point,
south of Patuyo Cove, Municipality of El Nido); and 48.843 kms or 26.9546 nm to
the Province of Palawan (northwest of Tapiutan Island, Municipality of El
Nido). 9 </p>
<p class="MsoNormal">The quantity of natural gas contained in the
Camago-Malampaya was estimated to be sufficient to justify the pursuit of
gas-to-power projects having an aggregate power-generating capacity of
approximately 3,000 megawatts operating at baseload for 20 to 25 years. 10 </p>
<p class="MsoNormal">Service Contract No. 38, as clarified by the Memorandum of
Clarification between the same parties dated December 11, 1990, provides for a
production sharing scheme whereby the National Government was entitled to
receive an amount equal to sixty percent (60%) of the net proceeds 11 from the
sale of petroleum (including natural gas) produced from petroleum operations
while SPEX/OXY, as service contractor, was entitled to receive an amount equal
to forty percent (40%) of the net proceeds. 12 </p>
<p class="MsoNormal">The Contractor was subsequently composed of the consortium
of SPEX, Shell Philippines LLC, Chevron Malampaya LLC and Philippine National
Oil Company-Exploration Corporation (PNOC-EC). 13 </p>
<p class="MsoNormal">Administrative Order No. 381</p>
<p class="MsoNormal">On February 17, 1998, President Fidel V. Ramos issued
Administrative Order (A.O.) No. 381 14 which, in part, stated that the Province
of Palawan was expected to receive about US$2.1 Billion from the estimated
US$8.1 Billion total government share from the Camago-Malampaya natural gas
project for the 20-year contract period. 15 CAIHTE</p>
<p class="MsoNormal">On June 10, 1998, DoE Secretary Francisco L. Viray wrote
Palawan Governor Salvador P. Socrates, requesting for the deferment of payment
of 50% of Palawan's share in the project for the first seven years of
operations, estimated at US$222.89 Million, which it would use to pay for the
National Power Corporation's Take-or-Pay Quantity (TOPQ) obligations under the
latter's Gas Sale and Purchase Agreements with SPEX/OXY. 16 </p>
<p class="MsoNormal">On October 16, 2001, the Camago-Malampaya natural gas
project was inaugurated. 17 </p>
<p class="MsoNormal">Palawan's Claim</p>
<p class="MsoNormal">The Provincial Government of Palawan asserted its claim over
forty percent (40%) of the National Government's share in the proceeds of the
project. It argued that since the reservoir is located within its territorial
jurisdiction, it is entitled to said share under Section 290 18 of the Local
Government Code. The National Government disputed the claim, arguing that since
the gas fields were approximately 80 kms from Palawan's coastline, they are
outside the territorial jurisdiction of the province and is within the national
territory of the Philippines. 19 </p>
<p class="MsoNormal">Negotiations took place between the National Government and
the Provincial Government of Palawan on the sharing of the proceeds from the
project, with the former proposing to give Palawan 20% of said proceeds after
tax. The negotiations, however, were unsuccessful. On March 14, 2003, in a
letter to the Secretaries of the Department of Energy (DoE), the Department of
Budget and Management (DBM) and the Department of Finance (DoF), Palawan
Governor Mario Joel T. Reyes (Governor Reyes) reiterated his province's demand
for the release of its 40% share. Attached to said letter was Resolution No.
5340-03 20 of the Sangguniang Panlalawigan of Palawan calling off further
negotiations with the National Government and authorizing Governor Reyes to
engage legal services to prosecute the province's claim. 21 </p>
<p class="MsoNormal">Civil Case No. 3779</p>
<p class="MsoNormal">On May 7, 2003, the Provincial Government of Palawan filed a
petition 22 for declaratory relief before the RTC of Palawan and Puerto
Princesa against DoE Secretary Vicente S. Perez, Jr., DoF Secretary Jose Isidro
N. Camacho and DBM Secretary Emilia T. Boncodin (Department Secretaries),
docketed as Civil Case No. 3779. It sought judicial determination of its rights
under A.O. No. 381 (1998), Republic Act (R.A.) No. 7611 23 or the Strategic Environmental
Plan (SEP) for Palawan Act, Section 290 of R.A. No. 7160 24 or the Local
Government Code of 1991 (Local Government Code), and Provincial Ordinance No.
474 25 (series of 2000). It asked the RTC to declare that the Camago-Malampaya
natural gas reservoir is part of the territorial jurisdiction of the Province
of Palawan and that the Provincial Government of Palawan was entitled to
receive 40% of the National Government's share in the proceeds of the
Camago-Malampaya natural gas project. 26 </p>
<p class="MsoNormal">Commenting on the petition, the Republic maintained that
Palawan was not entitled to the 40% share because the Camago-Malampaya
reservoir is outside its territorial jurisdiction. It postulated that Palawan's
territorial jurisdiction is limited to its land area and to the municipal
waters within 15 km from its coastline. It denied being estopped by the acts of
government officials who earlier acknowledged Palawan's share in the proceeds
of the project. 27 </p>
<p class="MsoNormal">The Interim Agreement</p>
<p class="MsoNormal">On February 9, 2005, DoE Secretary Vincent S. Perez, Jr.,
DBM Secretary Mario L. Relampagos and DoF Secretary Juanita D. Amatong, with
authority from President Gloria Macapagal-Arroyo, executed an Interim Agreement
28 with the Province of Palawan, represented by its Governor Reyes. The agreement
provided for the equal sharing between the National Government and the Province
of Palawan of 40% of (a) the funds already remitted to the National Government
under Service Contract No. 38 and (b) the funds to be remitted to the National
Government up the earlier of (i) the effective date of the final and executory
judgment on the petition by a court of competent jurisdiction on Civil Case No.
3779, or (ii) June 30, 2010. The parties also agreed that the amount of P600
Million, which was previously released to the Province of Palawan under E.O.
Nos. 254 and 254-A, would be deducted from the initial release of the
province's 50% share. Furthermore, the release of funds under the agreement
would be without prejudice to the respective positions of the parties in any
legal dispute regarding the territorial jurisdiction over the Camago-Malampaya
area. Should Civil Case No. 3779 be decided with finality in favor of either
party, the Interim Agreement treated the share which the prevailing party has
received as financial assistance to the other. 29 </p>
<p class="MsoNormal">The Province of Palawan claims that the National Government
failed to fulfill their commitments under the Interim Agreement and that it has
not received its stipulated share since it was signed. 30 </p>
<p class="MsoNormal">The RTC Rulings in Civil Case No. 3779</p>
<p class="MsoNormal">On December 16, 2005, the RTC decided Civil Case No. 3779 in
favor of the Province of Palawan, disposing as follows:</p>
<p class="MsoNormal">WHEREFORE, premises considered, the Court declares that the
province of Palawan is entitled to the 40% share of the national wealth
pursuant to the provisions of Sec. 7, Article X of the 1987 Constitution and
this right is in accord with the provisions of the Enabling Act, R.A. 7160 (The
Local Government Code of 1991), computed based on revenues generated from the
Camago-Malampaya Natural Gas Project since October 16, 2001.</p>
<p class="MsoNormal">IT IS SO ORDERED. 31 </p>
<p class="MsoNormal">The RTC held that it was "unthinkable" to limit
Palawan's territorial jurisdiction to its landmass and municipal waters
considering that the Local Government Code empowered them to protect the
environment, and R.A. No. 7611 adopted a comprehensive framework for the
sustainable development of Palawan compatible with protecting and enhancing the
natural resources and endangered environment of the province. 32 </p>
<p class="MsoNormal">Applying the principles of decentralization and devolution
of powers to local government units (LGUs) as recognized in the 1987
Constitution, the RTC explained that the State's resources must be shared with
the LGUs if they were expected to deliver basic services to their constituents
and to discharge their functions as agents of the State in enforcing laws,
preserving the integrity of the national territory and protecting the
environment. 33 </p>
<p class="MsoNormal">The RTC rejected the Department Secretaries' reliance on the
cases of Tan v. COMELEC 34 and Laguna Lake Development Authority v. CA 35
(LLDA) in arguing that territorial jurisdiction refers only to landmass. The
RTC held that the cases were inapplicable as Tan was an election controversy
involving the creation of a new province while LLDA merely highlighted the
primacy of the said agency's Charter over the Local Government Code. The 1950
case of Municipality of Paoay v. Manaois, 36 where a municipality was declared
as holding only a usufruct, not exclusive ownership, over the municipal waters,
was also held to be inapplicable since it was rendered before the principle of
local autonomy was instituted in the 1987 Constitution and the Local Government
Code. 37 </p>
<p class="MsoNormal">The RTC further declared that the Regalian Doctrine could
not be used by the Department Secretaries as a shield to defeat the
Constitutional provision giving LGUs an equitable share in the proceeds of the
utilization and development of national wealth within their respective areas.
The doctrine, said the RTC, is subject to this Constitutional limitation and
the 40% LGU share set by the Local Government Code. 38 </p>
<p class="MsoNormal">Finally, the RTC noted that from 1992 to 1998, Palawan
received a total of P116,343,197.76 from collections derived from the West
Linapacan Oil Fields, and that former President Fidel V. Ramos issued A.O. No.
381 acknowledging Palawan's claim and share in the proceeds of the
Camago-Malampaya project. The RTC, thus, held that by its previous actions and
issuances, the National Government legally acknowledged Palawan's claim to the
proceeds of the Camago-Malampaya project and it was "too late in the day
for [it] to take a 180 degree turn." 39 </p>
<p class="MsoNormal">On December 29, 2005, the Provincial Government of Palawan
filed a motion to require the Secretaries of the DoE, DoF and DBM to render a full
accounting of actual payments made by SPEX to the Bureau of Treasury from
October 1, 2001 to December 2005, and to freeze and/or place Palawan's 40%
share in an escrow account. 40 </p>
<p class="MsoNormal">On January 4, 2006, the aforesaid Secretaries filed an
urgent manifestation asserting that the motion was premature and should not be
heard by the RTC because the Republic still had fifteen (15) days to appeal. 41
The Provincial Government of Palawan countered that pending finality of the
December 16, 2005 Decision, there was a need to secure its 40% share over which
it had a "vested and inchoate right." 42 </p>
<p class="MsoNormal">The RTC subsequently issued an Order which was erroneously
dated December 16, 2006 and later amended to indicate the date as January 16,
2006. 43 The dispositive portion of the Amended Order 44 reads:</p>
<p class="MsoNormal">WHEREFORE, premises considered, the public respondents
individually or collectively DIRECTED within ten (10) days from receipt of this
Order pursuant to a "Freeze Order" hereby granted by this Court:</p>
<p class="MsoNormal">a.<span style="mso-tab-count: 1;"> </span>HON.
Respondent SECRETARY OF THE DEPARTMENT OF ENERGY RAPHAEL P.M. LOTILLA</p>
<p class="MsoNormal">To render a FULL ACCOUNTING of the total gross collections
derived by the National Government from the development and utilization of
Camago-Malampaya national gas project for the period January 2002 to December
2005, including its conversion to peso denomination and showing the 40% LGU
share and henceforth, submit MONTHLY an accounting of all succeeding
collections until the finality of the decision;</p>
<p class="MsoNormal">b.<span style="mso-tab-count: 1;"> </span>HON.
Respondent SECRETARY OF FINANCE MARGARITO TEVEZ</p>
<p class="MsoNormal">To submit a full report of the actual payments made by Shell
Spex from January 2002 to December 2005 deposited under Special Account 151 of
the Bureau of Treasury, Department of Finance, including the dates when the
payments were made, the Official Receipts covering the same and the present
status, particularly the disputed 40% LGU share for Palawan and to make MONTHLY
reports of actual payments received during the pendency of this case;<span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal">c.<span style="mso-tab-count: 1;"> </span>HON.
Respondent SECRETARY DEPARTMENT OF BUDGET [sic] ROMULO NERI</p>
<p class="MsoNormal">Effective immediately, NOT TO ISSUE nor CHARGE allotment
release orders, disbursements and cash allocation against the deposit/account
Special Fund 151 corresponding to the 40% LGU share for the period January 2002
to December 2005 pending the finality of the decision in this case.</p>
<p class="MsoNormal">d.<span style="mso-tab-count: 1;"> </span>ALL
RESPONDENTS, collectively or individually, effective immediately, CEASE and
DESIST from USING/DISBURSING the 40% share of the LGU-Palawan, for any other
purpose, except in compliance with the decision of this Court dated December
16, 2005, under pain of CONTEMPT, until the finality of the decision;</p>
<p class="MsoNormal">e.<span style="mso-tab-count: 1;"> </span>Furthermore,
the HON. Respondent Secretary of Finance Margarito Tevez [sic] and/or his
subordinate officer Hon. Omar T. Cruz Treasurer of the Philippines, to deposit
in escrow in the LAND BANK OF THE PHILIPPINES the fund/deposit to the 40%
disputed LGU share, identified as Special Account 151, and to
"freeze" said account, under pain of CONTEMPT, until finality of the
decision or except as directed by this Court pursuant to the Decision dated
December 16, 2005.</p>
<p class="MsoNormal">IT IS SO ORDERED. 45 </p>
<p class="MsoNormal">The RTC held that the motion for full accounting and
freezing of Palawan's claimed 40% share was actually part of the petition for
review which sought to declare the duties of the National Government and the
rights of the Provincial Government of Palawan, and that a resolution thereof
would guide this Court as to the actual amount due the local government since
it is not a trier of facts. 46 The RTC also noted that the National
Government's track record in complying with the Constitutional provisions on
local autonomy was not exactly immaculate as supposedly evidenced by the case
of Gov. Mandanas v. Hon. Romulo 47 where, after sharing with the Province of
Palawan collections from the West Linapacan oil fields from 1992 to 1998, the
National Government "turned its back on its legal commitment to the
former." The trial court stressed that the local government of Palawan was
merely preempting any possible dissipation of funds that would render any judgment
favorable to it an empty victory. 48 </p>
<p class="MsoNormal">On February 6, 2006, the Department Secretaries filed a
motion for reconsideration 49 of the Amended Order dated January 16, 2006. 50 </p>
<p class="MsoNormal">G.R. No. 170867</p>
<p class="MsoNormal">On February 16, 2006, the Republic, represented by DoE
Secretary Raphael P.M. Lotilla, DoF Secretary Margarito B. Teves and DBM
Secretary Romulo L. Neri, challenged the RTC's December 16, 2005 Decision
before this Court through a petition for review 51 docketed as G.R. No. 170867.
In the same petition, the Republic, in anticipation of the RTC's denial of its
motion for reconsideration, also assailed the January 16, 2006 Amended Order ad
cautelam, ascribing grave abuse of discretion to the RTC for granting
affirmative relief in a special civil action for declaratory relief. 52 </p>
<p class="MsoNormal">On June 6, 2006, the RTC in its Order 53 lifted its January
16, 2006 Order, holding that:</p>
<p class="MsoNormal">[A] becoming sense of modesty on the part of this Court,
compels it to defer to the Supreme Court's First Division as the Movants have
deviously appealed to the High Court the very issues raised in the Motion for
Reconsideration now pending before this Court. 54 </p>
<p class="MsoNormal">The dispositive portion of the RTC's June 6, 2006 Order,
thus, reads:</p>
<p class="MsoNormal">WHEREFORE, premises considered, the Amended Order dated
January 16, 2006 is hereby LIFTED and SET ASIDE to await final determination
thereof in view of the Petition for Review on Certiorari filed by Movants in
this case directly with the Supreme Court.</p>
<p class="MsoNormal">IT IS SO ORDERED. 55 </p>
<p class="MsoNormal">Consequently, the Republic manifested to the Court that its ad
cautelam arguments relative to the Amended Order dated January 16, 2006 need no
longer be resolved unless the Provincial Government of Palawan raised the same
in its comment. 56 </p>
<p class="MsoNormal">The Provisional Implementation</p>
<p class="MsoNormal">Agreement</p>
<p class="MsoNormal">On July 25, 2007, the duly authorized representatives of the
National Government and the Province of Palawan, with the conformity of the
Representatives of the Congressional Districts of Palawan, agreed on a
Provisional Implementation Agreement (PIA) that allowed 50% of the disputed 40%
of the Net Government Share in the proceeds of Service Contract No. 38 to be
utilized for the immediate and effective implementation of development projects
for the people of Palawan. 57 </p>
<p class="MsoNormal">E.O. No. 683</p>
<p class="MsoNormal">On December 1, 2007, President Gloria Macapagal-Arroyo issued
E.O. No. 683 which authorized the release of funds to the implementing agencies
pursuant to the PIA, without prejudice to any ongoing discussion or the final
judicial resolution of Palawan's claim of territorial jurisdiction over the
Camago-Malampaya area. E.O. No. 683 provided:</p>
<p class="MsoNormal">SECTION 1. <span style="mso-tab-count: 1;"> </span>Subject
to existing laws, and the usual government accounting and auditing rules and
regulations, the Department of Budget and Management (DBM) is hereby authorized
to release funds to the implementing agencies (IA) pursuant to the PIA, upon
the endorsement and submission by the DOE and/or the PNOC Exploration
Corporation of the following documents:</p>
<p class="MsoNormal">1.1.<span style="mso-tab-count: 1;"> </span>Directive
by the Office of the President or written request of the Province of Palawan,
the Palawan Congressional Districts or the Highly Urbanized City of Puerto
Princes[a], for the funding of designated projects;</p>
<p class="MsoNormal">1.2.<span style="mso-tab-count: 1;"> </span>A
certification that the designated projects fall under the investment program of
the Province of Palawan, City of Puerto Princesa, and/or the development
projects identified in the development program of the National Government or
its agencies; and</p>
<p class="MsoNormal">1.3.<span style="mso-tab-count: 1;"> </span>Bureau of
Treasury certification on the availability of funds from the 50% of the 40%
share being claimed by the Province of Palawan from the Net Government Share
under SC 38;</p>
<p class="MsoNormal">Provided, that the DBM shall be subject to the actual
collections deposited with the National Treasury, and shall be in accordance
with the Annual Fiscal Program of the National Government.</p>
<p class="MsoNormal">SECTION 2. <span style="mso-tab-count: 1;"> </span>The
IA to whom the DBM released the funds pursuant to Section 1 hereof shall be
accountable for the implementation of the projects and the expenditures
thereon, subject to applicable laws and existing budgeting, accounting and
auditing rules and regulations. For recording purposes, the DBM may authorize
the IAs to open and maintain a special account for the amounts released
pursuant to this Executive Order (EO).</p>
<p class="MsoNormal">SECTION 3. <span style="mso-tab-count: 1;"> </span>The
National government, with due regard to the pending judicial dispute, shall
allow the Province of Palawan, the Congressional Districts of Palawan and the
City of Puerto Princesa to securitize their respective shares in the 50% of the
disputed 40% of the Net Government Share in the proceeds of SC 38 pursuant to
the PIA. For the purpose, the DOE shall, in consultation with the Department of
Finance, be responsible for preparing the Net Government Revenues for the
period of to June 30, 2010.</p>
<p class="MsoNormal">SECTION 4. <span style="mso-tab-count: 1;"> </span>The
amounts released pursuant to this EO shall be without prejudice to any on-going
discussions or final judicial resolution of the legal dispute regarding the
National Government's territorial jurisdiction over the areas covered by SC 38
in relation to the claim of the Province of Palawan under Sec. 290 of RA
7160.<span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal">CA-G.R. SP No. 102247</p>
<p class="MsoNormal">On February 7, 2008, a petition for certiorari 58
questioning the constitutionality of E.O. No. 683 was filed before the CA by
Bishop Pedro Dulay Arigo, Cesar N. Sarino, Dr. Jose Antonio N. Socrates and
Prof. H. Harry L. Roque, Jr. (Arigo, et al.), as citizens and taxpayers, against
Executive Secretary Eduardo R. Ermita (Executive Secretary Ermita), DoE
Secretary Angelo T. Reyes (DoE Secretary Reyes), DoF Secretary Margarito B.
Teves, DBM Secretary Rolando D. Andaya, Jr., Palawan Governor Reyes,
Representative Antonio C. Alvarez (Alvarez) of the First District of Palawan,
Representative Abraham Mitra (Mitra) and Rafael E. Del Pilar, President and
Chief Executive Officer, PNOC-EC. Docketed as CA-G.R. SP No. 102247, the
petition also asked the CA to: (1) prohibit respondents therein from disbursing
funds allocated under E.O. No. 683; (2) direct the National Government to
release the 40% allocation of the Province of Palawan from the proceeds of the
Camago-Malampaya project pursuant to the sharing formula under the Constitution
and the Local Government Code; and (3) prohibit the parties to the PIA from
implementing the same for being violative of the Constitution and the Local
Government Code. 59 </p>
<p class="MsoNormal">In a Resolution dated March 18, 2008, the CA required Arigo,
et al., to submit, within five (5) days from notice, copies of relevant
pleadings and other material documents, namely: (1) the petition for review on
certiorari, docketed as G.R. No. 170867, filed before this Court; (2) the RTC's
Decision in Civil Case No. 3779; (3) the motion for reconsideration of said RTC
Decision; (4) the Service Contract No. 38; and (5) the PIA, as required under
Section 1, Rule 65, in relation to Section 3, Rule 46 of the Rules of Court. 60
TIADCc</p>
<p class="MsoNormal">Arigo, et al., asked for additional ten (10) days to comply
with the Resolution, which the CA granted. They later submitted the required
documents except for the copies of the petition in G.R. No. 170867 and the PIA.
They informed the CA that despite having made a formal request for said
petition, they were unable to secure a copy because they were not parties to
the case. The Third Division's Clerk of Court also informed them that the
records of G.R. No. 170867 were unavailable as the case had already been
submitted to the ponente for resolution. Though unable to obtain a copy of the
PIA, they submitted a copy of Service Contract No. 38 which they supposedly
secured from "unofficial sources." Considering the difficulty they
allegedly encountered in obtaining the documents, they asked the CA to direct
DoE Secretary Reyes and Executive Secretary Ermita to submit a copy of the
petition in G.R. No. 170867 and Service Contract No. 38, respectively. They
also asked the CA to require any of the respondents-officials of the Province
of Palawan to submit a copy of the PIA to which they were supposed to have been
signatories. 61 </p>
<p class="MsoNormal">Ruling of the CA</p>
<p class="MsoNormal">In the CA's Resolution 62 dated May 29, 2008, Arigo, et
al.'s, petition for certiorari was denied due course and dismissed. The CA held
that the task of submitting relevant documents fell squarely on Arigo, et al.,
as petitioners invoking its jurisdiction. It added that Arigo, et al., should
have submitted a certification from this Court's Third Division concerning the
unavailability of the records of G.R. No. 170867 and that they could have simply
secured a copy of the PIA from the Malacañang Records Office as the official
repository of all documents related to the Executive's functions.</p>
<p class="MsoNormal">The CA also held that apart from its procedural defect, the
petition was also prematurely filed considering that it was anchored on the
same essential facts and circumstances and raised the same issues in G.R. No.
170867. The CA likewise noted that the interim undertaking between the parties
to the PIA was contingent on the final adjudication of G.R. No. 170867. Taking
judicial notice of on-going efforts of both legislative and executive
departments to arrive at a common position in redefining the country's baseline
in the light of the United Nations Convention on the Law of the Sea (UNCLOS),
the appeals court further explained that ruling on the case may be tantamount
to a collateral adjudication of the archipelagic baseline which involved a
policy issue. 63 </p>
<p class="MsoNormal">Arigo, et al., asked the CA to reconsider its May 29, 2008
Resolution and later submitted an original duplicate of the Resolution 64 dated
June 23, 2008 of this Court's Third Division which denied their counsel's
request for certified true copies of certain documents since it was not a
counsel for any party. 65 </p>
<p class="MsoNormal">On December 16, 2008, the CA issued a Resolution 66 denying
the motion for reconsideration.</p>
<p class="MsoNormal">G.R. No. 185941 (Arigo, et al., petition)</p>
<p class="MsoNormal">On February 23, 2009, Arigo, et al., filed a petition for
review on certiorari 67 over the CA's May 29, 2008 and December 16, 2008
Resolutions, arguing that the case was ripe for decision and that the documents
required by the CA were not necessary. 68 They assert anew their constitutional
challenge to E.O. No. 638, claiming that it was in violation of the mandated
equitable sharing of resources between the National Government and LGUs. 69 </p>
<p class="MsoNormal">Consolidation of Cases</p>
<p class="MsoNormal">On June 23, 2009, the Court in its Resolution 70
consolidated G.R. No. 185941 with G.R. No. 170867.</p>
<p class="MsoNormal">Oral Argument</p>
<p class="MsoNormal">On September 1, 2009 71 and November 24, 2009, 72 the cases
were heard on oral argument. After the parties presented their respective
arguments, the Court heard the opinions of Atty. Henry Bensurto, Jr. (Atty.
Bensurto) of the Department of Foreign Affairs and Dean Raul Pangalangan of the
University of the Philippines as amici curiae.</p>
<p class="MsoNormal">Remittances under Service Contract No. 38</p>
<p class="MsoNormal">As of August 31, 2009, the amounts remitted to the DoE under
Service Contract No. 38 are as follows: 73 </p>
<p class="MsoNormal"> </p>
<p class="MsoNormal"> </p>
<p class="MsoNormal">Year<span style="mso-tab-count: 1;"> </span>Total
Collection<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">2002<span style="mso-tab-count: 1;"> </span>646,333,100.11<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">2003<span style="mso-tab-count: 1;"> </span>1,475,334,680.12<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">2004<span style="mso-tab-count: 1;"> </span>1,631,245,574.33<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">2005<span style="mso-tab-count: 1;"> </span>2,393,400,010.73<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">2006<span style="mso-tab-count: 1;"> </span>5,369,720,905.73<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">2007<span style="mso-tab-count: 1;"> </span>8,228,450,883.72<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">2008<span style="mso-tab-count: 1;"> </span>25,498,646,553.39<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">January 1 to August 31, 2009<span style="mso-tab-count: 1;"> </span>15,947,078,304.12<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">Total<span style="mso-tab-count: 1;"> </span>61,190,210,012.25<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal"> </p>
<p class="MsoNormal">Based on the aforesaid remittances, the Republic computed
the share claimed by the Province of Palawan (as of August 31, 2009) as
follows: 74 </p>
<p class="MsoNormal"> </p>
<p class="MsoNormal"> </p>
<p class="MsoNormal">Year<span style="mso-tab-count: 1;"> </span>DoE Share 75
<span style="mso-tab-count: 1;"> </span>Source of Assistance to the LGUs<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">Palawan's 40% Claim<span style="mso-tab-count: 1;"> </span>Total
Collection<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">2002<span style="mso-tab-count: 1;"> </span>10,113,578.87<span style="mso-tab-count: 1;"> </span>636,219,521.24<span style="mso-tab-count: 1;"> </span>646,333,100.11<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">2003<span style="mso-tab-count: 2;"> </span>1,475,334,680.12<span style="mso-tab-count: 1;"> </span>1,475,334,680.12<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">2004<span style="mso-tab-count: 2;"> </span>1,631,245,574.33<span style="mso-tab-count: 1;"> </span>1,631,245,574.33<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">2005<span style="mso-tab-count: 2;"> </span>2,393,400,010.73<span style="mso-tab-count: 1;"> </span>2,393,400,010.73<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">2006<span style="mso-tab-count: 2;"> </span>5,369,720,905.73<span style="mso-tab-count: 1;"> </span>5,369,720,905.73<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">2007<span style="mso-tab-count: 2;"> </span>8,228,450,883.72<span style="mso-tab-count: 1;"> </span>8,228,450,883.72<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">2008<span style="mso-tab-count: 1;"> </span>15,057,426,163.39<span style="mso-tab-count: 1;"> </span>10,441,220,390.00<span style="mso-tab-count: 1;"> </span>25,498,646,553.39<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">January 1 to August 31, 2009<span style="mso-tab-count: 1;"> </span>10,600,881,085.36<span style="mso-tab-count: 1;"> </span>5,346,197,218.76<span style="mso-tab-count: 1;"> </span>15,947,078,304.12<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">Total<span style="mso-tab-count: 1;"> </span>25,668,420,827.62<span style="mso-tab-count: 1;"> </span>35,521,789,184.63<span style="mso-tab-count: 1;"> </span>61,190,210,012.25<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal"> </p>
<p class="MsoNormal">The Parties' Submissions</p>
<p class="MsoNormal">Precised, the parties' respective arguments are as
follows:<span style="mso-spacerun: yes;"> </span>AIDSTE</p>
<p class="MsoNormal">The Republic</p>
<p class="MsoNormal">1.<span style="mso-tab-count: 1;"> </span>An LGU's
territorial jurisdiction refers only to its land area. 76 </p>
<p class="MsoNormal">1.1.<span style="mso-tab-count: 1;"> </span>Since
Section 7 of the Local Government Code uses "population" and
"land area" as indicators in the creation and conversion of LGUs, it
follows that the territorial jurisdiction is the land where the people live and
excludes seas or marine areas. 77 </p>
<p class="MsoNormal">1.2.<span style="mso-tab-count: 1;"> </span>In
describing the territorial requirement for a province, Section 461 (a) (i) of
the Local Government Code speaks of "a contiguous territory, as certified
by the Lands Management Bureau" while Section 461 (b) of the same law
provides that "the territory need not be contiguous if it comprises two
(2) or more islands," indicating that "territory" is limited to
the landmass. 78 </p>
<p class="MsoNormal">1.3.<span style="mso-tab-count: 1;"> </span>"Territory"
as used in Section 461 of the Local Government Code and "land area"
as used in Section 7 of the same law, must be attested to by the Lands
Management Bureau which has jurisdiction only over land areas. 79 </p>
<p class="MsoNormal">1.4.<span style="mso-tab-count: 1;"> </span>In Tan, 80
the Court interpreted "territory" to refer only to the mass of land
above sea water and excludes the waters over which the political unit exercises
control. 81 The RTC erred in holding that Tan is not applicable when it also
involved the issue of whether the province should include the waters around it.
Tan applies whether the purpose is the creation of a province or the
determination of its territorial jurisdiction. 82 </p>
<p class="MsoNormal">2.<span style="mso-tab-count: 1;"> </span>The area
referred to under Section 7, Article X of the 1987 Constitution, which grants
LGUs a share in the proceeds of the utilization and development of national
wealth within their respective areas, refers to the territorial boundaries of
the LGU as defined in its charter and not to its exercise of jurisdiction. 83</p>
<p class="MsoNormal">2.1.<span style="mso-tab-count: 1;"> </span>As examples
of such national wealth, members of the 1986 Constitutional Commission referred
to natural resources found inland or onshore, even when offshore explorations
were being conducted years before the Commission was formed. 84 </p>
<p class="MsoNormal">2.2.<span style="mso-tab-count: 1;"> </span>The Local
Government Code provides that the territorial jurisdiction of municipalities,
cities and barangays should be identified by metes and bounds, thus confirming
that "territorial jurisdiction" refers to the LGU's territorial
boundaries. 85 </p>
<p class="MsoNormal">3.<span style="mso-tab-count: 1;"> </span>The
Camago-Malampaya reservoir is outside the territorial boundaries of the
Province of Palawan as defined in its Charter. Under said Charter, Palawan's
territory is composed only of islands. 86 </p>
<p class="MsoNormal">4.<span style="mso-tab-count: 1;"> </span>On
municipal waters:</p>
<p class="MsoNormal">4.1.<span style="mso-tab-count: 1;"> </span>As argued
in the petition: Assuming an LGU's territory includes the waters around its
land area, the same should refer only to the municipal waters as defined under
Section 131 (r) of the Local Government Code and Section 4.58 87 of R.A. No.
8550, 88 otherwise known as the Philippine Fisheries Code of 1998. 89 </p>
<p class="MsoNormal">4.1.1.<span style="mso-tab-count: 1;"> </span>In defining
"municipal waters," Section 131 (r) of the Local Government Code only
includes marine waters within fifteen (15) kms from the coastline. Section 4.58
of R.A. No. 8550 gives a similar definition of "municipal waters." 90
</p>
<p class="MsoNormal">4.1.2.<span style="mso-tab-count: 1;"> </span>Under
Sections 6 and 7 of R.A. No. 8550, it is the Department of Agriculture, through
the Bureau of Fisheries and Aquatic Resources, that has jurisdiction over
Philippine waters beyond the 15-km limit of municipal waters, with respect to
the issuance of license, charging of fees and access to fishery resources. 91 </p>
<p class="MsoNormal">4.1.3.<span style="mso-tab-count: 1;"> </span>Section 16
of R.A. No. 8550 provides that the jurisdiction of a municipal or city
government extends only to the municipal waters, while Section 65 of the same
law provides that the enforcement of laws and the formulation of rules, except
in municipal waters, are vested in the National Government. 92 </p>
<p class="MsoNormal">4.1.4.<span style="mso-tab-count: 1;"> </span>Thus, the
LGUs' authority may be enforced only within the 15-km limit of the municipal
waters. Beyond it, jurisdiction rests with the National Government through the
Philippine Navy, Philippine Coast Guard, Philippine National Police-Maritime
Command, and the Department of Agriculture in their respective areas of concern.
93 </p>
<p class="MsoNormal">4.1.5.<span style="mso-tab-count: 1;"> </span>It was held
in Municipality of Paoay 94 that a municipality's right over municipal waters
consists merely of usufruct. Contrary to the RTC's pronouncement, the decision
in said case remains good law since nothing in the 1987 Constitution overthrew
the principle that the State owns all natural resources whether found on land
or under the sea. 95 </p>
<p class="MsoNormal">4.1.6.<span style="mso-tab-count: 1;"> </span>Even
assuming that the LGU's territory extends to the municipal waters, the
Camago-Malampaya natural gas reservoir is located approximately 80 kms from
mainland Palawan, thus, way beyond the 15-km radius. 96 </p>
<p class="MsoNormal">4.2.<span style="mso-tab-count: 1;"> </span>As argued
in the Memorandum: Under the Local Government Code, the 15-km municipal waters
and beyond, including the continental margin, do not form part of the territory
of an LGU. 97 </p>
<p class="MsoNormal">4.2.1.<span style="mso-tab-count: 1;"> </span>In Tan, the
Court excluded from the territory of the political unit the "waters over
which [it] exercises control" or the municipal waters. 98 </p>
<p class="MsoNormal">4.2.3. *<span style="mso-tab-count: 1;"> </span>The Local
Government Code and the Philippine Fisheries Code did not redefine and extend
the territorial jurisdiction of LGUs to include the 15-km municipal waters.
Instead, they merely granted "extraterritorial" jurisdiction over the
municipal waters, which is limited only to the waters, excluding the seabed,
subsoil and continental shelf; to fishery and aquatic resources, excluding
other resources; and to revenue generation and regulation of said resources. 99
</p>
<p class="MsoNormal">4.2.4.<span style="mso-tab-count: 1;"> </span>Other than
the 15-km municipal waters, the Local Government Code did not vest jurisdiction
beyond the LGU's territorial boundaries. 100 </p>
<p class="MsoNormal">5.<span style="mso-tab-count: 1;"> </span>Under the
Archipelagic and Regalian Doctrines enshrined in the 1987 Constitution, the
maritime area between Kalayaan and mainland Palawan belongs to the national
territory and does not pertain to any local government unit. 101 </p>
<p class="MsoNormal">5.1.<span style="mso-tab-count: 1;"> </span>The fact
that a territorial sea belongs to the internal waters of a coastal State does
not necessarily imply that it belongs to the province or local government
closest to it. R.A. No. 3046, entitled An Act to Define the Baselines of the
Territorial Sea of the Philippines, as amended by R.A. No. 5446, which defines
the State's "internal waters," does not expressly state that the
internal waters should also belong to the LGU. 102 </p>
<p class="MsoNormal">5.2.<span style="mso-tab-count: 1;"> </span>The
Archipelagic Doctrine, as enunciated in the UNCLOS and affirmed in Article I of
the 1987 Constitution, pertains to the sovereign state and does not place
within the territory of LGUs the waters between and surrounding its islands.
Nowhere in international or domestic law does it state that said doctrine
applies in pari materia to LGUs. 103 </p>
<p class="MsoNormal">5.3.<span style="mso-tab-count: 1;"> </span>The
application of the Archipelagic Doctrine to a political subdivision will
encroach on territories that belong to the State. Section 3 of the Water Code
provides that "all waters belong to the State" and Section 5 of the
same law specifies that "seawater belongs to the State." So also,
while the definition of Philippine waters under the Philippine Fisheries Code
acknowledges that waters may exist in political subdivisions, nothing therein
implies that such waters form part of the territory of the LGU. Furthermore,
said definition treats the waters connecting the islands as a separate group
from the waters existing in the political subdivisions, implying that waters
between islands are not deemed found in LGUs. 104 </p>
<p class="MsoNormal">5.4.<span style="mso-tab-count: 1;"> </span>The
Regalian Doctrine, as embodied in Section 2, Article XII of the 1987
Constitution, is all encompassing; thus, it behooves the claimant to present
proof of title before his right is recognized. Without a specific and
unmistakable grant by the State, the property remains to be that of the State
and the LGU cannot claim an area to be part of its territorial jurisdiction.
Inclusion of any land or water as part of Palawan's territory must be expressly
provided by law and not merely inferred by vague and ambiguous construction.
Statutes in derogation of authority should be construed in favor of the State
and should not be permitted to divest it of any of its rights or prerogatives
unless the legislature expressly intended otherwise. 105</p>
<p class="MsoNormal">5.5.<span style="mso-tab-count: 1;"> </span>In a number
of cases involving conflicting claims of the United States Federal Government
and the coastal states over natural wealth found within the latter's adjoining
maritime area, the Supreme Court of the United States of America (U.S.),
applying the Federal Paramountcy Doctrine, consistently ruled on the
fundamental right of the national government over the national wealth in
maritime areas, to the exclusion of the coastal state. The reason behind the
doctrine equally applies to the conflicting claims between the Philippine
National Government and the Province of Palawan. In fact, there are more
reasons to apply the doctrine in the Philippines since unlike the individual
states of the America which preexisted the U.S., the LGUs are creations and
agents of the Philippine National Government. 106 </p>
<p class="MsoNormal">6.<span style="mso-tab-count: 1;"> </span>The
inclusion of the Kalayaan Group of Islands (Kalayaan) to the Province of
Palawan under Presidential Decree (P.D.) No. 1596 107 did not ipso facto make
the waters between Kalayaan and the main island of Palawan part of the
territorial jurisdiction of Palawan. 108 </p>
<p class="MsoNormal">6.1.<span style="mso-tab-count: 1;"> </span>There is
nothing in P.D. No. 1596, or the charter of Palawan, Act No. 1396, that states
that the waters around Kalayaan are part of Palawan's territory. P.D. No. 1596
refers to Kalayaan as a cluster of islands and islets while Act No. 1396
identifies the islands included in the Province of Palawan. Thus, the areas
referred to are limited to the landmass. Since the Camago-Malampaya reservoir
is not an island, it cannot possibly be covered by either statute. More
importantly, the reservoir is outside the geographical lines mentioned in said
laws. 109 </p>
<p class="MsoNormal">6.2.<span style="mso-tab-count: 1;"> </span>Absent an
express grant by Congress, the Province of Palawan cannot validly claim that
the area between mainland Palawan and Kalayaan are automatically part of its
territorial jurisdiction. 110 </p>
<p class="MsoNormal">7.<span style="mso-tab-count: 1;"> </span>Section
1, Article X of the 1987 Constitution provides that the territorial and
political subdivisions of the Republic are the provinces, cities,
municipalities and barangays. It, however, does not require that every portion
of the Philippine territory be made part of the territory of an LGU. It was
intended merely to institutionalize the LGUs. And even on the supposition that
the Constitution intended to apportion the Philippine territory to the LGUs,
legislation is still needed to implement said provision. However, no law has
been enacted to divide the Philippine territory, including its continental
margin and exclusive economic zones, to all LGUs. 111 </p>
<p class="MsoNormal">8.<span style="mso-tab-count: 1;"> </span>Palawan's
territorial boundaries do not embrace the continental shelf where the
Camago-Malampaya reservoir is located. Contrary to Dean Raul Pangalangan's
view, the UNCLOS cannot be considered to have vested the LGUs with their own
continental shelf based on the doctrine of transformation. The concept of
continental shelf under the UNCLOS does not automatically apply to a province.
112 </p>
<p class="MsoNormal">8.1.<span style="mso-tab-count: 1;"> </span>A treaty is
an agreement between states and governs the legal relations between nations.
And even if the UNCLOS were to be deemed transformed as part of municipal law
after its ratification by the Batasang Pambansa in 1984 under Resolution No.
121, it did not automatically amend the Local Government Code and the charters
of the LGUs. No such intent is manifest either in the UNCLOS nor Resolution No.
121. Instead, the UNCLOS, as transformed into our municipal law, is to be
applied verba legis. 113 </p>
<p class="MsoNormal">8.2.<span style="mso-tab-count: 1;"> </span>Under the
express terms of the UNCLOS, the rights and duties over maritime zones and the
continental shelf pertain to the State, and no provision therein suggests any
reference to an LGU. 114 </p>
<p class="MsoNormal">8.3.<span style="mso-tab-count: 1;"> </span>In other
sovereign states such as Canada and the U.S., the maritime zones were ruled to
be outside the LGUs' territorial jurisdiction. The Federal Paramountcy Doctrine
was upheld in four leading U.S. cases where the claims of various U.S. coastal
states over the marginal and coastal waters and the continental shelf were
rejected. 115 </p>
<p class="MsoNormal">9.<span style="mso-tab-count: 1;"> </span>The State
is not estopped by the alleged mistakes of its officials or agents. 116 </p>
<p class="MsoNormal">9.1.<span style="mso-tab-count: 1;"> </span>On June 10,
1988, the DoE requested the Province of Palawan for a seven-year deferment of
payment to enable the National Government to pay a portion of NPC's TOPQ
obligations. On February 17, 1998, President Ramos issued A.O. No. 381 which
projected US$2.1 Billion as Palawan's share from the Camago-Malampaya project.
Although they seem to acknowledge Palawan's share in the proceeds of the
Camago-Malampaya project, they cannot contravene the laws that delineate
Palawan's territorial jurisdiction. Furthermore, the President has no authority
to expand the territorial jurisdiction of a province as this can only be done
by Congress. 117 </p>
<p class="MsoNormal">9.2.<span style="mso-tab-count: 1;"> </span>In issuing
A.O. No. 381, President Ramos made no misrepresentation as to give rise to
estoppel. The statements in said A.O. were not calculated to mislead the
Province of Palawan; they were not even directed to Palawan. No estoppel can be
invoked if the complaining party has not been misled to his prejudice. There is
no proof that the Province of Palawan sustained injury as a result of a
misrepresentation. 118 </p>
<p class="MsoNormal">9.3.<span style="mso-tab-count: 1;"> </span>The
doctrine of estoppel should be applied only in extraordinary circumstances and
should not be given effect beyond what is necessary to accomplish justice
between the parties. 119 </p>
<p class="MsoNormal">9.4.<span style="mso-tab-count: 1;"> </span>The
doctrine of estoppel does not preclude the correction of an erroneous
construction by the officer himself, by his successor in office, or by the
court in an appropriate case. An erroneous construction creates no vested right
and cannot be taken as precedent. 120 </p>
<p class="MsoNormal">9.5.<span style="mso-tab-count: 1;"> </span>Accordingly,
the Province of Palawan cannot rely on the fact that in 1992, they shared in
the proceeds derived from the West Linapacan oil fields located approximately
76 kms off the western coastline of Palawan. 121 </p>
<p class="MsoNormal">9.6.<span style="mso-tab-count: 1;"> </span>The public
funds available for various projects in other provinces would be significantly
reduced if Palawan is allowed to receive its claimed 40% share in the
Camago-Malampaya project. 122 </p>
<p class="MsoNormal">10.<span style="mso-tab-count: 1;"> </span>Ordinance
No. 474, series of 2000, enacted by the Sangguniang Panlalawigan of Palawan and
delineating the territorial jurisdiction of the province to include the
Camago-Malampaya area, is ultra vires. 123 </p>
<p class="MsoNormal">10.1.<span style="mso-tab-count: 1;"> </span>Ordinance
No. 474 conflicts with the Charter of the Province of Palawan as it expanded
the boundaries of the province and included the area between its constituent
islands. It is also in conflict with the limits of LGUs' rights over marine
areas under the Local Government Code, the Fisheries Code and other pertinent
laws. 124 </p>
<p class="MsoNormal">10.2.<span style="mso-tab-count: 1;"> </span>An LGU
cannot fix its territorial jurisdiction, or limit or expand the same through an
ordinance. Pursuant to Section 10, Article X of the 1987 Constitution and Sections
6 and 10 of the Local Government Code, only Congress can create, divide or
merge LGUs and alter their boundaries, subject to the plebiscite requirement.
