Framing Autonomy: Issues and Concerns on the changes in the economic provisions of the original BBL draft as approved by the Ad Hoc Committee

Atty. Ishak V. Mastura, LL.M.
Bangsamoro Study Group

[Powerpoint presentation of Atty. Ishak V. Mastura, LL.M., co-convenor of the Bangsamoro Study Group at the Experts’ Forum on Autonomy Framework in the House Ad Hoc Committee’s BBL of the Cotabato City-based Institute of Autonomy and Governance (IAG) held at the Asian Institute of Management on May 29, 2015. Mastura chairs the Autonomous Region in Muslim Mindanao’s Regional Board of Investments (ARMM-RBOI) and co-convener of the ARMM’s Promotion of Investment Sustainability Organization (PISO)
He also served as a lawyer and member of the technical working group of the MILF peace panel. MindaNews transfered the text of the Powerpoint presentation into this wordfile]

Some basic assumptions

  1. Philippine political economy is private sector driven under free market principles, i.e. State is supposed to facilitate private sector-led economic growth in contrast to a State-led or State-driven model.
  2. Provisions in the original BBL draft were lifted verbatim from the Comprehensive Agreement on the Bangsamoro (CAB) so a lot of provisions changed by the Ad Hoc Committee on the Bangsamoro Basic Law (BBL) also directly violated the CAB provisions. Changes in the BBL may violate not just CAB but the peace agreement with the Moro National Liberation Front (MNLF).
  3. Benchmarking is something important in business, economics and in autonomy. Thus, after determining violations of the CAB, we have to look at the current ARMM autonomy as starting point of benchmarking.
  4. Passage of BBL is not taking place in a “vacuum”. Standards have to be maintained otherwise we have no way of knowing whether we are complying with CAB or even getting an improved autonomy from that of the ARMM autonomy or not.
  5. ARMM law still has incomplete devolution because the Oversight Committee as provided by RA 9054 has not met since the time of Regional Governor Parouk Hussin. To my knowledge no study or report was ever submitted by the OC to the President as required under the law.
  6. Provisions in the amended and expanded ARMM Organic Act or RA 9054 have been substantially lifted (even verbatim) from the 1996 GRP-MNLF Final Peace Agreement.

Economic Provisions in Art. V Powers of Government

Section 1. Reserved Powers. – Reserved powers are matters over which authority and jurisdiction are retained “exclusively” by the National Government. (CAB violation since the reserved powers are clearly limited and this listing of reserved powers has been in existence since the 10 pt. decision point on principles in 2011 prior to the FAB) –Does “exclusively” mean that whenever anything encroaches upon reserved powers in the exercise of concurrent or exclusive powers ipso facto reserved powers prevail?

(c) banking – In RA 9054, banking is not a reserved power and it provides for the entry of “off-shore banking units” and power over income tax of banks and other financial institutions principally doing business in the ARMM.

(k) all other powers not given under the Basic Law – In RA 9054 the general welfare power of the ARMM may mitigate abusive exercise of reserved powers (Section 4, Article IV).

Section 3. Exclusive powers (CAB violation)

  1. Contract loans, credits, and other forms of indebtedness with any government or private bank and other lending institutions, in accordance with the Constitution. – If loans have to be in accordance with the Constitution it may be interpreted that it is only the President that contracts foreign loans but since the power is “subject to law” (Article VII, Section 20) it is not prohibited to empower the Bangsamoro to contract foreign loans. In one news article: “Asked what Aquino found disagreeable, Rodriguez said these included some economic provisions, such as the right of the Bangsamoro government to get loans abroad. “He said that if local governments can get loans abroad, why not the Bangsamoro?” Rodriguez said.” (Inquirer, May 20)

Section 3 (o) The Bangsamoro Government shall have authority to regulate power generation, transmission and distribution operating exclusively in the Bangsamoro and not connected to the “Mindanao grid” – The highlighted phrase was substituted for the original wording “national transmission grid” which amendment takes away the power of the Bangsamoro to set-up its own grid or grant a concession to build and operate its own grid since there is no existing national grid yet in Mindanao as there is no connectivity of Mindanao to the Visayas and Luzon grids. This changes the nature of “inland waters” which is supposed to be under the exclusive powers of Bangsamoro to a concurrent power.

