After years of negotiations, the Philippine government and the Moro Islamic Liberation Front signed the Comprehensive Agreement on the Bangsamoro (“CAB”) on 27 March 2014 that seeks to end more than four decades of Muslim secessionist movements and violence in Mindanao. The CAB includes the Framework Agreement on the Bangsamoro earlier signed on 15 October 2012, the four annexes (normalization, revenue generation and wealth sharing, transitional arrangement and modalities), and other agreements signed by both parties during the course of the 17-year peace negotiations. Despite the assurance by the negotiating parties of its constitutionality, the Bangsamoro Basic Law ("BBL") bill is expected to encounter severe scrutiny in Congress. As soon as the BBL becomes law, its constitutionality or other legally controversial provisions will most likely be challenged before the Supreme Court. When the dust has settled, the Bangsamoro governance structure will surely pave the way for the region to realize its full economic and development potential utilizing the untapped mineral and energy resources.

1. Bangsamoro
–
Open
for
Business?
After
years
of
negotiations,
the
Philippine
government
and
the
Moro
Islamic
Liberation
Front
(“MILF”)
signed
the
Comprehensive
Agreement
on
the
Bangsamoro
(“CAB”)
on
27
March
2014
that
seeks
to
end
more
than
four
decades
of
Muslim
secessionist
movements
and
violence
in
Mindanao.
The
CAB
includes
the
Framework
Agreement
on
the
Bangsamoro
earlier
signed
on
15
October
2012,
the
four
annexes
(normalization,
revenue
generation
and
wealth
sharing,
transitional
arrangement
and
modalities),
and
other
agreements
signed
by
both
parties
during
the
course
of
the
17-­‐year
peace
negotiations.
The
documents
describe
and
justify
the
Bangsamoro
as
an
identity,
a
territory
and
as
a
new
political
entity,
which
will
have
its
own
distinct
political,
economic
and
social
systems
suitable
to
the
life
and
culture
of
the
Bangsamoro
people.
It
will
enjoy
political
and
fiscal
autonomy
The
Regalian
Doctrine
and
the
Bangsamoro
Right
to
Self
Determination
The
concept
of
jura
regalia
where
the
Regalian
Doctrine
was
derived
states
that
private
title
to
land
must
be
traced
to
some
grant,
whether
express
or
implied,
from
the
Spanish
Crown
or
its
successors,
the
American
Colonial
government,
and
ultimately,
the
Philippine
Republic.
By
virtue
of
the
Treaty
of
Paris
of
10
December
1898,
Spain
ceded
to
the
United
States
of
America
all
rights,
interests,
and
claims
over
the
national
territory
of
the
Philippine
islands
for
a
consideration
of
US$20
million
whose
colonial
government
then
pursued
the
Spanish
policy
of
requiring
settlers
on
public
lands
to
obtain
deeds
from
the
government.
When
the
1935
Constitution
was
passed,
the
issue
then
was
the
conservation
of
the
national
patrimony
for
the
Filipinos,
which
impelled
the
framers
of
the
fundamental
law
to
entrench
the
Regalian
Doctrine
wherein
the
State
asserted
ownership
over
lands
of
the
public
domain
and
all
natural
resources
found
therein,
as
further
reiterated
in
the
1973
and
1987
Constitutions.
Professor
Miriam
Coronel
Ferrer,
now
the
Philippine
Government
Peace
Panel
Chair,
in
her
book
“Costly
Wars,
Elusive
Peace”
premised
that
while
landlessness
has
fed
rural
unrest
in
all
parts
of
the
country,
the
issue
of
landlessness
assumed
an
ethnic
dimension
in
Mindanao.
The
Moro
insurgencies
are
thus
sustained
by
domestic
inequities
and
state
failure
to
provide
redistributive
measures.
Rather
than
a
war
over
religion,
Moro
resistance
is
basically
a
Bangsamoro
(Moro
people/nation)
nationalist/national
liberation
struggle
to
free
Muslims
in
the
Philippines
and
their
claimed
homeland
from
Filipino
colonialism
and
oppression.
In
this
regard,
Muslim
resistance
organizations
have
invoked
the
United
Nations-­‐recognized
principle
of
the
right
to
self-­‐determination.
The
Resource
Potential
of
Bangsamoro
There
have
been
no
extensive
mineral
exploration
or
mining
activities
in
Bangsamoro.
These
can
be
attributed
to
the
security
risks
associated
with
the
prolonged
civil
strife
arising
from
violence
between
the
military
and
rebel
forces.
However,
the
Center
for
Energy
Sustainability
and
Economics
estimated
mineral