An ordinance cannot contravene the Constitution or any statute. 125 </p>
<p class="MsoNormal">10.3.<span style="mso-tab-count: 1;"> </span>As plotted
by the National Mapping and Resource Information Authority (NAMRIA), the
territorial boundaries of Palawan under Ordinance No. 474 appear to be
inconsistent with the delineation of the Philippine territory under the Treaty
of Paris. 126 </p>
<p class="MsoNormal">11.<span style="mso-tab-count: 1;"> </span>Section 3
(1) of R.A. No. 7611 or SEP for Palawan Act contains a definition of
"Palawan." The Camago-Malampaya reservoir is undoubtedly within the
area described and plotted on the map. However, R.A. No. 7611 did not redefine
Palawan's territory or amend its charter. 127 </p>
<p class="MsoNormal">11.1.<span style="mso-tab-count: 1;"> </span>With the
words "(A)s used in this Act," Section 3 of R.A. No. 7611 limited the
application of the definitions therein to said law which was enacted to promote
sustainable development goals for the province through proper conservation,
utilization and development of natural resources. 128 </p>
<p class="MsoNormal">11.2.<span style="mso-tab-count: 1;"> </span>Just like
Palawan's Charter, Section 3 (1) of R.A. No. 7611 limited the territory to the
islands and islets within the area. 129 </p>
<p class="MsoNormal">11.3.<span style="mso-tab-count: 1;"> </span>The metes
and bounds under Section 3 (1) of R.A. No. 7611, when plotted on the map, excluded
portions of mainland Palawan and several islands, municipalities or portions
thereof. 130 </p>
<p class="MsoNormal">11.4.<span style="mso-tab-count: 1;"> </span>The basis of
the description of Palawan is unclear and there is no record that the
alteration in Palawan's boundaries complied with Section 10, Article X of the
1987 Constitution which requires that the alteration be in accordance with the
criteria established in the local government code and approved by a majority of
the votes cast in a plebiscite in the political unit(s) directly affected. 131 </p>
<p class="MsoNormal">11.5.<span style="mso-tab-count: 1;"> </span>Based on the
Declaration of Policy in R.A. No. 7611, the object of the law is not to expand
the territory of Palawan but to make the province an agent of the National
Government in the protection of the environment. There is nothing in the title
of the law or any of its provisions indicating that there was a legislative
intent to expand or alter the boundaries of the province or to remove certain
municipalities from its territory. 132 </p>
<p class="MsoNormal">11.6.<span style="mso-tab-count: 1;"> </span>If the
description of Palawan under R.A. No. 7611 would be read as a new definition of
its territory, it would be unconstitutional because the title of the law does
not indicate that boundaries would be expanded, in contravention of the
Constitutional requirement that every bill must embrace only one subject to be
expressed in its title. 133 </p>
<p class="MsoNormal">11.7.<span style="mso-tab-count: 1;"> </span>Even if the
term "territorial jurisdiction" were to be understood as including
the grant of limited extraterritorial jurisdiction, the Camago-Malampaya
reservoir remains to be beyond Palawan's jurisdiction under R.A. No. 7611. The
said law did not expand the province's police or administrative jurisdiction;
it did not impose any additional function or jurisdiction on the Province of
Palawan. If anything, the SEP limited the province's governmental authority
since all LGUs in the area must align their projects and budgets with the SEP.
Furthermore, tasked to implement the SEP was not the province but the Palawan
Council for Sustainable Development (PCSD), a national agency created under the
law, composed of both national and local officials. The participation of local
officials did not turn PCSD into an arm of the Province of Palawan; their
inclusion is to allow a holistic view of the environmental issues and
opportunities for coordination. 134 </p>
<p class="MsoNormal">12.<span style="mso-tab-count: 1;"> </span>A.O. No.
381 was not issued to redefine Palawan's territory; its title precisely states
that it was issued to provide for the fulfillment by the National Power
Corporation of its obligations under the December 30, 1997 Agreement for Sale
and Purchase of Natural Gas with SPEX/OXY and for the compliance of the
National Government's performance undertaking. Palawan was mentioned but not in
the context of redefining its territory. Only a statute can expand the
territory or boundaries of an LGU. 135 </p>
<p class="MsoNormal">13.<span style="mso-tab-count: 1;"> </span>Sections
465 and 468 of the Local Government Code which respectively authorize the
Provincial Governor to adopt measures to safeguard marine resources of the
province and the Sangguniang Panlalawigan to impose penalties for destructive
fishing, did not give the provinces government authority over marine resources
beyond the municipal waters. 136 </p>
<p class="MsoNormal">14.<span style="mso-tab-count: 1;"> </span>Palawan's
claim that it exercises jurisdiction over the Camago-Malampaya area is bereft
of credible proof. Absent a law which vests LGUs jurisdiction over areas
outside their territorial boundaries, its acts over the Camago-Malampaya area
are ultra vires or at most an exercise of extraterritorial jurisdiction. 137 </p>
<p class="MsoNormal">15.<span style="mso-tab-count: 1;"> </span>The
proposition of the amici curiae that the principle of equity justifies granting
Palawan 40% of the government's share in the Camago-Malampaya project, may set
a dangerous precedent. Furthermore, the principle of equity cannot be applied
when there is a law applicable to the case. Applicable to the instant case are
Section 7, Article X of the 1987 Constitution and Section 290 of the Local
Government Code based on which the Province of Palawan is not entitled to share
in the proceeds of the Camago-Malampaya project. 138 </p>
<p class="MsoNormal">15.1.<span style="mso-tab-count: 1;"> </span>The concerns
of the amici curiae appear to rest on the possible damage to the environment
surrounding Palawan. However, this eventuality is covered by the Contractor's
obligations under the Environmental Compliance Certificate (ECC) which required
SPEX to ensure minimal impact on the environment and to provide for an
Environmental Guarantee Fund to cover expenses for environmental monitoring and
to compensate for whatever damage that may be caused by the project. 139 </p>
<p class="MsoNormal">16.<span style="mso-tab-count: 1;"> </span>The PIA and
E.O. No. 683 do not constitute evidence of the Republic's admission that
Palawan is entitled to the proceeds of the Camago-Malampaya project. In civil
cases, an offer of compromise is not admissible in evidence against the
offeror. Furthermore, the whereas clauses of E.O. No. 683 clearly show that the
President issued the E.O. based on a "broad perspective of the
requirements to develop Palawan as a major tourism destination" and
Section 25 of the Local Government Code which authorizes the President, on the
LGU's request, to provide financial assistance to the LGU. The E.O. also
expressly states that the amounts released shall be without prejudice to the
final resolution of the legal dispute between the National Government and the
Province of Palawan regarding the latter's claimed share under the Service
Contract No. 38. 140 </p>
<p class="MsoNormal">17.<span style="mso-tab-count: 1;"> </span>The
National Government has no intention to deprive the Province of Palawan a share
in the proceeds of the Camago-Malampaya project if were so entitled. 141 </p>
<p class="MsoNormal">18.<span style="mso-tab-count: 1;"> </span>The RTC
committed grave abuse of discretion when it issued Amended Order dated January
16, 2006 because it granted affirmative relief in a special civil action for
declaratory relief. 142 </p>
<p class="MsoNormal">18.1.<span style="mso-tab-count: 1;"> </span>While courts
have the inherent power to issue interlocutory orders as may be necessary to
carry its jurisdiction into effect, such authority should be exercised as
necessary in light of the jurisdiction conferred in the main action. In this
case, the main action is one for declaratory relief, which is a preventive and
anticipatory remedy designed to declare the parties' rights or to express the
court's opinion on a question of law, without ordering anything to be done. 143
</p>
<p class="MsoNormal">19.<span style="mso-tab-count: 1;"> </span>Arigo, et
al., have no legal standing to question E.O. No. 683 either as citizens or as
taxpayers since they have not shown any actual or threatened injury or that the
case involves disbursement of public funds in contravention of law. 144 </p>
<p class="MsoNormal">20.<span style="mso-tab-count: 1;"> </span>G.R. No.
185941 is not ripe for judicial adjudication considering that there is still no
final determination as to whether the Province of Palawan is entitled to share
in the proceeds of the Camago-Malampaya project. Also, the interim undertaking
of the parties under the PIA is contingent on the final adjudication of G.R.
No. 170867. Furthermore, the validity and manner by which the funds were
realigned under E.O. No. 683 could not be questioned since they are considered
as financial assistance subject to the discretion of the President pursuant to
the authority granted by Section 25 (c) of the Local Government Code. 145 </p>
<p class="MsoNormal">Arigo, et al.</p>
<p class="MsoNormal">1.<span style="mso-tab-count: 1;"> </span>Their
petition was not prematurely filed. While the interim undertaking between the
National Government and the Province of Palawan under the PIA was contingent on
the final adjudication of G.R. No. 170867, disbursements of public funds would
ensue or were already taking place in violation of the provisions of the
Constitution and the Local Government Code on the equitable sharing of national
wealth between the National Government and the LGUs. 146 </p>
<p class="MsoNormal">2.<span style="mso-tab-count: 1;"> </span>Neither
Governor Reyes nor Representatives Alvarez and Mitra had the authority to sign
the PIA on behalf of the cities, municipalities and barangays of Palawan. In
fact, the cities, municipalities and barangays have a bigger share that the
Provincial Government in the allocation of the revenues from the
Camago-Malampaya project. Under Section 292 of the Local Government Code, the
city or municipality gets 45% and the barangay gets 35%, or a combined share of
80% as against the Province's share of only 20%. Governor Reyes and
Representatives Alvarez and Mitra could not sign the PIA as if they were the
sole recipients of the proceeds of the Camago-Malampaya project. 147 </p>
<p class="MsoNormal">3.<span style="mso-tab-count: 1;"> </span>The PIA
reduces the share of Palawan's LGUs in two ways: first, by making "net
proceeds" the basis for sharing instead of "gross collection" as
provided by Section 290 of the Local Government Code; and second, by cutting
down the LGUs' equitable share in such proceeds by half, with the Province
solely claiming such allocation. 148 </p>
<p class="MsoNormal">4.<span style="mso-tab-count: 1;"> </span>The
equitable share of LGUs in the utilization and development of national wealth
is not subject to compromise. 149 </p>
<p class="MsoNormal">5.<span style="mso-tab-count: 1;"> </span>The PIA
requires that any fund allocation is subject to the prior approval of the DoE
and/or the PNOC-EC and to actual collections deposited with the National
Treasury, in contravention of the Local Government Code, which requires that
the proceeds of the utilization of natural resources should be directly released
to each LGU without need of further action, and the Court's ruling in Pimentel,
Jr. v. Hon. Aguirre 150 on the automatic release of the LGUs' shares in the
National Internal Revenue. 151 </p>
<p class="MsoNormal">6.<span style="mso-tab-count: 1;"> </span>In
providing that only those projects identified by the Office of the President,
or the Province of Palawan, or the Palawan Congressional Districts, or the
Highly Urbanized City of Puerto Princesa, may be funded, the PIA violates the
intent of the Local Government Code to grant autonomy to LGUs. 152 </p>
<p class="MsoNormal">7.<span style="mso-tab-count: 1;"> </span>The PIA
allows the securitization of the shares of the LGUs and the National Government
in the utilization of the Camago-Malampaya Oil and Gas resources, but the
National Government cannot securitize what it does not own legally and neither
can the Province of Palawan securitize what it does not fully own. 153 </p>
<p class="MsoNormal">8.<span style="mso-tab-count: 1;"> </span>E.O. No.
683 is nothing more than a realignment of funds carried out in violation of the
Constitutional provision giving LGUs an equitable share in the proceeds of the
utilization of national wealth, for in usual budgeting procedures of Congress,
such share should be included in the appropriation for "Allocation to
LGUs" which is classified as a mandatory obligation of the National
Government and automatically released to the LGUs. 154 </p>
<p class="MsoNormal">9.<span style="mso-tab-count: 1;"> </span>E.O. No.
683 is a usurpation of the power of the purse lodged in Congress under Section
29 (1) and (3), 155 Article VI of the 1987 Constitution. Since the proceeds
from the Camago-Malampaya project is the production share of the government in
a service contract, it cannot be disbursed without an appropriation law. 156 </p>
<p class="MsoNormal">10.<span style="mso-tab-count: 1;"> </span>E.O. No.
683 fails to consider its implications on the country's claim to an Extended
Continental Shelf (ECS) under the UNCLOS III regime. The best way to claim an
ECS is to consider the Camago-Malampaya area and the Kalayaan to be part of
Palawan's continental shelf. One basis for the Philippine claim to Kalayaan is
that it constitutes a natural prolongation of Palawan's land territory. 157 </p>
<p class="MsoNormal">11.<span style="mso-tab-count: 1;"> </span>The
Republic's invocation of U.S. case law to dispute the LGUs' entitlement under
Section 7, Article X of the 1987 Constitution is inappropriate and odd for a
unitary state like the Philippines. Said provision in the unitary Philippine
state only means that the entitlement exists only because of a constitutional
grant and not because the LGUs have sovereignty and jurisdiction in their
respective areas distinct from the Republic's. 158 </p>
<p class="MsoNormal">12.<span style="mso-tab-count: 1;"> </span>The
definition of "municipal waters" under applicable laws is irrelevant.
The Camago-Malampaya reservoir is located in the continental shelf which, under
Article 76 of the UNCLOS, pertains to the seabed and subsoil as the natural
prolongation of the landmass. 159 </p>
<p class="MsoNormal">13.<span style="mso-tab-count: 1;"> </span>The
constitutionality of E.O. No. 683 may be resolved without reference to the
conflicting territorial claims in G.R. No. 170867. In making reference to said
case, they merely meant to provide a historical backdrop to the issuance of
E.O. No. 683. It is for this reason that they attached only a copy of E.O. No.
683 to their petition. 160 </p>
<p class="MsoNormal">14.<span style="mso-tab-count: 1;"> </span>R.A. No.
7611 and A.O. No. 381 both recognize that the Camago-Malampaya area falls with
the continental shelf of Palawan. As regards the Republic's contention that
R.A. No. 7611 is illegal for having redrawn the boundaries of the Province of
Palawan without a plebiscite, the same ignores the fact that R.A. No. 7611 only
incorporates the continental shelf regime found in Article II of the 1987
Constitution. A plebiscite was unnecessary because the 1987 Constitution was
overwhelmingly ratified. 161 </p>
<p class="MsoNormal">15.<span style="mso-tab-count: 1;"> </span>The CA
erred in dismissing CA-G.R. SP No. 102247 in deference to executive and
legislative deliberations on the country's baselines as it is in violation of
its constitutional duty to interpret the constitutional provisions defining the
national territory. Furthermore, until revoked or amended, the country's
existing law on baselines (R.A. No. 3046 as amended by R.A. No. 5446) remains
good law. 162 </p>
<p class="MsoNormal">16.<span style="mso-tab-count: 1;"> </span>The CA
erred in dismissing their action for certiorari for failure to submit a copy of
the PIA considering that the terms of E.O. No. 683 embody all the provisions of
the assailed PIA. It was also unnecessary to submit a copy of the petition in
G.R. No. 170867 as it was only tangential to the resolution of the case.
Furthermore, the alleged failure to submit said documents has been mooted by the
June 23, 2008 Resolution of the Court's Third Division indicating that
non-parties could not have access to the records of G.R. No. 170867. At any
rate, the records of said case are now a matter of judicial notice to this
Court. 163 </p>
<p class="MsoNormal">The Province of Palawan</p>
<p class="MsoNormal">1.<span style="mso-tab-count: 1;"> </span>Section 7
of the Local Government Code, on the creation and conversion of LGUs, does not
expressly provide that an LGU's territorial jurisdiction refers only to its
land area. 164 </p>
<p class="MsoNormal">1.1.<span style="mso-tab-count: 1;"> </span>Land area
is included as one of the requisites for the creation or conversion of an LGU
because evidently, no LGU can be created out of the maritime area alone. 165 </p>
<p class="MsoNormal">1.2.<span style="mso-tab-count: 1;"> </span>Another
requisite — population — is determined as the total number of inhabitants
within the territorial jurisdiction of the LGU. The law thus aptly uses the
phrase "territorial jurisdiction" instead of territory or land area
since there are communities that live in coastal areas or low-water areas that
form part of the sea. If a local government's territorial jurisdiction is
limited to its land area, then these communities will not belong to any LGU.
166 </p>
<p class="MsoNormal">2.<span style="mso-tab-count: 1;"> </span>Section
461 of the Local Government Code does not define the territorial jurisdiction
of a province. It merely specifies the requisites for the creation of a
province. In fact, said provision shows that territory and population are
alternative requirements for the creation of a new province, with income being
the indispensable requirement. It does not necessarily exclude the maritime
area over which a province exercises control and authority, but merely provides
that to determine whether an area is sufficient to constitute a province, only
the landmass or land territory shall be included. 167 </p>
<p class="MsoNormal">3.<span style="mso-tab-count: 1;"> </span>In Tan,
which involves the creation of a province under the old Local Government Code,
the Court held that the word "territory" as used in said law
"has reference only to the mass of land area and excludes the waters over
which the political unit exercises control." This ruling affirms that an
LGU exercises control over waters, making them part of the political unit's
territorial jurisdiction. Furthermore, Tan only defines the word
"territory" as used in Section 197 of the old Local Government Code.
In convoluting the words "territory" and "territorial
jurisdiction," the Republic misapplied the doctrine laid out in Tan. 168 </p>
<p class="MsoNormal">4.<span style="mso-tab-count: 1;"> </span>Section
7, Article X of the 1987 Constitution provides that the LGU is "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 x
x x." The provision does not state "within their respective land
areas." The word "area" should accordingly be construed in its
ordinary meaning to mean a distinct part of the surface of something. It,
therefore, encompasses land, maritime area and the space above them. 169 </p>
<p class="MsoNormal">5.<span style="mso-tab-count: 1;"> </span>The
delineation of the territorial jurisdiction by metes and bounds is required
only for landlocked LGUs. 170 ICHDca</p>
<p class="MsoNormal">6.<span style="mso-tab-count: 1;"> </span>Limiting
the LGU's territorial jurisdiction to its land area is inconsistent with the
State's policy of local autonomy as enshrined in Section 25, Article II of the
1987 Constitution and amplified in Section 2 of the Local Government Code.
Extending such jurisdiction to all areas where the Province of Palawan has
control or authority will give it more resources to discharge its
responsibilities, particularly in the enforcement of environmental laws in its
vast marine area. 171 </p>
<p class="MsoNormal">7.<span style="mso-tab-count: 1;"> </span>Numerous
provisions of the Local Government Code indicate that an LGU's territorial
jurisdiction includes the maritime area. Section 138 speaks of public waters
within the territorial jurisdiction of the province. Section 465 (3) (v)
authorizes the Provincial Governor to adopt adequate measures to safeguard and
conserve the province's marine resources. Section 468 (1) (vi) empowers the Sangguniang
Panlalawigan to protect the environment and impose appropriate penalties for
acts that endanger it, such as dynamite fishing. More importantly, Section 3,
which provides for the operative principles of decentralization and local
autonomy, states that the vesting of duties in the LGU shall be accompanied
with provision for reasonably adequate resources to effectively carry them out.
When the same provision speaks of ecological balance which the LGUs shall
manage with the National Government, it encompasses the maritime area. 172 </p>
<p class="MsoNormal">7.1.<span style="mso-tab-count: 1;"> </span>The
environmental impact that the Camago-Malampaya project may have on the people
of Palawan requires that the Province of Palawan must equitably share in its
proceeds so it can have adequate resources to ensure that the extraction of
natural gas will not have a deleterious effect on its environment. 173 </p>
<p class="MsoNormal">8.<span style="mso-tab-count: 1;"> </span>The
Provincial Government of Palawan exercises administrative, environmental and
police jurisdiction over public waters within its territorial jurisdiction,
including the Camago-Malampaya reservoir. Local police, under the supervision
of local executives, maintain peace and order over the said area. Crimes
committed therein are filed and tried in Palawan courts. The provincial
government also enforces local and national environmental laws over this area.
In fact, SPEX consistently recognized Palawan as the location of the project,
having obtained the necessary endorsement from the Sangguniang Panlalawigan of
Palawan before starting its operations, in accordance with Sections 26 and 27
of the Local Government Code. Furthermore, the plant, equipment and platform of
SPEX, situated offshore, were declared for tax purposes with the Province of
Palawan. 174 </p>
<p class="MsoNormal">9.<span style="mso-tab-count: 1;"> </span>Based on
the Senate deliberations on the Local Government Code, it is a foregone
conclusion that the Province of Palawan has equitable share in the proceeds of
the Camago-Malampaya project. 175 </p>
<p class="MsoNormal">10.<span style="mso-tab-count: 1;"> </span>Under
Section 5 (a) of the Local Government Code, any question on a particular
provision of law on the power of an LGU shall be liberally construed, and any
doubt shall be resolved, in favor of the LGU. 176 </p>
<p class="MsoNormal">11.<span style="mso-tab-count: 1;"> </span>Neither the
Local Government Code nor the Philippine Fisheries Code provides that beyond
the land area, the LGU's territorial jurisdiction can extend only up to the 15-km
stretch of municipal waters. 177 </p>
<p class="MsoNormal">11.1.<span style="mso-tab-count: 1;"> </span>The
definition of "municipal waters" in Section 131 (r) of the Local
Government Code shall be used only for purposes of local government taxation
inasmuch as it is found under Title I of Book II on Local Taxation and Fiscal
Matters. Section 131 (r) also indicates that the definition applies when the
term "municipal waters" is used in Title I which refers to Local
Government Taxation. If anything, the definition bolsters the argument that the
LGU's territorial jurisdiction extends to the maritime area. 178 </p>
<p class="MsoNormal">11.2.<span style="mso-tab-count: 1;"> </span>The
Philippine Fisheries Code did not limit or define the territorial jurisdiction
of an LGU. The definition of "municipal waters" under both this law
and the Local Government Code was intended merely to qualify the degree of
governmental powers to be exercised by the coastal municipality or city over
said waters. 179 </p>
<p class="MsoNormal">11.3.<span style="mso-tab-count: 1;"> </span>Palawan is
composed of 1,786 islands and islets. Twelve (12) out of its twenty-three (23)
municipalities are island municipalities. Between them are expansive maritime
areas that exceed the 15-km municipal water-limit. It will, thus, be inevitable
for the province to exercise governmental powers over these areas. If Palawan
will be authorized to enforce laws only up to the municipal water-limit, it
will be tantamount to a duplication of functions already being performed by the
component municipalities. It will also render the province inutile in enforcing
laws in maritime areas between these municipalities. It was not the intention
of the lawmakers, in enacting the Local Government Code, to create a vacuum in
the enforcement of laws in these areas or to disintegrate LGUs. 180 </p>
<p class="MsoNormal">12.<span style="mso-tab-count: 1;"> </span>Laws other
than the Local Government Code recognize that the Province of Palawan has
territorial jurisdiction over the maritime area beyond the municipal waters.
181 </p>
<p class="MsoNormal">12.1.<span style="mso-tab-count: 1;"> </span>R.A. No.
7611 defines Palawan as comprising islands and islets and the surrounding sea,
which includes the entire coastline up to the open sea. 182 </p>
<p class="MsoNormal">12.1.1. <span style="mso-tab-count: 1;"> </span>Based on the
coordinates of Palawan provided in Section 3(1) of R.A. No. 7611, the
Camago-Malampaya reservoir is within the territorial jurisdiction of the
province. 183 </p>
<p class="MsoNormal">12.1.2. <span style="mso-tab-count: 1;"> </span>R.A. No. 7611
did not alter the territorial jurisdiction of Palawan, as provided in Section
37 of its charter, Act No. 2711. R.A. No. 7611 merely recognized the fact that
the islands comprising Palawan are bounded by waters that form part of its
territorial jurisdiction. Palawan's area as described in said law could be
called the province's "environmental jurisdiction." 184 </p>
<p class="MsoNormal">12.1.3. <span style="mso-tab-count: 1;"> </span>Pursuant to
R.A. No. 7611, the Palawan Council for Sustainable Development (PCSD) shall
establish a graded system of protection and development control over the whole
of Palawan, including mangroves, coral reefs, seagrass beds and the surrounding
sea. 185 </p>
<p class="MsoNormal">12.1.4. <span style="mso-tab-count: 1;"> </span>R.A. No. 7611
encompasses the entire ecological system of Palawan, including the coastal and
marine areas which it considers a main component of the Environmentally
Critical Areas Network. 186 </p>
<p class="MsoNormal">12.1.5. <span style="mso-tab-count: 1;"> </span>Local
government officials of Palawan have representations in PCSD, the agency tasked
to enforce the integrated plan under R.A. No. 7611. Since the enforcement of
environmental laws is a joint obligation of the national and local governments,
with local communities being the real stakeholders, LGUs should benefit from
the proceeds of the natural wealth found in their territorial jurisdictions.
187 </p>
<p class="MsoNormal">12.1.6. <span style="mso-tab-count: 1;"> </span>The Republic's
attempt to remove the Camago-Malampaya area from the Province of Palawan is
contrary to the declared state policy of adopting an integrated ecological
system for Palawan under R.A. No. 7611. 188 </p>
<p class="MsoNormal">12.2.<span style="mso-tab-count: 1;"> </span>A.O. No. 381
explicitly declared that the Camago-Malampaya reservoir is located offshore
northwest of Palawan and that the Province of Palawan was expected to receive
about US$2.1 Billion from the total government share of US$8.1 Billion out of
the proceeds from the Camago-Malampaya project. 189 </p>
<p class="MsoNormal">12.3.<span style="mso-tab-count: 1;"> </span>P.D. No.
1596 declared Kalayaan as a distinct and separate municipality of the Province
of Palawan. In delineating Kalayaan's boundaries, P.D. No. 1596 included the
seabed, subsoil, continental margin and airspace. 190 </p>
<p class="MsoNormal">12.3.1. <span style="mso-tab-count: 1;"> </span>P.D. No. 1596
states that the Republic's claim to Kalayaan is foremost based on the fact that
said group of islands is part of the Philippine archipelago's continental
margin which includes the continental shelf. The continental shelf is the
submerged natural prolongation of the land territory and is an integral part of
the landmass it is contiguous with. Oil and gas are found not in the waters off
Palawan but in the continental shelf which is contiguous to and a prolongation
of the landmass of Palawan. 191 </p>
<p class="MsoNormal">13.<span style="mso-tab-count: 1;"> </span>The
Province of Palawan cannot be said to be holding a mere usufruct over the
municipal waters based on the 1950 case of Municipality of Paoay. Said case is
not applicable as it was decided when there was a concentration of powers and
resources in the national government, unlike the decentralized system espoused
in the Local Government Code. 192 </p>
<p class="MsoNormal">14.<span style="mso-tab-count: 1;"> </span>The federal
paramountcy doctrine is a constitutional law doctrine followed in federal
states, particularly in the U.S. and Canada. The application of this doctrine
to the Philippine setting is legally inconceivable because the Philippines has
not adopted a federal form of government. Furthermore, most of the states in
the U.S. were previously independent states who were obliged to surrender their
sovereign functions over their maritime area or marginal belt to the federal
government when they joined the federal union. Contrarily, the Philippines had
a unitary system of government until it adopted the ideas of decentralization
and local autonomy as fundamental state principles. Instead of different states
surrendering their imperium and dominium over the maritime area to a federal
government, the Philippine setting works in the opposite as the National
Government, which is presumed to own all resources within the Philippine
territory, is mandated to share the proceeds of the national wealth with the
LGUs. 193 </p>
<p class="MsoNormal">15.<span style="mso-tab-count: 1;"> </span>The
Republic is divided into political and territorial subdivisions. Thus, for a
territory to be part of the Republic, it must belong to a political and
territorial subdivision. These subdivisions are the provinces, cities,
municipalities and barangays, and they are indispensable partners of the
National Government in the proper and efficient exercise of governmental powers
and functions. The Camago-Malampaya reservoir, which is part of the
Philippines, must necessarily belong to a political and territorial
subdivision. That subdivision is the Province of Palawan which has long been
exercising governmental powers and functions over the area. 194 </p>
<p class="MsoNormal">15.1.<span style="mso-tab-count: 1;"> </span>Since the
Camago-Malampaya reservoir is nearest to the Province of Palawan than any other
LGU, it is imperative that the province becomes the National Government's
co-protector and co-administrator in said maritime area. 195 </p>
<p class="MsoNormal">15.2.<span style="mso-tab-count: 1;"> </span>Under
Section 25 (b) of the Local Government Code, national agencies are to
coordinate with LGUs in planning and implementing national projects, while
under Section 3 (i) of the same law, LGUs shall share with the National
Government the responsibility of maintaining ecological balance within their
territorial jurisdiction. Thus, governmental powers are not solely exercised by
the National Government but are shared with LGUs. However, they cannot be
effective partners of the National Government without sufficient resources. For
this reason, the 1987 Constitution grants them an equitable share in the
proceeds of the utilization of national wealth. 196 </p>
<p class="MsoNormal">15.3.<span style="mso-tab-count: 1;"> </span>Numerous cases
of illegal fishing, poaching and illegal entry have been committed within the
waters surrounding Palawan, particularly westward of mainland Palawan and bound
by the South China Sea, along the same area where the Camago-Malampaya project
is located. These cases were prosecuted and tried before the courts of Palawan.
In Hon. Roldan, Jr. v. Judge Arca, 197 an illegal fishing case, the
jurisdiction of the Court of First Instance of Palawan was upheld given that
the vessels seized were engaged in prohibited fishing within the territorial
waters of Palawan, in obedience to the rule that the place where a criminal
offense was committed not only determines the venue of the case but is also an
essential element of jurisdiction. 198 </p>
<p class="MsoNormal">15.4.<span style="mso-tab-count: 1;"> </span>Sections 26
and 27 of the Local Government Code require mandatory consultation with the
LGUs concerned and the approval of their respective Sanggunian before the
National Government may commence any project that will have an environmental
impact. The National Government and SPEX recognized Palawan's jurisdiction over
the Camago-Malampaya area when it requested the indorsement of the Sangguniang
Panlalawigan of Palawan before commencing the Camago-Malampaya project, and
when SPEX obtained an ECC in compliance with the requirement of PCSD, an agency
created by R.A. No. 7611. 199 </p>
<p class="MsoNormal">15.5.<span style="mso-tab-count: 1;"> </span>In the
implementation of tariff and customs laws, the Province of Palawan is being
referred to by the Bureau of Customs as the place of origin of the barrels of
condensate (crude oil) being exported to Singapore from the Camago-Malampaya
area. Export Declarations for said condensate, as issued by the Department of
Trade and Industry, also showed Palawan as the place of origin. 200 </p>
<p class="MsoNormal">15.6.<span style="mso-tab-count: 1;"> </span>In Tano v.
Socrates, 201 the Court upheld the ordinances, passed by the Sangguniang
Panlalawigan of Palawan and the Sangguniang Panlungsod of the City of Puerto
Princesa, which banned the transport of live fish to protect their seawater and
corals from the effects of destructive fishing, in recognition of the LGUs' power
and duty to protect the right of the people to a balanced ecology. The
destructive way of catching live fish had been conducted not just within the
15-km municipal waters of Palawan but also beyond said waters. 202 </p>
<p class="MsoNormal">16.<span style="mso-tab-count: 1;"> </span>Palawan's
claim is not inconsistent with, but upholds, the archipelagic and regalian
doctrines enshrined in the 1987 Constitution. 203 </p>
<p class="MsoNormal">16.1.<span style="mso-tab-count: 1;"> </span>The Province
of Palawan agrees that all waters within the Philippine archipelago are owned
by the Republic. The issue in this case, however, is not the ownership of the
Camago-Malampaya reservoir. The Province of Palawan is not claiming dominion
over said area. It merely contends that since the reservoir is located in an
area over which it exercises control and shares in the National Government's
management responsibility, it is only just and equitable that the Province of
Palawan should share in the proceeds generated from its utilization.
Furthermore, the law does not require that the LGUs should own the area where
the national wealth is located before they can share in the proceeds of its use
and development; it merely requires that the national wealth be "found
within their respective areas." It is, thus, error for the Republic to
assert that the Camago-Malampaya area is not part of Palawan's territorial
jurisdiction because it belongs to the State. Otherwise, no LGU will share in
the proceeds derived from the utilization and development of national wealth
because the State owns it under the regalian doctrine. 204 </p>
<p class="MsoNormal">17.<span style="mso-tab-count: 1;"> </span>International
law has no application in this case. While the UNCLOS establishes various
maritime regimes of archipelagos like the Philippines, nothing therein purports
to govern internal matters such as the sharing of national wealth between its
national government and political subdivisions. 205 </p>
<p class="MsoNormal">18.<span style="mso-tab-count: 1;"> </span>The State
has long recognized the fact that the Camago-Malampaya area is part of Palawan.
206 </p>
<p class="MsoNormal">18.1.<span style="mso-tab-count: 1;"> </span>Palawan was
allotted P38,110,586.00 as its share in the national wealth based on actual
1992 collections from petroleum operations in the West Linapacan oil fields,
situated offshore, about the same distance from mainland Palawan as the
Camago-Malampaya reservoir. Furthermore, from 1993 to 1998, DBM consistently
released to Palawan its 40% share from the West Linapacan oil production.
Because these are lawful executive acts, the Republic may not invoke the rule
that it cannot be placed in estoppel by the mistakes of its agents. 207 </p>
<p class="MsoNormal">18.2.<span style="mso-tab-count: 1;"> </span>Jurisprudence
holds that estoppels against the public, which are little favored, must be
applied with circumspection and only in special cases where the interests of
justice clearly require it. To deprive Palawan of its constitutional right to a
just share in the national wealth will indisputably work injustice to its
people and generations to come. As it is, developmental projects have been
adversely stunted as a result of the National Government's withdrawal of its
commitment to give Palawan its 40% share. 208 </p>
<p class="MsoNormal">18.3.<span style="mso-tab-count: 1;"> </span>It has been
held that the contemporaneous construction of a statute by the executive
officers of the government is entitled to great respect and unless shown to be
clearly erroneous, should ordinarily control the construction of the statute by
the courts. 209 </p>
<p class="MsoNormal">19.<span style="mso-tab-count: 1;"> </span>Ordinance
No. 474 (series of 2000), which the Sangguniang Panlalawigan of Palawan enacted
to delineate the territorial jurisdiction of the Province of Palawan, including
therein the Camago-Malampaya area, is valid. Laws, including ordinances, enjoy
the presumption of constitutionality. Moreover, there is no flaw in the
Ordinance since it does not contravene Section 10, Article X of the
Constitution or Sections 6 and 10 of the Local Government Code. It is likewise
settled that a statute or ordinance cannot be impugned collaterally. 210 </p>
<p class="MsoNormal">20.<span style="mso-tab-count: 1;"> </span>Since the
RTC has deferred its ruling on the propriety of the Amended Order dated January
16, 2006 to this Court, the Province of Palawan asks that said Order be
sustained because:<span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal">20.1.<span style="mso-tab-count: 1;"> </span>Under
Section 6, Rule 135 of the Rules of Court, when by law jurisdiction is
conferred on a court, all auxiliary writs and processes necessary to carry it
into effect may be employed by such court. The Amended Order merely sought to
protect the subject of the litigation and to ensure that the RTC's decision may
be carried into effect when it attains finality. 211 </p>
<p class="MsoNormal">20.2.<span style="mso-tab-count: 1;"> </span>The Amended
Order encompasses issues that were raised and passed upon by the RTC,
particularly, the issue of whether the Province of Palawan is entitled to
receive 40% of the government's share in the proceeds of the Camago-Malampaya
project. 212 </p>
<p class="MsoNormal">20.3.<span style="mso-tab-count: 1;"> </span>In a catena
of decisions, the Court has allowed affirmative and even injunctive reliefs in
cases for declaratory relief. 213 </p>
<p class="MsoNormal">21.<span style="mso-tab-count: 1;"> </span>The
Provincial Governor's signing of the PIA was valid. 214 </p>
<p class="MsoNormal">21.1.<span style="mso-tab-count: 1;"> </span>Under
Article 85 (b) (1) (vi), Rule XV of the Implementing Rules and Regulations of
the Local Government Code, the Provincial Governor is authorized to represent
the province in all its business transactions and to sign all contracts on its
behalf upon the authority of the Sangguniang Panlalawigan or pursuant to law or
ordinance. The Provincial Governor of Palawan signed the PIA with the authority
of the Sangguniang Panlalawigan, representing all of its component
municipalities and its capital city of Puerto Princesa. Palawan's two
congressmen also signed the PIA to warrant that they were the duly elected
representatives of the province and to comply with the requirement under the
General Appropriations Act that implementation of the projects must be in
coordination with them. 215 </p>
<p class="MsoNormal">21.2.<span style="mso-tab-count: 1;"> </span>The Province
of Palawan is the only LGU which has territorial jurisdiction over the
Camago-Malampaya area under R.A. No. 7611. 216 </p>
<p class="MsoNormal">21.3.<span style="mso-tab-count: 1;"> </span>It may have
been the Provincial Governor that signed the PIA, but the proposed projects
thereunder would be implemented province-wide, to include all component
municipalities and barangays as well as Puerto Princesa. This is more
advantageous to the 23 municipalities of Palawan compared to Arigo, et al.'s,
stand that "the sharing should be one municipality (45%) and one barangay
(35%) or a total of 80%, with the balance of 20% for the rest of Palawan's 22
municipalities including Puerto Princesa City." 217 </p>
<p class="MsoNormal">22.<span style="mso-tab-count: 1;"> </span>E.O. No.
683, which uses "net proceeds" of Camago-Malampaya project as the
basis of sharing, does not violate Section 290 of the Local Government Code
where the share of the LGU is based on gross collection. 218 </p>
<p class="MsoNormal">22.1.<span style="mso-tab-count: 1;"> </span>The
allocation of funds under E.O. No. 683 is not, strictly speaking, the sharing
of proceeds of national wealth development under Section 290 of the Local
Government Code considering that Palawan's claimed 40% share is still under
litigation. 219 </p>
<p class="MsoNormal">22.2.<span style="mso-tab-count: 1;"> </span>In any case,
"gross collection" under Section 290 of the Local Government Code
cannot refer to gross proceeds because under Service Contract No. 38 and A.O.
No. 381, the production sharing scheme involves deduction of exploration,
development and production costs from the gross proceeds of the gas sales.
Since the net proceeds referred to in E.O. No. 683 is the same amount as the
government's gross collection from the Camago-Malampaya project, the Local
Government Code was not violated. 220 CHTAIc</p>
<p class="MsoNormal">23.<span style="mso-tab-count: 1;"> </span>The
Pimentel ruling cannot be applied to the release of funds under E.O. No. 683.
It does not refer to the LGU's claimed 40% share; it is in the form of
financial assistance pursuant to Section 25 (c) of the Local Government Code
which authorizes the President to direct the appropriate national agency to
provide financial and other forms of assistance to the LGU. The funds were
appropriated in the General Appropriations Act of 2007 and 2008 for the DoE and
not under the items for allocations from national wealth to LGUs. 221 </p>
<p class="MsoNormal">24.<span style="mso-tab-count: 1;"> </span>CA-G.R. SP
No. 102247 was correctly dismissed by the CA. Failure to submit essential and
necessary documents is a sufficient ground to dismiss a petition under Rule 46
of the Rules of Court. Arigo, et al., prematurely filed its petition before the
CA as it was anchored on the same basic issues to be resolved in G.R. No.
170867. Furthermore, Arigo, et al., had no legal standing either as real
parties-in-interest, as they failed to establish that they would be benefitted
or injured by the judgment in the suit, or as taxpayers, as they failed to show
that the E.O. No. 638 and PIA involved an illegal disbursement of public funds.
222 </p>
<p class="MsoNormal">Ruling of the Court</p>
<p class="MsoNormal">LGUs' share in national wealth</p>
<p class="MsoNormal">Under Section 25, Article II of the 1987 Constitution,
"(t)he State shall ensure the autonomy of local governments." In
furtherance of this State policy, the 1987 Constitution conferred on LGUs the
power to create its own sources of revenue and the right to share not only in
the national taxes, but also in the proceeds of the utilization of national
wealth in their respective areas. Thus, Sections 5, 6, and 7 of Article X of
the 1987 Constitution provides:</p>
<p class="MsoNormal">Section 5.<span style="mso-tab-count: 1;"> </span>Each
local government unit shall have the power to create its own sources of
revenues and to levy taxes, fees, and charges subject to such guidelines and
limitations as the Congress may provide, consistent with the basic policy of
local autonomy. Such taxes, fees, and charges shall accrue exclusively to the
local governments.</p>
<p class="MsoNormal">Section 6.<span style="mso-tab-count: 1;"> </span>Local
government units shall have a just share, as determined by law, in the national
taxes which shall be automatically released to them.</p>
<p class="MsoNormal">Section 7.<span style="mso-tab-count: 1;"> </span>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. (Emphasis ours)<span style="mso-spacerun: yes;"> </span>cHDAIS</p>
<p class="MsoNormal">At the center of this controversy is Section 7, an
innovation in the 1987 Constitution aimed at giving fiscal autonomy to local
governments. Deliberations of the 1986 Constitutional Commission reveal the
rationale for this provision, thus:</p>
<p class="MsoNormal">MR. OPLE. x x x</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>Just to
cite specific examples, in the case of timberland within the area of
jurisdiction of the Province of Quirino or the Province of Aurora, we feel that
the local governments ought to share in whatever revenues are generated from
this particular natural resource which is also considered a national resource
in a proportion to be determined by Congress. This may mean sharing not with
the local government but with the local population. The geothermal plant in the
Macban, Makiling-Banahaw area in Laguna, the Tiwi Geothermal Plant in Albay,
there is a sense in which the people in these areas, hosting the physical
facility based on the resources found under the ground in their area which are
considered national wealth, should participate in terms of reasonable rebates
on the cost of power that they pay. This is true of the Maria Cristina area in
Central Mindanao, for example. May I point out that in the previous government,
this has always been a very nettlesome subject of the Cabinet debates. Are the
people in the locality, where God chose to locate His bounty, not entitled to
some reasonable modest sharing of this with the national government? Why should
the national government claim all the revenues arising from them? And the usual
reply of the technocrats at that time is that there must be uniform treatment
of all citizens regardless of where God's gifts are located, whether below the
ground or above the ground. This, of course, has led to popular disenchantment.
In Albay, for example, the government then promised a 20-percent rebate in
power because of the contributions of the Tiwi Plant to the Luzon grid.
Although this was ordered, I remember that the Ministry of Finance, together
with the National Power Corporation, refused to implement it. There is a bigger
economic principle behind this, the principle of equity. If God chose to locate
the great rivers and sources of hydroelectric power in Iligan, in Central
Mindanao, for example, or in the Cordillera, why should the national government
impose fuel adjustment taxes in order to cancel out the comparative advantage
given to the people in these localities through these resources? So, it is in
that sense that under Section 8, the local populations, if not the local
governments, should have a share of whatever national proceeds may be realized
from this natural wealth of the nation located within their jurisdictions.</p>
<p class="MsoNormal">xxx<span style="mso-spacerun: yes;">
</span>xxx<span style="mso-spacerun: yes;"> </span>xxx</p>
<p class="MsoNormal">MR. NATIVIDAD.</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>The
history of local governments shows that the usual weaknesses of local
governments are: 1) fiscal inability to support itself; 2) lack of sufficient
authority to carry out its duties; and 3) lack of authority to appoint key
officials.</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>Under
this Article, are these traditional weaknesses of local governments addressed
to [sic]?<span style="mso-spacerun: yes;"> </span>EATCcI</p>
<p class="MsoNormal">MR. NOLLEDO.</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>Yes. The
first question is on fiscal inability to support itself. It will be noticed
that we widened the taxing powers if local governments. I explained that
exhaustively yesterday unless the Gentleman wants me to explain again.</p>
<p class="MsoNormal">MR. NATIVIDAD.</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>No, that
is all right with me.</p>
<p class="MsoNormal">MR. NOLLEDO.</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>There is
a right of retention of local taxes by local governments and according to the
Natividad, Ople, Maambong, de los Reyes amendment, local government units shall
share in the proceeds of the exploitation of the national wealth within the
area or region, etc. x x x</p>
<p class="MsoNormal">xxx<span style="mso-spacerun: yes;">
</span>xxx<span style="mso-spacerun: yes;"> </span>xxx</p>
<p class="MsoNormal">MR. OPLE. x x x</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>In the
hinterland regions of the Philippines, most municipalities receive an annual
income of only about P200,000 so that after paying the salaries of local
officials and employees, nothing is left to fund any local development project.
This is a prescription for a self-perpetuating stagnation and backwardness, and
numbing community frustrations, as well as a chronic disillusionment with the
central government. The thrust towards local autonomy in this entire Article on
Local Governments may suffer the fate of earlier heroic efforts of
decentralization which, without innovative features for local income
generation, remained a pious hope and a source of discontent. To prevent this,
this amendment which Commissioner Davide and I jointly propose will open up a
whole new source of local financial self-reliance by establishing a
constitutional principle of local governments, and their populations, sharing
in the proceeds of national wealth in their areas of jurisdiction. The sharing
with the national government can be in the form of shares from revenues, fees
and charges levied on the exploitation or development and utilization of
natural resources such as mines, hydro-electric and geothermal facilities,
timber, including rattan, fisheries, and processing industries based on
indigenous raw materials.</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>But the
sharing, Madam President, can also take the form of direct benefits to the
population in terms of price advantages to the people where, say, cheaper
electric power is sourced from a local hydroelectric or geothermal facility.