Aside from being a CAB violation, there is now inconsistency and contradiction in BBL on the extent of Bangsamoro powers over inland waters where it was mentioned twice in the BBL as part of the listing of exclusive powers and in Sec. 21. Inland Waters, Art. XII. Economy and Patrimony.

Section 3 (q) Receive grants and donations except grants and donations from foreign governments which require the concurrence of the National Government. – (CAB violation) Grants and donations from foreign governments are already being received by the ARMM government without need for concurrence by the national government , e.g. Basic Education Assistance in Muslim Mindanao from AusAID. (See RA 9054, ART. IX, SEC. 12. Donations or Grants; Tax Deductible. – The Regional Government may accept donations or grants for the development and welfare of the people in the autonomous region).

Section 4. Other Exclusive Powers (which refers to powers under the ARMM Organic Act as amended) – a. Subject to the provisions of the Constitution, to regulate and exercise authority over foreign investments within its jurisdiction; while in comparison, RA 9054, ART. XII, SEC. 34 – “Foreign Investments. – Subject to the provisions of the Constitution, the Regional Government shall regulate and exercise authority over foreign investments within its jurisdiction. The central government or national government may intervene in such matters only if national security is involved.”

Economic Provisions in Art. XI Fiscal Autonomy

Section 2. Auditing – this refers only to “internal auditing” (CAB violation) unlike in RA 9054 which states – “The utilization of the revenue generated by the Regional Government and block grants or subsidies remitted to it by foreign or domestic donors shall be subject to the rules and regulations of the Regional Government Department of the Budget and Management, if any, and to audit by regional government auditors. In the absence of such rules and regulations, the audit of the said funds, block grants or subsidies shall be done by the Commission on Audit and the use thereof shall be in accordance with the rules and regulations of the Department of the Budget and Management of the central government or national government.” (See Art. IX, Sec. 2. Fiscal Autonomy)

Section 6. Revenue Sources. – xxx The National Government shall continue to levy national taxes in the Bangsamoro Autonomous Region. (CAB violation) – This provision is contradictory to the devolution of taxing powers to the Bangsamoro as it allows the possibility of double taxation with regard to the national taxes supposedly devolved to the Bangsamoro, i.e. capital gains tax, donor’s tax, estate tax and documentary stamp tax under Section 9, Article XI. Thus, these taxes are rendered inoperative or unimplementable.

Section 8. Tax Incentives. – To encourage investments and other economic activities, the Bangsamoro Government shall have the power to grant tax exemptions, rebates, tax holidays and other incentives THAT ARE WITHIN ITS POWERS ITS TAXING POWERS UNDER SECTION 9 OF ARTICLE XI OF THIS ACT. (AMENDMENT BY THE WAYS AND MEANS COMMITTEE) – This is CAB violation. National fiscal incentives for investors such as income tax holiday have been reverted back to national government even though power over these incentives was the very first to be devolved to the ARMM in 1991 to spur private sector investments. So Bangsamoro will not have the same incentives as the rest of the country and there will be uncertainty on what investors are entitled to as incentives for investing in Bangsamoro. National investment incentives are also all currently being approved by the ARMM regional government since the office of the Regional Board of Investments including its powers and functions was devolved to the ARMM way back in 1991. This may touch upon VESTED RIGHTS.

In contrast and comparison:

RA 9054, ARTICLE X. SECTION 17. Incentives, Tax Rebates and Holidays. – The Regional Assembly may by law, and with the approval of the absolute majority of all its members, grant incentives, including tax rebates and holidays, for investors in businesses that contribute to the development of the autonomous region. It may provide similar incentives to companies doing business in the autonomous region which reinvest at least fifty percent (50%) of their net profits therein, and to cooperatives which reinvest at least ten percent (10%) of their surplus into socially-oriented projects in the autonomous region. NOTE: THE 1996 GRP-MNLF PEACE AGREEMENT ALSO HAD A SECTION ON THIS (SEC. 129)

This is CAB violation – Ways and Means Committee in Sec. 8 deleted the phrase “xxx other incentives including those granted to the Regional Board of Investment of the Autonomous Region in Muslim Mindanao. As part of incentives to investors, the Bangsamoro may opt instead to impose a flat rate lump sum tax on small and medium enterprises.” – This power allowed the Bangsamoro to replicate the success of PEZA in using a flat tax (5% of gross income) to attract investors, such as the booming BPO industry. For the Bangsamoro such “flat tax regime” would encourage the informal sector or grey economy of SMEs such as barter traders doing cross-border trade to formalize and start paying taxes (e.g. former Communist countries).