2. deposits
in
Mindanao
island
at
$312
billion.
With
respect
to
petroleum
potential,
the
Sulu
Sea
basin
and
Cotabato
basin,
where
the
Liguasan
Marsh
is
located,
are
within
the
territorial
limits
of
Bangsamoro.
The
Sulu
Sea
basin
extends
to
the
northeast
portion
of
Sabah
where
there
has
been
gas
discoveries
and
is
part
of
the
prolific
circum-­‐Borneo
deep-­‐water
trend.
The
Cotabato
Basin,
on
the
other
hand,
is
an
onshore
northwest-­‐trending
trough
in
south
central
Mindanao
covering
an
area
of
14,000
sq.
km.
It
is
considered
a
frontier
area
in
terms
of
level
of
exploration
maturity.
The
Department
of
Energy
(“DOE”)
calculated
the
resource
volumes
in
accordance
with
the
Philippine
Petroleum
Resource
Classification
System.
For
the
Sulu
Sea
basin,
the
hypothetical
(mapped)
resources
are
estimated
at
109
million
barrels
of
oil
equivalent
(“MBOE”)
while
the
speculative
(unmapped)
resources
are
94
MBOE
for
a
total
of
203
MBOE.
ExxonMobil
in
a
consortium
with
BHP
Billiton
Petroleum
and
Malaysian-­‐based
Mitra
Energy
drilled
four
wells
in
the
6,460-­‐sq
km
Service
Contract
56
in
the
Sulu
Sea
Basin
as
part
of
a
$400
million
exploration
campaign.
But
while
the
company
hit
gas
with
three
of
the
four
holes,
ExxonMobil
said
the
quantities
were
noncommercial.
According
to
the
Petroleum
Economist
(2011),
while
ExxonMobil
resigned
as
operator
and
pulled
out
of
its
deep-­‐water
block
in
the
Sulu
Sea,
its
campaign
had
been
lauded
as
a
success
by
some
industry
observers
and
had
generated
significant
interest
in
the
potential
of
the
Sulu
Sea.
Sulu
Sea
–
East
Palawan
Basin

3. In
the
Cotabato
Bain,
exploration
results
have
shown
that
it
is
mainly
an
oil-­‐
prone
area.
Based
on
resource
assessment
studies
made
by
the
DOE,
the
basin
is
estimated
to
contain
some
158
MBOE,
of
which
45%
is
gas.
Any
oil
or
gas
discovery
made
within
the
Cotabato
Basin
can
be
produced
economically
due
to
their
proximity
to
residential,
industrial
and
commercial
sites.
DRY WELL w/ gas shows,
P&A
DRY WELL w/ oil & gas shows,
P&A
OIL
SEEP
Cotabato
Basin
DRY WELL,
P&A
DRY WELL w/ oil shows,
P&A
Bangsamoro
Transition
Commission
and
the
Bangsamoro
Basic
Law
Since
1996,
the
Philippine
Government
and
the
MILF,
which
formally
broke
away
from
the
Mindanao
National
Liberation
Front
in
1981,
have
been
engaged
in
peace
talks.
On
27
July
2008,
their
respective
peace
panels
finalised
a
Memorandum
of
Agreement
on
Ancestral
Domain
(“MOA-­‐AD”),
creating
the
Bangsamoro
Juridical
Entity
as
an
independent
State
or
a
near-­‐independent
State.