For example, in the provinces reached by the power from the Maria Cristina
hydro-electric facility in Mindanao, the direct benefits to the population
cited in this section can take the form of lower prices of electricity. The
same benefit can be extended to the people of Albay, for example, where
volcanic steam in Tiwi provides 55 megawatts of cheap power to the Luzon grid.</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>The
existing policy of slapping uniform fuel adjustment taxes to equalize rates
throughout the country in the name of price standardization will have to yield
to a more rational pricing policy that recognizes the entitlement of local
communities to the enjoyment of their own comparative advantage based on
resources that God has given them. And so, Madam President, I ask that the
Committee consider this proposed amendment. 223 (Emphasis ours)</p>
<p class="MsoNormal">The Local Government Code gave flesh to Section 7, providing
that:</p>
<p class="MsoNormal">Section 18.<span style="mso-tab-count: 1;"> </span>Power
to Generate and Apply Resources. — Local government units shall have the power
and authority to establish an organization that shall be responsible for the
efficient and effective implementation of their development plans, program
objectives and priorities; to create their own sources of revenues and to levy
taxes, fees, and charges which shall accrue exclusively for their use and
disposition and which shall be retained by them; to have a just share in
national taxes which shall be automatically and directly released to them
without need of any further action; to have an equitable share in the proceeds
from the utilization and development of the national wealth and resources
within their respective territorial jurisdictions including sharing the same
with the inhabitants by way of direct benefits; to acquire, develop, lease,
encumber, alienate, or otherwise dispose of real or personal property held by
them in their proprietary capacity and to apply their resources and assets for productive,
developmental, or welfare purposes, in the exercise or furtherance of their
governmental or proprietary powers and functions and thereby ensure their
development into self-reliant communities and active participants in the
attainment of national goals.</p>
<p class="MsoNormal">Section 289.<span style="mso-tab-count: 1;"> </span>Share
in the Proceeds from the Development and Utilization of the National Wealth. —
Local government units shall have an equitable share in the proceeds derived
from the utilization and development of the national wealth within their respective
areas, including sharing the same with the inhabitants by way of direct
benefits.<span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal">Section 290.<span style="mso-tab-count: 1;"> </span>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.</p>
<p class="MsoNormal">Section 291.<span style="mso-tab-count: 1;"> </span>Share
of the Local Governments from any Government Agency or Owned or Controlled
Corporation. — Local government units shall have a share based on the preceding
fiscal year from the proceeds derived by any government agency or
government-owned or controlled corporation engaged in the utilization and
development of the national wealth based on the following formula whichever
will produce a higher share for the local government unit:</p>
<p class="MsoNormal">(a)<span style="mso-tab-count: 1;"> </span>One
percent (1%) of the gross sales or receipts of the preceding calendar year; or</p>
<p class="MsoNormal">(b)<span style="mso-tab-count: 1;"> </span>Forty
percent (40%) of the mining taxes, royalties, forestry and fishery charges and
such other taxes, fees or charges, including related surcharges, interests, or
fines the government agency or government owned or controlled corporation would
have paid if it were not otherwise exempt. (Emphasis ours)</p>
<p class="MsoNormal">Underlying these and other fiscal prerogatives granted to
the LGUs under the Local Government Code is an enhanced policy of local
autonomy that entails not only a sharing of powers, but also of resources,
between the National Government and the LGUs. Thus, during the Senate
deliberations on the proposed local government code, it was emphasized:</p>
<p class="MsoNormal">Senator Gonzales.</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>The old
concept of local autonomy, Mr. President, is, we grant more powers, more
functions, more duties, more prerogatives, more responsibilities to local
government units. But actually that is not autonomy. Because autonomy, without
giving them the resources or the means in order that they can effectively carry
out their enlarged duties and responsibilities, will be a sham autonomy. I
understand that the Gentleman's concept of autonomy is really centered in not
merely granting them more powers and more responsibilities, but also more
means; meaning, funding, more powers to raise funds in order that they can put
into effect whatever policies, decisions and programs that the local government
may approve. Is my understanding correct, Mr. President?</p>
<p class="MsoNormal">Senator Pimentel.</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>The
distinguished Gentleman is correct, Mr. President, Book II of the draft bill
under consideration deals with fiscal matters. 224 </p>
<p class="MsoNormal">This push for both administrative and fiscal autonomy was
reaffirmed during the deliberations of the Bicameral Conference Committee on
the proposed Local Government Code and the eventual signing of the Bicameral
Conference Committee Report. On these occasions, Senator Aquilino Q. Pimentel,
Jr., as Committee Chairman for the Senate panel, declared:<span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal">CHAIRMAN PIMENTEL:</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>Mr.
Chairman, in response to your opening statement, let me say in behalf of the
Senate panel that we believe the local government code is long overdue. It is
time that we really empower our people in the countryside. And to do this, the
local government code version of the Senate is based upon two premises. No. 1,
we have to share power between the national government and local government.
And No. 2, we have to share resources between the national government and local
government. It is the only way by which we believe countryside development will
become a reality in our nation. We can all speak out and spew rhetoric about
countryside development, but unless and until local governments are empowered
and given financial wherewithal to transform the countryside by the delivery of
basic services, then we can never attain such a dream of ensuring that we share
the development of this nation to the countryside where most of our people
reside. x x x 225 </p>
<p class="MsoNormal">xxx<span style="mso-spacerun: yes;">
</span>xxx<span style="mso-spacerun: yes;"> </span>xxx</p>
<p class="MsoNormal">CHAIRMAN PIMENTEL. x x x</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>Yes,
we'd like to announce that finally, after three years of deliberation and
hundreds of meeting not only by the Technical Committee, but by the Bicameral
Conference Committee itself, we have finally come up with the final version of
the Local Government Code for 1991.</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>x x x
And if there's any one thing that the Local Government Code will do for our
country, it is to provide the mechanism for the development of the countryside
without additional cost to the government because here, what we are actually
doing is merely to reallocate the funds of the national government giving a
substantial portion of those funds to the Local Government Units so that they,
in turn, can begin the process of development in their own respective
territories.</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>And to
my mind, this would be a signal achievement of the Senate and the House of
Representatives. And that finally, we are placing in the hands of the local
government officials their wherewithals [sic] and the tools necessary for the
development of the people in the countryside and of our Local Government Units
in particular.<span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal">xxx<span style="mso-spacerun: yes;">
</span>xxx<span style="mso-spacerun: yes;"> </span>xxx 226 </p>
<p class="MsoNormal">None of the parties in the instant cases dispute the LGU's
entitlement to an equitable share in the proceeds of the utilization and
development of national wealth within their respective areas. The question
principally raised here is whether the national wealth, in this case the
Camago-Malampaya reservoir, is within the Province of Palawan's
"area" for it to be entitled to 40% of the government's share under
Service Contract No. 38. The issue, therefore, hinges on what comprises the
province's "area" which the Local Government Code has equated as its
"territorial jurisdiction." While the Republic asserts that the term
pertains to the LGU's territorial boundaries, the Province of Palawan construes
it as wherever the LGU exercises jurisdiction.</p>
<p class="MsoNormal">Territorial jurisdiction refers to</p>
<p class="MsoNormal">territorial boundaries as defined in</p>
<p class="MsoNormal">the LGU's charter</p>
<p class="MsoNormal">The Local Government Code does not define the term
"territorial jurisdiction." Provisions therein, however, indicate
that territorial jurisdiction refers to the LGU's territorial boundaries.</p>
<p class="MsoNormal">Under the Local Government Code, a "province" is
composed of a cluster of municipalities, or municipalities and component
cities. 227 A "municipality," in turn, is described as a group of
barangays, 228 while a "city" is referred to as consisting of more
urbanized and developed barangays. 229 </p>
<p class="MsoNormal">In the creation of municipalities, cities and barangays, the
Local Government Code uniformly requires that the territorial jurisdiction of
these government units be "properly identified by metes and bounds,"
thus:</p>
<p class="MsoNormal">Section 386.<span style="mso-tab-count: 1;"> </span>Requisites
for Creation. —</p>
<p class="MsoNormal">xxx<span style="mso-spacerun: yes;">
</span>xxx<span style="mso-spacerun: yes;"> </span>xxx</p>
<p class="MsoNormal">(b)<span style="mso-tab-count: 1;"> </span>The
territorial jurisdiction of the new barangay shall be properly identified by
metes and bounds or by more or less permanent natural boundaries. The territory
need not be contiguous if it comprises two (2) or more islands.</p>
<p class="MsoNormal">xxx<span style="mso-spacerun: yes;">
</span>xxx<span style="mso-spacerun: yes;"> </span>xxx</p>
<p class="MsoNormal">Section 442.<span style="mso-tab-count: 1;"> </span>Requisites
for Creation. —</p>
<p class="MsoNormal">xxx<span style="mso-spacerun: yes;">
</span>xxx<span style="mso-spacerun: yes;"> </span>xxx</p>
<p class="MsoNormal">(b)<span style="mso-tab-count: 1;"> </span>The
territorial jurisdiction of a newly-created municipality shall be properly
identified by metes and bounds. The requirement on land area shall not apply
where the municipality proposed to be created is composed of one (1) or more
islands. The territory need not be contiguous if it comprises two (2) or more islands.</p>
<p class="MsoNormal">xxx<span style="mso-spacerun: yes;">
</span>xxx<span style="mso-spacerun: yes;"> </span>xxx</p>
<p class="MsoNormal">Section 450.<span style="mso-tab-count: 1;"> </span>Requisites
for Creation. —</p>
<p class="MsoNormal">xxx<span style="mso-spacerun: yes;">
</span>xxx<span style="mso-spacerun: yes;"> </span>xxx</p>
<p class="MsoNormal">(b)<span style="mso-tab-count: 1;"> </span>The
territorial jurisdiction of a newly-created city shall be properly identified
by metes and bounds. The requirement on land area shall not apply where the
city proposed to be created is composed of one (1) or more islands. The
territory need not be contiguous if it comprises two (2) or more islands.</p>
<p class="MsoNormal">xxx<span style="mso-spacerun: yes;">
</span>xxx<span style="mso-spacerun: yes;"> </span>xxx
(Emphasis ours)</p>
<p class="MsoNormal">The intention, therefore, is to consider an LGU's
territorial jurisdiction as pertaining to a physical location or area as
identified by its boundaries. This is also clear from other provisions of the
Local Government Code, particularly Sections 292 and 294, on the allocation of
LGUs' shares from the utilization of national wealth, which speak of the
location of the natural resources:<span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal">Section 292.<span style="mso-tab-count: 1;"> </span>Allocation
of Shares. — The share in the preceding Section shall be distributed in the
following manner:</p>
<p class="MsoNormal">(a)<span style="mso-tab-count: 1;"> </span>Where the
natural resources are located in the province:</p>
<p class="MsoNormal">(1)<span style="mso-tab-count: 1;"> </span>Province —
Twenty percent (20%);</p>
<p class="MsoNormal">(2)<span style="mso-tab-count: 1;"> </span>Component
City/Municipality — Forty-five percent (45%); and</p>
<p class="MsoNormal">(3)<span style="mso-tab-count: 1;"> </span>Barangay —
Thirty-five percent (35%).</p>
<p class="MsoNormal">Provided, however, That where the natural resources are
located in two (2) or more provinces, or in two (2) or more component cities or
municipalities or in two (2) or more barangays, their respective shares shall
be computed on the basis of:</p>
<p class="MsoNormal">(1)<span style="mso-tab-count: 1;"> </span>Population
— Seventy percent (70%); and</p>
<p class="MsoNormal">(2)<span style="mso-tab-count: 1;"> </span>Land area
— Thirty percent (30%).</p>
<p class="MsoNormal">(b)<span style="mso-tab-count: 1;"> </span>Where the
natural resources are located in a highly urbanized or independent component
city:</p>
<p class="MsoNormal">(1)<span style="mso-tab-count: 1;"> </span>City —
Sixty-five percent (65%); and</p>
<p class="MsoNormal">(2)<span style="mso-tab-count: 1;"> </span>Barangay —
Thirty-five percent (35%).</p>
<p class="MsoNormal">Provided, however, That where the natural resources are
located in such two (2) or more cities, the allocation of shares shall be based
on the formula on population and land area as specified in paragraph (a) of
this Section.</p>
<p class="MsoNormal">Section 294.<span style="mso-tab-count: 1;"> </span>Development
and Livelihood Projects. — The proceeds from the share of local government
units pursuant to this chapter shall be appropriated by their respective
sanggunian to finance local government and livelihood projects: Provided,
however, That at least eighty percent (80%) of the proceeds derived from the
development and utilization of hydrothermal, geothermal, and other sources of
energy shall be applied solely to lower the cost of electricity in the local
government unit where such a source of energy is located. (Emphasis ours)</p>
<p class="MsoNormal">That "territorial jurisdiction" refers to the
LGU's territorial boundaries is a construction reflective of the discussion of
the framers of the 1987 Constitution who referred to the local government as
the "locality" that is "hosting" the national resources and
a "place where God chose to locate His bounty." 230 It is also
consistent with the language ultimately used by the Constitutional Commission
when they referred to the national wealth as those found within (the LGU's)
respective areas. By definition, "area" refers to a particular extent
of space or surface or a geographic region. 231 </p>
<p class="MsoNormal">Such construction is in conformity with the pronouncement in
Sen. Alvarez v. Hon. Guingona, Jr. 232 where the Court, in explaining the need
for adequate resources for LGUs to undertake the responsibilities ensuing from
decentralization, made the following disquisition in which "territorial
jurisdiction" was equated with territorial boundaries:<span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal">The practical side to development through a decentralized
local government system certainly concerns the matter of financial resources.
With its broadened powers and increased responsibilities, a local government
unit must now operate on a much wider scale. More extensive operations, in
turn, entail more expenses. Understandably, the vesting of duty, responsibility
and accountability in every local government unit is accompanied with a
provision for reasonably adequate resources to discharge its powers and
effectively carry out its functions. Availment of such resources is effectuated
through the vesting in every local government unit of (1) the right to create
and broaden its own source of revenue; (2) the right to be allocated a just
share in national taxes, such share being in the form of internal revenue
allotments (IRAs); and (3) the right to be given its equitable share in the
proceeds of the utilization and development of the national wealth, if any,
within its territorial boundaries. 233 (Emphasis ours)</p>
<p class="MsoNormal">An LGU has been defined as a political subdivision of the
State which is constituted by law and possessed of substantial control over its
own affairs. 234 LGUs, therefore, are creations of law. In this regard,
Sections 6 and 7 of the Local Government Code provide:</p>
<p class="MsoNormal">Section 6.<span style="mso-tab-count: 1;"> </span>Authority
to Create Local Government Units. — A local government unit may be created,
divided, merged, abolished, or its boundaries substantially altered either by
law enacted by Congress in the case of a province, city, municipality, or any
other political subdivision, or by ordinance passed by the sangguniang
panlalawigan or sangguniang panlungsod concerned in the case of a barangay
located within its territorial jurisdiction, subject to such limitations and
requirements prescribed in this Code.</p>
<p class="MsoNormal">Section 7.<span style="mso-tab-count: 1;"> </span>Creation
and Conversion. — As a general rule, the creation of a local government unit or
its conversion from one level to another level shall be based on verifiable
indicators of viability and projected capacity to provide services, to wit:</p>
<p class="MsoNormal">(a)<span style="mso-tab-count: 1;"> </span>Income. —
It must be sufficient, based on acceptable standards, to provide for all
essential government facilities and services and special functions commensurate
with the size of its population, as expected of the local government unit
concerned;</p>
<p class="MsoNormal">(b)<span style="mso-tab-count: 1;"> </span>Population.
— It shall be determined as the total number of inhabitants within the
territorial jurisdiction of the local government unit concerned; and<span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal">(c)<span style="mso-tab-count: 1;"> </span>Land
Area. — It must be contiguous, unless it comprises two or more islands or is
separated by a local government unit independent of the others; properly
identified by metes and bounds with technical descriptions; and sufficient to
provide for such basic services and facilities to meet the requirements of its
populace.</p>
<p class="MsoNormal">Compliance with the foregoing indicators shall be attested
to by the Department of Finance (DOF), the National Statistics Office (NSO),
and the Lands Management Bureau (LMB) of the Department of Environment and
Natural Resources (DENR). (Emphasis ours)</p>
<p class="MsoNormal">In enacting charters of LGUs, Congress is called upon to
properly identify their territorial jurisdiction by metes and bounds. Mariano,
Jr. v. COMELEC 235 stressed the need to demarcate the territorial boundaries of
LGUs with certitude because they define the limits of the local governments'
territorial jurisdiction. Reiterating this dictum, the Court, in Municipality
of Pateros v. Court of Appeals, et al., 236 held:</p>
<p class="MsoNormal">[W]e reiterate what we already said about the importance and
sanctity of the territorial jurisdiction of an LGU:</p>
<p class="MsoNormal">The importance of drawing with precise strokes the
territorial boundaries of a local unit of government cannot be overemphasized.
The boundaries must be clear for they define the limits of the territorial
jurisdiction of a local government unit. It can legitimately exercise powers of
government only within the limits of its territorial jurisdiction. Beyond these
limits, its acts are ultra vires. Needless to state, any uncertainty in the
boundaries of local government units will sow costly conflicts in the exercise
of governmental powers which ultimately will prejudice the people's welfare.
This is the evil sought to be avoided by the Local Government Unit in requiring
that the land area of a local government unit must be spelled out in metes and
bounds, with technical descriptions. 237 (Emphasis ours)</p>
<p class="MsoNormal">Clearly, therefore, a local government's territorial
jurisdiction cannot extend beyond the boundaries set by its organic law.<span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal">Area as delimited by law and not</p>
<p class="MsoNormal">exercise of jurisdiction as basis of</p>
<p class="MsoNormal">the LGU's equitable share</p>
<p class="MsoNormal">The Court cannot subscribe to the argument posited by the
Province of Palawan that the national wealth, the proceeds from which the State
is mandated to share with the LGUs, shall be wherever the local government
exercises any degree of jurisdiction.</p>
<p class="MsoNormal">An LGU's territorial jurisdiction is not necessarily
co-extensive with its exercise or assertion of powers. To hold otherwise may
result in condoning acts that are clearly ultra vires. It may lead to, in the
words of the Republic, LGUs "rush[ing] to exercise its powers and
functions in areas rich in natural resources (even if outside its boundaries)
with the intention of seeking a share in the proceeds of its exploration"
238 — a situation that "would sow conflict not only among the local
government units and the national government but worse, between and among local
government units." 239 </p>
<p class="MsoNormal">There is likewise merit in the Republic's assertion that
Palawan's interpretation of what constitutes an LGU's territorial jurisdiction
may produce absurd consequences. Indeed, there are natural resources, such as
forests and mountains, which can be found within the LGU's territorial
boundaries, but are, strictly speaking, under national jurisdiction,
specifically that of the Department of Environment and Natural Resources. 240
To equate territorial jurisdiction to areas where the LGU exercises
jurisdiction means that these natural resources will have to be excluded from
the sharing scheme although they are geographically within the LGU's
territorial limits. 241 The consequential incongruity of this scenario finds no
support either in the language or in the context of the equitable sharing
provisions of the 1987 Constitution and the Local Government Code.</p>
<p class="MsoNormal">The Court finds it appropriate to also cite Section 150 of
the Local Government Code which speaks of the situs of local business taxes
under Section 143 of the same law. Section 150 provides:</p>
<p class="MsoNormal">Section 150.<span style="mso-tab-count: 1;"> </span>Situs
of the Tax. —</p>
<p class="MsoNormal">xxx<span style="mso-spacerun: yes;">
</span>xxx<span style="mso-spacerun: yes;"> </span>xxx</p>
<p class="MsoNormal">(b)<span style="mso-tab-count: 1;"> </span>The
following sales allocation shall apply to manufacturers, assemblers,
contractors, producers, and exporters with factories, project offices, plants,
and plantations in the pursuit of their business:</p>
<p class="MsoNormal">(1)<span style="mso-tab-count: 1;"> </span>Thirty
percent (30%) of all sales recorded in the principal office shall be taxable by
the city or municipality where the principal office is located; and</p>
<p class="MsoNormal">(2)<span style="mso-tab-count: 1;"> </span>Seventy
percent (70%) of all sales recorded in the principal office shall be taxable by
the city or municipality where the factory, project office, plant, or
plantation is located.</p>
<p class="MsoNormal">(c)<span style="mso-tab-count: 1;"> </span>In case
of a plantation located at a place other than the place where the factory is
located, said seventy percent (70%) mentioned in subparagraph (b) of subsection
(2) above shall be divided as follows:<span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal">(1)<span style="mso-tab-count: 1;"> </span>Sixty
percent (60%) to the city or municipality where the factory is located; and</p>
<p class="MsoNormal">(2)<span style="mso-tab-count: 1;"> </span>Forty
percent (40%) to the city or municipality where the plantation is located.</p>
<p class="MsoNormal">(d)<span style="mso-tab-count: 1;"> </span>In cases
where a manufacturer, assembler, producer, exporter or contractor has two (2)
or more factories, project offices, plants, or plantations located in different
localities, the seventy percent (70%) sales allocation mentioned in
subparagraph (b) of subsection (2) above shall be prorated among the localities
where the factories, project offices, plants, and plantations are located in
proportion to their respective volumes of production during the period for
which the tax is due.</p>
<p class="MsoNormal">(e)<span style="mso-tab-count: 1;"> </span>The
foregoing sales allocation shall be applied irrespective of whether or not
sales are made in the locality where the factory, project office, plant, or
plantation is located. (Emphasis ours)</p>
<p class="MsoNormal">The foregoing provision illustrates the untenability of the
Province of Palawan's interpretation of "territorial jurisdiction"
based on exercise of jurisdiction. To sustain the province's construction would
mean that the territorial jurisdiction of the municipality or city where the
factory, plant, project office or plantation is situated, extends to the LGU
where the principal office is located because said municipality or city can
exercise the authority to tax the sale transactions made or recorded in the
principal office. This could not have been the intent of the framers of the
Local Government Code.</p>
<p class="MsoNormal">The Provincial Government of Palawan argues that its
territorial jurisdiction extends to the Camago-Malampaya reservoir considering
that its local police maintains peace and order in the area; crimes committed
within the waters surrounding the province have been prosecuted and tried in
the courts of Palawan; and the provincial government enforces environmental
laws over the same area. 242 The province also cites Section 468 of the Local
Government Code, which authorizes the Sangguniang Panlalawigan to enact
ordinances that protect the environment, as well as Sections 26 and 27 of the
law, which require consultation with the LGUs concerned and the approval of
their respective sanggunian before the National Government may commence any project
that will have an environmental impact. 243 The province avers that the
Contractor, in fact, obtained the necessary endorsement from the Sangguniang
Panlalawigan of Palawan before starting its operations. 244 </p>
<p class="MsoNormal">The Court notes, however, that the province's claims of
maintaining peace and order in the Camago-Malampaya area and of enforcing
environmental laws therein have not been substantiated by credible proof. The
province likewise failed to adduce evidence of the crimes supposedly committed
in the same area or their prosecution in Palawan's courts.<span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal">The province cites illegal fishing, poaching and illegal
entry as the cases tried before the courts of Palawan. As conceded by the
parties, however, the subject gas reservoir is situated, not in the marine
waters, but in the continental shelf. The Province of Palawan has not
established that it has, in fact, exercised jurisdiction over this submerged
land area.</p>
<p class="MsoNormal">The LGU's authority to adopt and implement measures to
protect the environment does not determine the extent of its territorial
jurisdiction. The deliberations of the Bicameral Conference Committee on the
proposed Local Government Code provides the proper context for the exercise of
such authority:</p>
<p class="MsoNormal">HON. DE PEDRO.</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>The
Senate version does not have any specific provision on this. The House's reads:</p>
<p class="MsoNormal">"The delegation to each local government unit of the
responsibility in the management and maintenance of environmental balance
within its territorial jurisdiction."</p>
<p class="MsoNormal">CHAIRMAN PIMENTEL.</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>Well,
this is a matter of delegating to the local government units power to determine
environmental concerns, which is good. However, we have some reservations
precisely because environment does not know of territorial boundaries. That is
our reservation there. And we have to speak of the totality of the environment
of the nation rather than the provincial or municipal in that respect. x x x
245 (Emphasis ours)</p>
<p class="MsoNormal">Thus, the LGU's statutory obligation to maintain ecological
balance is but part of the nation's collective effort to preserve its
environment as a whole. The extent to which local legislation or enforcement
protects the environment will not define the LGU's territory.</p>
<p class="MsoNormal">Sections 26 and 27 of the Local Government Code provide:</p>
<p class="MsoNormal">Section 26.<span style="mso-tab-count: 1;"> </span>Duty
of National Government Agencies in the Maintenance of Ecological Balance. — It
shall be the duty of every national agency or government-owned or controlled
corporation authorizing or involved in the planning and implementation of any
project or program that may cause pollution, climatic change, depletion of
non-renewable resources, loss of crop land, rangeland, or forest cover, and
extinction of animal or plant species, to consult with the local government
units, nongovernmental organizations, and other sectors concerned and explain the
goals and objectives of the project or program, its impact upon the people and
the community in terms of environmental or ecological balance, and the measures
that will be undertaken to prevent or minimize the adverse effects thereof.</p>
<p class="MsoNormal">Section 27.<span style="mso-tab-count: 1;"> </span>Prior
Consultations Required. — No project or program shall be implemented by
government authorities unless the consultations mentioned in Sections 2 (c) and
26 hereof are complied with, and prior approval of the sanggunian concerned is
obtained: Provided, That occupants in areas where such projects are to be
implemented shall not be evicted unless appropriate relocation sites have been
provided, in accordance with the provisions of the Constitution. (Emphasis
ours)</p>
<p class="MsoNormal">It is clear from Sections 26 and 27 that the consideration
for the required consultation and sanggunian approval is the environmental
impact of the National Government's project on the local community. A project,
however, may have an ecological impact on a locality without necessarily being
situated therein. Thus, prior consultation made pursuant to the foregoing
provisions does not perforce establish that the national wealth sought to be
utilized is within the territory of the LGU consulted.<span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal">In fine, an LGU cannot claim territorial jurisdiction over
an area simply because its government has exercised a certain degree of
authority over it. Territorial jurisdiction is defined, not by the local
government, but by the law that creates it; it is delimited, not by the extent
of the LGU's exercise of authority, but by physical boundaries as fixed in its
charter.</p>
<p class="MsoNormal">Unless clearly expanded by</p>
<p class="MsoNormal">Congress, the LGU's territorial</p>
<p class="MsoNormal">jurisdiction refers only to its land</p>
<p class="MsoNormal">area.</p>
<p class="MsoNormal">Utilization of natural resources</p>
<p class="MsoNormal">found within the land area as</p>
<p class="MsoNormal">delimited by law is subject to the</p>
<p class="MsoNormal">40% LGU share.</p>
<p class="MsoNormal">Since it refers to a demarcated area, the term
"territorial jurisdiction" is evidently synonymous with the term
"territory." In fact, "territorial jurisdiction" is defined
as the limits or territory within which authority may be exercised. 246 </p>
<p class="MsoNormal">Under the Local Government Code, particularly the provisions
on the creation of municipalities, cities and provinces, and LGUs in general,
territorial jurisdiction is contextually synonymous with territory and the term
"territory" is used to refer to the land area comprising the LGU,
thus:</p>
<p class="MsoNormal">Section 442.<span style="mso-tab-count: 1;"> </span>Requisites
for Creation. —</p>
<p class="MsoNormal">(a)<span style="mso-tab-count: 1;"> </span>A
municipality may be created if it has an average annual income, as certified by
the provincial treasurer, of at least Two million five hundred thousand pesos
(P2,500,000.00) for the last two (2) consecutive years based on the 1991
constant prices; a population of at least twenty-five thousand (25,000)
inhabitants as certified by the National Statistics Office; and a contiguous
territory of at least fifty (50) square kilometers as certified by the Lands
Management Bureau: Provided, That the creation thereof shall not reduce the
land area, population or income of the original municipality or municipalities
at the time of said creation to less than the minimum requirements prescribed
herein.</p>
<p class="MsoNormal">(b)<span style="mso-tab-count: 1;"> </span>The
territorial jurisdiction of a newly-created municipality shall be properly
identified by metes and bounds. The requirement on land area shall not apply
where the municipality proposed to be created is composed of one (1) or more
islands. The territory need not be contiguous if it comprises two (2) or more
islands.</p>
<p class="MsoNormal">(c)<span style="mso-tab-count: 1;"> </span>The
average annual income shall include the income accruing to the general fund of
the municipality concerned, exclusive of special funds, transfers and
non-recurring income.</p>
<p class="MsoNormal">(d)<span style="mso-tab-count: 1;"> </span>Municipalities
existing as of the date of the effectivity of this Code shall continue to exist
and operate as such. Existing municipal districts organized pursuant to
presidential issuances or executive orders and which have their respective set
of elective municipal officials holding office at the time of the effectivity
of this Code shall henceforth be considered as regular municipalities.</p>
<p class="MsoNormal">Section 450.<span style="mso-tab-count: 1;"> </span>Requisites
for Creation. —</p>
<p class="MsoNormal">(a)<span style="mso-tab-count: 1;"> </span>A
municipality or a cluster of barangays may be converted into a component city
if it has an average annual income, as certified by the Department of Finance,
of at least Twenty million (P20,000,000.00) for the last two (2) consecutive
years based on 1991 constant prices, and if it has either of the following
requisites:</p>
<p class="MsoNormal">(i)<span style="mso-tab-count: 1;"> </span>a
contiguous territory of at least one hundred (100) square kilometers, as
certified by the Lands Management Bureau; or<span style="mso-spacerun: yes;">
</span></p>
<p class="MsoNormal">(ii)<span style="mso-tab-count: 1;"> </span>a
population of not less than one hundred fifty thousand (150,000) inhabitants,
as certified by the National Statistics Office:</p>
<p class="MsoNormal">Provided, That, the creation thereof shall not reduce the
land area, population, and income of the original unit or units at the time of
said creation to less than the minimum requirements prescribed herein.</p>
<p class="MsoNormal">(b)<span style="mso-tab-count: 1;"> </span>The
territorial jurisdiction of a newly-created city shall be properly identified
by metes and bounds. The requirement on land area shall not apply where the
city proposed to be created is composed of one (1) or more islands. The
territory need not be contiguous if it comprises two (2) or more islands.</p>
<p class="MsoNormal">(c)<span style="mso-tab-count: 1;"> </span>The
average annual income shall include the income accruing to the general fund,
exclusive of specific funds, transfers, and non-recurring income.</p>
<p class="MsoNormal">Section 461.<span style="mso-tab-count: 1;"> </span>Requisites
for Creation. —</p>
<p class="MsoNormal">(a)<span style="mso-tab-count: 1;"> </span>A province
may be created if it has an average annual income, as certified by the
Department of Finance, of not less than Twenty million pesos (P20,000,000.00)
based on 1991 constant prices and either of the following requisites:</p>
<p class="MsoNormal">(i)<span style="mso-tab-count: 1;"> </span>a
contiguous territory of at least two thousand (2,000) square kilometers, as
certified by the Lands Management Bureau; or</p>
<p class="MsoNormal">(ii)<span style="mso-tab-count: 1;"> </span>a
population of not less than two hundred fifty thousand (250,000) inhabitants as
certified by the National Statistics Office:</p>
<p class="MsoNormal">Provided, That, the creation thereof shall not reduce the
land area, population, and income of the original unit or units at the time of
said creation to less than the minimum requirements prescribed herein.</p>
<p class="MsoNormal">(b)<span style="mso-tab-count: 1;"> </span>The
territory need not be contiguous if it comprise two (2) or more islands or is
separated by a chartered city or cities which do not contribute to the income
of the province.</p>
<p class="MsoNormal">(c)<span style="mso-tab-count: 1;"> </span>The
average annual income shall include the income accruing to the general fund,
exclusive of special funds, trust funds, transfers and non-recurring income.</p>
<p class="MsoNormal">Section 7.<span style="mso-tab-count: 1;"> </span>Creation
and Conversion. — As a general rule, the creation of a local government unit or
its conversion from one level to another level shall be based on verifiable
indicators of viability and projected capacity to provide services, to wit:</p>
<p class="MsoNormal">(a)<span style="mso-tab-count: 1;"> </span>Income. —
It must be sufficient, based on acceptable standards, to provide for all
essential government facilities and services and special functions commensurate
with the size of its population, as expected of the local government unit
concerned;</p>
<p class="MsoNormal">(b)<span style="mso-tab-count: 1;"> </span>Population.
— It shall be determined as the total number of inhabitants within the
territorial jurisdiction of the local government unit concerned; and<span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal">(c)<span style="mso-tab-count: 1;"> </span>Land
Area. — It must be contiguous, unless it comprises two or more islands or is
separated by a local government unit independent of the others; properly
identified by metes and bounds with technical descriptions; and sufficient to
provide for such basic services and facilities to meet the requirements of its
populace.</p>
<p class="MsoNormal">Compliance with the foregoing indicators shall be attested
to by the Department of Finance (DOF), the National Statistics Office (NSO),
and the Lands Management Bureau (LMB) of the Department of Environment and
Natural Resources (DENR). (Emphasis ours)</p>
<p class="MsoNormal">That the LGUs' respective territories under the Local
Government Code pertain to the land area is clear from the fact that: (a) the
law generally requires the territory to be "contiguous"; (b) the
minimum area of the contiguous territory is measured in square kilometers; (c)
such minimum area must be certified by the Lands Management Bureau; and (d) the
territory should be identified by metes and bounds, with technical
descriptions.</p>
<p class="MsoNormal">The word "contiguous" signifies two solid masses
being in actual contact. Square kilometers are units typically used to measure
large areas of land. The Land Management Bureau, a government agency that
absorbed the functions of the Bureau of Lands, recommends policies and programs
for the efficient and effective administration, management and disposition of
alienable and disposable lands of the public domain and other lands outside the
responsibilities of other government agencies. 247 Finally, "metes and
bounds" are the boundaries or limits of a tract of land especially as
described by reference and distances between points on the land, 248 while "technical
descriptions" are used to describe these boundaries and are commonly found
in certificates of land title.</p>
<p class="MsoNormal">The following pronouncement in Tan v. COMELEC 249 is
particularly instructive:</p>
<p class="MsoNormal">It is of course claimed by the respondents in their Comment to
the exhibits submitted by the petitioners (Exhs. C and D, Rollo, pp. 19 and
91), that the new province has a territory of 4,019.95 square kilometers, more
or less. This assertion is made to negate the proofs submitted, disclosing that
the land area of the new province cannot be more than 3,500 square kilometers
because its land area would, at most, be only about 2,856 square kilometers,
taking into account government statistics relative to the total area of the
cities and municipalities constituting Negros del Norte. Respondents insist
that when Section 197 of the Local Government Code speaks of the territory of
the province to be created and requires that such territory be at least 3,500
square kilometers, what is contemplated is not only the land area but also the
land and water over which the said province has jurisdiction and control. It is
even the submission of the respondents that in this regard the marginal sea
within the three mile limit should be considered in determining the extent of
the territory of the new province. Such an interpretation is strained,
incorrect, and fallacious.</p>
<p class="MsoNormal">The last sentence of the first paragraph of Section 197 is
most revealing. As so stated therein the "territory need not be contiguous
if it comprises two or more islands." The use of the word territory in
this particular provision of the Local Government Code and in the very last
sentence thereof, clearly reflects that "territory" as therein used,
has reference only to the mass of land area and excludes the waters over which
the political unit exercises control.</p>
<p class="MsoNormal">Said sentence states that the "territory need not be
contiguous." Contiguous means (a) in physical contact; (b) touching along
all or most of one side; (c) near, text, or adjacent. "Contiguous,"
when employed as an adjective, as in the above sentence, is only used when it
describes physical contact, or a touching of sides of two solid masses of
matter. The meaning of particular terms in a statute may be ascertained by
reference to words associated with or related to them in the statute.
Therefore, in the context of the sentence above, what need not be
"contiguous" is the "territory" the physical mass of land
area. There would arise no need for the legislators to use the word contiguous
if they had intended that the term "territory" embrace not only land
area but also territorial waters. It can be safely concluded that the word
territory in the first paragraph of Section 197 is meant to be synonymous with
"land area" only. The words and phrases used in a statute should be
given the meaning intended by the legislature. The sense in which the words are
used furnished the rule of construction.<span style="mso-spacerun: yes;">
</span></p>
<p class="MsoNormal">The distinction between "territory" and "land
area" which respondents make is an artificial or strained construction of
the disputed provision whereby the words of the statute are arrested from their
plain and obvious meaning and made to bear an entirely different meaning to
justify an absurd or unjust result. The plain meaning in the language in a
statute is the safest guide to follow in construing the statute. A construction
based on a forced or artificial meaning of its words and out of harmony of the
statutory scheme is not to be favored. 250 (Emphasis ours and citations
omitted)</p>
<p class="MsoNormal">Though made in reference to the previous Local Government
Code or Batas Pambansa Blg. (BP) 337, the above-cited ruling remains relevant
in determining an LGU's territorial jurisdiction under the 1991 Local
Government Code. Section 197 of BP 337 251 cited the requisites for creating a
province, among which was a "territory," with a specified minimum
area, which did not need to be "contiguous" if it comprised two or
more islands. Tan, therefore, is clearly relevant since it explained the
significance of the word "contiguous," which is similarly used in the
Local Government Code, in the determination of the LGU's territory. More
importantly, it appears that the framers of the Local Government Code drew
inspiration from the Tan ruling such that in lieu of the word
"territory," they specified that such requisite in the creation of
the LGU shall refer to the land area. Thus, in his book on the Local Government
Code, Senator Pimentel who, in former Chief Justice Reynato S. Puno's words,
"shepherded the Code through the labyrinthine process of lawmaking,"
wrote:</p>
<p class="MsoNormal">When a law was passed in the Batasan Pambansa creating the
new province of Negros del Norte, the Supreme Court was asked to rule in Tan v.
Commission on Elections, whether or not the new province complied properly with
the "territory" requirement that it must have no less then [sic]
3,500 square kilometers.</p>
<p class="MsoNormal">The respondents claimed that "the new province has a
territory of 4,019.95 square kilometers" by including in that computation
not only the land area, but also the "water over which said province had
jurisdiction and control," and "the marginal sea within the three
mile limit."</p>
<p class="MsoNormal">The Supreme Court ruled that such an interpretation is
strained, incorrect and fallacious. The Court added that the use of the word
"territory" in the Local Government Code clearly reflected that
"territory" as therein used had reference only to the mass of land
area and excluded the waters over which the political unit exercises control.</p>
<p class="MsoNormal">Inspired by this Supreme Court ruling, the Code now uses the
words "land area" in lieu of "territory" to emphasize that
the area required of an LGU does not include the sea for purposes of compliance
with the requirements of the Code for its creation. 252 (Emphasis ours)</p>
<p class="MsoNormal">Tan, in fact, establishes that an LGU may have control over
the waters but may not necessarily claim them as part of their territory. This
supports the Court's finding that the exercise of authority does not determine
the LGU's territorial jurisdiction.<span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal">It is true that under Sections 442 and 450 of the Local
Government Code, "(t)he requirement on land area shall not apply" if
the municipality or city proposed to be created is composed of one or more
islands. This does not mean, however, that the territory automatically extends
to the waters surrounding the islands or to the open sea. Nowhere in said
provisions is it even remotely suggested that marine waters, or for that matter
the continental shelf, are consequently to be included as part of the
territory. The provisions still speak of "islands" as constituting
the LGU, and under Article 121 of the UNCLOS, an island is defined as "a
naturally formed area of land, surrounded by water, which is above water at
high tide." The inapplicability of the requirement on land area only means
that where the proposed municipality or city is an island, or comprises two or
more islands, it need not be identified by metes and bounds or satisfy the
required minimum area. In that case, the island mass constitutes the area of
the municipality or city and its limits are the island's natural boundaries.</p>
<p class="MsoNormal">Significantly, during the Senate deliberations on the
proposed Local Government Code, then Senate President Jovito Salonga suggested
an amendment that would extend the territorial jurisdiction of municipalities
abutting bodies of water to at least two kms from the shoreline. The ensuing
exchange is worth highlighting:</p>
<p class="MsoNormal">The President.</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>Here is
a proposed amendment: Line 17, to add the following: FOR MUNICIPALITIES
ABUTTING BODIES OF WATER THEIR TERRITORIAL JURISDICTION SHALL EXTEND TO AT
LEAST TWO KILOMETERS FROM THE SHORELINE; PROVIDED, THAT IN CASE THERE ARE TWO
OR MORE MUNICIPALITIES ON EITHER SIDE OF SUCH A BODY OF WATER MAKING THE
TWO-KILOMETER JURISDICTION INADVISABLE THE JURISDICTION OF THE AFFECTED
MUNICIPALITIES SHALL BE DETERMINED BY DRAWING A LINE AT THE MIDDLE OF SUCH BODY
OF WATER. This is only for municipalities abutting bodies of water.</p>
<p class="MsoNormal">Senator Pimentel.</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>Mr.
President, may we invite the attention of our Colleagues that in Book IV, page
273, we define what constitutes municipal waters. And, the measurement is not
two kilometers but three nautical miles starting from the sea-line boundary
marks at low tide. Therefore, there may be some complications here. We are not
against the amendment per se. What we are trying to make of record is the fact
that we have to consider also the provision of Section 464 which defines
"MUNICIPAL WATERS." So, probably, we can increase the extension of
the territorial jurisdiction to three nautical miles instead of two kilometers
as mentioned in this proposed amendment.</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>In fact,
Mr. President, it is also stated at the last sentence of Section 464:</p>
<p class="MsoNormal">Where two municipalities are so situated on the opposite
shores that there is less than six nautical miles of marine water between them,
the third line shall be aligned equally distant from the opposite shores of the
respective municipalities.</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>So,
there is an attempt here to delineate, really, the jurisdiction of the
municipalities which may have a common body of water, let us say, in between
them.<span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal">The President.</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>So, that
is acceptable, provided that it is three nautical miles?</p>
<p class="MsoNormal">Senator Pimentel.</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>Yes.
Probably, Mr. President, what we can do is hold in abeyance this proposed
amendment and take it up when we reach Section 464. I think, it will be more
appropriate in that section, Mr. President.</p>
<p class="MsoNormal">The President.</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>But, if
it is a question of territorial jurisdiction, may not this be the proper place
for it?</p>
<p class="MsoNormal">Senator Pimentel.</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>All
right, Mr. President, what we can do is, we will accept the proposed amendment,
subject to the observations that we have placed on record.</p>
<p class="MsoNormal">The President.</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>All
right. Subject to the three-nautical-mile limit.</p>
<p class="MsoNormal">Senator Saguisag.</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>Mr.
President.</p>
<p class="MsoNormal">The President.</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>Senator
Saguisag is recognized.</p>
<p class="MsoNormal">Senator Saguisag.</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>I just
would like to find out, Mr. President, if we are codifying something that may
represent the present state of the law, or are we creating a new concept here?
Ang ibig po bang sabihin nito ay mayroong magmamay-ari ng Pasig River? Kasi, I
do not believe that we have ever talked about Manila owning a river or Manila
owning Manila Bay. Is that what we are introducing here? And what are its
implications? Taga-Maynila lamang ba ang maaaring gumamit niyan at sila lamang
ang magpapasiya kung ano ang dapat gawin o puwedeng pumasok ang coast guard?
What do we intend to achieve by now saying that. . .</p>
<p class="MsoNormal">The President.</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>Inland
waters lamang naman yata ang pinag-uusapang ito.</p>
<p class="MsoNormal">Senator Saguisag.</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>Opo.
Pero, I am not sure whether there is an owner of the Pasig River. I am not
sure. Maybe, there is. Pero, my own recollection is that we have never talked
of that idea before. I do not know what it means. Does it mean now that the
municipality owning it can exclude the rest of the population from using it
without going through licensing processes? Ano po ang gusto nating gawin dito?</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>Ang alam
ko ho riyan, they cannot be owned in the sense that they are really owned by
every Filipino. Iyon lamang po. Kasi, capitals po ang naririto sa page 273,
baka bago ito. Pero, ano po ba and ibig sabihin nito?</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>In my
study of property before, hindi ko narinig. . . So, maybe, we should really
reserve this as suggested by the distinguished Chairman.</p>
<p class="MsoNormal">The President.</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>All
right. Why do we not defer this until we can determine which is the better
place?<span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal">Senator Pimentel.</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>Yes, Mr.
President.</p>
<p class="MsoNormal">The President.</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>All
right. So let us defer consideration of this plus the major question that
Senator Saguisag is posing, is this something new that we are laying down?</p>
<p class="MsoNormal">Senator Pimentel.</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>No.
