At the heart of this study is Section 7 of Article X of the 1987 Constitution

which provides local government units with “equitable share in the proceeds of

the utilization and development of the national wealth within their respective

areas, in the manner provided by law…” to which we question, what really is

national wealth? The term national wealth has been defined by Administrative

Order No. 2701 Article 386(b) as comprising all natural resources situated within

the Philippine territorial jurisdiction including lands of public domain, waters,

minerals, coal, petroleum, mineral oils, potential energy forces, gas and oil deposits,

forest products, wildlife, flora and fauna, fishery and aquatic resources, and all

quarry products. The case of Republic vs. Palawan, however, has limited the

definition of national wealth only to those national wealth that can be found within

its landmass. It used as basis the deliberations of the 1986 Constitutional

Commission which cited examples of national wealth from which LGUs may claim its

share of proceeds, such as “ 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 Palimpifion,

Municipality of Valencia and mountainous areas, which are all situated inland.”

Such construction however was contemplated during the time when offshore

gas projects were minimal or of low-impact, if not unsuccessful. Well-settled is

the rule in Statutory Construction that in case of ambiguity in the language of

1
Implementing Rules And Regulations Of The Local Government Code Of 1991
the statute, canons of statutory construction have to be employed to ascertain

and give effect to the intent of the law. 2 In this case, there lies the ambiguity as

to whether or not “national wealth” includes both onshore and offshore national

wealth. While it was right to have resorted to the deliberations of the 1986

Constitutional Commission to ascertain the real intent of the law, it is important

to note of the circumstances during such time to establish the proper context of

such deliberations. Where times and circumstances have changed in light of

technological advancements and economic developments, the laws must be

construed in consideration of such changes. This is based on the old legal

maxim Tempora mutantur et leges mutantur in illis which means “Times have

changed and laws have changed with them”. Ultimately, the key to

understanding the legislative intent behind the law is to construe it in light of

the purpose that the law wants to achieve, which is for local government units

to “…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,” 3 by opening up a whole

new source of local financial self-reliance through the LGU’s share in proceeds

from national wealth, without limiting it to national wealth found within the

land mass.

2
Agpalo, 2009 edition
3
Local Government Code of 1991, Section 2
 In any case, Section 5(a) of RA 7160 provides that “In the interpretation

of the provisions of this code, the following rules shall apply: (a) Any provision

on a power of a local government unit shall be liberally interpreted in its favor,

and in case of doubt, any question thereon shall be resolved in favor of

devolution of powers and of the lower local government unit. Any fair and

reasonable doubt as to the existence of the power shall be interpreted in favor

of the local government unit concerned.” Since a share in the proceeds of

national wealth would mean more funds for the local government’s basic

services and facilities to their local constituents, it must be interpreted to

include offshore oil and gas projects as it would be for the best interest not only

of the local government unit but also of its constituents.

Moreover, while Section 290 of the Local Government Code does not

explicitly say that local government units are entitled to a share in the proceeds

obtained by the national government from offshore oil and gas projects,

“royalties”, which is one of those listed sources of LGU’s share, necessarily

include “Offshore Natural Gas Royalties” which the national government

derives from companies as payment for the permission given to them to extract

and explore natural resources within the country’s territory. 4

4
Investopedia, but reworded it. https://www.investopedia.com/terms/r/royalty.asp