4. However,
on
4
August
2008,
the
Supreme
Court
issued
a
temporary
restraining
order
(“TRO”)
preventing
its
signing
by
both
parties.
The
TRO
was
issued
pursuant
to
the
Petition
for
Mandamus
and
Prohibition
filed
with
the
Supreme
Court
on
23
July
2008,
docketed
as
G.R.
No.
183591,
by
the
Province
of
North
Cotabato
and
its
Vice-­‐Governor
Emmanuel
Piñol,
questioning
the
constitutionality
of
the
MOA-­‐AD.
On
14
October
2008,
the
Supreme
Court
declared
the
MOA-­‐AD
unconstitutional.
A
year
later
the
Parties
resumed
negotiations
and
on
15
October
2012,
the
Philippine
Government
and
the
MILF
signed
the
Framework
Agreement
on
the
Bangsamoro
(“FAB”)
at
Malacañang.
In
December
2012,
President
Benigno
Simeon
Aquino
issued
Executive
Order
No.
120,
which
created
the
Bangsamoro
Transition
Commission
(“BTC”),
a
body
authorized
to
draft
the
Bangsamoro
Basic
Law
(“BBL”)
for
the
new
Bangsamoro
political
entity.
The
President
certified
the
draft
BBL
as
an
urgent
bill.
In
relation
to
its
task
to
draft
the
BBL,
the
BTC
is
also
mandated
to
recommend
to
Congress
or
the
people
amendments
to
the
1987
Philippine
Constitution,
if
it
deems
such
necessary.
According
to
the
119-­‐page
draft
BBL
submitted
to
Congress
on
10
September
2014
and
filed
as
House
Bill
4994
in
the
House
of
Representatives
and
Senate
Bill
2804
in
the
Senate,
the
powers
of
government
are
vested
in
the
Bangsamoro
Parliament,
which
shall
set
policies,
legislate
on
matters
within
its
authority
and
elect
a
Chief
Minister
who
shall
exercise
executive
authority
on
its
behalf.
The
BBL
shall
be
subject
to
a
plebiscite
scheduled
for
first
quarter
of
2015
to
give
the
people
the
choice
to
ratify
the
BBL.
Ratification
by
the
people
in
a
plebiscite
shall
make
the
BBL
effective
and
will
confirm
the
BBL
as
the
fundamental
law
of
the
Bangsamoro.
Provinces,
cities,
municipalities
and
barangays
wherein
the
majority
of
voters
have
ratified
the
BBL
will
form
part
of
the
Bangsamoro,
which
will
replace
the
Autonomous
Region
of
Muslim
Mindanao
(“ARMM”).
Upon
ratification
of
the
BBL,
the
Bangsamoro
Transition
Authority
(“BTA”)
shall
perform
the
functions
of
an
interim
Bangsamoro
government
until
the
election
and
assumption
of
the
members
of
the
Bangsamoro
Assembly
and
the
formation
of
the
Bangsamoro
government
in
2016.
The
future
Bangsamoro
will
be
the
only
region
in
the
country
that
will
run
a
government
through
parliamentary
means
and
have
an
“asymmetric
relationship”
with
the
Central
or
National
Government,
“reflective
of
the
recognition
of
their
Bangsamoro
identity,
and
their
aspiration
for
self
governance”
in
accordance
with
the
Constitutional
provisions
on
the
creation
of
autonomous
regions.
The
Bangsamoro
government
will
be
granted
authority
to
govern
its
financial
resources
and
levy
taxes
appropriately
as
prescribed
in
the
BBL.
In
addition
to
taxes
already
being
collected
by
the
ARMM,
the
Bangsamoro
may
also
collect
capital
gains
tax,
estate
tax,
documentary
stamp
tax
and
donor’s
tax.
All
the
revenues
from
these
taxes
will
form
part
of
the
Bangsamoro
treasury.
From
national
taxes,
fees
and
charges
collected
in
the
Bangsamoro,
75%
shall
go
to
the
Bangsamoro
and
25%
to
the
Central
government.

5. The
Bangsamoro
shall
have
the
authority
to
contract
loans,
credits
and
other
forms
of
indebtedness
with
government
or
private
banks
and
lending
institutions
except
those
requiring
sovereign
guaranty.
The
Bangsamoro
may
also
avail
of
overseas
development
assistance
(“ODA”)
for
priority
development
projects.
Other
sources
of
revenue
include
shares
of
government
income
derived
from
Bangsamoro
government-­‐owned
and
controlled
corporations,
financial
institutions,
economic
zones,
and
freeports
operating
within
the
Bangsamoro
territory.
It
may
receive
grants
derived
from
economic
agreements
entered
into
or
authorized
by
the
Bangsamoro
Assembly
such
as
donations,
endowments
and
other
forms
of
aid,
subject
to
the
reserved
powers
of
Central
government
over
foreign
affairs.
Grants
and
donations
may
be
received
directly
by
the
Bangsamoro
government
to
be
used
solely
for
the
purpose
for
which
they
were
received.
Ownership
and
Management
of
Natural
Resources
According
to
Nasser
Marohomsalic
in
his
paper
“The
Framework
Agreement
on
the
Bangsamoro:
Towards
Hurdling
the
Constitutional
Obstacle
to
Moro
Self-­‐
determination”,
the
FAB
unlike
the
MOA-­‐AD,
does
not
directly
vest
in
the
Bangsamoro
government
the
joint
jurisdiction
with
the
National
Government
over
natural
resources
in
the
territory
of
the
Bangsamoro
Government.
Neither
does
it
vest
in
the
Bangsamoro
government
jurisdiction
and
control
over
strategic
mineral
and
other
sources
of
energy
including
their
exploration
and
exploitation.
However
under
the
BBL,
income
from
the
exploration,
development
and
exploitation
of
all
the
natural
resources
within
the
Bangsamoro
shall
be
allocated
as
follows:
a.
For
non-­‐metallic
minerals
such
as
sand,
gravel
and
quarry
resources
within
the
Bangsamoro,
revenues
shall
belong
to
the
Bangsamoro
and
its
local
government
units.
b.
For
metallic
minerals
within
the
Bangsamoro,
seventy-­‐five
percent
(75%)
shall
belong
to
the
Bangsamoro,
and
twenty-­‐five
(25%)
shall
go
to
the
Central
government.
c.
For
fossil
fuels
such
as
petroleum,
natural
gas
and
coal,
and
uranium,
there
shall
be
equal
sharing
of
income
between
the
Central
and
Bangsamoro
governments.
Understandably,
the
resource
management
provisions
under
the
BBL
are
fraught
with
legal
and
fiscal
issues
and
uncertainties
that
might
impede
their
successful
applications.
Foremost
of
these
is
the
power
of
veto
by
the
Bangsamoro
government
over
development
projects
in
mining,
energy
and
power
entered
into
or
granted
by
the
Philippine
government
similar
to
the
festering
issues
experienced
under
the
Local
Government
Code
and
the
Indigenous
Peoples
Rights
Act.