Actually the definition of "municipal waters" came about, really,
because of several complaints that our Committee has received from
fisherpeople. They have complained that the municipality is not able to help
them, because the definition of "municipal waters" has not been
clearly spelled out. That is the reason why we attempted to introduce some
definitions of "municipal waters" here, basically, in answer to the
demands of the fisherfolk who believe that their rights are being intruded upon
by other people coming from other places. Probably, the definition of municipal
waters will also delineate the criminal jurisdiction of, let us say, the
municipal police in certain acts, like dynamite fishing in a particular
locality. It can help, Mr. President.</p>
<p class="MsoNormal">The President.</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>Sa
palagay ba ninyo, iyong Marikina River that goes through several municipalities
— we have the Municipality of Pasig, then the Municipality of Marikina, then
the Municipality of San Mateo, and then the Municipality of Montalban — how
will that be apportioned?</p>
<p class="MsoNormal">Senator Pimentel.</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>If a
river passes through several municipalities, the boundary will be an imaginary
line drawn at the middle of this river, basically, Mr. President.</p>
<p class="MsoNormal">The President.</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>Anyway,
we will defer this until we reach Book IV. 253 </p>
<p class="MsoNormal">Based on the records of the Senate and the Bicameral
Conference Committee on Local Government, however, the Salonga amendment was
not considered anew in subsequent deliberations. Neither did the proposed
amendment appear in the text of the Local Government Code as approved. By
Senator Pimentel's account, the Code deferred to the Court's ruling in Tan
which excluded the marginal sea from the LGU's territory. It can, thus, be
concluded that under the Local Government Code, an LGU's territory does not
extend to the municipal waters beyond the LGU's shoreline.<span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal">The parties all agree that the Camago-Malampaya reservoir is
located in the continental shelf. 254 If the marginal sea is not included in
the LGU's territory, with more reason should the continental shelf, located
miles further, be deemed excluded therefrom.</p>
<p class="MsoNormal">To recapitulate, an LGU's territorial jurisdiction refers to
its territorial boundaries or to its territory. The territory of LGUs, in turn,
refers to their land area, unless expanded by law to include the maritime area.
Accordingly, only the utilization of natural resources found within the land
area as delimited by law is subject to the LGU's equitable share under Sections
290 and 291 of the Local Government Code. This conclusion finds support in the
deliberations of the 1986 Constitutional Commission which cited, as examples of
national wealth the proceeds from which the LGU may share, the Tiwi Geothermal
Plant in Albay, the geothermal plant in Macban, Makiling-Banahaw area in
Laguna, the Maria Cristina area in Central Mindanao, the great rivers and
sources of hydroelectric power in Iligan, in Central Mindanao, the geothermal
resources in the area of Palimpiñon, Municipality of Valencia and mountainous
areas, which are all situated inland. 255 In his 2011 treatise on the Local
Government Code, former Senator Pimentel cited as examples of such national
wealth, the geothermal fields of Tongonan, Leyte and Palinpinon, Negros
Oriental which are both found inland. 256 </p>
<p class="MsoNormal">Section 6 of the Local Government Code empowers Congress to
create, divide, merge and abolish LGUs, and to substantially alter their
boundaries, subject to the plebiscite requirement under Section 10 of the law
which reads:</p>
<p class="MsoNormal">Section 10.<span style="mso-tab-count: 1;"> </span>Plebiscite
Requirement. — No creation, division, merger, abolition or substantial
alteration of boundaries of local government units shall take effect unless
approved by a majority of the votes cast in a plebiscite called for the purpose
in the political unit or units directly affected. Said plebiscite shall be
conducted by the Commission on Elections (COMELEC) within one hundred twenty
(120) days from the date of effectivity of the law or ordinance effecting such
action, unless said law or ordinance fixes another date.</p>
<p class="MsoNormal">Accordingly, unless Congress, with the approval of the
political units directly affected, clearly extends an LGU's territorial
boundaries beyond its land area, to include marine waters, the seabed and the
subsoil, it cannot rightfully share in the proceeds of the utilization of
national wealth found therein.</p>
<p class="MsoNormal">No law clearly granting the</p>
<p class="MsoNormal">Province of Palawan territorial</p>
<p class="MsoNormal">jurisdiction over the Camago-</p>
<p class="MsoNormal">Malampaya reservoir</p>
<p class="MsoNormal">The Republic has enumerated the laws defining the territory
of Palawan. 257 The following table has been culled from said enumeration:<span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal"> </p>
<p class="MsoNormal"> </p>
<p class="MsoNormal">Governing Law<span style="mso-tab-count: 1;"> </span>Territorial
Limits<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">Act No. 422 258 <span style="mso-tab-count: 1;"> </span>The
Province of Paragua shall consist of all that portion of the Island of Paragua
north of the tenth parallel of north latitude and the small islands adjacent
thereto, including Dumaran, and of the islands forming the Calamianes Group and
the Cuyos group. (Section 2)<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">Act No. 567 259 <span style="mso-tab-count: 1;"> </span>The
Province of Paragua shall consist of all that portion of the Island of Paragua
north of a line beginning in the middle of the channel at the mouth of the
Ulugan River in the Ulugan Bay, thence following the main channel of the Ulugan
River to the village of Bahile, thence along the main trail leading from Bahile
to the Tapul River, thence following the course of the Tapul River to its mouth
in the Honda Bay; except at the towns of Bahile and Tapul the west boundary
line shall be the arc of a circle with one mile radius, the center of the
circle being the center of the said towns of Bahile and Tapul. There shall be
included in the Province of Paragua the small islands adjacent thereto,
including Dumaran and the island forming the Calamianes group and the Cuyos
group. (Section 1)<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">Act No. 747 260 <span style="mso-tab-count: 1;"> </span>The
Province of Paragua shall consist of the entire Island of Paragua, the Islands
of Dumaran and Balabac, the Calamianes Islands, the Cuyos Islands, the
Cagayanes Islands, and all other islands adjacent thereto and not included
within the limits of any province. (Section 1)<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">Act No. 1363 261 <span style="mso-tab-count: 1;"> </span>Upon
the recommendation of the Philippine Committee on Geographical Names the name
of the Province and Island of Paragua is hereby changed to that of Palawan.
(Section 1)<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">Act No. 1396 262 <span style="mso-tab-count: 1;"> </span>The
Province of Palawan shall include the entire Island of Palawan, the Islands of
Dumaran and Balabac, the Calamianes Islands, the Cuyos Islands, the Cagayanes
Islands, and all other islands adjacent to these islands and not included
within the limits of any other province. (Section 26)<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">Act No. 2657 263 <span style="mso-tab-count: 1;"> </span>Article
II (Situs and Major Subdivisions of Provinces Other than such as are Contained
in Department of Mindanao and Sulu)</p>
<p class="MsoNormal"> </p>
<p class="MsoNormal">Section 43. Situs of Provinces and Major Subdivisions. — The
general location of the provinces other than such as are contained in the
Department of Mindanao and Sulu, together with the subprovinces,
municipalities, and townships respectively contained in them is as follows:</p>
<p class="MsoNormal"> </p>
<p class="MsoNormal">xxx<span style="mso-spacerun: yes;"> </span><span style="mso-spacerun: yes;"> </span>xxx<span style="mso-spacerun: yes;"> </span>xxx</p>
<p class="MsoNormal"> </p>
<p class="MsoNormal">The Province of Palawan consists of the Island of Palawan,
the islands of Dumaran and Balabac, the Calamian Islands, the Cuyo Islands, the
Cagayanes Islands, and all other islands adjacent to any of them, not included
in some other province. It contains the townships of Cagayancillo, Coron, Cuyo,
Puerto Princesa (the capital of the province), and Taytay.<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">Act No. 2711 264 <span style="mso-tab-count: 1;"> </span>Chapter
2 (Political Grand Divisions and Subdivisions)</p>
<p class="MsoNormal"> </p>
<p class="MsoNormal">Article I</p>
<p class="MsoNormal">Grand Divisions</p>
<p class="MsoNormal"> </p>
<p class="MsoNormal">Section 37. Grand divisions of (Philippines Islands)
Philippines. — The (Philippine Islands) Philippines comprises the forty-two
provinces named in the next succeeding paragraph hereof, the seven provinces of
the Department of Mindanao and Sulu, and the territory of the City of Manila.</p>
<p class="MsoNormal"> </p>
<p class="MsoNormal">xxx<span style="mso-spacerun: yes;">
</span>xxx<span style="mso-spacerun: yes;"> </span>xxx</p>
<p class="MsoNormal"> </p>
<p class="MsoNormal">The Province of Palawan consists of the Island of Palawan,
the islands of Dumaran and Balabac, the Calamian Islands, the Cuyo Islands, the
Cagayanes Islands, and all other islands adjacent to any of them, not included
in some other province, and comprises the following municipalities: Agutaya,
Bacuit, Cagayancillo, Coron, Cuyo, Dumaran, Puerto Princesa (the capital of the
province), and Taytay.</p>
<p class="MsoNormal"> </p>
<p class="MsoNormal">The province also contains the following municipal
districts: Aborlan, Balabac and Brooke's Point.<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal"> </p>
<p class="MsoNormal">As defined in its organic law, the Province of Palawan is
comprised merely of islands. The continental shelf, where the Camago-Malampaya
reservoir is located, was clearly not included in its territory.</p>
<p class="MsoNormal">An island, as herein before-mentioned, is defined under
Article 121 of the UNCLOS as "a naturally formed area of land, surrounded
by water, which is above water at high tide." The continental shelf, on
the other hand, is defined in Article 76 of the same Convention as comprising
"the seabed and subsoil of the submarine areas that extend beyond (the
coastal State's) territorial sea throughout the natural prolongation of its
land territory to the outer edge of the continental margin, or to a distance of
200 nm from the baselines from which the breadth of the territorial sea is
measured where the outer edge of the continental margin does not extend up to
that distance." Where the continental shelf of the coastal state extends
beyond 200 nm, Article 76 allows the State to claim an extended continental
shelf up to 350 nm from the baselines. 265 </p>
<p class="MsoNormal">Under Palawan's charter, therefore, the Camago-Malampaya
reservoir is not located within its territorial boundaries.</p>
<p class="MsoNormal">P.D. No. 1596, which constituted Kalayaan as a separate municipality
of the Province of Palawan, cannot be the basis for holding that the
Camago-Malampaya reservoir forms part of Palawan's territory. Section 1 of P.D.
No. 1596 provides:</p>
<p class="MsoNormal">SECTION 1. <span style="mso-tab-count: 1;"> </span>The
area within the following boundaries:</p>
<p class="MsoNormal">KALAYAAN ISLAND GROUP</p>
<p class="MsoNormal">From a point [on the Philippine Treaty Limits] at latitude
7º40' North and longitude 116º00' East of Greenwich, thence due West along the
parallel of 7º40' N to its intersection with the meridian of longitude 112º10'
E, thence due north along the meridian of 112º10' E to its intersection with
the parallel of 9º00' N, thence northeastward to the intersection of the
parallel of 12º00' N with the meridian of longitude 114º30' E, thence, due East
along the parallel of 12º00' N to its intersection with the meridian of 118º00'
E, thence, due South along the meridian of longitude 118º00' E to its
intersection with the parallel of 10º00' N, thence Southwestwards to the point
of beginning at 7º40' N, latitude and 116º00' E longitude; including the
sea-bed, sub-soil, continental margin and air space shall belong and be subject
to the sovereignty of the Philippines. Such area is hereby constituted as a
distinct and separate municipality of the Province of Palawan and shall be
known as "Kalayaan." (Emphasis ours)</p>
<p class="MsoNormal">None of the parties assert that the Camago-Malampaya
reservoir is within the territory of Kalayaan as delimited in Section 1 of P.D.
No. 1596 or as referred to in R.A. No. 9522, 266 commonly known as the
"2009 baselines law." The Province of Palawan, however, invokes P.D.
No. 1596 to argue that similar to Kalayaan, its territory extends to the
seabed, the subsoil and the continental margin. The Court is not persuaded.</p>
<p class="MsoNormal">The delineation of territory in P.D. No. 1596 refers to
Kalayaan alone. The inclusion of the seabed, subsoil and continental margin in
Kalayaan's territory cannot, by simple analogy, be applied to the Province of
Palawan. To hold otherwise is to expand the province's territory, as presently
defined by law, without the requisite legislation and plebiscite.</p>
<p class="MsoNormal">The Court likewise finds no merit in the Province of
Palawan's assertion that R.A. No. 7611 establishes that the Camago-Malampaya
area is within the territorial jurisdiction of Palawan. It is true that R.A.
No. 7611 contains a definition of "Palawan" that states:<span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal">Section 3.<span style="mso-tab-count: 1;"> </span>Definition
of Terms. — As used in this Act, the following terms are defined as follows:</p>
<p class="MsoNormal">(1)<span style="mso-tab-count: 1;"> </span>"Palawan"
refers to the Philippine province composed of islands and islets located 7º47'
and 12º'22' north latitude and 117º'00' and 119º'51' east longitude, generally
bounded by the South China Sea to the northwest and by the Sulu Sea to the
east.</p>
<p class="MsoNormal">xxx<span style="mso-spacerun: yes;">
</span>xxx<span style="mso-spacerun: yes;"> </span>xxx</p>
<p class="MsoNormal">Both the Republic and the Province of Palawan agree that the
above geographic coordinates, when plotted, would show that the
Camago-Malampaya reservoir is within the area described. However, no less than
the map 267 submitted by the Province of Palawan showed that substantial
portions of Palawan's territory were excluded from the area so defined.</p>
<p class="MsoNormal">The Republic cites, without controversion from the province,
that portions of mainland Palawan and several islands, municipalities or
portions thereof, namely, the Municipalities of Balabac, Cagayancillo,
Busuanga, Coron, Agutaya, Magsaysay, Cuyo, Araceli, Linapacan and Dumaran were
excluded. 268 Their exclusion constitutes a substantial alteration of Palawan's
territory which, under Section 10 of the Local Government Code, cannot take
effect without the approval of the majority of the votes cast for the purpose
in a plebiscite in the political units directly affected.</p>
<p class="MsoNormal">There is also no showing that the criteria for the
alteration, as established in Sections 7 and 461 of the Local Government Code,
had been met. The definition, therefore, does not have the effect of redefining
Palawan's territory. In fact, R.A. No. 7611 was enacted not for such purpose
but to adopt a comprehensive framework for the sustainable development of
Palawan compatible with protecting and enhancing the natural resources and
endangered environment of the province. 269 </p>
<p class="MsoNormal">The definitions under Section 1 of R.A. No. 7611 are also
qualified by the phrase "[A]s used in this Act." Thus, the definition
of "Palawan" should be taken, not as a statement of territorial
limits for purposes of Section 7, Article X of the 1987 Constitution, but in
the context of R.A. No. 7611 which is aimed at environmental monitoring,
research and education. 270 </p>
<p class="MsoNormal">It is true, as the Province of Palawan has pointed out, that
R.A. No. 7611 includes the coastal or marine area as one of the three
components of the Environmentally Critical Areas Network designated in said
law, the other two being the terrestrial component and the tribal ancestral
lands. R.A. No. 7611 refers to the coastal or marine area as the whole coastline
up to the open sea, characterized by active fisheries and tourism activities.
By all the parties' accounts, however, the Camago-Malampaya reservoir, is
located not in such coastal or marine area but in the continental shelf. Thus,
even on the supposition that R.A. No. 7611 redefined Palawan's territory, it
clearly did not include the seabed and subsoil comprising the continental
shelf. In fact, what it expressly declares as composing the Province of Palawan
are the "islands and islets."<span style="mso-spacerun: yes;">
</span></p>
<p class="MsoNormal">It is also clear that R.A. No. 7611 does not vest any
additional jurisdiction on the Province of Palawan. The PCSD, formed under said
law, is composed of both provincial officials and representatives from national
government agencies. It was also established under the Office of the President.
The tasks outlined by R.A. No. 7611, which largely involve policy formulation
and coordination, are carried out not by the province, but by the council.</p>
<p class="MsoNormal">Thus, even if the Court were to apply the province's
definition of "territorial jurisdiction" as co-extensive with its
exercise of authority, R.A. No. 7611 cannot be considered as conferring
territorial jurisdiction over the Camago-Malampaya reservoir to Palawan since
the law did not grant additional power to the province.</p>
<p class="MsoNormal">It must be pointed out, too, that the Province of Palawan
never alleged in which of its municipalities or component cities and barangays
the Camago-Malampaya reservoir is located. Under Section 292 of the Local
Government Code, the local government's share in the utilization of national
wealth located in a province shall be allocated in the following ratio:</p>
<p class="MsoNormal">(1)<span style="mso-tab-count: 1;"> </span>Province —
Twenty percent (20%);</p>
<p class="MsoNormal">(2)<span style="mso-tab-count: 1;"> </span>Component
City/Municipality — Forty-five percent (45%); and</p>
<p class="MsoNormal">(3)<span style="mso-tab-count: 1;"> </span>Barangay —
Thirty-five percent (35%).</p>
<p class="MsoNormal">The allocation of the LGU share to the component
city/municipality and the barangay cannot but indicate that the natural
resource is necessarily found therein. This is only logical since a province is
composed of component cities and municipalities, and municipalities are in turn
composed of barangays. Senate deliberations on the proposed Local Government
Code also reflect that at bottom, the natural resource is located in the
municipality or component city:</p>
<p class="MsoNormal">Senator Rasul.</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>Mr.
President, may I continue. Also on the same page, same section, "Share of
Local Government in the Proceeds from the Exploration," I propose that
there should be a specific sharing in this section, because this section does
not speak of the sharing; how much goes to the barangay, municipality, city, or
province?</p>
<p class="MsoNormal">Senator Pimentel.</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>Yes, in
fact, we have Mr. President, and I was about to read it into the record, so
that, there will be a new paragraph after the word "Resources on page 54,
and it will read as follows:</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>THE
SHARES OF THE LOCAL GOVERNMENT UNITS IN THE PROCEEDS FROM THE EXPLANATION
[sic], DEVELOPMENT AND UTILIZATION OF NATURAL RESOURCES LOCATED WITHIN THEIR
TERRITORIAL JURISDICTIONS SHALL BE AS FOLLOWS:</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>1. IN
THE CASE OF MUNICIPALITIES AND COMPONENT CITIES: (A) THE BARANGAY UNIT WHERE
THE NATURAL RESOURCES ARE SITUATED AN EXTRACTED, FORTY PERCENT.<span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal">The President.</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>Is there
any objection? [Silence] Hearing none, the amendment is approved.</p>
<p class="MsoNormal">Senator Pimentel.</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>Then
"(B)." "THE MUNICIPALITY OR COMPONENT CITY WHERE THE BARANGAY
WITH THE NATURAL RESOURCES ARE SITUATED," THIRTY PERCENT.</p>
<p class="MsoNormal">The President.</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>Is there
any objection? [Silence] Hearing none, the amendment is approved.</p>
<p class="MsoNormal">Senator Pimentel.</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>Then we
have a paragraph 2 on the same aspect of sharing; "IN THE CASE OF HIGHLY
URBANIZED CITIES, THE FOLLOWING RULES SHALL APPLY;</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>A)
BARANGAY WHERE THE NATURAL RESOURCES ARE SITUATED AND EXTRACTED, SIXTY (60%)
PERCENT;</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>B) FOR
THE HIGHLY URBANIZED CITY WHERE THE BARANGAY WITH THE NATURAL RESOURCES ARE
LOCATED, FORTY (40%) PERCENT."</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>So it is
a 60:40 sharing.</p>
<p class="MsoNormal">The President.</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>Before
we use the word SITUATED, probably, we should make it uniform — SITUATED AND
EXTRACTED.</p>
<p class="MsoNormal">Senator Pimentel.</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>AND
EXTRACTED. Yes, Mr. President.</p>
<p class="MsoNormal">The President.</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>Is there
any objection? [Silence] Hearing one [sic], the amendment is approved. Any
more? 271 (Emphasis ours.)</p>
<p class="MsoNormal">During the oral argument, Dean Pangalangan, as amicus
curiae, stressed that the Camago-Malampaya reservoir is not part of any
barangay:</p>
<p class="MsoNormal">JUSTICE CARPIO:</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>Following
your argument counsel Malampaya would form part of one barangay in Palawan but
yet it is outside of the Philippine territorial waters, how do you reconcile
that?</p>
<p class="MsoNormal">DEAN PANGALANGAN:</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>Oh, no,
Your Honor, Malampaya will lie within our continental shelf and that is in fact
the way by which we claim title over a resource lying out there in the seas on
the seabed. It will not be considered in itself a barangay for instance.<span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal">JUSTICE CARPIO:</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>So, it
is not part of any barangay?</p>
<p class="MsoNormal">DEAN PANGALANGAN:</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>Yes,
Your Honor, it is not. 272 </p>
<p class="MsoNormal">The Province of Palawan's failure to specify the component
city or municipality, or the barangay for that matter, in which the
Camago-Malampaya reservoir is situated militates against its claim that the
area forms part of its area or territory.</p>
<p class="MsoNormal">The Republic endeavored to enumerate the different LGUs composing
the Province of Palawan and their respective territorial limits under
applicable organic laws. 273 The following matrix has been culled from its
enumeration:</p>
<p class="MsoNormal">LGU<span style="mso-tab-count: 1;"> </span>Governing Law<span style="mso-tab-count: 1;"> </span>Territorial Description/Component Barangays<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">Cagayancillo</p>
<p class="MsoNormal">Coron</p>
<p class="MsoNormal">Cuyo</p>
<p class="MsoNormal">Puerto Princesa 274 </p>
<p class="MsoNormal">Taytay<span style="mso-tab-count: 1;"> </span>Act No. 2657<span style="mso-tab-count: 1;"> </span>Section 43. Situs of Provinces and Major
Subdivisions. — The general location of the provinces other than such as are
contained in the Department of Mindanao and Sulu, together with the
subprovinces, municipalities, and townships respectively contained in them is
as follows:</p>
<p class="MsoNormal"> </p>
<p class="MsoNormal">xxx<span style="mso-spacerun: yes;">
</span>xxx<span style="mso-spacerun: yes;"> </span>xxx</p>
<p class="MsoNormal"> </p>
<p class="MsoNormal">The Province of Palawan consists of the Island of Palawan,
the islands of Dumaran and Balabac, the Calamian Islands, the Cuyo Islands, the
Cagayanes Islands, and all other islands adjacent to any of them, not included
in some other province. It contains the townships of Cagayancillo, Coron, Cuyo,
Puerto Princesa (the capital of the province), and Taytay.<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>Act No.
2711<span style="mso-tab-count: 1;"> </span>Section 37. Grand divisions of
(Philippines Islands) Philippines. — The (Philippine Islands) Philippines
comprises the forty-two provinces named in the next succeeding paragraph
hereof, the seven provinces of the Department of Mindanao and Sulu, and the
territory of the City of Manila.</p>
<p class="MsoNormal"> </p>
<p class="MsoNormal">xxx<span style="mso-spacerun: yes;">
</span>xxx<span style="mso-spacerun: yes;"> </span>xxx</p>
<p class="MsoNormal"> </p>
<p class="MsoNormal">The Province of Palawan consists of the Island of Palawan,
the islands of Dumaran and Balabac, the Calamian Islands, the Cuyo Islands, the
Cagayanes Islands, and all other islands adjacent to any of them, not included
in some other province, and comprises the following municipalities: Agutaya,
Bacuit, Cagayancillo, Coron, Cuyo, Dumaran, Puerto Princesa (the capital of the
province), and Taytay.</p>
<p class="MsoNormal"> </p>
<p class="MsoNormal">xxx<span style="mso-spacerun: yes;">
</span>xxx<span style="mso-spacerun: yes;"> </span>xxx<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">Roxas<span style="mso-tab-count: 1;"> </span>R.A. No. 615
275 <span style="mso-tab-count: 1;"> </span>Section 1. The barrios of
Tinitian, Caramay, Rizal, Del Pilar, Malcampo Tumarbong, Taraduñgan, Ilian, and
Capayas in the municipality of Puerto Princesa, Province of Palawan, are hereby
separated from said municipality and constituted into a new municipality to be
known as the Municipality of Roxas. The seat of the government of the new
municipality shall be at the sitio of Barbacan in the barrio of Del Pilar,
Puerto Princesa.<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">Agutaya</p>
<p class="MsoNormal">Bacuit (now El Nido) 276 </p>
<p class="MsoNormal">Dumaran</p>
<p class="MsoNormal">Aborlan</p>
<p class="MsoNormal">Balabac</p>
<p class="MsoNormal">Brooke's Point<span style="mso-tab-count: 1;"> </span>Act
No. 2711<span style="mso-tab-count: 1;"> </span>Section 37. Grand divisions
of (Philippines Islands) Philippines. — x x x</p>
<p class="MsoNormal"> </p>
<p class="MsoNormal">The Province of Palawan consists of the Island of Palawan,
the islands of Dumaran and Balabac, the Calamian Islands, the Cuyo Islands, the
Cagayanes Islands, and all other islands adjacent to any of them, not included
in some other province, and comprises the following municipalities: Agutaya,
Bacuit, Cagayancillo, Coron, Cuyo, Dumaran, Puerto Princesa (the capital of the
province), and Taytay.</p>
<p class="MsoNormal"> </p>
<p class="MsoNormal">The province also contains the following municipal
districts: Aborlan, Balabac and Brooke's Point.<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">R.A. No. 1111 277 </p>
<p class="MsoNormal">R.A. No. 3418 278 <span style="mso-tab-count: 1;"> </span>RA
1111 changed the name of the Municipality of Dumaran to Araceli. However, under
RA 3418, a distinct and independent municipality, to be known as the
Municipality of Dumaran, was constituted from certain barrios of the
municipalities of Araceli, Roxas and Taytay. Section 1 of RA 3418 provides
"The barrios of Dumaran, San Juan, Bacao, Calasag and Bohol in the
Municipality of Araceli; the barrios of Ilian, Capayas, and Leguit in the
Municipality of Roxas; and the barrios of Danleg and Pangolasian in the
Municipality of Taytay, all in the province of Palawan, are separated from the
said municipalities, and are constituted into a distinct and independent
municipality, to be known as the Municipality of Dumaran, with the seat of
government at the site of the barrio of Dumaran."<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">Busuanga<span style="mso-tab-count: 1;"> </span>R.A.
No. 560 279 <span style="mso-tab-count: 1;"> </span>Section 1. The
barrios of Concepcion, Salvacion, Busuanga, New Busuanga, Buluang, Quezon,
Calawit, and Cheey in the Municipality of Coron are separated from the said
municipality and constituted into a new and regular municipality to be known as
the Municipality of Busuanga, with the present site of the barrio of New
Busuanga as the seat of the government.<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">R.A. No. 5943 280 <span style="mso-tab-count: 1;"> </span>RA
5943 amended Section 1 of RA 560 to read as follows: "The barrios of
Sagrada, Maglalambay, Bogtong, San Isidro, Pallitan, San Rafael, Concepcion,
Salvacion, Busuanga, Buluang, Quezon, Calawit, and Cheey, in the Municipality
of Coron, Province of Palawan, are separated from said municipality and
constituted into a new Municipality of Busuanga with the present site of the
barrio of Salvacion as the seat of the government."<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">Quezon<span style="mso-tab-count: 1;"> </span>R.A. No. 617 281
<span style="mso-tab-count: 1;"> </span>Section 1. The barrios of
Berong and Alfonso XII in the Municipality of Aborlan and the barrios of Iraan,
Candawaga and Canipaan in the Municipality of Brook's Point are separated from
the said municipalities and constituted into a new and regular municipality to
be known as the Municipality of Quezon, with the present site of the barrio of
Alfonso XIII as the seat of the government.<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">Linapacan<span style="mso-tab-count: 1;"> </span>R.A.
No. 1020 282 <span style="mso-tab-count: 1;"> </span>Section 1. The
islands of Linapacan, Cabunlaoan, Niangalao, Decabayotot, Calibanbangan, Pical,
and Barangonan are hereby separated from the Municipality of Coron, Province of
Palawan, and constituted into a municipality to be known as the Municipality of
Linapacan with the seat of government in the barrio of San Miguel in the island
of Linapacan.<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">Araceli<span style="mso-tab-count: 1;"> </span>Act No. 2711</p>
<p class="MsoNormal">R.A. No. 1111</p>
<p class="MsoNormal">R.A. No. 3418<span style="mso-tab-count: 1;"> </span>Comprises
the original territorial jurisdiction of the Municipality of Dumaran under Act
No. 2711, excluding the barrios of Dumaran, San Juan, Bacao, Calasag and Bohol
which were included in the newly created Municipality of Dumaran under RA 3418.<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">Batarasa<span style="mso-tab-count: 1;"> </span>R.A.
No. 3425 283 <span style="mso-tab-count: 1;"> </span>Section 1. The
barrios of Inogbong, Marangas, Bonobono, Malihod, Bulalakaw, Tarusan, Iwahig,
Iganigang, Sarong, Akayan, Rio Tuba, Sumbiling, Sapa, Malitub, Puring,
Buliluyan and Tahod in the Municipality of Brooke's Point, Province of Palawan,
are separated from said municipality and constituted into a distinct and
independent municipality, to be known as the Municipality of Batarasa, same
province. The seat of government of the new municipality shall be in the
present site of the barrio of Marangas.<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">Magsaysay<span style="mso-tab-count: 1;"> </span>R.A.
No. 3426 284 <span style="mso-tab-count: 1;"> </span>Section 1. The
barrios of Los Angeles, Rizal, Lucbuan, Igabas, Imilod, Balaguen, Danawan,
Cocoro, Patonga, Tagawayan Island, Siparay Island and Canipo in the
Municipality of Cuyo, Province of Palawan, are separated from said municipality
and constituted into a distinct and independent municipality, to be known as
the Municipality of Magsaysay. The seat of government of the new municipality
shall be the present site of the barrio of Danawan.<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">San Vicente<span style="mso-tab-count: 1;"> </span>R.A.
No. 5821 285 <span style="mso-tab-count: 1;"> </span>Section 1. The
barrios of Binga, New Canipo, Alimanguan and New Agutaya, now in the
Municipality of Taytay and all barrios from Vicente to Caruray in the
Municipality of Puerto Princesa, Province of Palawan, are separated from said
municipalities, and constituted into a distinct and independent municipality,
to be known as the Municipality of San Vicente, same province. The seat of
government of the municipality shall be in the present site of the barrio of
San Vicente.<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">Narra<span style="mso-tab-count: 1;"> </span>R.A. No. 5642
286 <span style="mso-tab-count: 1;"> </span>Section 1. The barrios of
Malatgao, Tinagong-dagat, Taritien, Antipoloan, Teresa, Panacan, Narra,
Caguisan, Batang-batang, Bato-bato, Barirao, Malinao, Sandoval, Dumagueña, El
Vita, Calategas, Arumayuan, Tacras, Borirao and that part of barrio Abo-abo now
belonging to the Municipality of Aborlan, Province of Palawan, are separated
from said municipality and constituted into a distinct and independent
municipality, to be known as the Municipality of Narra. The seat of the new
municipality shall be in the present site of Barrio Narra.<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">Kalayaan<span style="mso-tab-count: 1;"> </span>P.D.
No. 1596<span style="mso-tab-count: 1;"> </span>Section 1. The area within
the following boundaries:</p>
<p class="MsoNormal"> </p>
<p class="MsoNormal">KALAYAAN ISLAND GROUP</p>
<p class="MsoNormal"> </p>
<p class="MsoNormal">From a point [on the Philippine Treaty Limits] at latitude
7º40' North and longitude 116º00' East of Greenwich, thence due West along the
parallel of 7º40' N to its intersection with the meridian of longitude 112º10'
E, thence due north along the meridian of 112º10' E to its intersection with
the parallel of 9º00' N, thence northeastward to the intersection of the
parallel of 12º00' N with the meridian of longitude 114º30' E, thence, due East
along the parallel of 12º00' N to its intersection with the meridian of 118º00'
E, thence, due South along the meridian of longitude 118º00' E to its
intersection with the parallel of 10º00' N, thence Southwestwards to the point
of beginning at 7º40' N, latitude and 116º00' E longitude; including the
sea-bed, sub-soil, continental margin and air space shall belong to and be
subject to the sovereignty of the Philippines. Such area is hereby constituted
as a distinct and separate municipality of the Province of Palawan and shall be
known as "Kalayaan."<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">Marcos (now Rizal) 287 <span style="mso-tab-count: 1;"> </span>BP
Blg. 386 288 <span style="mso-tab-count: 1;"> </span>Section 1. The barangays of
Bunog, Iraan, Punta Baja, Capung Ulay, Ramsang, Candawag, Culasian,
Panalingaan, Tabuin, Latud, and Canipaan are hereby separated from the
Municipality of Quezon, Province of Palawan, and constituted into a distinct
and independent municipality to be known as the Municipality of Marcos. The
seat of government of the new municipality will be in Barangay Punta Baja.</p>
<p class="MsoNormal"> </p>
<p class="MsoNormal">Section 2. The Municipality of Marcos shall be bounded as
follows:</p>
<p class="MsoNormal"> </p>
<p class="MsoNormal">"A parcel of land known as the proposed Municipality of
Marcos, in the Province of Palawan, Luzon Island, bounded in the north along
lines 11 and 1 in the Plan by the municipal boundary of Quezon, on the south
along lines 2 and 3 by Sulu Sea, on the east along lines 1 and 2 by the
municipal boundary of Brooke's Point, on the west along lines 3 to 11 by the
shoreline of the South China Sea. Beginning at the point marked 1 in the plan
at latitude 8º59'10" T north, longitude 117º50'32"; thence S 62-00W
80,750 meters to point 2; thence N 85-00W 5,800 meters to point 3; thence N
31-29E 20,670.35 meters to point 4; thence N 46-13E 8,298.46 meters to point 5;
thence N 52-21E 6,137.67 meters to point 6; thence N 39-14E 9,594.37 meters to
point 7; thence N 37-45E 11,017.16 meters to point 8; thence N 53-08E 10,364.93
meters to point 9; thence N 41-12E 14,556.17 meters to point 10; thence N 76-02E
6,509.60 meters to point 11; thence S 48-10E 14,442.69 meters to point 12,
containing an area of nine hundred seventy-seven million, two hundred sixty-one
thousand two hundred square meters (977,261,200 square meters) or ninety-seven
thousand seven hundred twenty-six and twelve hundredth hectares (97,726.12
hectares)."<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">Culion<span style="mso-tab-count: 1;"> </span>R.A. No. 7193
289 as amended by R.A. No. 9032 290 <span style="mso-tab-count: 1;"> </span>Section
1. The Islands of Culion Leper Colony, Marily, Sand, Tampel, Lamud, Galoc,
Lanka, Tambon, Dunaun, Alava, Chindonan and a small island without a name
situated directly south of Chindonan Island in latitude 11º55' N, longitude
12º02' E, comprising the national reservation for lepers in the Province of
Palawan as described under Executive Order No. 35, Series of 1912, are hereby
constituted into a distinct and independent municipality to be known as the
Municipality of Culion. The seat of government of the new municipality shall be
in Barangay Balala.</p>
<p class="MsoNormal"> </p>
<p class="MsoNormal">Section 1-A. The barangays of Balala, Baldat, Binudac,
Culango, Galoc, Jardin, Libis, Luac, Malaking Patag, Osmeña and Tiza which have
been existing and functioning as regular barangays before the creation of the
municipality in 1992 are hereby declared as legally existent upon the creation
of the Municipality of Culion. These barangays shall comprise the Municipality
of Culion, subject to the provisions of the succeeding paragraphs. The
territorial boundaries of these barangays are specified in Annex "A"
of this Act.</p>
<p class="MsoNormal"> </p>
<p class="MsoNormal">Subject to the provisions of Section 10, Republic Act No.
7160, Burabod and Halsey in the Municipality of Busuanga, Province of Palawan,
are hereby separated from said municipality and are transferred as part of the
political jurisdiction of the Municipality of Culion.</p>
<p class="MsoNormal"> </p>
<p class="MsoNormal">A barangay for the indigenous cultural communities to be
known as Barangay Carabao is hereby created to be composed of the following
sitios, namely: Bacutao, Baracuan, Binabaan, Cabungalen, Corong, De Carabao
(Lumber Camp), Igay, Layang-layang, Marily Pula and Pinanganduyan.</p>
<p class="MsoNormal"> </p>
<p class="MsoNormal">Section 2. The Municipality of Culion shall be bounded and
described as follows:</p>
<p class="MsoNormal"> </p>
<p class="MsoNormal">The municipality shall be bounded on the north by the
Municipality of Busuanga-Coron Island with Concepcion and Salvacion in the
Calamian Island Group; on the south by the Municipality of Bacuit-Taytay and
Linapacan area; on the east by the South China Sea; on the west by the Cuyo
West Pass.</p>
<p class="MsoNormal"> </p>
<p class="MsoNormal">The land contained in all the above named islands in Section
One is shown on C.G. Map No. 4717 published in Washington D.C., September,
1908, and lies within the following limits, i.e., between the parallels of
11º36' N and 12º03' N, and the meridians of 119º47' E and 120º15' E.<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">Sofronio Española<span style="mso-tab-count: 1;"> </span>R.A.
No. 7679 291 <span style="mso-tab-count: 1;"> </span>Section 1.
Barangays Pulot Center, Pulot Shore (Pulot I), Pulot Interior (Pulot II,)
Iraray, Punang, Labog, Panitian, Isumbo, and Abo-Abo in the Municipality of
Brooke's Point, Province of Palawan, are hereby separated from the Municipality
and constituted into a distinct and independent municipality of the province,
to be known as the Municipality of Sofronio Española. The seat of government of
the new municipality shall be in Barangay Pulot Center.</p>
<p class="MsoNormal"> </p>
<p class="MsoNormal">Section 2. The boundary of the Municipality of Sofronio
Española is described as follows:</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">Corner<span style="mso-tab-count: 1;"> </span>Latitude<span style="mso-tab-count: 1;"> </span>Longitude<span style="mso-tab-count: 1;"> </span>Location<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">1<span style="mso-tab-count: 1;"> </span>8º53'50.23"<span style="mso-tab-count: 1;"> </span>118º00'20.28"<span style="mso-tab-count: 1;"> </span>on the southern side of Caramay Bay<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">2<span style="mso-tab-count: 1;"> </span>8º59'58.01"<span style="mso-tab-count: 1;"> </span>117º51'24.42"<span style="mso-tab-count: 1;"> </span>on the slopes of Mantalingahan Range<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">3<span style="mso-tab-count: 1;"> </span>9º01'01.84"<span style="mso-tab-count: 1;"> </span>117º54'03.69"<span style="mso-tab-count: 1;"> </span>on the slopes of Mantalingahan Range<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">4<span style="mso-tab-count: 1;"> </span>9º02'52.18"<span style="mso-tab-count: 1;"> </span>117º54'29.33"<span style="mso-tab-count: 1;"> </span>on the slopes of Mantalingahan Range<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">5<span style="mso-tab-count: 1;"> </span>9º04'18.78"<span style="mso-tab-count: 1;"> </span>117º55'15.71"<span style="mso-tab-count: 1;"> </span>on the slopes of Mount Corumi<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">6<span style="mso-tab-count: 1;"> </span>9º05'34.18"<span style="mso-tab-count: 1;"> </span>117º55'18.00"<span style="mso-tab-count: 1;"> </span>on the slopes of Pulot Range<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">7<span style="mso-tab-count: 1;"> </span>9º07'49.27"<span style="mso-tab-count: 1;"> </span>117º56'48.09"<span style="mso-tab-count: 1;"> </span>on the slopes of Pulot Range<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">8<span style="mso-tab-count: 1;"> </span>9º09'50.88"<span style="mso-tab-count: 1;"> </span>117º59'50.82"<span style="mso-tab-count: 1;"> </span>on the slopes of Malanut Range<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">9<span style="mso-tab-count: 1;"> </span>9º11'26.26"<span style="mso-tab-count: 1;"> </span>118º03'49.28"<span style="mso-tab-count: 1;"> </span>on the slopes of Malanut Range<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">10<span style="mso-tab-count: 1;"> </span>9º11'26.26"<span style="mso-tab-count: 1;"> </span>118º03'49.28"<span style="mso-tab-count: 1;"> </span>on the slopes of Malanut Range<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">11<span style="mso-tab-count: 1;"> </span>9º08'58.93"<span style="mso-tab-count: 1;"> </span>118º07'35.58"<span style="mso-tab-count: 1;"> </span>southern side, mouth of Abo-Abo River<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">Line<span style="mso-tab-count: 1;"> </span>Bearing<span style="mso-tab-count: 1;"> </span>Distance<span style="mso-tab-count: 2;"> </span></p>
<p class="MsoNormal">1-2<span style="mso-tab-count: 1;"> </span>N. 55º23' W<span style="mso-tab-count: 1;"> </span>19,886.37 m.<span style="mso-tab-count: 2;"> </span></p>
<p class="MsoNormal">2-3<span style="mso-tab-count: 1;"> </span>N. 68º03' E<span style="mso-tab-count: 1;"> </span>5,244.48 m.<span style="mso-tab-count: 2;"> </span></p>
<p class="MsoNormal">3-4<span style="mso-tab-count: 1;"> </span>N. 13º00' E<span style="mso-tab-count: 1;"> </span>3,478.91 m.<span style="mso-tab-count: 2;"> </span></p>
<p class="MsoNormal">4-5<span style="mso-tab-count: 1;"> </span>N. 28º02' E<span style="mso-tab-count: 1;"> </span>3,013.93 m.<span style="mso-tab-count: 2;"> </span></p>
<p class="MsoNormal">5-6<span style="mso-tab-count: 1;"> </span>N. 01º44' E<span style="mso-tab-count: 1;"> </span>2,317.35 m.<span style="mso-tab-count: 2;"> </span></p>
<p class="MsoNormal">6-7<span style="mso-tab-count: 1;"> </span>N. 33º33' E<span style="mso-tab-count: 1;"> </span>4,979.17 m.<span style="mso-tab-count: 2;"> </span></p>
<p class="MsoNormal">7-8<span style="mso-tab-count: 1;"> </span>N. 71º16' E<span style="mso-tab-count: 1;"> </span>5,892.79 m.<span style="mso-tab-count: 2;"> </span></p>
<p class="MsoNormal">8-9<span style="mso-tab-count: 1;"> </span>N. 16º10' E<span style="mso-tab-count: 1;"> </span>4,168.24 m.<span style="mso-tab-count: 2;"> </span></p>
<p class="MsoNormal">9-10<span style="mso-tab-count: 1;"> </span>N. 82º50' E<span style="mso-tab-count: 1;"> </span>6,170.26 m.<span style="mso-tab-count: 2;"> </span></p>
<p class="MsoNormal">10-11<span style="mso-tab-count: 1;"> </span>S. 56º50' E<span style="mso-tab-count: 1;"> </span>8,261.31 m.<span style="mso-tab-count: 2;"> </span></p>
<p class="MsoNormal">11-1<span style="mso-tab-count: 1;"> </span>SW,
meandering mainland coastline.<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">The new municipality shall include the islands of Bintaugan,
Inamukan, Arrecife, Bessie, Gardiner, and Tagalinog.<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal"> </p>
<p class="MsoNormal">Based on the foregoing territorial descriptions, the
municipalities of Palawan do not include the continental shelf where the
Camago-Malampaya reservoir is concededly located. In fact, with the exception
of Kalayaan, which includes the seabed, the subsoil and the continental margin
as part of its demarcated area, the municipalities are either located within an
island or are comprised of islands. That only Kalayaan (under P.D. No. 1596),
among the municipalities of Palawan, had land submerged in water as part of its
area or territory, was confirmed by the amicus curiae, Atty. Bensurto, during
the oral argument as gleaned from the following exchange:<span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal">JUSTICE DE CASTRO:</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>It is
not a question of belonging to Palawan, it is a question of Palawan having a
share because it is within the area of Palawan, that is the question before the
Court now, it is not, the right to govern is not in question, that is not the
issue because we are very clear. The Philippines is not a Federal Government x
x x So, we are just defining the area of the Province of Palawan, if it is not
included in the polygon, what about in other islands of Palawan, is there any
continental shelf in the other areas, if there is none here in the polygon,
within the polygon and which will extend up to the Camago-Malampaya, is there
any other continental shelf in the other islands comprising Palawan where there
is such a continental shelf that will extend up to the Camago-Malampaya.</p>
<p class="MsoNormal">ATTY. HENRY BENSURTO: x x x</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>[W]ith
all due respect, Your Honor, I do not think Federalism or Unitary is relevant
in the issue of maritime concepts or maritime jurisdiction the end would still
be the same, Your Honor. Thank you.</p>
<p class="MsoNormal">JUSTICE DE CASTRO:</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>You see
that is my point, we are just here trying to analyze domestic law and if, only
P.D. 1596 refers to areas submerged in water, that is (interrupted)</p>
<p class="MsoNormal">ATTY. HENRY BENSURTO:</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>Everything,
Your Honor.</p>
<p class="MsoNormal">JUSTICE DE CASTRO:</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>You find
that only in 1596.</p>
<p class="MsoNormal">ATTY. HENRY BENSURTO:</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>Yes,
Your Honor. 292 (Emphasis ours)</p>
<p class="MsoNormal">The parties, however, agreed that the Camago-Malampaya
reservoir lies outside the geographic coordinates mentioned in P.D. No. 1596
which constituted Kalayaan as a distinct municipality of Palawan. Atty.
Bensurto also confirmed during the oral argument that "the area of
Malampaya is not within the polygon area described under P.D. [No.] 1596."