Article XI. Section 11. Assessment and Collection of taxes – xxx Corporations, partnerships, or firms whose central, main, or head offices are located outside the Bangsamoro Autonomous Region but which are doing business within its territorial jurisdiction by farming, developing, or utilizing the land, aquatic, or natural resources therein WHERE THE MAJORITY BUSINESS INCOME ARE DERIVED FROM THE BANGSAMORO AUTONOMOUS REGION, shall pay the income taxes corresponding to the income realized from their business operations in the Bangsamoro Autonomous Region to the city, or municipality where their branch offices or business operations or activities are located. – This is CAB violation. THE WAYS AND MEANS COMMITTEE INSERTED THE ABOVE PHRASE in the said provision which was verbatim lifted from Art. IX, Sec. 6 of RA 9054. So that means mining companies and big fishing operators and agricultural plantations with national or Mindanao-wide operations no longer have to account for the income they derive from the Bangsamoro as they are currently doing in the ARMM. NOTE: THIS PROVISION HAS ITS ORIGINS IN SEC. 134 OF THE 1996 GRP-MNLF PEACE AGREEMENT FROM WHICH IT WAS COPIED VERBATIM.

Section 17. Automatic Appropriation. – Deleted last sentence which provides that unspent amount of the block grant shall revert to the Bangsamoro Government general fund.

Article XI. Section 22. Foreign and Domestic Loans; Bills, Bonds, Notes and Obligations – (b) Bills, Bonds, Notes, Debentures and Obligations. – Subject to the rules and regulations of the BSP and the SEC, the Bangsamoro Government is also authorized to issue treasury bills, bonds, debentures, securities, collaterals, notes, obligations, and other debt papers or documents, as well as redeem or retire the same, pursuant to law enacted by the Bangsamoro Parliament. CAB violation 


SEC. 10. Treasury Bills, Notes and Other Debt Papers. – The Regional Government may issue treasury bills, bonds, promissory notes, and other debt papers or documents pursuant to law enacted by the Regional Assembly.

Section 23. Overseas Development Assistance. – In its efforts to achieve inclusive growth and poverty reduction, through the implementation of priority development projects, the Bangsamoro Government may avail of international assistance in accordance with the Overseas Development Assistance Law. –   Executive Order No. 125 s. 2002 provides SEC. 2. Devolution of ODA Funded Programs and Projects to ARMM. – xxx , Programs and Projects funded by ODA specifically intended only for ARMM shall be implemented by ARG. Programs and Projects funded by ODA implemented on a nation-wide basis, but with an ARMM component shall be implemented by the concerned national agency, with the ARG implementing the component within the ARMM. On-going programs and projects in the ARMM funded by ODA and covered by loan agreements shall be devolved to and implemented by ARG, subject to re-negotiation and amendment of the loan agreements covering said programs and/or projects. EO 125-A amended that GAA shall determine the agency.

Section 9. Economic Agreements. – The Bangsamoro Government may enter into economic agreements and receive benefits and grants derived therefrom subject to the approval of the National Government. –

COMPARE WITH RA 9054, ART. IX, SEC. 11. Economic Agreements. – Subject to the provisions of the Constitution, the Regional Government shall evolve a system of economic agreements and trade compacts to generate block grants for regional investments and improvements of regional economic structures which shall be authorized by law enacted by the Regional Assembly.


III. POWERS, 2. The Central Government shall have powers on:

  1. c) Common market and global trade, provided that the power to enter into economic agreements already allowed under Republic Act No. 9054 shall be transferred to the Bangsamoro

Section 30. xxx Properties and assets of the Southern Philippines Development Authority outside the area of the Bangsamoro shall be sold or conveyed to the local government unit where the same are located. – (CAB violation) SPDA was a product of the Mindanao Conflict and used to uplift the conditions of the Moros so some assets were turned over to the ARMM but during the SPCPD was run by the MNLF because it was attached to the SPCPD.

