REPUBLIC OF THE PHILIPPINES v.

PROVINCIAL GOVERNMENT OF PALAWAN

G.R. No. 170867 | December 4, 2018

“Unless stated by law, territorial jurisdiction refers to the geographic area or landmass wherein the local government
unit can validly exercise its powers and discharge its functions and not to the exercise of jurisdiction which may extend
beyond the metes and bounds delimited by law.”
“Absent the finding that such natural resources being developed for national wealth is located within the territorial
boundaries of the local government unit, it is not entitled to the 40% profit-sharing scheme prescribed in the law.”

FACTS:
The Republic of the Philippines entered into a service contract with Shell and other
consortiums for the exploration of oil and natural gas in the Camago – Malampaya reservoir located
northwest of Palawan.
Attesting to such fact is the Administrative Order issued by then President Fidel Ramos
stating that Palawan is entitled to almost two billion dollars from the profits of the proceeds.
Subsequently, the government asked for the deferment of payment in order to fulfill with its
obligation to the consortium in the service contract.
In a nutshell, Palawan is asking for its 40% share in the gross sales of the oil exploration to
which it is entitled to under the Local Government Code since the provincial government is
exercising its jurisdiction in the said area by enforcing environmental laws, maintaining peace and
order, and having jurisdiction of criminal and civil cases in the oil plant.
The Government denies to grant this claim by alleging that the Camago – Malampaya
reservoir is beyond the territorial jurisdiction, in this case, within the boundaries of Palawan. While
Palawan thus have “territory” in its municipal waters, the location of the reservoir is far from the
boundaries of the local government unit, thus not entitling it to the profit-sharing scheme.

ISSUES:

 Whether or not territorial jurisdiction refers to the landmass and geographic area
delimited by law and not the exercise of jurisdiction? (YES)

RULING:
Palawan is not entitled to the profit-sharing scheme since the oil plant is beyond its territorial
jurisdiction. Territorial jurisdiction under the laws and jurisprudence refers to the territorial
boundaries representing the landmass set under the law. Unless otherwise expanded by the law to
include maritime area or if it is an island municipality, territorial jurisdiction refers to the geographic
area of the local government unit.
As the Camago – Malampaya Powerplant is beyond the territorial jurisdiction of Palawan as
stated in its charter and statutes, it is not entitled to the profits of the service contract.