293 The succeeding exchange between Atty. Bensurto and Associate Justice
Teresita Leonardo-de Castro (Justice De Castro) illumines:</p>
<p class="MsoNormal">JUSTICE DE CASTRO:</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>Now, the
question is — if in the other islands even assuming that there is a continental
shelf which extends up to Camago there is now that legal question of whether
that belongs to Palawan, whether Palawan, that is within the area of Palawan
even if it is protruding from an island in Palawan because there is no such law
like P.D. 1596 pertaining to the other islands?<span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal">ATTY. HENRY BENSURTO:</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>Yes,
Your Honor.</p>
<p class="MsoNormal">JUSTICE DE CASTRO:</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>So, if
there is none and Camago is in the continental shelf protruding from any other
island in Palawan and then we cannot apply 1596?</p>
<p class="MsoNormal">ATTY. HENRY BENSURTO:</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>No, Your
Honor.</p>
<p class="MsoNormal">JUSTICE DE CASTRO:</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>All
right, so, there maybe some doubt as to whether or not Palawan should have a
bigger share in that Camago-Malampaya?</p>
<p class="MsoNormal">ATTY. HENRY BENSURTO:</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>Yes,
Your Honor.</p>
<p class="MsoNormal">JUSTICE DE CASTRO:</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>Okay,
that is clear now. Thank you. 294 (Emphasis ours)</p>
<p class="MsoNormal">Estoppel does not lie against the</p>
<p class="MsoNormal">Republic</p>
<p class="MsoNormal">Fundamental is the rule that the State cannot be estopped by
the omission, mistake or error of its officials or agents. 295 Thus, neither
the DoE's June 10, 1998 letter to the Province of Palawan nor President Ramos'
A.O. No. 381, which acknowledged Palawan's share in the Camago-Malampaya
project, will place the Republic in estoppel as they had been based on a
mistaken assumption of the LGU's entitlement to said allocation.</p>
<p class="MsoNormal">Erroneous application and enforcement of the law by public
officers do not preclude subsequent corrective application of the statute. 296
As the Court explained in Adasa v. Abalos: 297</p>
<p class="MsoNormal">True indeed is the principle that a contemporaneous
interpretation or construction by the officers charged with the enforcement of
the rules and regulations it promulgated is entitled to great weight by the
court in the latter's construction of such rules and regulations. That does
not, however, make such a construction necessarily controlling or binding. For
equally settled is the rule that courts may disregard contemporaneous
construction in instances where the law or rule construed possesses no
ambiguity, where the construction is clearly erroneous, where strong reason to
the contrary exists, and where the court has previously given the statute a
different interpretation.</p>
<p class="MsoNormal">If through misapprehension of law or a rule an executive or
administrative officer called upon to implement it has erroneously applied or
executed it, the error may be corrected when the true construction is
ascertained. If a contemporaneous construction is found to be erroneous, the
same must be declared null and void. Such principle should be as it is applied
in the case at bar. 298 (Emphasis ours)</p>
<p class="MsoNormal">Section 1, Article X of the 1987</p>
<p class="MsoNormal">Constitution did not apportion the</p>
<p class="MsoNormal">entire Philippine territory among</p>
<p class="MsoNormal">the LGUs</p>
<p class="MsoNormal">Dean Pangalangan shares the Province of Palawan's claim that
based on Section 1, Article X of the 1987 Constitution, the entire Philippine
territory is necessarily divided into political and territorial subdivisions,
such that at any one time, a body of water or a piece of land should belong to
some province or city. 299 The Court finds this position untenable.</p>
<p class="MsoNormal">Section 1, Article X of the 1987 Constitution states:</p>
<p class="MsoNormal">Section 1.<span style="mso-tab-count: 1;"> </span>The
territorial and political subdivisions of the Republic of the Philippines are
the provinces, cities, municipalities, and barangays. There shall be autonomous
regions in Muslim Mindanao and the Cordilleras as hereinafter provided.
(Emphasis ours)</p>
<p class="MsoNormal">By indicating that the LGUs comprise the territorial
subdivisions of the State, the Constitution did not ipso facto make every
portion of the national territory a part of an LGU's territory.<span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal">The above-quoted section is found under the General
Provisions of Article X on Local Government. Explaining this provision, the
eminent author and member of the 1986 Constitutional Commission, Fr. Joaquin G.
Bernas, S.J. wrote:</p>
<p class="MsoNormal">The existence of "provinces" and
"municipalities" was already acknowledged in the 1935 Constitution.
Section 1, however, when first enacted in 1973, went a step further than mere
acknowledgment of their existence and recognized them, together with cities and
barrios, as "(t)he territorial and political subdivisions of the
Philippines." Thus, the municipalities, and barrios (now barangays) have
been fixed as the standard territorial and political subdivisions of the
Philippines. To these the 1987 Constitution has added the "autonomous
regions." But the Constitution allows only two regions: one for the
Cordilleras and one for Muslim Mindanao. The creation of other autonomous
regions whether by dividing the Cordilleras or Muslim Mindanao into two or by
creating others outside these two regions, can be accomplished only by
constitutional amendment.</p>
<p class="MsoNormal">xxx<span style="mso-spacerun: yes;">
</span>xxx<span style="mso-spacerun: yes;"> </span>xxx</p>
<p class="MsoNormal">Neither Section 1, however, nor any part of the Constitution
prescribed the actual form and structure which individual local government
units must take. These are left by Sections 3, 18 and 20 to legislation. As
constitutional precepts, therefore, they are very general. x x x</p>
<p class="MsoNormal">xxx<span style="mso-spacerun: yes;"> </span><span style="mso-spacerun: yes;"> </span>xxx<span style="mso-spacerun: yes;"> </span>xxx</p>
<p class="MsoNormal">The designation by the 1973 Constitution of provinces,
cities, municipalities and barangays as the political and territorial
subdivisions of the Philippines effected a measure of institutional
instability. To this extent, it was a move in the direction of real local
autonomy. The 1987 Constitution moved farther forward by authorizing the
creation of autonomous regions. These are the passive aspects of local
autonomy. The dynamic and more important aspect of local autonomy must be
measured in terms of the scope of the powers given to the local units. 300
(Emphasis ours)</p>
<p class="MsoNormal">There is, thus, merit in the Republic's assertion that
Section 1, Article X of the 1987 Constitution was intended merely to
institutionalize the LGUs.</p>
<p class="MsoNormal">The Court is further inclined to agree with the Republic's
argument that assuming Section 1 of Article X was meant to divide the entire
Philippine territory among the LGUs, it cannot be deemed as self-executing and
legislation will still be necessary to implement it. LGUs are constituted by
law and it is through legislation that their respective territorial boundaries
are delineated. Furthermore, in the creation, division, merger and abolition of
LGUs and in the substantial alteration of their boundaries, Section 10 of
Article X requires satisfying the criteria set by the Local Government Code. It
further requires the approval by the majority of the votes cast in a plebiscite
in the political units directly affected. Needless to say, apportionment of the
national territory by the LGUs, based solely on the general terms of Section 1
of Article X, may only sow conflict and dissension among these political
subdivisions.<span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal">As the Republic asserted, no law has been enacted dividing
the Philippine territory, including its continental margin and exclusive
economic zones, among the LGUs.</p>
<p class="MsoNormal">The UNCLOS did not confer on</p>
<p class="MsoNormal">LGUs their own continental shelf</p>
<p class="MsoNormal">Dean Pangalangan posited that since the Constitution has
incorporated into Philippine law the concepts of the UNCLOS, including the
concept of the continental shelf, Palawan's "area" could be construed
as including its own continental shelf. 301 The Province of Palawan and Arigo,
et al., accordingly assert that Camago-Malampaya reservoir forms part of Palawan's
continental shelf. 302 </p>
<p class="MsoNormal">The Court is unconvinced. The Republic was correct in
arguing that the concept of continental shelf under the UNCLOS does not, by the
doctrine of transformation, automatically apply to the LGUs. We quote with
approval its disquisition on this issue:</p>
<p class="MsoNormal">The Batasang Pambansa ratified the UNCLOS through Resolution
No. 121 adopted on February 27, 1984. Through this process, the UNCLOS attained
the force and effect of municipal law. But even if the UNCLOS were to be
considered to have been transformed to be part of the municipal law, after its
ratification by the Batasang Pambansa, the UNCLOS did not automatically amend
the Local Government Code and the charters of the local government units. No
such intent is manifest either in the UNCLOS or in Resolution No. 121. Instead,
the UNCLOS, transformed into our municipal laws, should be applied as it is
worded. Verba legis.</p>
<p class="MsoNormal">xxx<span style="mso-spacerun: yes;">
</span>xxx<span style="mso-spacerun: yes;"> </span>xxx</p>
<p class="MsoNormal">It must be stressed that the provisions under the UNCLOS are
specific in declaring the rights and duties of a state, not a local government
unit. The UNCLOS confirms the sovereign rights of the States over the
continental shelf and the maritime zones. The UNCLOS did not confer any rights
to the States' local government units.</p>
<p class="MsoNormal">xxx<span style="mso-spacerun: yes;"> </span><span style="mso-spacerun: yes;"> </span>xxx<span style="mso-spacerun: yes;"> </span>xxx</p>
<p class="MsoNormal">At the risk of being repetitive, it is respectfully
emphasized that the foregoing indubitably established that under the express
terms of the UNCLOS, the rights and duties over the maritime zones and
continental shelf pertain to the State. No provision was set forth to even
suggest any reference to a local government unit. Simply put, the UNCLOS did
not obligate the States to grant to, much less automatically vest upon, their
respective local government units territorial jurisdiction over the different
maritime zones and the continental shelf. Hence, contrary to the submission of
Dean Pangalangan, no such application can be made. 303 </p>
<p class="MsoNormal">Atty. Bensurto took a similar stand, declaring during the
oral argument that:</p>
<p class="MsoNormal">ATTY. HENRY BENSURTO:</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>x x x
[T]here was an assertion earlier, Your Honor, that there was a reference in
fact to the continental shelf, that there is an automatic application of the
continental shelf with respect to the municipal territories. I submit, Your
Honor that this should not be the case, why? Because the United Nation
Convention on the Law of the Sea which is the conventional law directly
applicable in this case is an International Law. International Law by
definition is a body of rules governing relations between sovereign States or
other entities which are capable of having rights and obligations under
International Law. Therefore, it is the State that is the subject of
International Law, the only exception to this is with respect to individuals
with respect to the issue of Humanitarian and Human Rights Law. From there, it
flows the principal [sic] therefore that International Law affects only
sovereign States. With respect to the relationship between the State and its
Local Government Units this is reserved to the sovereign right of the sovereign
State. It is a dangerous proposition for us to make that there is an automatic
application because to do that would mean a violation of the sovereign right of
a State and the State always reserves the right to promulgate laws governing
its domestic jurisdiction. Therefore, the United Nations Convention of the Law
of the Sea affects only the right of the Philippines vis a vis another
sovereign State. And so, when we talk of the different maritime jurisdictions
enumerated, illustrated and explained under the United Nations Convention on
the Law of the Sea we are actually referring to inter state relations not intra
state relations. x x x 304 (Emphasis ours)</p>
<p class="MsoNormal">In fact, Arigo, et al., acknowledged during the oral
argument that the UNCLOS applies to the coastal state and not to their
provinces, and that Palawan, both under constitutional and international, has
no distinct and separate continental shelf, thus:</p>
<p class="MsoNormal">ASSOCIATE JUSTICE VELASCO:</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>You
admit that under UNCLOS it is only the coastal states that are recognized not
the provinces of the coastal state.</p>
<p class="MsoNormal">ATTY. BAGARES:</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>That is
true, Your Honor, and we do not dispute that, Your Honor.</p>
<p class="MsoNormal">ASSOCIATE JUSTICE VELASCO:</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>That's
correct. And you cited that in your petition. . . .</p>
<p class="MsoNormal">ATTY. BAGARES:</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>Yes,
Your Honor. That is true, Your Honor.</p>
<p class="MsoNormal">ASSOCIATE JUSTICE VELASCO:</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>. . .
that under Article 76, it is the continental shelf of the coastal state.</p>
<p class="MsoNormal">ATTY. BAGARES:</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>Yes,
Your Honor.</p>
<p class="MsoNormal">ASSOCIATE JUSTICE VELASCO:</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>And in
our case, the Republic of the Philippines, right?</p>
<p class="MsoNormal">ATTY. BAGARES:</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>Yes,
Your Honor.</p>
<p class="MsoNormal">ASSOCIATE JUSTICE VELASCO:</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>Okay.
You also made the submission that under Republic Act 7611 and Administrative
Order 381, there is a provision there that serves as basis for, what you call
again the continental shelf of Palawan. What provisions in 7611 and AO 381 are
there that serves as basis, for you to say that there is such a continental
shelf of Palawan?<span style="mso-spacerun: yes;"> </span>HcDSaT</p>
<p class="MsoNormal">ATTY. BAGARES:</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>Your
Honor, I apologize that perhaps I've been like Atty. Roque very academic in the
language in which we make our presentations but our position, Your Honor,
exactly just to make it clear, Your Honor, we're not saying that there's a
separate continental shelf of the Province of Palawan outside the territorial bounds
of the sovereign State of the Republic of the Philippines. We are only saying,
Your Honor, that that continental shelf is reckoned, Your Honor, from the
Province of Palawan. We are not saying, Your Honor, that there is a distinct
and separate continental shelf that Palawan may lay acclaim [sic] to, under the
Constitutional Law and under International Law, Your Honor.</p>
<p class="MsoNormal">ASSOCIATE JUSTICE VELASCO:</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>Alright.
And that is only the continental shelf of the coastal State, which is the
Philippines.</p>
<p class="MsoNormal">ATTY. BAGARES:</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>Yes,
Your Honor. I hope that is clear, Your Honor. 305 (Emphasis ours)</p>
<p class="MsoNormal">The Federal Paramountcy doctrine</p>
<p class="MsoNormal">as well as the Regalian and</p>
<p class="MsoNormal">Archipelagic doctrines are</p>
<p class="MsoNormal">inapplicable</p>
<p class="MsoNormal">Contrary to the Republic's submission, the LGU's share under
Section 7, Article X of the 1987 Constitution cannot be denied on the basis of
the archipelagic and regalian doctrines.</p>
<p class="MsoNormal">The archipelagic doctrine is embodied in Article I of the
1987 Constitution which provides:<span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal">The national territory comprises the Philippine archipelago,
with all the islands and waters embraced therein, and all other territories
over which the Philippines has sovereignty or jurisdiction, consisting of its
terrestrial, fluvial, and aerial domains, including its territorial sea, the
seabed, the subsoil, the insular shelves, and other submarine areas. The waters
around, between, and connecting the islands of the archipelago, regardless of
their breadth and dimensions, form part of the internal waters of the
Philippines.</p>
<p class="MsoNormal">The regalian doctrine, in turn, is found in Section 2,
Article XII of the 1987 Constitution which states:</p>
<p class="MsoNormal">Section 2.<span style="mso-tab-count: 1;"> </span>All
lands of the public domain, waters, minerals, coal, petroleum, and other
mineral oils, all forces of potential energy, fisheries, forests or timber,
wildlife, flora and fauna, and other natural resources are owned by the State.
x x x</p>
<p class="MsoNormal">It is at once evident that the foregoing doctrines find no
application in this case which involves neither a question of what comprises
the Philippine territory or the ownership of all natural resources found
therein.</p>
<p class="MsoNormal">There is no debate that the natural resources in the
Camago-Malampaya reservoir belong to the State. Palawan's claim is anchored not
on ownership of the reservoir but on a revenue-sharing scheme, under Section 7,
Article X of the 1987 Constitution and Section 290 of the Local Government
Code, that allows LGUs to share in the proceeds of the utilization of national
wealth provided they are found within their respective areas. To deny the LGU's
share on the basis of the State's ownership of all natural resources is to
render Section 7 of Article X nugatory for in such case, it will not be
possible for any LGU to benefit from the utilization of national wealth.</p>
<p class="MsoNormal">Accordingly, the Court cannot subscribe to Atty. Bensurto's
opinion 306 that the Province of Palawan cannot claim the 40% LGU share from
the proceeds of the Camago-Malampaya project because the National Government
"remains to have full dominium" (or ownership rights) over the gas
reservoir.</p>
<p class="MsoNormal">Atty. Bensurto's theory is ostensibly drawn from several
U.S. cases, namely U.S. v. California, 307 U.S. v. Louisiana, 308 U.S. v. Texas
309 and U.S. v. Maine, 310 which the Republic also cites in applying the
federal paramountcy doctrine to the Province of Palawan's claim. To explain
this doctrine, the Republic turns to the case of Native Village of Eyak v.
Trawler Diane Marie, Inc., 311 where the U.S. Court of Appeals for the Ninth
Circuit, in part, stated:<span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal">The "federal paramountcy doctrine" is derived, in
essence, from four Supreme Court cases in which the federal government and
various coastal states disputed ownership and control of the territorial sea
and the adjacent portions of the OCS.</p>
<p class="MsoNormal">The first of these cases was United States v. California,
332 U.S. 19, 67 S.Ct. 1658, 91 L.Ed. 1889 (1947), in which the United States
sued to enjoin the State of California from executing leases authorizing the
taking of petroleum, gas, and other mineral deposits from the Pacific Ocean. x
x x</p>
<p class="MsoNormal">xxx<span style="mso-spacerun: yes;">
</span>xxx<span style="mso-spacerun: yes;"> </span>xxx</p>
<p class="MsoNormal">[T]hus, the Court declared, "California is not the
owner of the three-mile marginal belt along its coast." Instead, "the
Federal Government rather than the state has paramount rights in and power over
that belt, an incident to which is full dominion over the resources of the soil
under that water area, including oil."</p>
<p class="MsoNormal">Bolstered by the favorable outcome in California, the United
States brought similar actions to confirm its title to the seabed adjacent to
other coastal states. In United States v. Louisiana, 339 U.S. 699, 70 S.Ct.
914, 94 L.Ed. 1216 (1950), the United States brought suit against the State of
Louisiana, which argued that it held title to the seabed under the waters
extending twenty-seven miles into the Gulf of Mexico. x x x</p>
<p class="MsoNormal">xxx<span style="mso-spacerun: yes;">
</span>xxx<span style="mso-spacerun: yes;"> </span>xxx</p>
<p class="MsoNormal">The Court found that the only difference between the
argument raised by Louisiana and the one raised by California was that
Louisiana's claimed boundary extended twenty-four miles beyond California's
three-mile claim. This difference did not weigh in Louisiana's favor, however:</p>
<p class="MsoNormal">If the three-mile belt is in the domain of the Nation rather
than that of the separate States, it follows a fortiori that the ocean beyond
that limit also is the ocean seaward of the marginal belt is perhaps even more
directly related to the national defense, the conduct of foreign affairs, and
world commerce than is the marginal sea. Certainly it is not less so far as the
issues presented here are concerned, Louisiana's enlargement of her boundary
emphasizes the strength of the claim of the United States to this part of the
ocean and the resources of the soil under that area, including oil.</p>
<p class="MsoNormal">In the companion case to Louisiana, United States v. Texas,
339 U.S. 707, 70 S.Ct. 918, 94 L.Ed. 1221 (1950), the Supreme Court again
reaffirmed its holding in California. The State of Texas had, by statute,
extended its boundary first to a line twenty-four miles beyond the three-mile
limit, and thereafter to the outer edge of the continental shelf. Texas raised
a somewhat different argument than had either California or Louisiana, one more
analogous to that asserted by the Villages here. Texas argued that, because it
was a separate republic prior to its entry into the United States, it had both
dominium (ownership or proprietary rights) and imperium (governmental powers of
regulation and control) with respect to the lands, minerals, and other products
underlying the marginal sea. Upon entering the Union, Texas transferred to the
federal government its powers of sovereignty-its imperium-over the marginal
sea, but retained its dominium.</p>
<p class="MsoNormal">The Supreme Court was not persuaded. While the Republic of
Texas may have had complete sovereignty and ownership over the marginal sea and
all things of value derived therefrom, the State of Texas did not. x x x
"When Texas came into the Union, she ceased to be an independent nation.
The United States then took her place as respects foreign commerce, the waging
of war, the making of treaties, defense of the shores, and the like." As an
incident to the transfer of that sovereignty, any "claim that Texas may
have had to the marginal sea was relinquished to the United States." The
Court recognized that "dominion and imperium are normally separable and
separate"; however, in this instance, "property interests are so
subordinated to the rights of sovereignty as to follow sovereignty." x x x</p>
<p class="MsoNormal">xxx<span style="mso-spacerun: yes;">
</span>xxx<span style="mso-spacerun: yes;"> </span>xxx</p>
<p class="MsoNormal">In the last of the paramountcy cases, United States v.
Maine, 420 U.S. 515, 95 S.Ct. 1155, 43 L.Ed.2d 363 (1975), the United States
brought an action against the thirteen Atlantic Coastal States asserting that
the federal government was entitled to exercise sovereign rights over the
seabed and subsoil underlying the Atlantic Ocean to the exclusion of the
coastal states for the purpose of exploring the area and exploiting its natural
resources. x x x</p>
<p class="MsoNormal">At the urging of the coastal states, the Supreme Court
reexamined the decisions in California, Louisiana, and Texas. To the states'
dismay, the Court concluded that these cases remained grounded on sound
constitutional principles. Whatever interest the states may have held in the
sea prior to statehood, the Court held, as a matter of "purely legal
principle the Constitution allotted to the federal government jurisdiction over
foreign commerce, foreign affairs, and national defense and it necessarily
follows, as a matter of constitutional law, that as attributes of these
external sovereign powers the federal government has paramount rights in the
marginal sea." x x x. (Emphasis ours and citations omitted)<span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal">There are several reasons why the foregoing doctrine cannot
be applied to this case. First, the U.S. does not appear to have an equitable
sharing provision similar to Section 7, Article X of the 1987 Constitution. Second,
the Philippines is not composed of states that were previously independent
nations. Third, the resolution of these cases does not necessitate
distinguishing between dominium and imperium since neither determines the LGU's
entitlement to the equitable share under Section 7 of Article X. Fourth, the
Court is not called upon to determine who between the Province of Palawan and
the National Government has the paramount or dominant right to explore or
exploit the natural resources in the marginal sea or beyond. Fifth,
adjudication of these cases does not entail upholding the dominion of the
National Government over a political subdivision since ownership of the natural
resources is concededly vested in the State. Sixth, it is settled that dominion
over national wealth belongs to the State under the regalian doctrine.
Ownership of the subject reservoir, therefore, is a non-issue and what simply
needs to be determined is whether said resource is located within the area or
territorial jurisdiction of the Province of Palawan.</p>
<p class="MsoNormal">Justice De Castro's observation during the oral argument is
thus apropos:</p>
<p class="MsoNormal">JUSTICE DE CASTRO:</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>It is
not a question of belonging to Palawan, it is a question of Palawan having a
share because it is within the area of Palawan, that is the question before the
Court now, it is not, the right to govern is not in question, that is not the
issue because we are very clear. The Philippines is not a Federal Government so
as distinguished from a Federal Government where the sovereign authority came
from the member State and granted to the Federal Government, here we have the
reverse it is the central government giving to the local government certain
powers and defining the limits of these powers. So, in this case there is no
question about the right to govern, the local government have [sic] have only
such powers granted to it by the Local Government Code. Now, the question is
whether the Province of Palawan should have a share in the proceeds in the
development of the Camago-Malampaya because it is within its area. So, we are
just defining the area of the Province of Palawan x x x. 312 (Emphasis ours)</p>
<p class="MsoNormal">LGU's share cannot be granted</p>
<p class="MsoNormal">based on equity</p>
<p class="MsoNormal">Atty. Bensurto opined that under the existing law, the
Province of Palawan is not entitled to the statutory 40% LGU share. He posited
that it is only on equitable grounds that the Province of Palawan could
participate in the proceeds of the utilization of the Camago-Malampaya
reservoir. He concluded that from the perspective of the principle of equity,
it may be appropriate for the Province of Palawan to be given some share in the
operation of the Camago-Malampaya gas reservoir considering: (a) its proximity
to the province which makes the latter environmentally vulnerable to any major
accidents in the gas reservoir; and (b) the gas pipes that pass through the
northern part of the province. 313 </p>
<p class="MsoNormal">The Court finds the submission untenable. Our courts are
basically courts of law, not courts of equity. 314 Furthermore, for all its
conceded merits, equity is available only in the absence of law and not as its
replacement. 315 As explained in the old case of Tupas v. Court of Appeals:
316<span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal">Equity is described as justice outside legality, which
simply means that it cannot supplant although it may, as often happens, supplement
the law. We said in an earlier case, and we repeat it now, that all abstract
arguments based only on equity should yield to positive rules, which preempt
and prevail over such persuasions. Emotional appeals for justice, while they
may wring the heart of the Court, cannot justify disregard of the mandate of
the law as long as it remains in force. The applicable maxim, which goes back
to the ancient days of the Roman jurists — and — is now still reverently
observed — is "aequetas nunquam contravenit legis." 317 </p>
<p class="MsoNormal">In this case, there are applicable laws found in Section 7,
Article X of the 1987 Constitution and in Sections 289 and 290 of the Local
Government Code. They limit the LGUs' share to the utilization of national
wealth located within their respective areas or territorial jurisdiction. As
herein before-discussed, however, existing laws do not include the
Camago-Malampaya reservoir within the area or territorial jurisdiction of the
Province of Palawan.</p>
<p class="MsoNormal">The pertinent positive rules being present here, they should
preempt and prevail over all abstract arguments based only on equity. 318 </p>
<p class="MsoNormal">The supposed presence of gas pipes through the northern part
of Palawan cannot justify granting the province the 40% LGU share because both
the Constitution and the Local Government Code refer to the LGU where the
natural resource is situated. The 1986 Constitutional Commission referred to
this area as "the locality, where God chose to locate his bounty,"
while the Senate deliberations on the proposed Local Government Code cited it
as the area where the natural resource is "extracted." To hold
otherwise, on the basis of equity, will run afoul of the letter and spirit of
both constitutional and statutory law. It is settled that equity cannot
supplant, overrule or transgress existing law.</p>
<p class="MsoNormal">Furthermore, as the Republic noted, any possible
environmental damage to the province is addressed by the contractor's
undertakings, under the ECC, to ensure minimal impact on the environment and to
set up an Environmental Guarantee Fund that would cover expenses for
environmental monitoring, as well as a replenishable fund that would compensate
for any damage the project may cause. 319 The ECC, in pertinent part, provides:</p>
<p class="MsoNormal">This Certificate is being issued subject to the following
conditions:</p>
<p class="MsoNormal">1.<span style="mso-tab-count: 1;"> </span>This
Certificate shall cover the construction of the shallow water platform (SWP) in
the Service Contract 38 (SC38) offshore northwest Palawan, a pipeline from the
Malampaya wells (well drilling site) to the SWP passing the offshore route from
Mindoro to a land terminal at Shell Tabangao's refinery plant in Batangas;</p>
<p class="MsoNormal">2.<span style="mso-tab-count: 1;"> </span>The
proponent shall consider the offshore route of the pipeline to minimize its
environment socio-economic impacts particularly to the province of Mindoro;</p>
<p class="MsoNormal">3.<span style="mso-tab-count: 1;"> </span>Selection
of the SWP site and the final offshore pipeline route should avoid
environmentally sensitive areas such as coral reefs, sea grass, mangroves,
fisheries, pearl farms, habitats of endangered wildlife, tourism areas and
areas declared as protected by the national, provincial and local government
agencies. It shall also be routed away from geologically high risk areas;</p>
<p class="MsoNormal">4.<span style="mso-tab-count: 1;"> </span>Proponent
shall use the optimum amount of anti-corrosion anodes necessary in order to
maintain pipeline integrity and minimize impacts on water quality;</p>
<p class="MsoNormal">5.<span style="mso-tab-count: 1;"> </span>The
design of the pipeline shall conform to the international standards that can
handle extreme conditions. The proponent shall ensure extensive monitoring
(internal and external inspections) to maintain the pipeline integrity;</p>
<p class="MsoNormal">xxx<span style="mso-spacerun: yes;">
</span>xxx<span style="mso-spacerun: yes;"> </span>xxx</p>
<p class="MsoNormal">26.<span style="mso-tab-count: 1;"> </span>The
proponent shall set up an Environmental Guarantee Fund (EGF) to cover expenses
for environmental monitoring and the establishment of a readily available and
replenishable fund to compensate for whatever damage may be caused by the
project, for the rehabilitation and/or restoration of affected-areas, the
future abandonment/decommissioning of project facilities and other activities
related to the prevention of possible negative impacts.<span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal">The amount and mechanics of the EGF shall be determined by
the DENR and the proponent taking into consideration the concerns of the
affected areas stakeholders and formalized through a MOA which shall be
submitted within ninety (90) days prior to project implementation. The absence of
the EGF shall cause the cancellation of this Certificate;</p>
<p class="MsoNormal">xxx<span style="mso-spacerun: yes;">
</span>xxx<span style="mso-spacerun: yes;"> </span>xxx</p>
<p class="MsoNormal">29.<span style="mso-tab-count: 1;"> </span>In cases
where pipe laying activities will adversely affect existing fishing grounds,
the proponent in coordination with the Bureau of Fisheries and Aquatic
Resources (BFAR) shall identify alternative fishing grounds and negotiate with
affected fisherfolks the reasonable compensation to be paid[.] 320 </p>
<p class="MsoNormal">There is logic in the Republic's contention that the
National Government cannot be compelled to compensate the province for damages
it has not yet sustained.</p>
<p class="MsoNormal">The foregoing considered, the Court finds that the Province
of Palawan's remedy is not judicial adjudication based on equity but
legislation that clearly entitles it to share in the proceeds of the
utilization of the Camago-Malampaya reservoir. Mariano instructs that the
territorial boundaries must be clearly defined "with precise
strokes." Defining those boundaries is a legislative, not a judicial
function. 321 The Court cannot, on the basis of equity, engage in judicial
legislation and alter the boundaries of the Province of Palawan to include the
continental shelf where the subject natural resource lies. As conceded by Dean
Pangalangan, "territorial jurisdiction is fixed by a law, by a charter and
that defines the territory of Palawan very strictly," and it is
"something that can be altered only in accordance with [the] proper
procedure ending with a plebiscite." 322 </p>
<p class="MsoNormal">It is true that the Local Government Code envisioned a
genuine and meaningful autonomy to enable local government units to attain
their fullest development as self-reliant communities and make them effective
partners in the attainment of national goals. 323 This objective, however, must
be enforced within the extent permitted by law. As the Court held in Hon. Lina,
Jr. v. Hon. Paño: 324 </p>
<p class="MsoNormal">Nothing in the present constitutional provision enhancing
local autonomy dictates a different conclusion.<span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal">The basic relationship between the national legislature and
the local government units has not been enfeebled by the new provisions in the
Constitution strengthening the policy of local autonomy. Without meaning to
detract from that policy, we here confirm that Congress retains control of the
local government units although in significantly reduced degree now than under
our previous Constitutions. The power to create still includes the power to
destroy. The power to grant still includes the power to withhold or recall.
True, there are certain notable innovations in the Constitution, like the
direct conferment on the local government units of the power to tax (citing
Art. X, Sec. 5, Constitution), which cannot now be withdrawn by mere statute.
By and large, however, the national legislature is still the principal of the
local government units, which cannot defy its will or modify or violate it.</p>
<p class="MsoNormal">Ours is still a unitary form of government, not a federal
state. Being so, any form of autonomy granted to local governments will
necessarily be limited and confined within the extent allowed by the central
authority. Besides, the principle of local autonomy under the 1987 Constitution
simply means "decentralization." It does not make local governments
sovereign within the state or an "imperium in imperio." 325 (Emphasis
ours)</p>
<p class="MsoNormal">Constitutional challenge to E.O. No. 683</p>
<p class="MsoNormal">The challenge to the constitutionality of E.O. No. 683,
brought by Arigo, et al., is premised on the alleged violation of Section 7,
Article X of the 1987 Constitution and Sections 289 and 290 of the Local
Government Code, which is the basic issue submitted for resolution by the
Republic and the Province of Palawan in G.R. No. 170867. Considering its ruling
in G.R. No. 170867, the Court resolves to deny the Arigo petition, without need
of passing upon the procedural issues therein raised. The same ruling also
renders it unnecessary to rule upon the propriety of the Amended Order dated
January 16, 2006, which the Republic raised ad cautelam in G.R. No. 170867.</p>
<p class="MsoNormal">WHEREFORE, the Petition in G.R. No. 170867 is GRANTED. The
Decision dated December 16, 2005 of the Regional Trial Court of the Province of
Palawan, Branch 95 in Civil Case No. 3779 is REVERSED and SET ASIDE. The Court
declares that under existing law, the Province of Palawan is not entitled to
share in the proceeds of the Camago-Malampaya natural gas project. The Petition
in G.R. No. 185941 is DENIED.<span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal">SO ORDERED.</p>
<p class="MsoNormal">Bersamin, C.J., Carpio, Peralta, Del Castillo,
Perlas-Bernabe, Caguioa, A.B. Reyes, Jr., Gesmundo, J.C. Reyes, Jr. and
Hernando, JJ., concur.</p>
<p class="MsoNormal">Leonen, J., see separate opinion.</p>
<p class="MsoNormal">Jardeleza, * J., took no part.</p>
<p class="MsoNormal">Carandang, ** J., is on leave.</p>
<p class="MsoNormal">Separate Opinions</p>
<p class="MsoNormal">LEONEN, J., concurring:</p>
<p class="MsoNormal">I concur, but only in the result.</p>
<p class="MsoNormal">The Province of Palawan should be entitled to an equitable
share in the utilization and development of resources within its territorial
jurisdiction. Due to Palawan's unique position and archipelagic shape, its
territorial jurisdiction should not only encompass land mass. It should also
include its coastline, subsoil, and seabed.<span style="mso-spacerun: yes;">
</span></p>
<p class="MsoNormal">However, the maps submitted to this Court failed to
substantially prove that the Camago-Malampaya Natural Gas Project was within
the area of responsibility of the Province of Palawan.</p>
<p class="MsoNormal">The factual antecedents of this case are undisputed. On
December 11, 1990, the Republic, through the Department of Energy, entered into
a service contract (Service Contract No. 38) with Shell Philippines Exploration
B.V. (Shell) and Occidental Philippines, Inc. (Occidental) for the drilling of
a natural gas reservoir in the Camago-Malampaya area, located about 80
kilometers from the main island of Palawan. 1 </p>
<p class="MsoNormal">Specifically, Camago-Malampaya is located:</p>
<p class="MsoNormal"> </p>
<p class="MsoNormal"> </p>
<p class="MsoNormal">From Kalayaan Island Group<span style="mso-tab-count: 1;"> </span>93.264
kilometers or 50.3585 nautical miles<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">Mainland Palawan (Nacpan Point, south of Patuyo Cove,
Municipality of El Nido)<span style="mso-tab-count: 1;"> </span>55.476
kilometers or 29.9546 nautical miles<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal">Tapiutan Island, Municipality of El Nido<span style="mso-tab-count: 1;"> </span>48.843 kilometers or 26.[3731] nautical
miles 2<span style="mso-tab-count: 1;"> </span></p>
<p class="MsoNormal"> </p>
<p class="MsoNormal">Service Contract No. 38 provides for a production sharing
scheme, where the National Government would receive 60% of the net proceeds
from the sale of petroleum while Shell and Occidental, as service contractors,
would receive 40% of the net proceeds. Subsequently, Shell and Occidental were
replaced by a consortium of Shell, Occidental, Shell Philippines LLC, Chevron
Malampaya LLC, and Philippine National Oil Company Explorations Corporation
(Shell Consortium). 3 </p>
<p class="MsoNormal">On February 17, 1998, then President Fidel V. Ramos
(President Ramos) issued Administrative Order No. 381, 4 which provided that
the National Government's share from the net proceeds of the Camago-Malampaya
Natural Gas Project would "be reduced . . . by the share of the concerned
local government units pursuant to the Local Government Code[.]" 5 It
further provided that "the Province of Palawan [was] expected to receive
about US$2.1 billion from the total Government share of US$8.1 billion" 6
throughout the 20-year contract period. For reference, Section 290 of the Local
Government Code provides:</p>
<p class="MsoNormal">Section 290.<span style="mso-tab-count: 1;"> </span>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.</p>
<p class="MsoNormal">On June 10, 1998, then Secretary of Energy Francisco L.
Viray (Viray) wrote to then Palawan Governor Salvador P. Socrates (Socrates),
requesting that the payment of 50% of Palawan's share in the Camago-Malampaya
Natural Gas Project be "spread over in the initial seven years of
operations . . . to pay [for] the [National Power Corporation]'s . . .
obligations" in its Gas Sales and Purchase Agreements with Shell
Consortium. 7 </p>
<p class="MsoNormal">On July 30, 2001, then Secretary of Finance Jose Isidro N.
Camacho wrote to then Secretary of Justice Hernando B. Perez, seeking legal
opinion on whether the Province of Palawan had a share in the national wealth
from the proceeds of the Camago-Malampaya Natural Gas Project. It was the
position of the Department of Finance that a local government unit's
territorial jurisdiction was only within its land area and excludes marine
waters more than 15 kilometers from its coastline. 8 </p>
<p class="MsoNormal">On October 16, 2001, the Camago-Malampaya Natural Gas
Project was formally inaugurated. 9 </p>
<p class="MsoNormal">Negotiations were held between the Province of Palawan, the
Department of Energy, the Department of Finance, and the Department of Budget
and Management to determine the Province of Palawan's share in the net proceeds
of the Camago-Malampaya Natural Gas Project. 10 However, on February 11, 2003,
the Sangguniang Panlalawigan of Palawan resolved to call off further
negotiations since the National Government would not grant its expected share
in the net proceeds amounting to approximately over US$2 billion. 11 </p>
<p class="MsoNormal">On March 14, 2003, then Palawan Governor Mario Joel T. Reyes
wrote to the Department of Energy, and the Department of Budget and Management
reiterating the Province's claim of its 40% share citing "long historical
precedent and the statutory definition of Palawan under Republic Act No.
7611." 12 </p>
<p class="MsoNormal">On May 7, 2003, the Province of Palawan filed a Petition for
Declaratory Relief, 13 docketed as Civil Case No. 3779, before the Regional
Trial Court to seek a judicial determination of its rights under Administrative
Order No. 381, series of 1998; Republic Act No. 7611; Section 290 of the Local
Government Code; and Palawan Provincial Ordinance No. 474, series of 2000. In
particular, it sought a judicial declaration that the Camago-Malampaya
reservoir was part of its territorial jurisdiction, and hence, it was entitled
to an equitable share in its utilization and development. 14 </p>
<p class="MsoNormal">During the pendency of the case before the Regional Trial
Court, or on February 9, 2005, then Secretary of Energy Vincent S. Perez, Jr.
(Perez), then Secretary of Budget and Management Mario L. Relampagos
(Relampagos), and then Secretary of Finance Juanita D. Amatong (Amatong)
executed an Interim Agreement 15 with the Province of Palawan. This Interim
Agreement provided for equal sharing of the 40% being claimed by the Province
of Palawan, to be called the "Palawan Share," for its development and
infrastructure projects, environment protection and conservation,
electrification of 431 barangays, and establishment of facilities for the security
enhancements of the exclusive economic zone. 16 </p>
<p class="MsoNormal">The Interim Agreement likewise stated that the release of
funds would be without prejudice to the outcome of the legal dispute between
the parties. Once Civil Case No. 3779 was decided with finality in favor of either
party, the shares already received would be treated as financial assistance. To
this end, the parties further agreed that the amount of P600,000,000.00 already
released to the Province of Palawan would be deducted from the initial release
of its 50% share in the 40% of the remitted funds. 17 </p>
<p class="MsoNormal">On December 16, 2005, the Regional Trial Court rendered a
Decision 18 holding that the Province of Palawan was entitled to a 40% share of
the revenues generated from the Camago-Malampaya Natural Gas Project from
October 16, 2001, in view of Article X, Section 7 of the Constitution and the
provisions of the Local Government Code.<span style="mso-spacerun: yes;">
</span>CAIHTE</p>
<p class="MsoNormal">Subsequently, the Province of Palawan filed a Motion to
require the Secretary of Energy, the Secretary of Budget and Management, and
the Secretary of Finance to render a full accounting of the actual payments
made by the Shell Consortium to the Bureau of Treasury from October 1, 2001 to
December 2005, 19 and to freeze and/or place Palawan's 40% share in an escrow
account. 20</p>
<p class="MsoNormal">In its January 16, 2006 Amended Order, 21 the Regional Trial
Court issued a Freeze Order directing a full accounting of actual payments made
by Shell Consortium and ordering the Secretary of Finance to deposit 40% of the
Province of Palawan's share in escrow until the finality of its December 16,
2005 Decision.</p>
<p class="MsoNormal">On February 16, 2006, 22 the Republic filed a Petition for
Review before this Court, docketed as G.R. No. 170867, assailing the Regional
Trial Court's December 16, 2005 Decision and its January 16, 2006 Amended
Order. 23 </p>
<p class="MsoNormal">On June 6, 2006, the Regional Trial Court lifted its January
16, 2006 Amended Order in view of the pending Petition before this Court. The
Republic subsequently manifested that its arguments relating to the January 16,
2006 Amended Order no longer needed to be resolved unless the Province of
Palawan raises them as issues before this Court. 24 </p>
<p class="MsoNormal">While the Petition was pending before this Court, or on July
25, 2007, the National Government and the Province of Palawan, in conformity
with the representatives of the legislative districts of Palawan, executed a
Provisional Implementation Agreement 25 which allowed for the release of 50% of
the disputed 40% share of Palawan to be utilized for its development projects.</p>
<p class="MsoNormal">On December 1, 2007, then President Gloria Macapagal-Arroyo
(President Arroyo) issued Executive Order No. 683, authorizing the release of
funds pursuant to the Provisional Implementation Agreement, or 50% of the
disputed 40% share, without prejudice to this Court's final resolution of
Palawan's claim in G.R. No. 170867. 26 </p>
<p class="MsoNormal">On February 7, 2008, Bishop Pedro Dulay Arigo (Bishop
Arigo), Cesar N. Sarino (Sarino), Dr. Jose Antonio N. Socrates (Dr. Socrates),
and H. Harry L. Roque, Jr. (Roque), as citizens and taxpayers, filed a Petition
for Certiorari against the Executive Secretary, the Secretary of Energy, the
Secretary of Finance, the Secretary of Budget and Management, the Palawan
Governor, the Representative of the First District of Palawan, the Philippine
National Oil Company Explorations Corporation President and Chief Executive
Officer before the Court of Appeals. The Petition assailed Executive Order No.
683, series of 2007, and the Provisional Implementation Agreement for being
contrary to the Constitution and the Local Government Code. It also sought the
release of the Province of Palawan's full 40% share in the Camago-Malampaya
Natural Gas Project. 27 </p>
<p class="MsoNormal">In its May 29, 2008 Resolution, 28 the Court of Appeals
dismissed the Petition on procedural grounds, finding that Bishop Arigo, Sarino,
Dr. Socrates, and Roque failed to submit the required documents substantiating
their allegations. It likewise noted that the Petition was prematurely filed
since the implementation of the Provisional Implementation Agreement was
contingent on the final adjudication of G.R. No. 170867. The Court of Appeals
also took judicial notice of the "on-going efforts" 29 by the
Executive and Legislative branches to arrive at a common position on the
country's baselines under the United Nations Convention on the Law of the Sea.
