FIFTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
Third Regular Session 
SENATE 
S.No. 3230 
) 
) 
) 
Introduced by Senator Ralph G. Recto 
EXPLANATORY NOTE 
The Malampaya Deep Water Gas-to-Power Project represents the single-biggest 
foreign direct investment to the Philippines, supplying three gas turbine power plants 
with a combined capacity of 2,700 megawatts of power. All fees, revenues and receipts 
covering the exploration, development and production of petroleum resources in the 
Camago-Malampaya Reservoir, located 80 kilometers west of Northern Palawan, goes to 
the Malampaya Special Account in the General Fund maintained by the Depmimcnt of 
Energy (DOE). 
According to the DOE, as of February 2012, the aggregate government 
production share from the Malampaya Natural Gas Project (MNGP) reached P94.441 
billion since it began producing natural gas commercially in January 2002. The DOE is 
optimistic that the MNGP will bring in the same huge returns in future years. 
Presidential Decree No. 910 mandates that the Malampaya Fund shall be used to 
finance energy resource development and exploration programs and projects as may be 
directed by the President. 
However, the MNGP, which is one of the largest and most significant industrial 
endeavors in Philippine history, has in previous years been confronted with 
environmental and security threats. Thus, the Malampaya Fund should be utilized to 
secure the MNGP from the offshore gas platform, submerged pipelines up to the shore 
gas processing plant. 
The Armed Forces of the Philippines (AFP), as one of the members of the Joint 
Task Force Malampaya, endeavors to strengthen the country's defense capability to 
secure the MNGP from terrorist attacks. However, the AFP and the other members of the 
Joint Task Force still have to improve their capacity in order to efficiently respond to 
'terrorist attacks and security threat situations. 
. 
Republic Act No. 7898, also known as the "Armed Forces of the Philippines 
(AFP) Modernization Act" provides for the development and employment of certain 
capabilities to uphold the sovereignty and territorial integrity of the Republic and ensures 
the security of the national territory from all forms of intrusion and encroachment. 
However, after more than seventeen years, the AFP is still far from achieving its 
mandate of full modernization of equipment and weapons systems. 
Last May 25, 2012, the Department of National Defense (DND) submitted a 
proposal to the President seeking an allocation of P75 billion for the military's 
modernization program in the next five years. The said amount is needed to fund 39 
-'.\ ~ 
;' 


projects intended to boost the armed forces' capabilities, which includes acquisition of 
communications equipment, lead-in fighter trainer jets, closed air support aircraft, long-
range patrol aircraft, radar systems and engineering equipment. 
The Malampaya Fund should provide substantial funding for these programs since 
the necessary allocation for such could not be supp011ed by the AFP Modernization Trust 
Fund alone. 
Furthermore, to make the disbursement of the Malampaya Fund transparent and 
fi'ee from discretion and abuse, the bill also mandates that the allocation of the said Fund 
to augment the APP Modernization Act Trust Fund should be clearly provided for in the 
General Appropriations Act. 
In view of the foregoing, the approval of the bill is earnestly sought. 


FIFTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
Third Regular Session 
SENATE 
S.No. 
323u 
) 
) 
) 
Introduced by Senator ~alph G. Recto 
AN ACT 
, l 
:. tl~-
ALLOCATING THE NET NATIONAL GOVERNMENT SHARE FROM THE 
MALAMPAYA 
NATURAL 
GAS 
PROJECT 
TO 
FINANCE 
THE 
AFP 
MODERNIZATION ACT 
Be it enacted by the Senate and the House of Representatives of the Philippines in Congress 
assembled: 
1 
SECTION 1. All proceeds of the net national government share from collections of the 
2 
Malampaya Natural Gas Project otherwise known as the Malampaya Fund shall be allocated 
3 
solely for the Armed Forces of the Philippines (AFP) Modernization Program: Provided, That the 
4 
amounts herein allocated shall be included in the General Appropriations Act: Provided,Jurther, 
5 
That when the AFP Modernization Program expires, the aforementioned collection shall accrue to 
6 
the General Fund. 
7 
SEC. 
2. 
Repealing Clause. - All laws, decrees, issuances, rules, and regulations 
8 
or parts thereof inconsistent with the provisions of th is Act are hereby repealed, amended or 
9 
modified accordingly. 
10 
SEC. 
3. 
Implementing Rules and Regulations. - Within sixty (60) days from the 
11 
effectivity of this Act, the Department of Energy, Department of Finance and the Department of 
12 
Budget and Management shall provide the necessary rules and regulations for the proper 
13 
disposition oflhe said funds and the effective implementation of this Act. 
14 
SEC. 4. 
Effectivity. - The Act shall take effect after fifteen (15) days following 
15 
its publication in at least two (2) newspapers of general circulation. 
Approved,