6. As
there
are
legislated
sharing
agreements
in
resources
development
contracts,
there
is
then
an
urgency
to
review
petroleum
and
coal
services
contracts,
renewable
energy
service
contracts,
and
mineral
agreements
and
FTAAs
under
the
Philippine
Mining
Act
of
1995.
The
same
is
true
in
the
power
sector
as
there
is
a
need
to
harmonize
the
provisions
of
RA
9136
or
the
Electric
Power
Industry
Reform
Act
(“EPIRA”),
Energy
Regulations
No.
1-­‐94
or
the
Rules
and
Regulations
Implementing
Section
5
(i)
of
Department
of
Energy
Act
of
1992
(“ER
1-­‐94”)
and
the
Local Government Code on Royalty Tax (or National Wealth Tax) and
Government Share. There
is
also
a
need
to
determine
with
certainty
the
role
of
indigenous
peoples,
the
free
and
prior
informed
process,
and
the
royalties
extended
to
IPs
under
the
Indigenous
Peoples
Rights
Act.
Perhaps
the
Bangsamoro
can
start
from
a
clean
slate
learning
from
the
successes
and
mistakes
in
resource
management
from
the
National
Government.
To
begin
with,
the
Bangsamoro
can
tap
ODAs
for
comprehensive
resources
potential
assessment
and
the
establishment
of
a
centralized
data
base
system
for
mineral
and
petroleum
resources
that
will
be
accessible
to
resource
developers.
Depending
on
the
outcome
of
the
final
resource
management
structure
with
the
Central
Government
under
the
BBL,
the
Bangsamoro
government
can
then
implement
a
transparent
mineral
tenement,
energy
service
contract,
and
power
contracts
management
system.
Of
course,
there
are
apprehensions
that
the
Bangsamoro
during
its
early
stages
of
existence
is
incapable
of
conducting
the
required
administrative
and
financial
know-­‐how
in
resource
management.
There
is
an
urgent
need
to
build
its
capacity
and
knowledge
in
handling
public
financial
resources
and
improve
the
quality
of
governance.
Law
enforcement
and
maintenance
of
peace
and
order
shall
be
the
primary
function
of
the
police
force
for
the
Bangsamoro.
It
remains
to
be
seen
if
the
Bangsamoro
will
be
able
to
fully
secure
its
territorial
jurisdiction
particularly
from
lawless
elements,
warlords,
local
militias,
break-­‐away
rebel
factions
and
communist
insurgents,
which
have
been
the
scourged
of
resources
developers
in
Mindanao
island.
The
BBL
provides
that
the
privileges
already
enjoyed
by
the
local
government
units
(“LGUs”)
under
existing
laws
shall
not
be
diminished
unless
otherwise
altered,
modified
or
reformed
for
the
purpose
of
good
governance
pursuant
to
the
provisions
of
a
Bangsamoro
local
government
code.
Policy
issues
encountered
with
LGUs
are
expected
to
be
encountered
within
the
Bangsamoro
although
at
a
greater
and
more
complicated
scale.
Conclusion
Despite
the
assurance
by
the
negotiating
parties
of
its
constitutionality,
the
BBL
bill
is
expected
to
encounter
severe
scrutiny
in
Congress.
As
soon
as
the
BBL
becomes
law,
its
constitutionality
or
other
legally
controversial
provisions
will
most
likely
be
challenged
before
the
Supreme
Court.
When
the
dust
has
settled,
the
Bangsamoro
governance
structure
will
surely
pave
the
way
for
the
region
to

7. realize
its
full
economic
and
development
potential
utilizing
the
untapped
mineral
and
energy
resources.
Bangsamoro
administrators
through
transparent
management
must
assuage
the
lingering
fear
that
resource
development
will
not
pave
the
way
for
environmental
degradation
or
an
inequitable
distribution
of
wealth
thereby
negating
the
opportunity
to
improve
the
well
being
of
their
Moro
constituents.
The
resources
industry
must
share
in
the
responsibility
to
ensure
that
inclusive
growth
will
be
achieved.
Fernando “Ronnie” Penarroyo is the Managing Partner of Puno and Penarroyo Law
(fspenarroyo@punopenalaw.com). He specializes in Energy, Resources and
Environmental Law, Business Development and Project Finance.