Thus, any judicial ruling may be tantamount to a "collateral
adjudication" 30 of a policy issue.<span style="mso-spacerun: yes;">
</span></p>
<p class="MsoNormal">Bishop Arigo, Sarino, Dr. Socrates, and Roque filed a Motion
for Reconsideration, which was denied by the Court of Appeals in its December
16, 2008 Resolution. Hence, they filed a Petition for Review on Certiorari
before this Court, docketed as G.R. No. 185941, insisting that Executive Order
No. 683, series of 2007, and the Provisional Implementation Agreement were
invalid for being unconstitutional and for violating the provisions of the
Local Government Code. 31 </p>
<p class="MsoNormal">G.R. Nos. 170867 and 185941 were consolidated by this Court
on June 23, 2009. Oral arguments were heard on September 1, 2009 and November
24, 2009. 32 </p>
<p class="MsoNormal">As of August 31, 2009, P61,190,210,012.25 has been remitted
to the Department of Energy. The amount claimed by the Province of Palawan as
its 40% share was P35,521,789,184.63 as of August 31, 2009. 33 </p>
<p class="MsoNormal">It is the position of the ponencia that the interpretation
of the phrase "within their respective areas" in Article X, Section 7
of the Constitution 34 refers to only to areas where a local government unit
exercises territorial jurisdiction. The ponencia further opines that the
territorial jurisdiction of a local government unit is limited only to its land
area and will not extend to its marine waters, seabed, and subsoil. Thus, the
equitable share of a local government unit in the proceeds of the utilization
and development of national wealth within its respective area refers only to
national wealth that can be found within its land mass.</p>
<p class="MsoNormal">I disagree.</p>
<p class="MsoNormal">I</p>
<p class="MsoNormal">The Constitution declares it a policy of the State to ensure
the autonomy of local governments. 35 </p>
<p class="MsoNormal">The entirety of Article X of the Constitution is devoted to
local governments. Under this article, local autonomy means "a more
responsive and accountable local government structure instituted through a
system of decentralization." 36 To this end, the Local Government Code
reiterates the declared policy of the State to ensure local autonomy,
providing:</p>
<p class="MsoNormal">Section 2.<span style="mso-tab-count: 1;"> </span>Declaration
of Policy. — (a) It is hereby declared the policy of the State that the
territorial and political subdivisions of the State shall enjoy genuine and
meaningful local autonomy to enable them to attain their fullest development as
self-reliant communities and make them more effective partners in the
attainment of national goals. Toward this end, the State shall provide for a
more responsive and accountable local government structure instituted through a
system of decentralization whereby local government units shall be given more
powers, authority, responsibilities, and resources. The process of
decentralization shall proceed from the national government to the local
government units.<span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal">Under this concept of autonomy, administration over local
affairs is delegated by the national government to the local government units
to be more responsive and effective at the local level. 37 Thus, Section 17 of
the Local Government Code tasks local government units to provide basic
services and facilities to their local constituents:</p>
<p class="MsoNormal">Section 17.<span style="mso-tab-count: 1;"> </span>Basic
Services and Facilities. — (a) Local government units shall endeavor to be
self-reliant and shall continue exercising the powers and discharging the
duties and functions currently vested upon them. They shall also discharge the
functions and responsibilities of national agencies and offices devolved to
them pursuant to this Code. Local government units shall likewise exercise such
other powers and discharge such other functions and responsibilities as are
necessary, appropriate, or incidental to efficient and effective provision of
the basic services and facilities enumerated herein.</p>
<p class="MsoNormal">In addition to administrative autonomy, local governments
are likewise granted fiscal autonomy, or "the power to create their own
sources of revenue in addition to their equitable share in the national taxes
released by the national government, as well as the power to allocate their
resources in accordance with their own priorities." 38 Section 18 of the
Local Government Code provides:</p>
<p class="MsoNormal">Section 18.<span style="mso-tab-count: 1;"> </span>Power
to Generate and Apply Resources. — Local government units shall have the power
and authority to establish an organization that shall be responsible for the
efficient and effective implementation of their development plans, program
objectives and priorities; to create their own sources of revenues and to levy
taxes, fees, and charges which shall accrue exclusively for their use and
disposition and which shall be retained by them; to have a just share in national
taxes which shall be automatically and directly released to them without need
of any further action; to have an equitable share in the proceeds from the
utilization and development of the national wealth and resources within their
respective territorial jurisdictions including sharing the same with the
inhabitants by way of direct benefits; to acquire, develop, lease, encumber,
alienate, or otherwise dispose of real or personal property held by them in
their proprietary capacity and to apply their resources and assets for
productive, developmental, or welfare purposes, in the exercise or furtherance
of their governmental or proprietary powers and functions and thereby ensure
their development into self-reliant communities and active participants in the
attainment of national goals.<span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal">The Local Government Code mandates that local government
units shall have "an equitable share in the proceeds from the utilization
and development of the national wealth and resources within their respective
territorial jurisdictions." This provision implements Article X, Section 7
of the Constitution, which reads:</p>
<p class="MsoNormal">ARTICLE X</p>
<p class="MsoNormal">Local Government</p>
<p class="MsoNormal">General Provisions</p>
<p class="MsoNormal">Section 7.<span style="mso-tab-count: 1;"> </span>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.</p>
<p class="MsoNormal">Thus, Section 290 of the Local Government Code provides:</p>
<p class="MsoNormal">Section 290.<span style="mso-tab-count: 1;"> </span>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.</p>
<p class="MsoNormal">The controversy in this case revolves around the proper
interpretation of "within their respective areas" and "within
their territorial jurisdiction."</p>
<p class="MsoNormal">II</p>
<p class="MsoNormal">The Constitution itself provides for the natural boundaries
of the State's political units. Article X, Section 1 of the Constitution
allocates them as either "territorial and political subdivisions" or
"autonomous regions," thus:</p>
<p class="MsoNormal">ARTICLE X</p>
<p class="MsoNormal">Local Government</p>
<p class="MsoNormal">General Provisions</p>
<p class="MsoNormal">Section 1.<span style="mso-tab-count: 1;"> </span>The
territorial and political subdivisions of the Republic of the Philippines are
the provinces, cities, municipalities, and barangays. There shall be autonomous
regions in Muslim Mindanao and the Cordilleras as hereinafter provided.<span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal">Territorial and political subdivisions are the provinces,
cities, municipalities, and barangays. Article X, Section 2 of the Constitution
further provides:</p>
<p class="MsoNormal">Section 2.<span style="mso-tab-count: 1;"> </span>The
territorial and political subdivisions shall enjoy local autonomy.</p>
<p class="MsoNormal">Autonomous regions are covered by a different set of
provisions in the Constitution. 39 Thus, the territorial jurisdiction of an
autonomous region is not defined in the same manner as that of a territorial
and political subdivision.</p>
<p class="MsoNormal">A local government unit can only be created by an act of
Congress. 40 Its creation is based on "verifiable indicators of viability
and projected capacity to provide services," 41 one of which is land area,
thus:</p>
<p class="MsoNormal">(c)<span style="mso-tab-count: 1;"> </span>Land
Area. — It must be contiguous, unless it comprises two (2) or more islands or
is separated by a local government unit independent of the others; properly
identified by metes and bounds with technical descriptions; and sufficient to
provide for such basic services and facilities to meet the requirements of its
populace.</p>
<p class="MsoNormal">Compliance with the foregoing indicators shall be attested
to by the Department of Finance (DOF), the National Statistics Office (NSO),
and the Lands Management Bureau (LMB) of the Department of Environment and
Natural Resources (DENR). 42 </p>
<p class="MsoNormal">The Local Government Code requires that the land area be
contiguous unless it comprises of two (2) or more islands. The same provision
is repeated throughout the Code, thus:</p>
<p class="MsoNormal">Section 386.<span style="mso-tab-count: 1;"> </span>Requisites
for Creation. — . . .</p>
<p class="MsoNormal">(b)<span style="mso-tab-count: 1;"> </span>The
territorial jurisdiction of the new Barangay shall be properly identified by
metes and bounds or by more or less permanent natural boundaries. The territory
need not be contiguous if it comprises two (2) or more islands.</p>
<p class="MsoNormal">xxx<span style="mso-spacerun: yes;">
</span>xxx<span style="mso-spacerun: yes;"> </span>xxx</p>
<p class="MsoNormal">Section 442.<span style="mso-tab-count: 1;"> </span>Requisites
for Creation. — . . .</p>
<p class="MsoNormal">(b)<span style="mso-tab-count: 1;"> </span>The
territorial jurisdiction of a newly-created municipality shall be properly
identified by metes and bounds. The requirement on land area shall not apply
where the municipality proposed to be created is composed of one (1) or more
islands. The territory need not be contiguous if it comprises two (2) or more
islands.</p>
<p class="MsoNormal">xxxx<span style="mso-spacerun: yes;">
</span>xxx<span style="mso-spacerun: yes;"> </span>xxx</p>
<p class="MsoNormal">Section 450. Requisites for Creation. — . . .</p>
<p class="MsoNormal">(b)<span style="mso-tab-count: 1;"> </span>The
territorial jurisdiction of a newly-created city shall be properly identified
by metes and bounds. The requirement on land area shall not apply where the
city proposed to be created is composed of one (1) or more islands. The
territory need not be contiguous if it comprises two (2) or more islands.</p>
<p class="MsoNormal">xxx<span style="mso-spacerun: yes;">
</span>xxx<span style="mso-spacerun: yes;"> </span>xxx</p>
<p class="MsoNormal">The requirement of contiguity does not apply if the
territory is comprised of islands. All that is required is that it is properly
identified by its metes and bounds.</p>
<p class="MsoNormal">The Province of Palawan, previously known as Paragua, was
organized under Act No. 422. 43 Section 2 of the Act, as amended, provided:</p>
<p class="MsoNormal">Section 2.<span style="mso-tab-count: 1;"> </span>The
Province of Paragua shall consist of all that portion of the Island of Paragua
north of a line beginning in the middle of the channel at the mouth of the
Ulugan River in the Ulugan Bay, thence following the main channel of the Ulugan
River to the village of Bahile, thence along the main trail leading from Bahile
to the Tapul River, thence following the course of the Tapul River to its mouth
in the Honda Bay; except that the towns of Bahile and Tapul the west<span style="mso-spacerun: yes;"> </span>boundary line shall be the arc of a circle
with one mile radius, the center of the circle being the center of the said
towns of Bahile and Tapul. There shall be included in the Province of Paragua
the small islands adjacent thereto, including Dumaran and the islands forming
the Calamianes group and the Cuyos Group. 44 </p>
<p class="MsoNormal">The law that created the Province of Palawan had no
technical description. Instead, it anchored the province's borders on the
bodies of water surrounding it. Since, the province's metes and bounds are not
technically described, reference must be made to other laws interpreting the
province's borders.<span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal">Palawan comprises 1,780 islands. To determine its metes and
bounds would be to go beyond the contiguity of its land mass.</p>
<p class="MsoNormal">The ponencia places too much reliance on Tan v. Commission
on Elections, 45 a case that was decided long before the passage of the present
Local Government Code. In Tan, a petition was filed before this Court to halt
the conduct of a plebiscite to pass a law creating the province of Negros. A
question was raised on whether the marginal sea within the three (3)-mile limit
should be considered in determining a province's extent. This Court, in finding
the argument unmeritorious, held:</p>
<p class="MsoNormal">As so stated therein the "territory need not be
contiguous if it comprises two or more islands." The use of the word
territory in this particular provision of the Local Government Code and in the
very last sentence thereof, clearly, reflects that "territory" as
therein used, has reference only to the mass of land area and excludes the
waters over which the political unit exercises control. 46 (Emphasis omitted)</p>
<p class="MsoNormal">This Court's wording is peculiar. It speaks of territory as
a mass of land area, not waters, over which the political unit exercises control.
In the same breath, Tan also establishes that political units may have control
over the waters in their territory.</p>
<p class="MsoNormal">It can be presumed that when Tan discussed the metes and
bounds of a local government unit's territory, it only meant to refer to its
physical land area. It did not include a discussion on what may encompass a
local government unit's territorial jurisdiction.</p>
<p class="MsoNormal">In any case, the creation of a local government unit is not
solely dependent on land mass. Article 9 (2) of the Implementing Rules and
Regulations of the Local Government Code provides:</p>
<p class="MsoNormal">Article 9.<span style="mso-tab-count: 1;"> </span>Provinces.
— (a) Requisites for creation — A province shall not be created unless the
following requisites on income and either population or land area are present:</p>
<p class="MsoNormal">xxxx<span style="mso-spacerun: yes;">
</span><span style="mso-spacerun: yes;"> </span>xxx<span style="mso-spacerun: yes;"> </span>xxx</p>
<p class="MsoNormal">(2)<span style="mso-tab-count: 1;"> </span>Population
or land area — Population which shall not be less than two hundred fifty
thousand (250,000) inhabitants, as certified by NSO; or land area which must be
contiguous with an area of at least two thousand (2,000) square kilometers, as
certified by LMB. The territory need not be contiguous if it comprises two (2)
or more islands or is separated by a chartered city or cities which do not
contribute to the income of the province. The land area requirement shall not
apply where the proposed province is composed of one (1) or more islands. The
territorial jurisdiction of a province sought to be created shall be properly
identified by metes and bounds. (Emphasis supplied)<span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal">In Navarro v. Ermita, 47 a controversy arose on the creation
of the Province of Dinagat Islands considering that its total land mass was
only 802.12 square kilometers, or below the 2,000 square kilometers required by
law. Petitioners in that case, who were the former Vice Governor and members of
the Provincial Board of the Province of Surigao del Norte, questioned the
constitutionality of Article 9 (2), arguing that the exemption to land area
requirement was not explicitly provided for in the Local Government Code.</p>
<p class="MsoNormal">The majority initially declared Article 9 (2)
unconstitutional for being an extraneous provision not intended by the Local
Government Code.</p>
<p class="MsoNormal">On reconsideration, however, the majority reversed its prior
decision and upheld the constitutionality of the assailed provision. 48 In
particular, Navarro found:</p>
<p class="MsoNormal">. . . [W]hen the local government unit to be created
consists of one (1) or more islands, it is exempt from the land area
requirement as expressly provided in Section 442 and Section 450 of the LGC if
the local government unit to be created is a municipality or a component city,
respectively. This exemption is absent in the enumeration of the requisites for
the creation of a province under Section 461 of the LGC, although it is
expressly stated under Article 9 (2) of the LGC-IRR.</p>
<p class="MsoNormal">There appears neither rhyme nor reason why this exemption
should apply to cities and municipalities, but not to provinces. In fact,
considering the physical configuration of the Philippine archipelago, there is
a greater likelihood that islands or group of islands would form part of the
land area of a newly-created province than in most cities or municipalities. It
is, therefore, logical to infer that the genuine legislative policy decision
was expressed in Section 442 (for municipalities) and Section 450 (for component
cities) of the LGC, but was inadvertently omitted in Section 461 (for
provinces). Thus, when the exemption was expressly provided in Article 9 (2) of
the LGC-IRR, the inclusion was intended to correct the congressional oversight
in Section 461 of the LGC — and to reflect the true legislative intent. It
would, then, be in order for the Court to uphold the validity of Article 9 (2)
of the LGC-IRR.<span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal">This interpretation finds merit when we consider the basic
policy considerations underpinning the principle of local autonomy.</p>
<p class="MsoNormal">xxxx<span style="mso-spacerun: yes;">
</span>xxx<span style="mso-spacerun: yes;"> </span>xxx</p>
<p class="MsoNormal">Consistent with the declared policy to provide local
government units genuine and meaningful local autonomy, contiguity and minimum
land area requirements for prospective local government units should be
liberally construed in order to achieve the desired results. The strict
interpretation adopted by the February 10, 2010 Decision could prove to be
counter-productive, if not outright absurd, awkward, and impractical. Picture
an intended province that consists of several municipalities and component
cities which, in themselves, also consist of islands. The component cities and
municipalities which consist of islands are exempt from the minimum land area
requirement, pursuant to Sections 450 and 442, respectively, of the LGC. Yet,
the province would be made to comply with the minimum land area criterion of
2,000 square kilometers, even if it consists of several islands. This would
mean that Congress has opted to assign a distinctive preference to create a
province with contiguous land area over one composed of islands — and negate
the greater imperative of development of self-reliant communities, rural
progress, and the delivery of basic services to the constituency. This
preferential option would prove more difficult and burdensome if the
2,000-square-kilometer territory of a province is scattered because the islands
are separated by bodies of water, as compared to one with a contiguous land
mass.<span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal">Moreover, such a very restrictive construction could trench
on the equal protection clause, as it actually defeats the purpose of local
autonomy and decentralization as enshrined in the Constitution. Hence, the land
area requirement should be read together with territorial contiguity. 49 </p>
<p class="MsoNormal">Neither can it be said that a local government unit's
territorial jurisdiction can only be exercised over its municipal waters.</p>
<p class="MsoNormal">The Local Government Code provides:</p>
<p class="MsoNormal">(r)<span style="mso-tab-count: 1;"> </span>"Municipal
Waters" includes not only streams, lakes, and tidal waters within the municipality,
not being the subject of private ownership and not comprised within the
national parks, public forest, timber lands, forest reserves or fishery
reserves, but also marine waters included between two lines drawn
perpendicularly to the general coastline from points where the boundary lines
of the municipality or city touch the sea at low tide and a third line parallel
with the general coastline and fifteen (15) kilometers from it. Where two (2)
municipalities are so situated on the opposite shores that there is less than
fifteen (15) kilometers of marine waters between them, the third line shall be
equally distant from opposite shores of their respective municipalities. 50 </p>
<p class="MsoNormal">Under this provision, Palawan can only exercise jurisdiction
over waters that are within 15 kilometers from its general coastline.</p>
<p class="MsoNormal">This narrow interpretation, however, disregards other laws
that have defined and specified portions of Palawan's territory and the extent
of its territorial jurisdiction.</p>
<p class="MsoNormal">Presidential Decree No. 1596 51 established the Kalayaan
Island Group, delineated as follows:</p>
<p class="MsoNormal">Section 1.<span style="mso-tab-count: 1;"> </span>The
area within the following boundaries:</p>
<p class="MsoNormal">KALAYAAN ISLAND GROUP</p>
<p class="MsoNormal">From a point [on the Philippine Treaty Limits] at latitude
7º40' North and longitude 116º00' East of Greenwich, thence due West along the
parallel of 7º40' N to its intersection with the meridian of longitude 112º10'
E, thence due north along the meridian of 112º10' E to its intersection with
the parallel of 9º00' N, thence northeastward to the intersection of parallel of
12º00' N with the meridian of longitude 114º30' E, thence, due East along the
parallel of 12º00' N to its intersection with the meridian of 118º00' E,
thence, due South along the meridian of longitude 118º00' E to its intersection
with the parallel of 10º00' N, thence Southwestwards to the point of beginning
at 7º40' N, latitude and 116º00' E longitude;<span style="mso-spacerun: yes;">
</span></p>
<p class="MsoNormal">including the sea-bed, sub-soil, continental margin and air
space shall belong and be subject to the sovereignty of the Philippines. Such
area is hereby constituted as a distinct and separate municipality of the
Province of Palawan and shall be known as "Kalayaan". 52 </p>
<p class="MsoNormal">The law categorically states that the area includes the
seabed, subsoil, and the continental margin, and that the island shall be a municipality
in the Province of Palawan.</p>
<p class="MsoNormal">Republic Act No. 7611, or the Strategic Environmental Plan
for Palawan, includes in its Environmentally Critical Areas Network:</p>
<p class="MsoNormal">Section 8.<span style="mso-tab-count: 1;"> </span>Main
Components. — . . .</p>
<p class="MsoNormal">(1)<span style="mso-tab-count: 1;"> </span>Terrestrial
— The terrestrial component shall consist of the mountainous as well as
ecologically important low hills and lowland areas of the whole province. It
may be further subdivided into smaller management components.</p>
<p class="MsoNormal">(2)<span style="mso-tab-count: 1;"> </span>Coastal/marine
area — This area includes the whole coastline up to the open sea. This is
characterized by active fisheries and tourism activities; and</p>
<p class="MsoNormal">(3)<span style="mso-tab-count: 1;"> </span>Tribal
Ancestral lands — These are the areas traditionally occupied by the cultural
communities. (Emphasis supplied)</p>
<p class="MsoNormal">Under this law, local chief executives, together with representatives
of national government, are tasked with the protection and preservation of
environmentally critical areas in Palawan. This includes the exercise of
jurisdiction beyond the province's land mass.</p>
<p class="MsoNormal">Under Article 76 (1) of the United Nations Convention on the
Law of the Sea:</p>
<p class="MsoNormal">1.<span style="mso-tab-count: 1;"> </span>The
continental shelf of a coastal State comprises the seabed and subsoil of the
submarine areas that extend beyond its territorial sea throughout the natural
prolongation of its land territory to the outer edge of the continental margin,
or to a distance of 200 nautical miles from the baselines from which the
breadth of the territorial sea is measured where the outer edge of the
continental margin does not extend up to that distance.</p>
<p class="MsoNormal">In the recent arbitral case between the Republic and China,
the Permanent Court of Arbitration, in ruling favorably for the Republic, made
the following factual findings:</p>
<p class="MsoNormal">285.<span style="mso-tab-count: 1;"> </span>Cuarteron
Reef is known as "Huayang Jiao" () in China and "Calderon
Reef" in the Philippines. It is a coral reef located at 08º 51' 41'' N,
112º 50' 08'' E and is the easternmost of four maritime features known
collectively as the London Reefs that are located on the western edge of the
Spratly Islands. Cuarteron Reef is 245.3 nautical miles from the archipelagic
baseline of the Philippine island of Palawan and 585.3 nautical miles from
China's baseline point 39 (Dongzhou (2)) adjacent to the island of Hainan. The
general location of Cuarteron Reef, along with the other maritime features in
the Spratly Islands, is depicted in Map 3 on page 125 below.</p>
<p class="MsoNormal">286.<span style="mso-tab-count: 1;"> </span>Fiery Cross
Reef is known as "Yongshu Jiao" () in China and "Kagitingan
Reef" in the Philippines. It is a coral reef located at 09º 33' 00'' N,
112º 53' 25'' E, to the north of Cuarteron Reef and along the western edge of
the Spratly Islands, adjacent to the main shipping routes through the South
China Sea. Fiery Cross Reef is 254.2 nautical miles from the archipelagic
baseline of the Philippine island of Palawan and 547.7 nautical miles from the
China's baseline point 39 (Dongzhou (2)) adjacent to the island of Hainan.<span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal">287.<span style="mso-tab-count: 1;"> </span>Johnson
Reef, McKennan Reef, and Hughes Reef are all coral reefs that form part of the
larger reef formation in the centre of the Spratly Islands known as Union Bank.
Union Bank also includes the high-tide feature of Sin Cowe Island. Johnson Reef
(also known as Johnson South Reef) is known as "Chigua Jiao" () in
China and "Mabini Reef" in the Philippines. It is located at 9º 43'
00'' N, 114º 16' 55'' E and is 184.7 nautical miles from the archipelagic baseline
of the Philippine island of Palawan and 570.8 nautical miles from China's
baseline point 39 (Dongzhou (2)) adjacent to Hainan. Although the Philippines
has referred to "McKennan Reef (including Hughes Reef)" in its
Submissions, the Tribunal notes that McKennan Reef and Hughes Reef are distinct
features, albeit adjacent to one another, and considers it preferable, for the
sake of clarity, to address them separately. McKennan Reef is known as
"Ximen Jiao" () in China and, with Hughes Reef, is known collectively
as "Chigua Reef" in the Philippines. It is located at 09º 54' 13'' N,
114º 27' 53'' E and is 181.3 nautical miles from the archipelagic baseline of
the Philippine island of Palawan and 566.8 nautical miles from China's baseline
point 39 (Dongzhou (2)) adjacent to Hainan. Hughes Reef is known as
"Dongmen Jiao" () in China and, with McKennan Reef, is known
collectively as "Chigua Reef" in the Philippines. It is located at
09º 54' 48'' N, 114º 29' 48'' E and is 180.3 nautical miles from the archipelagic
baseline of the Philippine island of Palawan and 567.2 nautical miles from
China's baseline point 39 (Dongzhou (2)) adjacent to Hainan.</p>
<p class="MsoNormal">288.<span style="mso-tab-count: 1;"> </span>The Gaven
Reefs are known as "Nanxun Jiao" () in China and "Burgos"
in the Philippines. They constitute a pair of coral reefs that forms part of
the larger reef formation known as Tizard Bank, located directly to the north
of Union Bank. Tizard Bank also includes the high-tide features of Itu Aba
Island, Namyit Island, and Sand Cay. Gaven Reef (North) is located at 10º 12'
27'' N, 114º 13' 21'' E and is 203.0 nautical miles from the archipelagic
baseline of the Philippine island of Palawan and 544.1 nautical miles from
China' s baseline point 39 (Dongzhou (2)) adjacent to Hainan. Gaven Reef
(South) is located at 10º 09' 42'' N, 114º 15' 09'' E and is 200.5 nautical
miles from the archipelagic baseline of the Philippine island of Palawan and
547.4 nautical miles from China's baseline point 39 (Dongzhou (2)) adjacent to
Hainan.</p>
<p class="MsoNormal">289.<span style="mso-tab-count: 1;"> </span>Subi Reef is
known as "Zhubi Jiao" () in China and "Zamora Reef" in the
Philippines. It is a coral reef located to the north of Tizard Bank and a short
distance to the south-west of the high-tide feature of Thitu Island and its
surrounding Thitu Reefs. Subi Reef is located at 10º 55' 22'' N, 114º 05' 04''
E and lies on the north-western edge of the Spratly Islands. Subi Reef is 231.9
nautical miles from the archipelagic baseline of the Philippine island of
Palawan and 502.2 nautical miles from China's baseline point 39 (Dongzhou (2))
adjacent to Hainan.<span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal">290.<span style="mso-tab-count: 1;"> </span>Mischief
Reef and Second Thomas Shoal are both coral reefs located in the centre of the
Spratly Islands, to the east of Union Bank and to the south-east of Tizard
Bank. Mischief Reef is known as "Meiji Jiao" () in China and "Panganiban"
in the Philippines. It is located at 09º 54' 17'' N, 115º 31' 59'' E and is
125.4 nautical miles from the archipelagic baseline of the Philippine island of
Palawan and 598.1 nautical miles from China's baseline point 39 (Dongzhou (2))
adjacent to Hainan. Second Thomas Shoal is known as "Ren' ai Jiao" ()
in China and "Ayungin Shoal" in the Philippines. It is located at 09º
54' 17'' N, 115º 51' 49'' E and is 104.0 nautical miles from the archipelagic
baseline of the Philippine island of Palawan and 616.2 nautical miles from
China's baseline point 39 (Dongzhou (2)) adjacent to Hainan. 53 </p>
<p class="MsoNormal">The Permanent Court of Arbitration used the Province of
Palawan as its baseline point to determine the reefs' proximity to the
Philippines. The Republic likewise made argument with regard to Reed Bank in
asserting its sovereignty over the Kalayaan Island Group:</p>
<p class="MsoNormal">FIRST, the Republic of the Philippines has sovereignty and
jurisdiction over the Kalayaan Island Group (KIG);</p>
<p class="MsoNormal">SECOND, even while the Republic of the Philippines has
sovereignty and jurisdiction over the KIG, the Reed Bank where GSEC 101 is
situated does not form part of the "adjacent waters," specifically
the 12 M territorial waters of any relevant geological feature in the KIG
either under customary international law or the United Nations Convention on
the Law of the Sea (UNCLOS);</p>
<p class="MsoNormal">THIRD, Reed Bank is not an island, a rock, or a low tide
elevation. Rather, Reed Bank is a completely submerged bank that is part of the
continental margin of Palawan. Accordingly, Reed Bank, which is about 85 M from
the nearest coast of Palawan and about 595 M from the coast of Hainan, forms
part of the 200 M continental shelf of the Philippine archipelago under
UNCLOS[.] 54 </p>
<p class="MsoNormal">The Republic has manifested before an international audience
that it exercises sovereignty over territories without a definitive land mass
on the ground that they form part and parcel of the Province of Palawan. Thus,
it recognized that jurisdiction can be established even over areas which are
not susceptible of land mass or defined by contiguity.<span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal">In any case, the grant of an equitable share in the
utilization and development of resources within a local government unit's
territorial jurisdiction has practical basis.</p>
<p class="MsoNormal">When resources are being utilized and developed in a certain
area, there will be a need for the surrounding areas to be secured. The
environmental impacts to the nearby community will have to be addressed. While
amicus curiae Secretary General Bensurto eventually concluded that the
Camago-Malampaya reservoir was not within Palawan's territorial jurisdiction,
he nonetheless made the following observations:</p>
<p class="MsoNormal">1.<span style="mso-tab-count: 1;"> </span>The
proximity of the Camago-Malampaya gas reservoir to the Province of Palawan
makes the latter environmentally vulnerable to any major accidents in the gas
reservoir;</p>
<p class="MsoNormal">2.<span style="mso-tab-count: 1;"> </span>The gas
pipes of the Camago-Malampaya pass through the Northern part of the Palawan
Province. 55 </p>
<p class="MsoNormal">The local government unit's equitable share is meant to
address the possible effects that the project may have on the local population.
It can also assist in strengthening the economic development of the local
government unit and uplift the lives of its constituents.</p>
<p class="MsoNormal">III</p>
<p class="MsoNormal">The ponencia submits that there was no estoppel on the part
of the Executive Branch when it promulgated issuances recognizing the Province
of Palawan's share in the Camago-Malampaya Project, as they were merely
"based on a mistaken assumption." 56 </p>
<p class="MsoNormal">The doctrine of contemporaneous construction is settled. In
Tamayo v. Manila Hotel Company: 57 </p>
<p class="MsoNormal">It is a rule of statutory construction that "courts
will and should respect the contemporaneous construction placed upon a statute
by the executive officers, whose duty it is to enforce it and unless such
interpretation is clearly erroneous will ordinarily be controlled thereby."
58 </p>
<p class="MsoNormal">Another variation of the doctrine states:</p>
<p class="MsoNormal">. . . [An] order, constituting executive or contemporaneous
construction of a statute by an administrative agency charged with the task of
interpreting and applying the same, is entitled to full respect and should be
accorded great weight by the courts, unless such construction is clearly shown
to be in sharp conflict with the Constitution, the governing statute, or other
laws. 59 (Citation omitted)<span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal">The National Government has repeatedly recognized that the
Province of Palawan was entitled to an equitable share in the proceeds of its
utilization and development.</p>
<p class="MsoNormal">Administrative Order No. 381, issued by then President
Ramos, expressly recognized that the National Government would share in the net
proceeds of the Camago-Malampaya Natural Gas Project. 60 In particular, it
provided:</p>
<p class="MsoNormal">WHEREAS, under SC 38, as clarified, a production sharing
scheme has been provided whereby the Government is entitled to receive an
amount equal to sixty percent (60%) of the net proceeds from the sale of
Petroleum (including Natural Gas) produced from Petroleum Operations (all as
defined in SC 38) while Shell/Oxy, as Service Contractor is entitled to receive
an amount equal to forty percent (40%) of the net proceeds;</p>
<p class="MsoNormal">xxx<span style="mso-spacerun: yes;"> </span><span style="mso-spacerun: yes;"> </span>xxx<span style="mso-spacerun: yes;"> </span>xxx</p>
<p class="MsoNormal">WHEREAS, the Government has determined that it can derive
the following economic and social benefits from the Natural Gas Project:</p>
<p class="MsoNormal">xxx<span style="mso-spacerun: yes;">
</span>xxx<span style="mso-spacerun: yes;"> </span>xxx</p>
<p class="MsoNormal">2.<span style="mso-tab-count: 1;"> </span>based on
the estimated production level and Natural Gas pricing formula between the
Sellers and the Buyers of such Natural Gas, the estimated Government revenues
for the 20-year contract period will be around US$8.1 billion; this includes
estimated revenues to be generated from the available oil and condensate
reserves of the Camago-Malampaya Reservoir; the province of Palawan is expected
to receive about US$2.1 billion from the total Government share of US$8.1
billion;</p>
<p class="MsoNormal">xxx<span style="mso-spacerun: yes;">
</span>xxx<span style="mso-spacerun: yes;"> </span>xxx</p>
<p class="MsoNormal">WHEREAS, the Government's share in Petroleum (including
Natural Gas) produced under SC 38, as clarified, will be reduced (i) by the
share of concerned local government units pursuant to the Local Government Code
and (ii) by amounts of income taxes due from and paid on behalf of the Service
Contractor (the resulting amounts hereinafter called the "Net Government
Share") [.] 61 </p>
<p class="MsoNormal">On June 10, 1998, then Secretary of Energy Viray wrote a
letter to then Palawan Governor Socrates, requesting for a deferred payment of
50% of Palawan's share in the Camago-Malampaya Natural Gas Project, 62 which
likewise shows an effort by the Executive Branch to fulfill its commitments to
the Province of Palawan.</p>
<p class="MsoNormal">After the formal launch of the Camago-Malampaya Natural Gas
Project, negotiations occurred between agents of the National Government and
the Province of Palawan, to determine the Province of Palawan's share in the
net proceeds, until it was called off by the Province of Palawan. 63 This is
yet another instance of the Executive Branch's acceptance of the Province of
Palawan's territorial jurisdiction over the area. Otherwise, there would have
been no need to negotiate.<span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal">Even when the case before the Regional Trial Court was
pending, then Secretary of Energy Perez, then Secretary of Budget and
Management Relampagos, and then Secretary of Finance Amatong executed an
Interim Agreement 64 with the Province of Palawan, providing for equal sharing
of the 40% being claimed by the Province of Palawan, to be called the
"Palawan Share," for its development and infrastructure projects,
environment protection and conservation, electrification of 431 barangays, and
establishment of facilities for the security enhancements of the exclusive
economic zone. 65 </p>
<p class="MsoNormal">Representatives of the National Government, with authority
from then President Arroyo, and the Province of Palawan, in conformity with the
representatives of the legislative districts of Palawan, likewise executed a
Provisional Implementation Agreement which allowed for the release of 50% of
the disputed 40% share to be utilized for development projects in Palawan.</p>
<p class="MsoNormal">Then President Arroyo issued Executive Order No. 683 dated
December 1, 2007, pertinent portions of which state:</p>
<p class="MsoNormal">WHEREAS, on 11 December, 1990, the Republic of the
Philippines, represented by the Department of Energy (DOE), entered into
Service Contract No. 38 (SC 38) and engaged the services of a consortium
composed today of Shell B.V., Shell Philippines LLC, Chevron Malampaya LLC and
PNOC-Exploration Corporation (EC), as Contractor for the exploration,
development and production of petroleum resources in an identified offshore
area, known as the Camago-Malampaya Reservoir, to the West Philippines Sea;</p>
<p class="MsoNormal">xxx<span style="mso-spacerun: yes;">
</span>xxx<span style="mso-spacerun: yes;"> </span>xxx</p>
<p class="MsoNormal">WHEREAS, President as Chief Executive has a broad
perspective of the requirements to develop Palawan as a major tourism
destination from the point of view of the National Government, which has
identified the Central Philippines Superregion, of which Palawan is a part, for
tourism infrastructure investments;</p>
<p class="MsoNormal">WHEREAS, there is a pending court dispute between the
National Government and the Province of Palawan on the issue of whether
Camago-Malampaya Reservoir is within the territorial boundaries of the Province
of Palawan thus entitling the said province to 40% of the Net Government Share
in the proceeds of SC 38 pursuant to Sec. 290 of Republic Act No. (RA) 7160,
otherwise known as the "Local Government Code";<span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal">WHEREAS, Sec. 25 of RA 7160 provides that the President may,
upon request of the local government unit (LGU) concerned, direct the
appropriate national government agency to provide financial, technical or other
forms of assistance to the LGU;</p>
<p class="MsoNormal">WHEREAS, the duly-authorized representatives of the National
Government and the Province of Palawan, with the conformity of the
Representatives of the Congressional District of Palawan, have agreed on a
Provisional Implementation Agreement (PIA) that would allow 50% of the disputed
40% of the Net Government Share in the proceeds of SC 38 to be utilized for the
immediate and effective implementation of development projects for the people
of Palawan;</p>
<p class="MsoNormal">NOW, THEREFORE, I, GLORIA M. ARROYO, President of the
Philippines, by virtue of the power vested in me by law, do hereby order:</p>
<p class="MsoNormal">SECTION 1. <span style="mso-tab-count: 1;"> </span>Subject
to existing laws, and the usual government accounting and auditing rules and
regulations, the Department of Budget and Management (DBM) is hereby authorized
to release funds to the implementing agencies (IA) pursuant to the PIA, upon
the endorsement and submission by the DOE and/or the PNOC Exploration
Corporation of the following documents:</p>
<p class="MsoNormal">1.1.<span style="mso-tab-count: 1;"> </span>Directive
by the Office of the President or written request of the Province of Palawan,
the Palawan Congressional Districts or the Highly Urbanized City of Puerto
Princesa, for the funding of designated projects;</p>
<p class="MsoNormal">1.2.<span style="mso-tab-count: 1;"> </span>A
certification that the designated projects fall under the investment program of
the Province of Palawan, City of Puerto Princesa, and/or the development
projects identified in the development program of the National Government or
its agencies; and</p>
<p class="MsoNormal">1.3.<span style="mso-tab-count: 1;"> </span>Bureau of
Treasury certification on the availability of funds from the 50% of the 40%
share being claimed by the Province of Palawan from the Net Government Share
under SC 38;</p>
<p class="MsoNormal">Provided, that the DBM shall be subject to the actual
collections deposited with the National Treasury, and shall be in accordance
with the Annual Fiscal Program of the National Government.</p>
<p class="MsoNormal">xxx<span style="mso-spacerun: yes;">
</span>xxx<span style="mso-spacerun: yes;"> </span>xxx</p>
<p class="MsoNormal">SECTION 3. <span style="mso-tab-count: 1;"> </span>The
National government, with due regard to the pending judicial dispute, shall
allow the Province of Palawan, the Congressional Districts of Palawan and the
City of Puerto Princesa to securitize their respective shares in the 50% of the
disputed 40% of the Net Government Share in the proceeds of SC 38 pursuant to
the PIA. For the purpose, the DOE shall, in consultation with the Department of
Finance, be responsible for preparing the Net Government Revenues for the
period of to June 30, 1010.<span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal">SECTION 4. <span style="mso-tab-count: 1;"> </span>The
amounts released pursuant to this EO shall be without prejudice to any on-going
discussions or final judicial resolution of the legal dispute regarding the
National Government's territorial jurisdiction over the areas covered by SC 38
in relation to the claim of the Province of Palawan under Sec. 290 of RA 7160.</p>
<p class="MsoNormal">These enactments show the Executive Branch's contemporaneous
construction of Section 290 of the Local Government Code in relation to Service
Contract No. 38.</p>
<p class="MsoNormal">Contemporaneous construction is resorted to when there is an
ambiguity in the law and its provisions cannot be discerned through plain
meaning. The interpretation of those called upon to implement the law is given
great respect. 66 </p>
<p class="MsoNormal">Given the ambiguity of the phrase "within their
respective areas" under Article X, Section 7 of the Constitution, it was
necessary to resort to the examination of prior and subsequent acts of those
required to implement the law.</p>
<p class="MsoNormal">Considering that the Executive Branch has consistently
recognized the Province of Palawan's entitlement to its equitable share in the
net proceeds of the Camago-Malampaya Natural Gas Project, its interpretation
must be given its due weight.</p>
<p class="MsoNormal">The ponencia, in confining territorial jurisdiction to only
that of land mass, does a disservice to the entirety of Article X, Section 7,
which reads:</p>
<p class="MsoNormal">ARTICLE X</p>
<p class="MsoNormal">Local Government</p>
<p class="MsoNormal">General Provisions</p>
<p class="MsoNormal">Section 7.<span style="mso-tab-count: 1;"> </span>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.</p>
<p class="MsoNormal">Under this provision, local governments are 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.
This means that law may define what could be included within a local
government's respective area.</p>
<p class="MsoNormal">Thus, the extent of a local government unit's territorial
jurisdiction cannot be limited only to its land mass, as defined by the Local
Government Code. Reference must also be made to other statutes.<span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal">In this instance, Presidential Decree No. 1596 and Republic
Act No. 7611 grants the Province of Palawan territorial jurisdiction over areas
that are beyond its coastline. Presidential Decree No. 1596 even explicitly
declares that the Province of Palawan may have territorial jurisdiction over
the continental shelf of the Kalayaan Island Group. Thus, I cannot agree with
the ponencia's recommendation that territorial jurisdiction is exercised solely
over a local government's land mass.</p>
<p class="MsoNormal">Unfortunately, the Province of Palawan failed to provide
sufficient evidence to show that the Camago-Malampaya Natural Gas Project was
within its area of responsibility. The maps submitted to this Court were
inadequate to prove that the Province of Palawan's claims. Thus, I am
constrained to vote with the majority.</p>
<p class="MsoNormal">Accordingly, I vote to GRANT the Petition in G.R. No. 170867
and DENY the Petition in G.R. No. 189514.</p>
<p class="MsoNormal">Footnotes</p>
<p class="MsoNormal"><span style="mso-spacerun: yes;"> </span>*<span style="mso-tab-count: 1;"> </span>No Part.</p>
<p class="MsoNormal">**<span style="mso-tab-count: 1;"> </span>On leave.</p>
<p class="MsoNormal"><span style="mso-spacerun: yes;"> </span>1.<span style="mso-tab-count: 1;"> </span>Rollo (G.R. No. 170867), pp. 9-81.</p>
<p class="MsoNormal"><span style="mso-spacerun: yes;"> </span>2.<span style="mso-tab-count: 1;"> </span>Penned by Judge Bienvenido C.
Blancaflor; id. at 83-112.</p>
<p class="MsoNormal"><span style="mso-spacerun: yes;"> </span>3.<span style="mso-tab-count: 1;"> </span>Id. at 113-116.</p>
<p class="MsoNormal"><span style="mso-spacerun: yes;"> </span>4.<span style="mso-tab-count: 1;"> </span>Rollo (G.R. No. 185941), pp. 13-58.</p>
<p class="MsoNormal"><span style="mso-spacerun: yes;"> </span>5.<span style="mso-tab-count: 1;"> </span>Penned by Associate Justice Rebecca De
Guia-Salvador, concurred in by Associate Justices Vicente S.E. Veloso and
Apolinario D. Bruselas, Jr.; id. at 218-224.</p>
<p class="MsoNormal"><span style="mso-spacerun: yes;"> </span>6.<span style="mso-tab-count: 1;"> </span>AUTHORIZING THE USE OF FEES, REVENUES
AND RECEIPTS FROM SERVICE CONTRACT NO. 38 FOR THE IMPLEMENTATION OF DEVELOPMENT
PROJECTS FOR THE PEOPLE OF PALAWAN. Issued on December 1, 2007. Rollo, (G.R.
No. 170867), pp. 392-J-392-L.</p>
<p class="MsoNormal"><span style="mso-spacerun: yes;"> </span>7.<span style="mso-tab-count: 1;"> </span>Rollo (G.R. No. 185941), pp. 250-252.</p>
<p class="MsoNormal"><span style="mso-spacerun: yes;"> </span>8.<span style="mso-tab-count: 1;"> </span>Rollo (G.R. No. 170867), pp. 14, 556,
891, 1464-1465; rollo (G.R. No. 185941), p. 17. TSN, November 24, 2009, p. 15.</p>
<p class="MsoNormal"><span style="mso-spacerun: yes;"> </span>9.<span style="mso-tab-count: 1;"> </span>Rollo (G.R. No. 170867), p. 1465.</p>
<p class="MsoNormal">10.<span style="mso-tab-count: 1;"> </span>Id. at
1466.</p>
<p class="MsoNormal">11.<span style="mso-tab-count: 1;"> </span>"Net
proceeds" is defined under Section VII, paragraph 7.3 (c) of Service
Contract No. 38 as the difference between the gross income and the sum of the
Operating Expenses as defined in Section II, paragraph 2.19 of the contract.
Rollo (G.R. No. 185941), pp. 165 and 182.</p>
<p class="MsoNormal">12.<span style="mso-tab-count: 1;"> </span>Third
Whereas Clause, Administrative Order No. 381; rollo (G.R. No. 170867), pp. 549
and 556.</p>
<p class="MsoNormal">13.<span style="mso-tab-count: 1;"> </span>First
Whereas Clause, Executive Order No. 683 issued on December 1, 2007; id. at
392-J.</p>
<p class="MsoNormal">14.<span style="mso-tab-count: 1;"> </span>PROVIDING
FOR THE FULFILLMENT BY THE NATIONAL POWER CORPORATION OF ITS OBLIGATIONS UNDER
THE AGREEMENT FOR THE SALE AND PURCHASE OF NATURAL GAS DATED DECEMBER 30, 1997
WITH SHELL PHILIPPINE EXPLORATION B.V./OCCIDENTAL PHILIPPINES, INC. AND THE
COMPLIANCE OF THE NATIONAL GOVERNMENT, THROUGH THE DEPARTMENT OF FINANCE AND
THE DEPARTMENT OF ENERGY WITH ITS PERFORMANCE UNDERTAKING THEREFOR AND OTHER
PURPOSES. Issued on February 17, 1998. Id. at 549-550-A.</p>
<p class="MsoNormal">15.<span style="mso-tab-count: 1;"> </span>Fifteenth
Whereas Clause, Administrative Order No. 381, paragraph 2; id. at 549-A and
892.</p>
<p class="MsoNormal">16.<span style="mso-tab-count: 1;"> </span>Id. at
551-552, 892-893.</p>
<p class="MsoNormal">17.<span style="mso-tab-count: 1;"> </span>Id. at 892.</p>
<p class="MsoNormal">18.<span style="mso-tab-count: 1;"> </span>Sec. 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.</p>
<p class="MsoNormal">19.<span style="mso-tab-count: 1;"> </span>Rollo (G.R.
No. 170867), pp. 14, 894-895.</p>
<p class="MsoNormal">20.<span style="mso-tab-count: 1;"> </span>Id. at
128-129.</p>
<p class="MsoNormal">21.<span style="mso-tab-count: 1;"> </span>Id. at
15-16, 127-129, 895-896.</p>
<p class="MsoNormal">22.<span style="mso-tab-count: 1;"> </span>Id. at
130-158.</p>
<p class="MsoNormal">23.<span style="mso-tab-count: 1;"> </span>AN ACT
ADOPTING THE STRATEGIC ENVIRONMENT PLAN FOR PALAWAN, CREATING THE
ADMINISTRATIVE MACHINERY TO ITS IMPLEMENTATION, CONVERTING THE PALAWAN
INTEGRATED AREA DEVELOPMENT PROJECT OFFICE TO ITS SUPPORT STAFF, PROVIDING
FUNDS THEREFOR, AND FOR OTHER PURPOSES. Approved on June 19, 1992.</p>
<p class="MsoNormal">24.<span style="mso-tab-count: 1;"> </span>AN ACT
PROVIDING FOR A LOCAL GOVERNMENT CODE OF 1991.</p>
<p class="MsoNormal">25.<span style="mso-tab-count: 1;"> </span>An
Ordinance Delineating the Territorial Jurisdiction of the Province of Palawan.