Section 31. The Bangsamoro Government shall be represented in the board of directors or in the policy-making bodies of government-owned or controlled corporations that operate a substantial portion of their businesses directly or through their subsidiaries in the Bangsamoro Autonomous Region or where the Bangsamoro Government has substantial interest. – This is CAB violation. Inclusion of the word “Government” after “Bangsamoro”- some interests may not involve the Bangsamoro Government. 

Section 8. Natural Resources. Excluded “strategic minerals and all sources of potential energy” from Bangasamoro authority and jurisdiction – This is a violation of the CAB since there is supposed to be concurrent powers over fossil fuels and energy resources and not a reserved power. Even the Constitution does not distinguish when it provides that autonomous regions shall have power over “ancestral domain and natural resources”. This issue is supposed to have been resolved in the CAB to address OIC and MNLF peace agreement concerns. At the very least it violates the Tripartite Review of the MNLF in Solo, Indonesia which resolved this provision on strategic minerals by providing “co-management” so this provision violates two peace agreements already and may be a cause for concern at the OIC. It also contradicts exclusive powers over generation, transmission and distribution since it makes energy a reserved power. (Sec. 3, Art. V).

Article VIII. Basic Rights. Section 9. Rights of Labor. – The Bangsamoro Government shall guarantee all fundamental rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike, in accordance with the Constitution, Labor Code of the Philippines and all conventions of the International Labor Organization ratified or which shall be ratified in the future by the National Government. The Constitution, the Labor Code, and the said Conventions of the International Labor Organization hereby form part of the law of the Bangsamoro Autonomous Region. –

This is contrary to the exclusive powers over labor, employment and occupation under the CAB and constrains the Bangsamoro from determining its own labor laws.

End of Presentation

Thank you



Disomangcop vs. DPWH, G.R. No. 149848, November 25, 2004

  1. Regional autonomy is the degree of self-determination exercised by the local government unit vis-à-vis the central government.
  2. Regional autonomy refers to the granting of basic internal government powers to the people of a particular area or region with least control and supervision from the central government.
  3. Devolution, on the other hand, connotes political decentralization, or the transfer of powers, responsibilities, and resources for the performance of certain functions from the central government to local government units.
  4. More importantly, Congress itself through R.A. 9054 transferred and devolved the administrative and fiscal management of public works and funds for public works to the ARG.
  1. In Cordillera Broad Coalition v. Commission on Audit, the Court, with the same composition, ruled without any dissent that the creation of autonomous regions contemplates the grant of political autonomy—an autonomy which is greater than the administrative autonomy granted to local government units. It held that “the constitutional guarantee of local autonomy in the Constitution (Art. X, Sec. 2) refers to administrative autonomy of local government units or, cast in more technical language, the decentralization of government authority…. On the other hand, the creation of autonomous regions in Muslim Mindanao and the Cordilleras, which is peculiar to the 1987 Constitution, contemplates the grant of political autonomy and not just administrative autonomy to these regions.”

Constitution limits Congress and the President’s power over ARMM

  1. By regional autonomy, the framers intended it to mean “meaningful and authentic regional autonomy.”
  2. To this end, Section 16, Article X[75] limits the power of the President over autonomous regions. [76] In essence, the provision also curtails the power of Congress over autonomous regions. [77] Consequently, Congress will have to re-examine national laws and make sure that they reflect the Constitution’s adherence to local autonomy. And in case of conflicts, the underlying spirit which should guide its resolution is the Constitution’s desire for genuine local autonomy. [78]

[76] FR. BERNAS. I think what we were saying is that when we speak of autonomy, we are speaking of autonomy not just vis-à-vis the President but also vis-à-vis the Legislature. So that while we are curtailing the power of the President, we are also curtailing the power of the Legislature. (III RECORD 515; 19 August 1986). 

SC on conflict of laws

  1. The diminution of Congress’ powers over autonomous regions was confirmed in Ganzon v. Court of Appeals,[79] wherein this Court held that “the omission (of “as may be provided by law”) signifies nothing more than to underscore local governments’ autonomy from Congress and to break Congress’ ‘control’ over local government affairs.” This is true to subjects over which autonomous regions have powers, as specified in Sections 18 and 20, Article X of the 1987 Constitution. Expressly not included therein are powers over certain areas. Worthy of note is that the area of public works is not excluded and neither is it reserved for the National Government.  (END)