Malampaya Funds should not be used at the President’s discretion.

Just last night, Cong. Lito Atienza manifested that the PDAF funds for 2013 should be scrapped as well. And now the Supreme Court did just that! And, aside from that, the SC also stopped the release of the Special Funds coming from the Malampaya area that the President has discretion over (without having to go through Congress’ Appropriation power). I did some research on that, and here’s what I found out:

In 1990, the Philippines entered into Service Contract No. 38 (SC 38) with Shell Exploration BV, Shell Philippines LLC, Chevron Malampaya LLC and PNOC-Exploration Corporation which is set to expire on 2024. By 1998, President Ramos signed declaration of commerciality of the venture in Malampaya (Palawan).

In 2001, the Malampaya Deep Water Gas-to-Power Project inaugurated at the onshore gas plant in Batangas; and by 2002, it became fully operational.

2005 saw the Executive Order of President Gloria Arroyo: EO 473 November 29, 2005:


Now comes the tricky part regarding the HUGE FUNDS that came along with this gas field. The LOCAL GOVERNMENT CODE stipulates:

Section 290. Amount of Share of Local Government Units. – Local government units shall, in addition to the internal revenue allotment, have a share of forty percent (40%) of the gross collection derived by the national government from the preceding fiscal year from mining taxes, royalties, forestry and fishery charges, and such other taxes, fees, or charges, including related surcharges, interests, or fines, and from its share in any co-production, joint venture or production sharing agreement in the utilization and development of the national wealth within their territorial jurisdiction.

So, Palawan should get 40% of the proceeds of the Malampaya gas project. BUT GMA’s EO 683 s. 2007 changed it by mentioning a Presidential Decree of Ferdinand Marcos (from the 1970s):

Sec, 8 of Presidential Decree No. 910, authorizes the use of the fees, revenues and receipts from SC 38 [Service Contract 38] for such purpose as may be directed by the President of the Philippines

THIS EO WAS QUESTIONED AND IS NOW PENDING IN THE SUPREME COURT. Though with the latest TRO, we can see the leanings of this Court.

But what does that Presidential Decree 910 actually say? And does it hold water?  Original law regarding funds from energy resources:


Section 8. Appropriations.

(…) government share representing royalties, rentals, production share on service contracts and similar payments on the exploration, development and exploitation of energy resources, shall form part of a Special Fund to be used to finance energy resource development and exploitation programs and projects of the government and for such other purposes as may be hereafter directed by the President.

If you take this, then you see that there is a Special Fund that can be used at the President’s discretion. Stay with me for the next few paragraphs…. BUT Energy Development Board devolved into the Department of Energy through PRESIDENTIAL DECREE No. 1206: CREATING THE DEPARTMENT OF ENERGY:

Section 20. Appropriation. To carry out the purposes of this Decree, there is hereby appropriated out of any funds in the National Treasury not otherwise appropriated, the sum of ten million pesos (P10,000,000.00) for the operation of the Department and its bureaus, including such amount thereof as may be needed to augment the appropriations of the Board of Energy, for the remaining period of FY 1977 in addition to whatever applicable appropriation that may be transferred to it from among the government agencies reorganized under this Decree. Thereafter, the appropriation for the Department, its bureaus and the Board of Energy shall be included in the Annual General Appropriation Act.

So it did not mention the Special Fund under the President, and it mentioned that the funds should go through Congress. Now you can say, well, since it didn’t mention PD 910, then that PD should still be implemented. Even if the agency it created was already devolved. So, the DOE PD was again amended as (mentioning PD 910): PRESIDENTIAL DECREE No. 1573 June 11, 1978: AMENDING PRESIDENTIAL DECREE NO. 1206 CREATING THE DEPARTMENT OF ENERGY:

Section 6. Section 20 of the same Decree is amended to read as follows:

(…)forming part of the Special Fund under Section (g) of Presidential Decree No. 910, shall be disbursed for the health, welfare and other similar benefits of their personnel; for the acquisition, maintenance and repair of urgently needed equipment and for expenses necessary for the effective discharge of their powers and functions under this Decree.

It CLEARLY mentions PD 910. And also states where those funds should be used. VERY SPECIFIC. For their personnel. For acquisition and maintenance of equipment. And other expenses of the DOE. NOT a Special Fund under the President’s discretion.

But what’s the big deal? How much are we talking about?

Well, from circa 2009 – 2010, the Malampaya field remitted about P 77.1 BILLION to the government.

In January 2012: $1.134 Billion.

And in February 2013: $1.1 Billion.

A LOT OF MONEY. Thank you Supreme Court for stopping it’s misuse. Now let’s put it to good use. For the people.


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