Rollo (G.R. No. 170867), pp. 149 and 972.</p>
<p class="MsoNormal">26.<span style="mso-tab-count: 1;"> </span>Id. at 16-17,
130-158.</p>
<p class="MsoNormal">27.<span style="mso-tab-count: 1;"> </span>Id. at 89,
92.</p>
<p class="MsoNormal">28.<span style="mso-tab-count: 1;"> </span>Id. at
555-561.</p>
<p class="MsoNormal">29.<span style="mso-tab-count: 1;"> </span>Id. at
557-559, 896-897.</p>
<p class="MsoNormal">30.<span style="mso-tab-count: 1;"> </span>Id. at 897.</p>
<p class="MsoNormal">31.<span style="mso-tab-count: 1;"> </span>Id. at 112.</p>
<p class="MsoNormal">32.<span style="mso-tab-count: 1;"> </span>Id. at 109.</p>
<p class="MsoNormal">33.<span style="mso-tab-count: 1;"> </span>Id. at
109-110.</p>
<p class="MsoNormal">34.<span style="mso-tab-count: 1;"> </span>226 Phil.
624 (1986).</p>
<p class="MsoNormal">35.<span style="mso-tab-count: 1;"> </span>321 Phil.
395 (1995).</p>
<p class="MsoNormal">36.<span style="mso-tab-count: 1;"> </span>86 Phil.
629 (1950).</p>
<p class="MsoNormal">37.<span style="mso-tab-count: 1;"> </span>Rollo (G.R.
170867), p. 111.</p>
<p class="MsoNormal">38.<span style="mso-tab-count: 1;"> </span>Id.</p>
<p class="MsoNormal">39.<span style="mso-tab-count: 1;"> </span>Id. at 112.</p>
<p class="MsoNormal">40.<span style="mso-tab-count: 1;"> </span>Id. at 17,
113-114.</p>
<p class="MsoNormal">41.<span style="mso-tab-count: 1;"> </span>Id. at
17-18.</p>
<p class="MsoNormal">42.<span style="mso-tab-count: 1;"> </span>Id. at 113.</p>
<p class="MsoNormal">43.<span style="mso-tab-count: 1;"> </span>Id. at 435.</p>
<p class="MsoNormal">44.<span style="mso-tab-count: 1;"> </span>Id. at
113-116.</p>
<p class="MsoNormal">45.<span style="mso-tab-count: 1;"> </span>Id. at
115-116.</p>
<p class="MsoNormal">46.<span style="mso-tab-count: 1;"> </span>Id. at 114.</p>
<p class="MsoNormal">47.<span style="mso-tab-count: 1;"> </span>473 Phil.
806 (2004).</p>
<p class="MsoNormal">48.<span style="mso-tab-count: 1;"> </span>Rollo (G.R.
No. 170867), p. 115.</p>
<p class="MsoNormal">49.<span style="mso-tab-count: 1;"> </span>Id. at
417-432.</p>
<p class="MsoNormal">50.<span style="mso-tab-count: 1;"> </span>Id. at 18
and 437.</p>
<p class="MsoNormal">51.<span style="mso-tab-count: 1;"> </span>Id. at
9-81.</p>
<p class="MsoNormal">52.<span style="mso-tab-count: 1;"> </span>Id. at 18,
21, 437.</p>
<p class="MsoNormal">53.<span style="mso-tab-count: 1;"> </span>Id. at
622-625.</p>
<p class="MsoNormal">54.<span style="mso-tab-count: 1;"> </span>Id. at 625.</p>
<p class="MsoNormal">55.<span style="mso-tab-count: 1;"> </span>Id.</p>
<p class="MsoNormal">56.<span style="mso-tab-count: 1;"> </span>Id. at 438.</p>
<p class="MsoNormal">57.<span style="mso-tab-count: 1;"> </span>Sixth
Whereas Clause, Executive Order No. 683 issued on December 1, 2007; id. at
392-J; <https://www.dbm.gov.ph/wp-content/uploads/Issuances/2008/Joint%20Circular/JC_No3/jc_no3.pdf>.</p>
<p class="MsoNormal">58.<span style="mso-tab-count: 1;"> </span>Rollo (G.R.
No. 185941), pp. 62-96.</p>
<p class="MsoNormal">59.<span style="mso-tab-count: 1;"> </span>Id. at 20
and 219.</p>
<p class="MsoNormal">60.<span style="mso-tab-count: 1;"> </span>Id. at
20-21, 219.</p>
<p class="MsoNormal">61.<span style="mso-tab-count: 1;"> </span>Id. at 21,
219-220.</p>
<p class="MsoNormal">62.<span style="mso-tab-count: 1;"> </span>Id. at
218-224.</p>
<p class="MsoNormal">63.<span style="mso-tab-count: 1;"> </span>Id. at
220-223.</p>
<p class="MsoNormal">64.<span style="mso-tab-count: 1;"> </span>Id. at 249.</p>
<p class="MsoNormal">65.<span style="mso-tab-count: 1;"> </span>Id. at 22.</p>
<p class="MsoNormal">66.<span style="mso-tab-count: 1;"> </span>Id. at
250-252.</p>
<p class="MsoNormal">67.<span style="mso-tab-count: 1;"> </span>Id. at
13-58.</p>
<p class="MsoNormal">68.<span style="mso-tab-count: 1;"> </span>Id. at 25.</p>
<p class="MsoNormal">69.<span style="mso-tab-count: 1;"> </span>Id. at 14.</p>
<p class="MsoNormal">70.<span style="mso-tab-count: 1;"> </span>Id. at 327.</p>
<p class="MsoNormal">71.<span style="mso-tab-count: 1;"> </span>Rollo (G.R.
No. 170867), pp. 1210-1214.</p>
<p class="MsoNormal">72.<span style="mso-tab-count: 1;"> </span>Id. at
1260-1261.</p>
<p class="MsoNormal">73.<span style="mso-tab-count: 1;"> </span>Id. at
1466-1467.</p>
<p class="MsoNormal">74.<span style="mso-tab-count: 1;"> </span>Id. at
1467.</p>
<p class="MsoNormal">75.<span style="mso-tab-count: 1;"> </span>From 2002
to 2007, there were no or minimal remittance because of the Take-or-Pay
Quantity (TOPQ) obligation of the National Power Corporation as implemented
through Administrative Order No. 381 issued on February 17, 1998. Id.</p>
<p class="MsoNormal">76.<span style="mso-tab-count: 1;"> </span>Id. at 22.</p>
<p class="MsoNormal">77.<span style="mso-tab-count: 1;"> </span>Id.</p>
<p class="MsoNormal">78.<span style="mso-tab-count: 1;"> </span>Id. at 23.</p>
<p class="MsoNormal">79.<span style="mso-tab-count: 1;"> </span>Id.</p>
<p class="MsoNormal">80.<span style="mso-tab-count: 1;"> </span>Supra note
34.</p>
<p class="MsoNormal">81.<span style="mso-tab-count: 1;"> </span>Id. at 24.</p>
<p class="MsoNormal">82.<span style="mso-tab-count: 1;"> </span>Id. at
23-25.</p>
<p class="MsoNormal">83.<span style="mso-tab-count: 1;"> </span>Id. at
1473-1474.</p>
<p class="MsoNormal">84.<span style="mso-tab-count: 1;"> </span>Id. at
1475-1476.</p>
<p class="MsoNormal">85.<span style="mso-tab-count: 1;"> </span>Id. at 1481
and 1483.</p>
<p class="MsoNormal">86.<span style="mso-tab-count: 1;"> </span>Id. at
1487-1488.</p>
<p class="MsoNormal">87.<span style="mso-tab-count: 1;"> </span>Section 4.
Definition of Terms. — x x x</p>
<p class="MsoNormal">xxx<span style="mso-spacerun: yes;">
</span>xxx<span style="mso-spacerun: yes;"> </span>xxx</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>58.
Municipal waters — include not only streams, lakes, inland bodies of water and
tidal waters within the municipality which are not included within the
protected areas as defined under Republic Act No. 7586 (The NIPAS Law), public
forest, timber lands, forest reserves or fishery reserves, but also marine
waters included between two (2) lines drawn perpendicular to the general
coastline from points where the boundary lines of the municipality touch the
sea at low tide and a third line parallel with the general coastline including
offshore islands and fifteen (15) kilometers from such coastline. Where two (2)
municipalities are so situated on opposite shores that there is less than
thirty (30) kilometers of marine waters between them, the third line shall be
equally distant from opposite shore of the respective municipalities.</p>
<p class="MsoNormal">88.<span style="mso-tab-count: 1;"> </span>AN ACT
PROVIDING FOR THE DEVELOPMENT, MANAGEMENT AND CONSERVATION OF THE FISHERIES AND
AQUATIC RESOURCES, INTEGRATING ALL LAWS PERTINENT THERETO, AND FOR OTHER
PURPOSES. Approved on February 25, 1998.</p>
<p class="MsoNormal">89.<span style="mso-tab-count: 1;"> </span>Rollo (G.R.
No. 170867), p. 26.</p>
<p class="MsoNormal">90.<span style="mso-tab-count: 1;"> </span>Id. at
26-28.</p>
<p class="MsoNormal">91.<span style="mso-tab-count: 1;"> </span>Id. at
28-29, 1559, 1562-1563.</p>
<p class="MsoNormal">92.<span style="mso-tab-count: 1;"> </span>Id. at
29-30, 1564.</p>
<p class="MsoNormal">93.<span style="mso-tab-count: 1;"> </span>Id. at 30,
1564-1565.</p>
<p class="MsoNormal">94.<span style="mso-tab-count: 1;"> </span>Supra note
36.</p>
<p class="MsoNormal">95.<span style="mso-tab-count: 1;"> </span>Rollo (G.R.
No. 170867), pp. 30-31, 1566.</p>
<p class="MsoNormal">96.<span style="mso-tab-count: 1;"> </span>Id. at
32-33.</p>
<p class="MsoNormal">97.<span style="mso-tab-count: 1;"> </span>Id. at
1501-1502.</p>
<p class="MsoNormal">98.<span style="mso-tab-count: 1;"> </span>Id. at
1503.</p>
<p class="MsoNormal">99.<span style="mso-tab-count: 1;"> </span>Id. at
1556-1557.</p>
<p class="MsoNormal">100.<span style="mso-tab-count: 1;"> </span>Id. at 1557.</p>
<p class="MsoNormal">101.<span style="mso-tab-count: 1;"> </span>Id. at
34-35.</p>
<p class="MsoNormal">102.<span style="mso-tab-count: 1;"> </span>Id. at 36.</p>
<p class="MsoNormal">103.<span style="mso-tab-count: 1;"> </span>Id. at
1499-1501.</p>
<p class="MsoNormal">104.<span style="mso-tab-count: 1;"> </span>Id. at
37-38.</p>
<p class="MsoNormal">105.<span style="mso-tab-count: 1;"> </span>Id. at
38-40, 1530, 1532-1533.</p>
<p class="MsoNormal">106.<span style="mso-tab-count: 1;"> </span>Id. at
40-46.</p>
<p class="MsoNormal">107.<span style="mso-tab-count: 1;"> </span>DECLARING
CERTAIN AREA PART OF THE PHILIPPINE TERRITORY AND PROVIDING FOR THEIR
GOVERNMENT AND ADMINISTRATION. Issued on June 11, 1978.</p>
<p class="MsoNormal">108.<span style="mso-tab-count: 1;"> </span>Rollo (G.R.
170867), pp. 46 and 1498.</p>
<p class="MsoNormal">109.<span style="mso-tab-count: 1;"> </span>Id. at 47-49
and 1492.</p>
<p class="MsoNormal">110.<span style="mso-tab-count: 1;"> </span>Id. at 1499.</p>
<p class="MsoNormal">111.<span style="mso-tab-count: 1;"> </span>Id. at
1504-1508.</p>
<p class="MsoNormal">112.<span style="mso-tab-count: 1;"> </span>Id. at
1487-1488 and 1511.</p>
<p class="MsoNormal">113.<span style="mso-tab-count: 1;"> </span>Id. at
1511-1513.</p>
<p class="MsoNormal">114.<span style="mso-tab-count: 1;"> </span>Id. at 1518.</p>
<p class="MsoNormal">115.<span style="mso-tab-count: 1;"> </span>Id. at
1519-1520.</p>
<p class="MsoNormal">116.<span style="mso-tab-count: 1;"> </span>Id. at 49.</p>
<p class="MsoNormal">117.<span style="mso-tab-count: 1;"> </span>Id. at
49-50.</p>
<p class="MsoNormal">118.<span style="mso-tab-count: 1;"> </span>Id. at
1576-1577 and 1579.</p>
<p class="MsoNormal">119.<span style="mso-tab-count: 1;"> </span>Id. at 1580.</p>
<p class="MsoNormal">120.<span style="mso-tab-count: 1;"> </span>Id. at 51
and 1580-1581.</p>
<p class="MsoNormal">121.<span style="mso-tab-count: 1;"> </span>Id. at 52.</p>
<p class="MsoNormal">122.<span style="mso-tab-count: 1;"> </span>Id. at 52
and 1579-1580.</p>
<p class="MsoNormal">123.<span style="mso-tab-count: 1;"> </span>Id. at 52.</p>
<p class="MsoNormal">124.<span style="mso-tab-count: 1;"> </span>Id. at 1552.</p>
<p class="MsoNormal">125.<span style="mso-tab-count: 1;"> </span>Id. at
54-56, 1548-1551.</p>
<p class="MsoNormal">126.<span style="mso-tab-count: 1;"> </span>Id. at
56-57.</p>
<p class="MsoNormal">127.<span style="mso-tab-count: 1;"> </span>Id. at 60
and 1533-1534.</p>
<p class="MsoNormal">128.<span style="mso-tab-count: 1;"> </span>Id. at 1535.</p>
<p class="MsoNormal">129.<span style="mso-tab-count: 1;"> </span>Id. at 62
and 1535.</p>
<p class="MsoNormal">130.<span style="mso-tab-count: 1;"> </span>Id. at 1535.</p>
<p class="MsoNormal">131.<span style="mso-tab-count: 1;"> </span>Id. at 60-61
and 1535.</p>
<p class="MsoNormal">132.<span style="mso-tab-count: 1;"> </span>Id. at 62
and 1535-1536.</p>
<p class="MsoNormal">133.<span style="mso-tab-count: 1;"> </span>Id.</p>
<p class="MsoNormal">134.<span style="mso-tab-count: 1;"> </span>Id. at
1567-1570.</p>
<p class="MsoNormal">135.<span style="mso-tab-count: 1;"> </span>Id. at
1536-1538.</p>
<p class="MsoNormal">136.<span style="mso-tab-count: 1;"> </span>Id. at
1572-1574.</p>
<p class="MsoNormal">137.<span style="mso-tab-count: 1;"> </span>Id. at 1473.</p>
<p class="MsoNormal">138.<span style="mso-tab-count: 1;"> </span>Id. at
1582-1583.</p>
<p class="MsoNormal">139.<span style="mso-tab-count: 1;"> </span>Id. at 1584.</p>
<p class="MsoNormal">140.<span style="mso-tab-count: 1;"> </span>Id. at
1588-1590.</p>
<p class="MsoNormal">141.<span style="mso-tab-count: 1;"> </span>Id. at 1590.</p>
<p class="MsoNormal">142.<span style="mso-tab-count: 1;"> </span>Id. at
63-65.</p>
<p class="MsoNormal">143.<span style="mso-tab-count: 1;"> </span>Id. at 66
and 72, citing Westminster High School v. Bernardo, 51 O.G. 6245.</p>
<p class="MsoNormal">144.<span style="mso-tab-count: 1;"> </span>Rollo (G.R.
No. 185941), pp. 299-300.</p>
<p class="MsoNormal">145.<span style="mso-tab-count: 1;"> </span>Id. at
303-305.</p>
<p class="MsoNormal">146.<span style="mso-tab-count: 1;"> </span>Id. at 26
and 589.</p>
<p class="MsoNormal">147.<span style="mso-tab-count: 1;"> </span>Id. at 29
and 591.</p>
<p class="MsoNormal">148.<span style="mso-tab-count: 1;"> </span>Id. at 29-30
and 592.</p>
<p class="MsoNormal">149.<span style="mso-tab-count: 1;"> </span>Id. at 30
and 592.</p>
<p class="MsoNormal">150.<span style="mso-tab-count: 1;"> </span>391 Phil. 84
(2000).</p>
<p class="MsoNormal">151.<span style="mso-tab-count: 1;"> </span>Rollo (G.R.
No. 185941), pp. 30-31, 592-593</p>
<p class="MsoNormal">152.<span style="mso-tab-count: 1;"> </span>Id. at 30
and 593.</p>
<p class="MsoNormal">153.<span style="mso-tab-count: 1;"> </span>Id. at 31
and 593.</p>
<p class="MsoNormal">154.<span style="mso-tab-count: 1;"> </span>Id. at 33
and 595.</p>
<p class="MsoNormal">155.<span style="mso-tab-count: 1;"> </span>SECTION 29.</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>(1) No
money shall be paid out of the Treasury except in pursuance of an appropriation
made by law.</p>
<p class="MsoNormal">xxx<span style="mso-spacerun: yes;">
</span>xxx<span style="mso-spacerun: yes;"> </span>xxx</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>(3) All
money collected on any tax levied for a special purpose shall be treated as a
special fund and paid out for such purpose only. If the purpose for which a
special fund was created has been fulfilled or abandoned, the balance, if any,
shall be transferred to the general funds of the Government.</p>
<p class="MsoNormal">156.<span style="mso-tab-count: 1;"> </span>Rollo (G.R.
No. 185941), p. 601.</p>
<p class="MsoNormal">157.<span style="mso-tab-count: 1;"> </span>Id. at
37-38, 42-43, 581, 586-587.</p>
<p class="MsoNormal">158.<span style="mso-tab-count: 1;"> </span>Id. at
599-600.</p>
<p class="MsoNormal">159.<span style="mso-tab-count: 1;"> </span>Id. at 602.</p>
<p class="MsoNormal">160.<span style="mso-tab-count: 1;"> </span>Id. at 34
and 596.</p>
<p class="MsoNormal">161.<span style="mso-tab-count: 1;"> </span>Id. at
603-604.</p>
<p class="MsoNormal">162.<span style="mso-tab-count: 1;"> </span>Id. at
36-37, 597-598.</p>
<p class="MsoNormal">163.<span style="mso-tab-count: 1;"> </span>Id. at 49-50
and 605.</p>
<p class="MsoNormal">164.<span style="mso-tab-count: 1;"> </span>Rollo (G.R.
No. 170867), p. 907.</p>
<p class="MsoNormal">165.<span style="mso-tab-count: 1;"> </span>Id. at 908.</p>
<p class="MsoNormal">166.<span style="mso-tab-count: 1;"> </span>Id. at
908-908-A.</p>
<p class="MsoNormal">167.<span style="mso-tab-count: 1;"> </span>Id. at
909-910.</p>
<p class="MsoNormal">168.<span style="mso-tab-count: 1;"> </span>Id. at
910-911.</p>
<p class="MsoNormal">169.<span style="mso-tab-count: 1;"> </span>Id. at
912-914, 1380-1381.</p>
<p class="MsoNormal">170.<span style="mso-tab-count: 1;"> </span>Id. at
1381-1382.</p>
<p class="MsoNormal">171.<span style="mso-tab-count: 1;"> </span>Id. at 915-916
and 1382.</p>
<p class="MsoNormal">172.<span style="mso-tab-count: 1;"> </span>Id. at
916-918, 1383-1385.</p>
<p class="MsoNormal">173.<span style="mso-tab-count: 1;"> </span>Id. at 919.</p>
<p class="MsoNormal">174.<span style="mso-tab-count: 1;"> </span>Id. at
919-920 and 1386.</p>
<p class="MsoNormal">175.<span style="mso-tab-count: 1;"> </span>Id. at 921.</p>
<p class="MsoNormal">176.<span style="mso-tab-count: 1;"> </span>Id. at 922
and 1389.</p>
<p class="MsoNormal">177.<span style="mso-tab-count: 1;"> </span>Id. at
922-926 and 1389.</p>
<p class="MsoNormal">178.<span style="mso-tab-count: 1;"> </span>Id. at
924-925, 1389-1390, 1392.</p>
<p class="MsoNormal">179.<span style="mso-tab-count: 1;"> </span>Id. at
922-923.</p>
<p class="MsoNormal">180.<span style="mso-tab-count: 1;"> </span>Id. at 926,
1393-1394.</p>
<p class="MsoNormal">181.<span style="mso-tab-count: 1;"> </span>Id. at 927.</p>
<p class="MsoNormal">182.<span style="mso-tab-count: 1;"> </span>Id. at 927
and 1394.</p>
<p class="MsoNormal">183.<span style="mso-tab-count: 1;"> </span>Id. at 972,
1397-1398.</p>
<p class="MsoNormal">184.<span style="mso-tab-count: 1;"> </span>Id. at
973-974, 1397, 1400.</p>
<p class="MsoNormal">185<span style="mso-tab-count: 1;"> </span>Id. at 1397.</p>
<p class="MsoNormal">186.<span style="mso-tab-count: 1;"> </span>Id. at 1399.</p>
<p class="MsoNormal">187.<span style="mso-tab-count: 1;"> </span>Id. at 974.</p>
<p class="MsoNormal">188.<span style="mso-tab-count: 1;"> </span>Id. at 958
and 1400.</p>
<p class="MsoNormal">189.<span style="mso-tab-count: 1;"> </span>Id. at 928.</p>
<p class="MsoNormal">190.<span style="mso-tab-count: 1;"> </span>Id. at 928
and 1394.</p>
<p class="MsoNormal">191.<span style="mso-tab-count: 1;"> </span>Id. at
950-951.</p>
<p class="MsoNormal">192.<span style="mso-tab-count: 1;"> </span>Id. at
929-930.</p>
<p class="MsoNormal">193.<span style="mso-tab-count: 1;"> </span>Id. at
937-938.</p>
<p class="MsoNormal">194.<span style="mso-tab-count: 1;"> </span>Id. at
940-944 and 1373.</p>
<p class="MsoNormal">195.<span style="mso-tab-count: 1;"> </span>Id. at 1377.</p>
<p class="MsoNormal">196.<span style="mso-tab-count: 1;"> </span>Id. at
1377-1379.</p>
<p class="MsoNormal">197.<span style="mso-tab-count: 1;"> </span>160 Phil.
343 (1975).</p>
<p class="MsoNormal">198.<span style="mso-tab-count: 1;"> </span>Rollo (G.R.
No. 170867), p. 941.</p>
<p class="MsoNormal">199.<span style="mso-tab-count: 1;"> </span>Id. at
942-943.</p>
<p class="MsoNormal">200.<span style="mso-tab-count: 1;"> </span>Id. at
943-944.</p>
<p class="MsoNormal">201.<span style="mso-tab-count: 1;"> </span>343 Phil.
670 (1997).</p>
<p class="MsoNormal">202.<span style="mso-tab-count: 1;"> </span>Rollo (G.R.
No. 170867), pp. 955-958.</p>
<p class="MsoNormal">203.<span style="mso-tab-count: 1;"> </span>Id. at 939.</p>
<p class="MsoNormal">204.<span style="mso-tab-count: 1;"> </span>Id. at
945-948.</p>
<p class="MsoNormal">205.<span style="mso-tab-count: 1;"> </span>Id. at
1403-1404.</p>
<p class="MsoNormal">206.<span style="mso-tab-count: 1;"> </span>Id. at 959.</p>
<p class="MsoNormal">207.<span style="mso-tab-count: 1;"> </span>Id. at 962,
967-968.</p>
<p class="MsoNormal">208.<span style="mso-tab-count: 1;"> </span>Id. at
968-969.</p>
<p class="MsoNormal">209.<span style="mso-tab-count: 1;"> </span>Id. at
1402-1403.</p>
<p class="MsoNormal">210.<span style="mso-tab-count: 1;"> </span>Id. at
969-971.</p>
<p class="MsoNormal">211.<span style="mso-tab-count: 1;"> </span>Id. at
977-978.</p>
<p class="MsoNormal">212.<span style="mso-tab-count: 1;"> </span>Id. at
978-979.</p>
<p class="MsoNormal">213.<span style="mso-tab-count: 1;"> </span>Id. at
981-985.</p>
<p class="MsoNormal">214.<span style="mso-tab-count: 1;"> </span>Id. at 1410.</p>
<p class="MsoNormal">215.<span style="mso-tab-count: 1;"> </span>Id. at
1410-1411.</p>
<p class="MsoNormal">216.<span style="mso-tab-count: 1;"> </span>Id. at 1411.</p>
<p class="MsoNormal">217.<span style="mso-tab-count: 1;"> </span>Id.</p>
<p class="MsoNormal">218.<span style="mso-tab-count: 1;"> </span>Id. at 1412.</p>
<p class="MsoNormal">219.<span style="mso-tab-count: 1;"> </span>Id.</p>
<p class="MsoNormal">220.<span style="mso-tab-count: 1;"> </span>Id. at
1412-1413.</p>
<p class="MsoNormal">221.<span style="mso-tab-count: 1;"> </span>Id. at
1413-1414.</p>
<p class="MsoNormal">222.<span style="mso-tab-count: 1;"> </span>Id. at
1409-1410.</p>
<p class="MsoNormal">223.<span style="mso-tab-count: 1;"> </span>Record of
the 1986 Constitution Commission, Volume III, pp. 178, 216 and 482.</p>
<p class="MsoNormal">224.<span style="mso-tab-count: 1;"> </span>Record of
the Senate, May 8, 1990, p. 16.</p>
<p class="MsoNormal">225.<span style="mso-tab-count: 1;"> </span>Record of
the Bicameral Conference Committee on Local Government, February 12, 1991, pp.
8-9.</p>
<p class="MsoNormal">226.<span style="mso-tab-count: 1;"> </span>Record of
the Bicameral Conference Committee on Local Government, September 4, 1991, pp.
12-13.</p>
<p class="MsoNormal">227.<span style="mso-tab-count: 1;"> </span>Section 459.</p>
<p class="MsoNormal">228.<span style="mso-tab-count: 1;"> </span>Section 440.</p>
<p class="MsoNormal">229.<span style="mso-tab-count: 1;"> </span>Section 448.</p>
<p class="MsoNormal">230.<span style="mso-tab-count: 1;"> </span>Record of
the 1986 Constitution Commission, Volume III, pp. 178 and 194.</p>
<p class="MsoNormal">231.<span style="mso-tab-count: 1;"> </span><http://www.merriam-webster.com/dictionary/area>
(last updated November 28, 2018).</p>
<p class="MsoNormal">232.<span style="mso-tab-count: 1;"> </span>322 Phil.
774 (1996).</p>
<p class="MsoNormal">233.<span style="mso-tab-count: 1;"> </span>Id. at 783.</p>
<p class="MsoNormal">234.<span style="mso-tab-count: 1;"> </span>Id.</p>
<p class="MsoNormal">235.<span style="mso-tab-count: 1;"> </span>321 Phil.
259, 265-266 (1995).</p>
<p class="MsoNormal">236.<span style="mso-tab-count: 1;"> </span>607 Phil.
104 (2009).</p>
<p class="MsoNormal">237.<span style="mso-tab-count: 1;"> </span>Id. at 121.</p>
<p class="MsoNormal">238.<span style="mso-tab-count: 1;"> </span>Rollo (G.R.
No. 170867), p. 1574.</p>
<p class="MsoNormal">239.<span style="mso-tab-count: 1;"> </span>Id. at 1575.</p>
<p class="MsoNormal">240.<span style="mso-tab-count: 1;"> </span>Under
Section 17 of the Local Government Code, municipalities and provinces are
authorized to exercise such powers as are "necessary, appropriate or
incidental to efficient provisions of the basic services and facilities
enumerated (therein)," including:</p>
<p class="MsoNormal">xxx<span style="mso-spacerun: yes;">
</span>xxx<span style="mso-spacerun: yes;"> </span>xxx</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>(2) For
a Municipality:</p>
<p class="MsoNormal">xxx<span style="mso-spacerun: yes;">
</span>xxx<span style="mso-spacerun: yes;"> </span><span style="mso-spacerun: yes;"> </span>xxx</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>(ii)
Pursuant to national policies and subject to supervision, control and review of
the DENR, implementation of community-based forestry projects which include
integrated social forestry programs and similar projects; management and
control of communal forests with an area not exceeding fifty (50) square
kilometers; establishment of tree parks, greenbelts, and similar forest
development projects;</p>
<p class="MsoNormal">xxx<span style="mso-spacerun: yes;">
</span>xxx<span style="mso-spacerun: yes;"> </span>xxx</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>(3) For
a Province:</p>
<p class="MsoNormal">xxx<span style="mso-spacerun: yes;">
</span>xxx<span style="mso-spacerun: yes;"> </span><span style="mso-spacerun: yes;"> </span>xxx</p>
<p class="MsoNormal"><span style="mso-tab-count: 1;"> </span>(iii)
Pursuant to national policies and subject to supervision, control and review of
the DENR, enforcement of forestry laws limited to community-based forestry
projects, pollution control law, small-scale mining law, and other laws on the
protection of the environment; and mini-hydroelectric projects for local
purposes;</p>
<p class="MsoNormal">xxx<span style="mso-spacerun: yes;">
</span>xxx<span style="mso-spacerun: yes;"> </span>xxx
(Emphasis ours)</p>
<p class="MsoNormal">241.<span style="mso-tab-count: 1;"> </span>Rollo (G.R.
No. 170867), p. 1485.</p>
<p class="MsoNormal">242.<span style="mso-tab-count: 1;"> </span>Id. at 478.</p>
<p class="MsoNormal">243.<span style="mso-tab-count: 1;"> </span>Id. at 474.</p>
<p class="MsoNormal">244.<span style="mso-tab-count: 1;"> </span>Id. at 478.</p>
<p class="MsoNormal">245.<span style="mso-tab-count: 1;"> </span>Records of
the Bicameral Conference Committee on Local Government, February 12, 1991, p.
39.</p>
<p class="MsoNormal">246.<span style="mso-tab-count: 1;"> </span><https://www.merriam-webster.com/dictionary/jurisdiction#legalDictionary>
(last updated November 27, 2018).</p>
<p class="MsoNormal">247.<span style="mso-tab-count: 1;"> </span>Section 14,
Executive Order No. 192 (1987).</p>
<p class="MsoNormal">248.<span style="mso-tab-count: 1;"> </span><https://www.merriam-webster.com/legal/metes%20and%20bounds>.</p>
<p class="MsoNormal">249.<span style="mso-tab-count: 1;"> </span>Supra note
34.</p>
<p class="MsoNormal">250.<span style="mso-tab-count: 1;"> </span>Id. at
645-647.</p>
<p class="MsoNormal">251.<span style="mso-tab-count: 1;"> </span>AN ACT
ENACTING A LOCAL GOVERNMENT CODE. Approved on February 10, 1983.</p>
<p class="MsoNormal">252.<span style="mso-tab-count: 1;"> </span>Aquilino Q.
Pimentel, Jr., The Local Government Code, 2011 Edition, p. 44.</p>
<p class="MsoNormal">253.<span style="mso-tab-count: 1;"> </span>Record of
the Senate, September 10, 1990, pp. 959-960.</p>
<p class="MsoNormal">254.<span style="mso-tab-count: 1;"> </span>TSN,
November 24, 2009, p. 7.</p>
<p class="MsoNormal">255.<span style="mso-tab-count: 1;"> </span>Record of
the 1986 Constitutional Commission, Volume III, pp. 178, 194 and 221.</p>
<p class="MsoNormal">256.<span style="mso-tab-count: 1;"> </span>Aquilino Q.
Pimentel, Jr., The Local Government Code, 2011 Edition, p. 434.</p>
<p class="MsoNormal">257.<span style="mso-tab-count: 1;"> </span>Rollo (G.R.
No. 170867), pp. 1595-1602.</p>
<p class="MsoNormal">258.<span style="mso-tab-count: 1;"> </span>AN ACT
PROVIDING FOR THE ORGANIZATION OF A PROVINCIAL GOVERNMENT IN THE PROVINCE OF
PARAGUA, AND DEFINING THE LIMITS OF THAT PROVINCE. Approved on June 23, 1902.</p>
<p class="MsoNormal">259.<span style="mso-tab-count: 1;"> </span>AN ACT
AMENDING ACT NUMBERED FOUR AND TWENTY-TWO, PROVIDING FOR THE ORGANIZATION OF A
PROVINCIAL GOVERNMENT IN THE PROVINCE OF PARAGUA AND DEFINING THE LIMITS OF
THAT PROVINCE, BY FIXING NEW BOUNDARIES FOR THE PROVINCE OF PARAGUA. Approved
on December 22, 1902.</p>
<p class="MsoNormal">260.<span style="mso-tab-count: 1;"> </span>AN ACT TO
AMEND ACT NUMBERED FOUR HUNDRED AND TWENTY-TWO, AS AMENDED, BY DEFINING NEW
LIMITS FOR THE PROVINCE OF PARAGUA AND FOR OTHER PURPOSES. Approved on May 14,
1903.</p>
<p class="MsoNormal">261.<span style="mso-tab-count: 1;"> </span>AN ACT
CHANGING THE NAME OF THE PROVINCE AND ISLAND OF PARAGUA TO THAT OF PALAWAN.
Approved on June 28, 1905.</p>
<p class="MsoNormal">262.<span style="mso-tab-count: 1;"> </span>AN ACT
PROVIDING FOR THE ORGANIZATION OF PROVINCIAL GOVERNMENTS OF THE PHILIPPINE
ISLANDS, OTHER THAN THE MORO PROVINCE, WHICH ARE NOT ORGANIZED UNDER THE
PROVISIONS OF THE PROVINCIAL GOVERNMENT ACT NUMBERED EIGHTY-THREE, AND
REPEALING ACTS NUMBERED FORTY-NINE, THREE HUNDRED AND THIRTY-SEVEN, FOUR
HUNDRED AND TEN, FOUR HUNDRED AND TWENTY-TWO, FOUR HUNDRED AND FORTY-ONE, FIVE
HUNDRED, FIVE HUNDRED AND SIXTY-SIX, AND FIVE HUNDRED AND SIXTY-SEVEN, AND
SECTIONS ONE AND TWO OF ACT NUMBERED SEVEN HUNDRED AND FORTY-SEVEN. Approved on
September 14, 1905.</p>
<p class="MsoNormal">263.<span style="mso-tab-count: 1;"> </span>AN ACT
CONSISTING AN ADMINISTRATIVE CODE. Approved on December 31, 1916.</p>
<p class="MsoNormal">264.<span style="mso-tab-count: 1;"> </span>AN ACT
AMENDING THE ADMINISTRATIVE CODE. Approved on March 10, 1917.</p>
<p class="MsoNormal">265.<span style="mso-tab-count: 1;"> </span>Rollo (G.R.
No. 170867), p. 1339.</p>
<p class="MsoNormal">266.<span style="mso-tab-count: 1;"> </span>AN ACT TO
AMEND CERTAIN PROVISIONS OF REPUBLIC ACT NO. 3046, AS AMENDED BY REPUBLIC ACT
NO. 5446, TO DEFINE THE ARCHIPELAGIC BASELINE OF THE PHILIPPINES AND FOR OTHER
PURPOSES. Approved on March 10, 2009.</p>
<p class="MsoNormal">267.<span style="mso-tab-count: 1;"> </span>Rollo (G.R.
No. 170867), p. 1395.</p>
<p class="MsoNormal">268.<span style="mso-tab-count: 1;"> </span>Id. at 1535.</p>
<p class="MsoNormal">269.<span style="mso-tab-count: 1;"> </span>Section 4.</p>
<p class="MsoNormal">270.<span style="mso-tab-count: 1;"> </span>Sections 13,
14 and 15.</p>
<p class="MsoNormal">271.<span style="mso-tab-count: 1;"> </span>Record of
the Senate, November 17, 1990, pp. 1580-1581.</p>
<p class="MsoNormal">272.<span style="mso-tab-count: 1;"> </span>TSN,
November 24, 2009, pp. 235-236.</p>
<p class="MsoNormal">273.<span style="mso-tab-count: 1;"> </span>Rollo (G.R.
No. 170867), pp. 1596-1602.</p>
<p class="MsoNormal">274.<span style="mso-tab-count: 1;"> </span>Subsequent
Act No. 2711, or the Administrative Code of 1917, also designated Puerto
Princesa as the capital of the Province of Palawan. RA 5906 created the City of
Puerto Princesa; Section 2 thereof states that the City shall comprise the
present territorial jurisdiction of the Municipality of Puerto Princesa."
On March 26, 2007, President Gloria Macapagal-Arroyo issued Proclamation No.
1264 entitled "Conversion of the City of Puerto Princesa into a Highly
Urbanized City," reclassifying Puerto Princesa City as a "highly
urbanized city."</p>
<p class="MsoNormal">275.<span style="mso-tab-count: 1;"> </span>AN ACT
CREATING THE MUNICIPALITY OF ROXAS, PROVINCE OF PALAWAN. Approved on May 15,
1951.</p>
<p class="MsoNormal">276.<span style="mso-tab-count: 1;"> </span>R.A. No.
1140, entitled AN ACT CHANGING THE NAME OF THE MUNICIPALITY OF BACUIT IN THE
PROVINCE OF PALAWAN TO EL NIDO, approved on June 17, 1954, changed the name of
Bacuit to El Nido.</p>
<p class="MsoNormal">277.<span style="mso-tab-count: 1;"> </span>AN ACT
CHANGING THE NAME OF THE MUNICIPALITY OF DUMARAN, PROVINCE OF PALAWAN, TO
ARACELI. Approved on June 15, 1954.</p>
<p class="MsoNormal">278.<span style="mso-tab-count: 1;"> </span>AN ACT
CREATING THE MUNICIPALITY OF DUMARAN IN THE PROVINCE OF PALAWAN. Enacted on
June 18, 1961.</p>
<p class="MsoNormal">279.<span style="mso-tab-count: 1;"> </span>AN ACT TO
CREATE THE MUNICIPALITY OF BUSUANGA IN THE PROVINCE OF PALAWAN. Approved on
June 17, 1950.</p>
<p class="MsoNormal">280.<span style="mso-tab-count: 1;"> </span>AN ACT
AMENDING SECTION ONE OF REPUBLIC ACT NUMBERED FIVE HUNDRED SIXTY, ENTITLED
"AN ACT CREATING THE MUNICIPALITY OF BUSUANGA IN THE PROVINCE OF
PALAWAN." Approved on June 21, 1969.</p>
<p class="MsoNormal">281.<span style="mso-tab-count: 1;"> </span>AN ACT TO
CREATE THE MUNICIPALITY OF QUEZON IN THE PROVINCE OF PALAWAN. Approved on May
15, 1951.</p>
<p class="MsoNormal">282.<span style="mso-tab-count: 1;"> </span>AN ACT TO
CREATE THE MUNICIPALITY OF LINAPACAN IN THE PROVINCE OF PALAWAN. Approved on
June 12, 1954.</p>
<p class="MsoNormal">283.<span style="mso-tab-count: 1;"> </span>AN ACT
CREATING THE MUNICIPALITY OF BATARASA IN THE PROVINCE OF PALAWAN. Enacted
without Executive approval on June 18, 1961.</p>
<p class="MsoNormal">284.<span style="mso-tab-count: 1;"> </span>AN ACT
CREATING THE MUNICIPALITY OF MAGSAYSAY IN THE PROVINCE OF PALAWAN. Approved on
June 18, 1961.</p>
<p class="MsoNormal">285.<span style="mso-tab-count: 1;"> </span>AN ACT
CREATING THE MUNICIPALITY OF SAN VICENTE IN THE PROVINCE OF PALAWAN. Approved
on June 21, 1969.</p>
<p class="MsoNormal">286.<span style="mso-tab-count: 1;"> </span>AN ACT
CREATING THE MUNICIPALITY OF NARRA, PROVINCE OF PALAWAN. Approved June 21,
1969.</p>
<p class="MsoNormal">287.<span style="mso-tab-count: 1;"> </span>AN ACT
CHANGING THE NAME OF THE MUNICIPALITY OF MARCOS, PROVINCE OF PALAWAN, TO
MUNICIPALITY OF DR. JOSE P. RIZAL. Enacted without executive approval on April
17, 1988.</p>
<p class="MsoNormal">288.<span style="mso-tab-count: 1;"> </span>AN ACT
CREATING THE MUNICIPALITY OF MARCOS IN THE PROVINCE OF PALAWAN. Approved on
April 14, 1983.</p>
<p class="MsoNormal">289.<span style="mso-tab-count: 1;"> </span>AN ACT
CREATING THE MUNICIPALITY OF CULION IN THE PROVINCE OF PALAWAN. Approved on February
19, 1992.</p>
<p class="MsoNormal">290.<span style="mso-tab-count: 1;"> </span>AN ACT
EXPANDING THE AREA OF JURISDICTION OF THE MUNICIPALITY OF CULION, PROVINCE OF
PALAWAN, AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 7193. Approved on March 12,
2001.</p>
<p class="MsoNormal">291.<span style="mso-tab-count: 1;"> </span>AN ACT
CREATING THE MUNICIPALITY OF SOFRONIO ESPAÑOLA IN THE PROVINCE OF PALAWAN.
Lapsed into law on February 24, 1994 without the President's signature.</p>
<p class="MsoNormal">292.<span style="mso-tab-count: 1;"> </span>TSN,
November 24, 2009, pp. 196-200.</p>
<p class="MsoNormal">293.<span style="mso-tab-count: 1;"> </span>TSN,
November 24, 2009, p. 166.</p>
<p class="MsoNormal">294.<span style="mso-tab-count: 1;"> </span>TSN,
November 24, 2009, pp. 201-202.</p>
<p class="MsoNormal">295.<span style="mso-tab-count: 1;"> </span>Rep. of the
Phils. v. Roxas, et al., 723 Phil. 279, 311 (2013) citing Republic of the
Phils. v. Hon. Mangotara, et al., 638 Phil. 353 (2010).</p>
<p class="MsoNormal">296.<span style="mso-tab-count: 1;"> </span>National
Amnesty Commission v. COA, 481 Phil. 279 (2004).</p>
<p class="MsoNormal">297.<span style="mso-tab-count: 1;"> </span>545 Phil.
168 (2007).</p>
<p class="MsoNormal">298.<span style="mso-tab-count: 1;"> </span>Id. at 186.</p>
<p class="MsoNormal">299.<span style="mso-tab-count: 1;"> </span>TSN,
November 24, 2009, p. 232.</p>
<p class="MsoNormal">300.<span style="mso-tab-count: 1;"> </span>The 1987
Constitution of the Republic of the Philippines, A Commentary, 1996 Edition,
pp. 960-961.</p>
<p class="MsoNormal">301.<span style="mso-tab-count: 1;"> </span>TSN,
November 24, 2009, pp. 217-218 and 224.</p>
<p class="MsoNormal">302.<span style="mso-tab-count: 1;"> </span>Rollo (G.R.
No. 170867), pp. 37-38.</p>
<p class="MsoNormal">303.<span style="mso-tab-count: 1;"> </span>Id. at 1514
and 1518.</p>
<p class="MsoNormal">304.<span style="mso-tab-count: 1;"> </span>TSN,
November 24, 2009, pp. 156-158.</p>
<p class="MsoNormal">305.<span style="mso-tab-count: 1;"> </span>TSN,
November 24, 2009, pp. 78-81.</p>
<p class="MsoNormal">306.<span style="mso-tab-count: 1;"> </span>Rollo (G.R.
No. 170867), pp. 1355-1356.</p>
<p class="MsoNormal">307.<span style="mso-tab-count: 1;"> </span>332 U.S. 19
(1947).</p>
<p class="MsoNormal">308.<span style="mso-tab-count: 1;"> </span>339 U.S. 699
(1950).</p>
<p class="MsoNormal">309.<span style="mso-tab-count: 1;"> </span>339 U.S. 707
(1950).</p>
<p class="MsoNormal">310.<span style="mso-tab-count: 1;"> </span>420 U.S. 515
(1975).</p>
<p class="MsoNormal">311.<span style="mso-tab-count: 1;"> </span>U.S. 9th
Circuit, No. 97-35944, September 9, 1998.</p>
<p class="MsoNormal">312.<span style="mso-tab-count: 1;"> </span>TSN,
November 24, 2009, pp. 196-197.</p>
<p class="MsoNormal">313.<span style="mso-tab-count: 1;"> </span>Rollo (G.R.
No. 170867), pp. 1344, 1355-1356.</p>
<p class="MsoNormal">314.<span style="mso-tab-count: 1;"> </span>GF Equity,
Inc. v. Valenzona, 501 Phil. 153, 166 (2005).</p>
<p class="MsoNormal">315.<span style="mso-tab-count: 1;"> </span>Tupas v.
Court of Appeals, 271 Phil. 628 (1991).</p>
<p class="MsoNormal">316.<span style="mso-tab-count: 1;"> </span>Id.</p>
<p class="MsoNormal">317.<span style="mso-tab-count: 1;"> </span>Id. at
632-633.</p>
<p class="MsoNormal">318.<span style="mso-tab-count: 1;"> </span>Development
Bank of the Philippines v. Carpio, G.R. No. 195450, February 1, 2017, 816 SCRA
473, 487.</p>
<p class="MsoNormal">319.<span style="mso-tab-count: 1;"> </span>Rollo (G.R.
No. 170867), p. 1584.</p>
<p class="MsoNormal">320.<span style="mso-tab-count: 1;"> </span>Id. at
1584-1586.</p>
<p class="MsoNormal">321.<span style="mso-tab-count: 1;"> </span>Supra note
235.</p>
<p class="MsoNormal">322.<span style="mso-tab-count: 1;"> </span>TSN,
November 24, 2009, pp. 233 and 235.</p>
<p class="MsoNormal">323.<span style="mso-tab-count: 1;"> </span>Phil. Rural
Electric Coop. Assoc., Inc. v. DILG Secretary, 451 Phil. 683, 698 (2003) citing
MCIAA v. Marcos, 330 Phil. 392, 417 (1996).</p>
<p class="MsoNormal">324.<span style="mso-tab-count: 1;"> </span>416 Phil.
438 (2001).</p>
<p class="MsoNormal">325.<span style="mso-tab-count: 1;"> </span>Id. at 448.</p>
<div class="blogger-post-footer">Check out more at www.philippinelegalguide.com</div>atty. stacyhttp://www.blogger.com/profile/01086234062798435600noreply@blogger.comtag:blogger.com,1999:blog-5581298077238331148.post-30389745452483298942021-08-26T23:54:00.000-07:002021-08-26T23:54:02.207-07:00RMC No. 97-2021: Taxation of Any Income Received by Social Media Influencers (August 16, 2021)<p style="-x-system-font: none; display: block; font-family: Helvetica, Arial, sans-serif; font-size-adjust: none; font-size: 14px; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal; margin: 12px auto 6px;"> RMC No. 97-2021: Taxation of Any Income Received by Social Media Influencers (August 16, 2021)<br /></p><p style="-x-system-font: none; display: block; font-family: Helvetica, Arial, sans-serif; font-size-adjust: none; font-size: 14px; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal; margin: 12px auto 6px;"> </p><p style="-x-system-font: none; display: block; font-family: Helvetica, Arial, sans-serif; font-size-adjust: none; font-size: 14px; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal; margin: 12px auto 6px;"><a href="https://www.scribd.com/document/521924861/RMC-No-97-2021#from_embed" style="text-decoration: underline;" title="View RMC No. 97-2021 on Scribd">RMC No. 97-2021</a> by <a href="https://www.scribd.com/user/80885331/Stacy-Liong-BloggerAccount#from_embed" style="text-decoration: underline;" title="View Stacy Liong BloggerAccount's profile on Scribd">Stacy Liong BloggerAccount</a> on Scribd</p><iframe class="scribd_iframe_embed" data-aspect-ratio="0.7080062794348508" data-auto-height="false" frameborder="0" height="600" id="doc_45843" scrolling="no" src="https://www.scribd.com/embeds/521924861/content?start_page=1&view_mode=scroll&access_key=key-C1zf8IAbd3FbH0nSZL9P" title="RMC No. 97-2021" width="100%"></iframe><div class="blogger-post-footer">Check out more at www.philippinelegalguide.com</div>atty. stacyhttp://www.blogger.com/profile/01086234062798435600noreply@blogger.comtag:blogger.com,1999:blog-5581298077238331148.post-25314737365192521952021-07-09T09:55:00.008-07:002021-07-12T01:12:12.480-07:00English 101: Outline of American English Grammar <p>I. Parts of Speech - function in a sentence<br />A. Main Parts<br />1. Nouns<br />a. definition: words that indicate/identify/name people, places, or things<br />b. functions:<br />i. subject of a:<br />1.) clause<br />2.) sentence<br />ii. object ([1.] direct or [2.] indirect) of a verb<br />iii. object of a preposition <br />iv. predicate nouns - follow linking verbs to rename or re-identify the subject of a clause or sentence.<br />2. Pronouns<br />a. definition: words that represent nouns<br />b. function (same as nouns)<br />3. Verbs<br />a. definition: words that describe the - <br />i. actions<br />ii. states of being of nouns<br />b. function (necessary at least 1 in a sentence): root of a predicate to form a sentence<br />4. Adjectives<br />a. definition: words that modify (add description to): <br />1.) nouns; and <br />2.) pronouns (occasionally)<br />b. function: subject or predicate<br />5. Adverbs<br />a. words that modify: <br />1.) verbs, <br />2.) adjectives, <br />3.) other adverbs, or even <br />4.) entire clauses<br />b. function: predicate - depending on what they modify (and how), adverbs can appear<br />anywhere in the sentence<br />c. Common form: adjectives + "ly"<br />6. Prepositions<br />a. definition: words that express a relationship between a 1.) noun or pronoun (object of the preposition) and 2.) another part of the sentence<br />b. function of prepositional phrases:<br />i. adjectives; or<br />ii. adverbs<br />7. Conjunctions <br />a. Definition: words that connect other words, phrases, or clauses,<br />expressing a specific kind of relationship between the two (or more) elements <br />B. Others<br />1. Particles - similar in appearance to preposition but different function<br />2. Determiners - similar to adjectives<span> a. quantifier</span><br />3. Gerunds</p><p><br />II. Inflection<br />A. Conjugation - inflection of:<br />1. Verbs (i.e. tenses)<br />B. Declension - inflection of:<br />1. Nouns (i.e. plurality)<br />2. Pronouns<br />3. Adjectives <br />4. Adverbs</p><p><br />III. Syntax - rules and patters that govern how to structure sentences<br />A. Words and phrases<br />1. Basic<br />a. Subjects; and <br />b. Predicates<br />2. Complex<br />a. Modifiers ([i.] direct: articles, adjectives or prepositional phrases and [ii.] indirect) <br />b. Phrases<br />c. Clauses<br />B. Sentence<br /><br /><br /></p><p>Sourced from: The Farflex Grammar Book 1</p><div class="blogger-post-footer">Check out more at www.philippinelegalguide.com</div>atty. stacyhttp://www.blogger.com/profile/01086234062798435600noreply@blogger.comtag:blogger.com,1999:blog-5581298077238331148.post-2999647623234724122021-04-30T10:41:00.001-07:002021-04-30T10:41:06.011-07:00Taxation Digest: CIR v. T Shuttle Services (G.R. No. 240729, August 24, 2020)<p>CIR v. T Shuttle Services </p><p>G.R. No. 240729, August 24, 2020</p><p><br />Laws and Regulations: Sec. 228 of the NIRC, Section 3 of RR 12-99, RMO 40-2019<br />Doctrine: Limitation on Presumption of Registered Mail</p><p><br />• July 15, 2009: CIR issued to respondent a Letter of Notice (LN) No. 057-RLF-07-00-00047 informing it of the discrepancy found after comparing its tax returns for CY 2007 with the RELIEF and Third-Party Matching under the Tax Reconciliation System<br />• July 24, 2009: LN was received and signed by a certain Malou Bohol<br />• January 12, 2010: CIR issued Letter of Authority (LOA) No. 200800044533 AND nic<br />• March 29, 2010: CIR issued a PAN for IT and VAT<br />• July 20, 2010: CIR issued a FAN for IT and VAT<br />• November 28, 2012: RDO issued a PCL requesting respondent to pay the assessed tax liability within 10 days from notice<br />• January 23, 2013: RDO issued a FNBS giving respondent the last opportunity to settle its tax liability within 10 days from notice<br />• March 20, 2013: T Shuttle sent a letter to the RDO and the collection officers stating that: (1) it is not aware of any pending liability for CY 2007 (2) Mr. B. Benitez, who signed and received the preliminary notices, was a disgruntled rank-and-file employee not authorized to receive the notices; and (3) Mr. B. Benitez did not forward the notices to it. It also requested a grace period of 1 month to review its documents.<br />• April 2, 2013: RDO denied the requested 1-month grace period.<br />• April 19, 2013: T Shuttle protested the FNBS: (1) not liable for IT (2) exemp from VAT as common carrier (3) service of the NIC was invalid (4) did not receive the PAN and FAN prior to the issuance of the FNBS.<br />• April 23, 2013: constructively served with WDL<br />• May 2, 2013: filed a Petition for Review (With Prayer for Preliminary Injunction and Issuance of a Temporary Restraining Order) with the CTA<br />• August 22, 2013: CIR prayed for the denial of the petition for review (1) due process was observed (2) failed to timely protest FAN and to submit within the prescribed period of 60 days supporting documents (3) presumption of the propriety and exactness of tax assessments<br />• CTA Division: granted<br />• MR of CIR in CTA Division: denied<br />• CTA En Banc: affirmed the ruling of the CTA Division that the CIR failed to prove that the PAN and the FAN were properly and duly served upon and received by T Shuttle and failure to demand payment of the taxes due within a specific period</p><p><br />ISSUES:<br />1. W/N Due Process Observed <br />2. W/N FAN is void for not containing definite due date</p><p><br />HELD: petition for review on certiorari is DENIED</p><p><br />1. NO.<br />• As can be gleaned from the above provisions (due process requirement in Section 228 of the NIRC, Section 3 of RR 12-99 dated September 6, 1999), service of the PAN or the FAN to the taxpayer may be made by registered mail. Under Section 3(v), Rule 131 of the Rules of Court, there is a disputable presumption that "a letter duly directed and mailed was received in the regular course of the mail." However, the presumption is subject to controversion and direct denial, in which case the burden is shifted to the party favored by the presumption to establish that the subject mailed letter was actually received by the addressee.<br />• In view of respondent's categorical denial of due receipt of the PAN and the FAN, the burden was shifted to the CIR to prove that the mailed assessment notices were indeed received by respondent or by its authorized representative. As ruled by the CTA En Banc, the CIR's mere presentation of Registry Receipt Nos. 5187 and 2581 was insufficient to prove respondent's receipt of the PAN and the FAN. It held that the witnesses for the CIR failed to identify and authenticate the signatures appearing on the registry receipts; thus, it cannot be ascertained whether the signatures appearing in the documents were those of respondent's authorized representatives. It further noted that Revenue Officer Joseph V. Galicia (Galicia), the CIR's witness, had in fact admitted during cross-examination that he was uncertain whether the PAN and FAN were actually received by respondent.<br />• As can be gleaned from RMO 40-2019 dated May 30, 2019, a detailed record of all assessment notices issued by the CIR is required. Notably, among the details to be recorded by the Chief of the Assessment Division or the Head of the Reviewing Office are the "[n]ame of [t]axpayer/[p]erson who received the assessment notice" and, more importantly, the "[p]osition/designation/relationship to the taxpayer, if not served to the taxpayer named in the assessment notice." While RMO 40-2019 was not yet in force at the time the questioned PAN and FAN in the case were issued, the fact of such subsequent issuance of RMO 40-2019 by the CIR gives the Court all the more reason to affirm, if only for consistency and uniformity, the CTA En Banc's finding.</p><p><br />2. Yes. Question of fact which this Court will not entertain in the present appeal under Rule 45.<br /><br /></p><div class="blogger-post-footer">Check out more at www.philippinelegalguide.com</div>atty. stacyhttp://www.blogger.com/profile/01086234062798435600noreply@blogger.comtag:blogger.com,1999:blog-5581298077238331148.post-51353989263838016852020-06-04T06:29:00.000-07:002020-06-04T06:29:46.256-07:00Constitutional Law Case Digest: De Lima v. Pres. Duterte, G.R. No. 227635, October 15, 2019 De Lima v. Pres. Rodrigo R. Duterte <br />G.R. No. 227635, October 15, 2019<br />
<br />Lessons Applicable: Writ of Habeas Data, Presidential Immunity from Suit<br />Laws Applicable:<br />
<br />FACTS:<br />
<ul>
<li>May 9, 2016: Davao City Mayor Rodrigo Roa Duterte was elected as the 16th President of the Philippines with a key agenda of his Administration was the relentless national crackdown on illegal drugs.</li>
<li>August 2, 2016: Sen. De Lima delivered a privilege speech on the floor of the Senate calling a stop to the alleged extrajudicial killings committed in the course of the crackdown.</li>
<li>Petition for the issuance of a writ of habeas data seeking to enjoin President Rodrigo Roa Dutete from committing acts allegedly violative of her right to life, liberty and security through his public statements: </li>
<ul>
<li>August 11, 2016 public statement of President Duterte: “I know I’m the favorite whipping boy of the NGOs and the human rights stalwarts. But, I have a special ano kaya no. She is a government official. One day soon I will – bitiwan ko yan in public and I will have to destroy her in public.” Incidentally, in the same event, President Duterte insinuated that with the help of another country, he was keeping surveillance of her. “Akala nila na hindi rin ako nakikinig sa kanila. So while all the time they were also listening to what I’ve done, I’ve also been busy, and with the help of another country, listening to them.</li>
<li>The statement uttered in a briefing at the NAIA Terminal 3, Pasay City in August 17, 2016 wherein President Duterte named Sen. De Lima as the government office he referred to earlier at the same time accused her of living an immortal life by having a romantic affair with her driver, a married man, and of being involved in illegal drugs. “There’s one crusading lady, whose even herself led a very immoral life, taking his driver as her lover… Paramour niya ang driver nya nagging hooked rin sa drugs because of the close association. You know, when you are an immoral, dirty woman, the driver was married. So you live with the driver, its concubinage.</li>
<li>The statements that described her an immoral woman; that publicized her intimate and personal life, starting from her new boyfriend to her sexual escapades; that told of her being involved in illegal drugs as well as in activities that included her construction of a house for her driver/lover with financing from drug-money</li>
<li>Statements that threatened her (“De Lima, you are finished”) and demeaned her womanhood and humanity. If I were De Lima, ladies and gentlemen, I’ll hang myself. Your life has been, hindi lang life, the innermost of your core as a female is being serialized everyday. Dapat kang mag-resign. You resign. And “De Lima better hang yourself… Hindi ka na naghiya sa sarili mo. Any other woman would have slashed her throat. You? Baka akala mo artista ka. Mga artistang x-rated paglabas sa, paktapos ng shooting, nakangiti…”</li>
</ul>
</ul>
<ul>
<li>Sen. De Lima traces his animosity towards her when she 1st encountered President Durterte while he was still the City Mayor of Davao and she the Chairperson of the Commission on Human Rights investigating the existence of the so-called “Davao Death Squad.”</li>
</ul>
<br />ISSUE: W/N Presidential’s immunity from suit can shield the President from being haled to court <br />HELD: Dismissed even without the President invoking the privilege of immunity from suit.<br />YES.<br />G.R. No. 227635, October 15, 2019<br />
<ul>
<li>Immunity can be classified either by: a. extent i.e. absolute or qualified or b. duration i.e. permanent or temporary</li>
<li>Extent: </li>
<ul>
<li>Absolute immunity is granted to a government official who has proven that his actions fell within the scope of his duties, and that his actions are discretionary rather than ministerial – conduct or the action performed must not involve insignificant or routinely office work but rather the challenged action must involve personal judgment. It attaches to the function instead of the office.</li>
<li>Qualified immunity was initially given to a government official who was able to prove that at the time of commission of the act complained of, he possessed a good faith that his actions were lawful – subjective element determined with the two-tier test:</li>
</ul>
</ul>
<ul>
<li>If the statutory or constitutional right asserted by the plaintiff was clear at the time of the alleged wrongful action</li>
<li>Whether the official should reasonably have known the action was contrary to law</li>
<li>Duration:</li>
<ul>
<li>Permanent or the immunity for speech or debate – immunity from liability in law suits that arise out of the performance of public duties of democratic deliberation</li>
<li>Temporary or congressional immunity from arrest – to legislators from litigating even private suits while “at Session” of Congress as public officers</li>
</ul>
</ul>
<ul>
<li>Estrada v. Desierto (G.R. No. 146710-15, March 2, 2001): Being a former President, President Estrada no longer enjoyed immunity from suit</li>
<li>David v. Macapagal-Arroyo (G.R. No. 171396, May 3, 2006): Improper to implead President Arroyo in a consolidated petition disputing the factual bases for Presidential Proclamation No. 1017 and General Order No. 5 declaring a state of national emergency and called out the Armed Forces of the Philippines in her capacity as Commander-in-Chief to maintain law and order throughout the country and to suppress acts of lawless violence, insurrection or rebellion. </li>
<li>Rubrico v. Macapagal-Arroyo (G.R. No. No. 183871, February 18, 2010): Court upheld the exclusion of President Gloria Macapagal-Arroyo, maintaining that presidential immunity from suit despite not being expressly reserved in the 1987 Constitution and declared that the President could not be sued during her tenure in a petition for the issuance of the writ of amparo against military, police personnel and the Office of the Ombudsman and including President Arroyo.</li>
<li>Balao v. Macapagal-Arroyo (G.R. No. 186050, December 13, 2011): Court ruled that RTC had erred in holding that Presidential immunity could not be invoked in amparo proceedings</li>
<li>While the concept of immunity from suit originated elsewhere, the ratification of the 1981 constitutional amendments and the 1987 Constitution made our version of presidential immunity unique. Section 15, Article VII of the 1973 Constitution, as amended, provided for immunity at two distinct points in time: 1. Immunity during the tenure of the President 2. Thereafter. Framer’s intended during tenure. </li>
<li>Presidential immunity does not hinge on the nature of the suit. It is not intended to immunize the President from liability or accountability.</li>
<ul>
<li>Rationale for the grant of immunity stated in Soliven v. Makasiar (G.R. No. 82585, 82827, 83979, November 14, 1988): To assure the exercise of Presidential duties and functions fee from any hindrance of distraction, considering that being the Chief Executive of the Government is a job that aside from requiring all of the office-holder’s time, also demands undivided attention.</li>
<li>Rationale expanded in David v. Macapagal-Arroyo: It will degrade the dignity of the high office of the President, the Head of State, if he can be dragged into court litigations while serving as such. Furthermore, it is important that he be freed from any form of harassment, hindrance or distraction to enable him to fully attend to the performance of his official duties and functions. Unlike the legislative and judicial branch, only one constitutes the executive branch and anything which impairs his usefulness in the discharge of the many great and important duties imposed upon him by the Constitution necessarily impairs the operation of the Government. However, this does not mean that the President is not accountable to anyone. Like any other official, he remains accountable to the people but he may be removed from office only in the mode provided by law and that is by impeachment.</li>
<li>Passage in Soliven was made only to point out that it was the President by virtue of the office and may be invoked only by the holder of the office; not by any other person in the President’s behalf and that it was the President who had gone to court as the complainant</li>
<li>If the Court were to first require the President to respond to each and every complaint brought against him, and then avail himself of presidential immunity on a case to case basis, then the rationale for the privilege – protecting the President from harassment, hindrance or distraction in the discharge of his duties – would very well be defeated.</li>
</ul>
</ul>
<ul>
<li>Constitution provides remedies for violations committed by the Chief Executive except an ordinary suit before the courts. The Chief Executive must 1st be allowed to end his tenure (not his term) either through resignation or removal by impeachment. </li>
</ul>
<br /><div class="blogger-post-footer">Check out more at www.philippinelegalguide.com</div>atty. stacyhttp://www.blogger.com/profile/01086234062798435600noreply@blogger.comtag:blogger.com,1999:blog-5581298077238331148.post-68700652216700463392020-06-04T06:11:00.003-07:002020-06-04T06:11:57.152-07:00Tax Case Digest: City of Davao v. Randy Allied Ventures, G.R. No. 241697, July 29, 2019City of Davao v. Randy Allied Ventures, Inc. <br />G.R. No. 241697, July 29, 2019.<br /><br />
Second Division<br />PERLAS-BERNABE, J.:<br />
<br />Lessons Applicable: non-bank financial intermediary, local business tax<br />Laws Applicable:<br />
<br />FACTS:<br />
<ul>
<li>Randy Allied Ventures, Inc. (RAVI) is one of the Coconut Industry Investment Fund (CIIF) holding companies established to own and hold the shares of stock of San Miguel Corporation (SMC).</li>
<li>January 24, 2012: Supreme Court decision in Philippine Coconut Producers Federation, Inc. v. Republic (COCOFED), G.R. Nos. 177857-58 and 178793, declared the CIIF companies, including RAVI, and the CIIF block of SMC shares as "public funds necessarily owned by the Government”.</li>
<li>January 17, 2013: RAVI filed with the Regional Trial Court (RTC), a claim for refund or credit of erroneously and illegally collected LBT for the taxable year 2010 in the amount of P503,346.00, corresponding to its dividends from its SMC preferred shares, on the mistaken assumption that it is a non-bank financial intermediary (NBFI).</li>
<li>RTC: Denied the claim for refund or credit. Being a financial intermediary, RAVI's income from dividends and interests is subject to LBT under Section 143 (f) of Republic Act (RA) No. 7160, or the Local Government Code of 1991 (LGC). It is its principal source of income, in line with the primary purpose stated in its Amended AOI.</li>
<li>RAVI filed a Petition for Review with the CTA First Division.</li>
<li>CTA First Division granted the petition and held that RAVI is a holding company and not an NBFI subject to LBT and denied City of Davao’s Motion for Reconsideration (MR)</li>
<li>CTA EB: Denied City of Davao’s petition for lack of merit. RAVI cannot be considered an NBFI for failing to meet the requisites provided under the General Banking Law, Manual of Regulations for Non-Bank Financial Institutions, and the National Internal Revenue Code, i.e., it is not authorized to act as an NBFI by the Bangko Sentral ng Pilipinas (BSP); its principal function does not relate to NBFI activities; and that while its primary purpose may involve one of the activities enumerated in the BSP Manual, there was no proof that it performed such activities as its principal function and on a regular and recurring basis.</li>
</ul>
<br />ISSUE: W/N CTA EB erred in finding that RAVI is not an NBFI subject to LBT under Section 143 (f) of the LGC<br />
<br />HELD: Petition is denied.<br />
<ul>
<li>Essentially, LBT are taxes imposed by local government units on the privilege of doing business within their jurisdictions. "Doing business" means some "trade or commercial activity regularly engaged in as a means of livelihood or with a view to profit." LBT imposed pursuant to Section 143 (f) is premised on the fact that the persons made liable for such tax are banks or other financial institutions by virtue of their being engaged in the business as such. This is why the LBT are imposed on their gross receipts from "interest, commissions and discounts from lending activities, income from financial leasing, dividends, rentals on property and profit from exchange or sale of property, insurance premium."</li>
<li>In order to be considered as an NBFI under the National Internal Revenue Code, banking laws, and pertinent regulations, the following must concur:</li>
<ul>
<li>a. The person or entity is authorized by the BSP to perform quasi-banking functions;</li>
<li>b. The principal functions of said person or entity include the lending, investing or placement of funds or evidences of indebtedness or equity deposited to them, acquired by them, or otherwise coursed through them, either for their own account or for the account of others; </li>
<li>c. The person or entity must perform any of the following functions on a regular and recurring, not on an isolated basis, to wit:</li>
<ul>
<li>i. Receive funds from 1 group of persons, irrespective of number, through traditional deposits, or issuance of debt or equity securities; and make available/lend these funds to another person or entity, and in the process acquire debt or equity securities;</li>
<li>ii. Use principally the funds received for acquiring various types of debt or equity securities</li>
<li>iii. Borrow against, or lend on, or buy or sell debt or equity securities.</li>
</ul>
</ul>
</ul>
<ul>
<li>A "'holding company' is 'organized' and is basically conducting its business by investing substantially in the equity securities of another company for the purpose of controlling their policies (as opposed to directly engaging in operating activities) and 'holding' them in a conglomerate or umbrella structure along with other subsidiaries."While holding companies may partake in investment activities, this does not per se qualify them as financial intermediaries that are actively dealing in the same. Financial intermediaries are regulated by the BSP because they deal with public funds when they offer quasi-banking functions. On the other hand, a holding company is not similarly regulated because any investment activities it conducts are mere incidental operations, since its main purpose is to hold shares for policy-controlling purposes</li>
</ul>
<br /><div class="blogger-post-footer">Check out more at www.philippinelegalguide.com</div>atty. stacyhttp://www.blogger.com/profile/01086234062798435600noreply@blogger.comtag:blogger.com,1999:blog-5581298077238331148.post-39833339427956521192020-06-04T05:06:00.000-07:002020-06-04T05:06:41.136-07:00Tax Case Digest: Chevron Holdings, Inc. v. CIR, CTA EB No. 1895/1896, March 9, 2020Chevron Holdings, Inc. v. CIR<br />CTA EB No. 1895/1896, March 9, 2020. <br /><br />
CTA En Banc<br />Castaneda, Jr., J.:<br />
<br />Lessons Applicable: filing of the complete supporting documents by the taxpayer in connection with an administrative claim for VAT refund<br />Laws Applicable: Section 112 (C) of the NIRC of 1997<br /><br />
FACTS:<br />
<ul>
<li>October 31, 2013: Chevron Holdings, Inc. (CHI) filed with the Department of Finance One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center (DOF-OSS) an administrative claim for refund or issuance of TCC for unutilized input VAT for the 1st quarter of CY 2012 in the total amount of P16,165,791.62.</li>
<li>January 16, 2014: CHI filed with DOF-OSS an administrative claim for refund or issuance of TCC for unutilized input VAT for the 2nd quarter of CY 2012 in the total amount of P19,732,044.98.</li>
<li>February 17 and 27, 2014: CHI submitted additional documents required under the First Notice attached to the Letter of Authority (LOA) No. LOA-311-2013-0000050327 dated November 28, 2013.</li>
<li>March 14, 2014: CHI received LOA No. LOA-411-2014-00000015 dated March 10, 2014.</li>
<li>Due to CIR’s inaction on its administrative claims for refund, it filed a Petition for Review on March 28, 2014 for CTA Case No. 8790 and June 13, 2014 for CTA Case No. 8835.</li>
<li>January 18 and July 10, 2018: CTA 1st Division issued the assailed decision</li>
<li>August 14, 2018: CHI filed its Petition for Review in CTA EB No. 1895 and CIR filed his Petition for Review in CTA EB No. 1896. </li>
</ul>
ISSUES: <br />1. W/N CTA has jurisdiction<br />2. W/N CHI is entitled to its entire refund claim. <br /><br />
HELD: Dismissed. <br />1. NO. CHI complied with the thirty (30) day period from the request of the BIR dated February 7, 2014 when it submitted its last batch of supporting documents on February 27, 2014. But, failed to observe the unqualified provision of law regarding the 120-day period which commences from the taxpayer’s submission of complete documents. In other words, while Chevron’s due process were observed following the pronouncement of the Supreme Court in the Total case, Chevron completely disregarded the BIR’s right to be afforded opportunity to review its claims. Thus, Chevron’s haste in elevating the instant case to the CTA is a blatant violation of the doctrine of exhaustion of administrative remedies as pronounced in the San Roque case.<br /><br />
<ul>
<li>Subject provision works to protect both the taxpayer and the BIR from belated resolution of the claim and from prematurity of elevating the same to the proper courts, respectively.</li>
<li>To be sure, it is the taxpayer who ultimately determines when complete documents have been submitted for the purpose of commencing and continuing the running of the 120-day period. Nevertheless, the Supreme Court also emphasized that the forgoing benefit given to taxpayer is not unbridled and, as such, is subject to limitations. Hence, based on the above-quoted portion of Pilipinas Total Gas, the filing of the complete supporting documents by the taxpayer in connection with an administrative claim for VAT refund is subject to the following rules: </li>
</ul>
a. Upon filing of his application for tax credit or refund for excess creditable input taxes, the taxpayer-claimant is given thirty (30) days within which to complete the required documents within thirty (30) days from request of the investigation/processing unit. <br />b. If in the course of the investigation and processing of the claim, additional documents are required for the proper determination of the legitimate amount of the claim, the taxpayer-claimants shall submit such documents within thirty (30) days from request of the investigation/processing unit. Notice of the request for the submission of additional supporting document is required.<br />c. It is only upon the submission of the taxpayer that the 120-day period would begin to run.<br />d. In all cases, whatever documents a taxpayer intends to file to support his claim must be completed within the two-year period under Section 112 (A) of the NIRC. <br /><br />2. NO. <br />
<ul>
<li>Chevon’s presentation of its clients’ (1) SEC Certificates of Non-Registration (2) screenshots of Chevron Subsidiary governance website and (3) Service Agreements, may have sufficed to prove that they were foreign corporations. However, these pieces of evidence are insufficient to prove that they are doing business outside the Philippines.</li>
<li>Even if RMC No. 42-03 allows out-of-period claims of input VAT, the same cannot be adhered to, as it contravenes Section 110 (A)(2) of the NIRC OF 1997, as amended. It is clear from the foregoing provision that for purchases of goods, the corresponding input value added taxes of which is creditable to the purchaser upon the issuance of the corresponding invoice. On the other hand, for purchases of services, the corresponding input value added taxes of which is creditable to the purchaser upon payment of compensation, rental, royalty or fee, that is, upon the date of official receipt. Section 110 (A) is explicit – upon consummation, in the case of domestic purchases of goods, and upon payment, in the case of purchases of services. It does not provide any qualification.</li>
</ul>
<br /><div class="blogger-post-footer">Check out more at www.philippinelegalguide.com</div>atty. stacyhttp://www.blogger.com/profile/01086234062798435600noreply@blogger.comtag:blogger.com,1999:blog-5581298077238331148.post-11817524470239488792020-06-04T04:58:00.000-07:002020-06-04T04:58:55.994-07:00Tax Case Digest: Lennie De Sagun et al. v. CIR, CTA Case No. 9084, March 11, 2020Lennie De Sagun et al. v. CIR<br />CTA Case No. 9084. March 11, 2020.<br />
<br />CTA Third Division<br />Modesto-San Pedro, J.:<br />
<br />FACTS:<br />
<ul>
<li>February 2014: 2 Filipino ADB employees, on their own, and on behalf of other Filipino ADB employees, questioned its legality of the RMC 31-13 issued on April 12, 2013 which provides that only officers and staff of the ADB who are not Philippine nationals shall be exempt from Philippine income tax with the RTC of Mandaluyong</li>
<li>RTC: Declared section 2 (d) (1) RMC 31-13 void for being issued without legal basis, in excess of authority and/or without due process of law, and in the absence of legislation and/or regulation to the contrary</li>
<li>Lennie De Sagun et al. filed their administrative claim for refund using the Decision of the RTC to prove that their payment of income tax for taxable years 2012 and 2013 are erroneous.</li>
<li>Lennie De Sagun et al. filed a Petition for Review</li>
</ul>
<br />ISSUES: <br />1. W/N RTC Mandaluyong has no jurisdiction. <br />2. W/N NIRC and RMC 31-13 intended to impose income tax on resident Filipino citizens who are ADB employees.<br />3. W/N RMC 31-13 should be prospectively applied.<br />4. W/N evidence presented is sufficient for the entitlement of refund.<br /><br />HELD: NO. Denied. <br />1. NO. RTC Mandaluyong has no jurisdiction to decide on the validity or constitutionality of RMC 31-13. Consequently, its Decision is a nullity. Assuming it has jurisdiction and its Decision is valid, the same is still not binding upon this Court. It must be stressed that only decisions of the Supreme Court establish jurisprudence or doctrines in this jurisdiction and these decisions become judicial precedents to be followed in subsequent cases by all courts of the land. <br /><br />2. YES.<br />
<ul>
<li>Based on Section 23 (A) and related Sections 24, and 32 (A)(1) of the NIRC provides that income of a resident Filipino citizen, whether derived from sources within or outside the Philippines are subject to tax.</li>
<li>A perusal of RMC 31-13 would reveal that CIR merely exercised his power to interpret the pertinent provisions of the NIRC in relation to the RP-ADB Agreement. Section 45 (b) of the RP-ADB Agreement: (B) Exemption from taxation on or in respect of the salaries and emoluments paid by Bank subject to the power of the Government to tax its nationals”</li>
</ul>
3. YES. To retroactively apply RMC 31-13 would be prejudicial to the Filipino ADB officers and employees would be prejudicial to the Filipino ADB officers and employees as they may be issued deficiency income tax assessments for compensation which at the time of payment was declared tax-exempt by CIR. Consequently, the retroactive application of RMC 31-13 will violate Section 246 of NIRC. <br />
<ul>
<li>CIR issued contradictory rulings causing confusion among them prior to finally settling the issue in RMC 31-13 on April 12, 2013, to wit: </li>
</ul>
a. March 11, 1999: Former CIR issued a ruling that ADB Filipino employees holding managerial and technical position are subject to a preferential rate of 15%<br />b. January 29, 2001: BIR, through its Regional Director (RD) which had the jurisdiction over ADB, issued an opinion stating that salaries and emoluments received by ADB officers and staff are exempt from taxation<br />c. February 6, 2013: Chief Legal Division of Revenue Region No. 7, Amado Rey B. Pagarigan issued an opinion that the Filipino employees in ADB are subject to the preferential tax rate of 15% on their compensation income.<br />
<ul>
<li>When the Filipino ADB officers and employees received their 2012 salaries and emoluments, CIR’s position then was that their compensation was tax-exempt. Xxx They cannot be faulted for believing that they were exempt from paying income tax for such belief was brought about by an opinion by CIR himself, who, after all, is in charge of implementing the country’s tax laws.</li>
<li>Although it can be argued that RMC 31-13 is a mere interpretation of existing law and should be applied even to compensation for TY 2012, the Court finds that it should only be applied prospectively in the interest of justice and equity. </li>
</ul>
<br />4. NO. Without adequate proof that a prior administrative claim for refund was lodged before the present Petition was institution, petitioners claim for tax refund CANNOT prosper.<br />
<ul>
<li>Before a refund claim under Section 229 of the NIRC can be granted, a taxpayer/claimant must 1st prove that he or she has filed an administrative claim with CIR prior to filing suit with this Court.</li>
<li>Section 3 of Rule 130 of the Rules of Court provides that no documentary evidence is admissible as proof of its content without presenting its original. </li>
<ul>
<li>Proof of the following facts: 1. Filing an administrative claim for refund and 2. Content of administrative refund claim were mere photocopies </li>
</ul>
</ul>
<ul>
<li>As an exception is the best evidence rule under Section 2 of Rule 130 of the Rules of Court. Consequently, before a copy may be admitted as proof of the contents of a document, its execution or existence, and the cause of its unavailability (which should be without bad faith on the part of the offeror) must be first be established. </li>
<ul>
<li>In this case, petitioner’s witness did not testify on matters proving 1. The execution or existence of the original administrative claims for refund 2. Cause of the unavailability of these documents which is not due to the bad faith of petitioners. In fact, she did not adduce any testimony at all identifying these documents. Worse, these documents have not been marked considering that these were neither included in the Pre-trial Brief nor Pre-trial order. – inadmissible</li>
</ul>
</ul>
<ul>
<li>It may be pointed out that the presentation of the originals of the administrative claims for refund is unnecessary since the truth of its contents is not in issue but only the fact of (prior execution of the administrative claim before the filing of the present Petition) is needed to be proved, hence, parol evidence is allowed. Nonetheless, petitioner’s counsel still failed to offer as evidence the copies of the administrative claims for refund in the Formal Offer of Evidence.</li>
</ul>
<br /><div class="blogger-post-footer">Check out more at www.philippinelegalguide.com</div>atty. stacyhttp://www.blogger.com/profile/01086234062798435600noreply@blogger.comtag:blogger.com,1999:blog-5581298077238331148.post-9256039801552134102020-06-04T04:28:00.000-07:002020-06-04T04:28:35.522-07:00Tax Case Digest: Macquarie Offshore Services v. CIR CTA Case No. 9722, March 12, 2020.Macquarie Offshore Services v. CIR<br />
CTA Case No. 9722, March 12, 2020.<br />
<br />
CTA Second Division <br />
Mindaro-Grulla, J.: <br />
<br />
Lessons Applicable: VAT refund claim, zero-rated sales<br />
Laws Applicable: Section 112 (A) and (C) of the NIRC of 1997, Sections 106(A)(2)(1) and (2); 106(B) and 108(B)(1) and (2)<br />
<br />
FACTS: <br />
<ul>
<li>June 29, 2017: Macquarie Offshore Services Pty Ltd. (Philippines Branch) (MOS) filed with the BIR an Application for Tax Credits / Refunds with corresponding Checklist of Mandatory Requirements for Claims for VAT Credit/Refund, and the letter dated June 29, 2017, applying for refund of its alleged excess and unutilized input VAT in the total amount of P85,098,492.89 for the 1st to 4th quarters of the FY 2016.</li>
<li>November 24, 2017: MOS filed the instant Petition for Review</li>
</ul>
ISSUE: W/N VAT credit or claim should be allowed<br />
<br />
HELD: Denied.<br />
<br />
NO. <br />
<ul>
<li>Based on Section 112 (A) and (C) of the NIRC of 1997, as amended by RA 9337, jurisprudence has laid down certain requisites which the taxpayer-applicant must comply with to successfully obtain a credit/refund of input VAT – classified into certain categories, to wit: </li>
</ul>
<br />
1. As to the timeliness of the filing of the administrative and judicial claims: - met<br />
<ul>
<li>a. Claim is filed with the BIR within 2 years after the close of the taxable quarter when the sales were made – filed June 29, 2017</li>
<li>b. In case of full or partial of the Commissioner to act on the said claim within a period of 120 days, the judicial claim has been filed with this Court, within 30 days from receipt of the decision or after the expiration of the said 120-day period – filed on November 24, 2017</li>
</ul>
2. With reference to the taxpayer’s registration with the BIR<br />
<ul>
<li>a. Taxpayer is a VAT-registered person – met since BIR Payment Forms, standing alone, may be considered as evidence of VAT registration</li>
</ul>
3. In relation to the taxpayer’s output VAT<br />
<ul>
<li>a. Taxpayer is engaged in zero-rated or effectively zero-rated sales </li>
<li>b. For zero-rated sales under Sections 106(A)(2)(1) and (2); 106(B) and 108(B)(1) and (2), the acceptable foreign currency exchange proceeds have been duly accounted for in accordance with BSP rules and regulations</li>
<ul>
<li>Essential elements must be present for a sale or supply of services to be subject to the VAT rate of zero percent (0%), under Section 108(B)(2) of the NIRC of 1997:</li>
<ul>
<li>1) The services fall under any of the categories under Section 108(B)(2) or simply, the services rendered should be other than “processing, manufacturing or repacking goods. - met</li>
<li>2) Services must be performed in the Philippines by a VAT-registered person</li>
<li>3) Recipient of the services is a foreign corporation, and the said corporation is doing business outside the Philippines or is a non-resident person not engaged in business who is outside the Philippines when the services were performed; - not met since the documents presented: (1) Certification of Non-Registration of Company issued by the SEC, (2) Certificate/Articles of Foreign Incorporation/Registration and (3) Minor Services Agreements, standing alone is inadequate proof that its client is a non-resident doing business outside the Philippines.</li>
<li>4) The payment for such services should be in acceptable foreign currency accounted for in accordance with BSP rules</li>
</ul>
</ul>
</ul>
4. As regards taxpayer’s input VAT being refunded <br />
a. Input taxes are not transitional input taxes<br />
b. Input taxes are due or paid<br />
c. Input taxes have not been applied against output taxes during and n the succeeding quarters<br />
d. Input taxes claimed are attributable to zero-rated or effectively zero-rated sales. However, where there are both zero-rated or effectively zero-rated sales and taxable or exempt sales, and the input taxes cannot be directly and entirely attributable to any of these sales, the input taxes shall be proportionately allocated on the sales volume<div class="blogger-post-footer">Check out more at www.philippinelegalguide.com</div>atty. stacyhttp://www.blogger.com/profile/01086234062798435600noreply@blogger.comtag:blogger.com,1999:blog-5581298077238331148.post-6513426977566443292020-06-04T02:48:00.000-07:002020-06-04T02:48:50.002-07:00Tax Case Digest: Jones Lang Lasalle (Philippines), Inc. v. CIR, CTA Case No. 9590, March 12, 2020Jones Lang Lasalle (Philippines), Inc. v. CIR<br />CTA Case No. 9590, March 12, 2020.<br />
<br />CTA Third Division<br />Uy, J:<br />
<br />Lessons Applicable: CTA Jurisdiction, Prescription, Due Process<br />Laws Applicable: RA 1124, as amended by RA 9282, Section 3 (a) (1), Rule 4, under Section 228 of the NIRC of 1997, as amended, and RR No. 12-99<br />
<br />FACTS:<br />
<ul>
<li>September 3, 2009: Commissioner of Internal Revenue (CIR) issued
a Letter Notice informing Jones Lang Lasalle (Philippines), Inc. (JLL)
that a computerized matching on the information/data provided by
3rd-party sources against its declarations per income/VAT/percentage
withholding tax returns, disclosed discrepancies for calendar year 2007.</li>
<li>May 11, 2010: CIR issued Letter of Authority (LOA). </li>
<li>May 31, 2010: CIR issued an undated Notice for Informal Conference. </li>
<li>October 8, 2010: CIR issued the Preliminary Assessment Notice (PAN).</li>
<li>October 19, 2011: CIR issued a FAN.</li>
<li>September 19, 2016: JLL filed a letter stating that the deficiency VAT assessment for VY 2007 and Collection Letter should be cancelled.</li>
<li>May 8, 2017: JLL received a Final Notice Before Seizure (FNBS) dated February 28, 2017.</li>
<li>JLL filed a petition for Review (With Urgent Motion for the Issuance of an Order to Suspend the Collection of Tax)</li>
</ul>
ISSUES:<br />1. W/N CTA has jurisdiction to act on the Petition for Review<br />2. W/N period to assess has already prescribed.<br />3. W/N due process requirements under NIRC and its regulations has been complied with.<br />
<br />HELD: Granted.<br />1. YES. Issuance of the subject FBNS constitutes the final decision of CIR that is appealable before the CTA.<br />
<ul>
<li>Jurisdiction over the subject matter or nature of an action is fundamental for a court to act on a given controversy. CTA being a court of special jurisdiction can take cognizance only of matters that are clearly within its jurisdiction.</li>
<li>Based on RA 1124, as amended by RA 9282 and Section 3 (a) (1), Rule 4 of the Revised Rules of the CTA, the jurisdiction of the CTA is not limited to decisions of the CIR involving disputed assessments. The second part thereof also includes “other matters” arising under the NIRC or other laws administered by the BIR. </li>
<ul>
<li>Jurisdiction of the CTA to rule on “other matters arising under the NIRC or other laws administered by the BIR” include among others, the validity of the warrant of distraint and levy and waiver of statute of limitations.</li>
<li>Moreover, the term “other matters” pertain to matters directly related to disputed assessments or refunds or internal revenue taxes, fees or other charges, penalties imposed in relation thereto.</li>
</ul>
</ul>
<ul>
<li>CIR v. Isabela Cultural Corporation (G.R. No. 135210, July 11, 2001): FBNS which indicates that the taxpayer was being given "this LAST OPPORTUNITY" to pay; otherwise, its properties would be subjected to distraint and levy, constitutes the CIR’s final decision.</li>
</ul>
<br />2. NO. Section 11 of RA 1125 as amended, provides that any party adversely affected by a decision or ruling of the CIR may file an appeal with the CTA 30 days after the receipt of such decision or ruling. Since FBNS was received on May 8, 2017, thus it has until June 7, 2017 or 30 days, to appeal and challenge its validity with the CTA. Hence, May 15, 2017 was within the 30-day period.<br /><br />3. NO. Failure to strictly comply with the notice requirements prescribed under Section 228 of the NIRC of 1997, as amended, and RR No. 12-99 is tantamount to denial of due process. <br />
<ul>
<li>If there exists sufficient basis to assess the taxpayer, the CIR or his authorized representative is mandated to issue a PAN. Thereafter, a formal letter of demand and an assessment notice shall be issued by the CIR or his duly authorized representative. The use of the word “shall” in these legal provisions indicates the mandatory nature of the requirements laid down therein. Thus, it is essential for CIR to establish and prove that the requisite assessment notices were fully served to the taxpayer within the prescription period. </li>
<li>Tax assessment, due process requires that the taxpayer must actually receive the assessment. </li>
<li>If the taxpayer denies having received the assessment notices, it is incumbent upon respondent to prove by competent evidence that the assessment notices were indeed received by the taxpayer. </li>
<li>It is basic in the rule of evidence that bare allegations unsubstantiated by evidence, are not equivalent proof. </li>
<li>BIR was fully informed of the change in address in accordance to Section 11 of RR No. 12-8531. Court notes that the new address was likewise indicated in the documents issued by the BIR in the BIR records. Evidently, BIR had knowledge of the change of address and should have sent the PAN and FAN to its new address. But, they were sent to the old address. While it appears that BIR did indeed issued the assessment notices, it failed to present evidence to refute JLL’s claim that it did not receive said assessment notices. Consequently, there was no valid service of assessment notices to petitioner. </li>
</ul>
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