Natural Resource Management: Mindanao Final Agreement

III. The New Regional Autonomous Government, D. The Economic and Financial System, Mines and Minerals

Article 134:

All corporations, partnerships or business entities whose head offices are located outside the area of autonomy, but doing business within its territorial jurisdiction, either by using, exploiting, and utilizing the land, aquatic and all natural resources therein, shall pay their income taxes corresponding to their income realized from their business operation in the area of autonomy through the province, city or municipality where their branch offices are located. In case the business establishment has no branch in the area of autonomy, such business establishment shall pay through the city or municipality where its operation is located.

Article 143:

The residents in the area of the autonomy shall have preferential rights over the exploration, development and utilization of natural resources in the area of autonomy respecting existing rights on the exploitation, exploration, development and utilization of natural resources.

Article 147:

In the regulation of the exploration, utilization, development, protection of the natural resources inclusive of mines and minerals, except strategic minerals which will be defined later, the government in the area of autonomy shall enact rules and regulations and shall impose regulatory fees, taking into account national policies.

Implementation History

1996

No Implementation

A widely acknowledged juxtaposition in the conflict literature on Mindanao is that the area is extremely rich in natural resources, yet the area is the single poorest in all of the Philippines. Articles 134, 143, and 147 are means of putting a greater amount of control over the area's natural resources in the hands of the inhabitants of the region (ARMM) and, consequently, to increase the benefits enjoyed by ARMM residents from the utilization of these resources by firms. As outlined in article 146 and 147, MNLF leaders and GRP leaders will meet and define strategic minerals at a later date. The peace agreement does not indicate that the GRP retains full control over strategic minerals and all revenues from strategic minerals. The accord states that the ARMM has 100% control over all minerals, except strategic minerals. 

To evaluate the degree of implementation for this provision, two streams of information can be used. First, did the GRP and Regional Government meet and collectively agree upon strategic minerals and how to allocate revenues from strategic minerals? Second, does the ARMM budget in its revenue inlays reflect increasing revenue flows from control over natural resources? No developments along these lines were observed this year. 

1997

No Implementation

No developments observed this year. 

1998

No Implementation

No developments observed this year. 

1999

No Implementation

No developments observed this year. 

2000

No Implementation

No developments observed this year. 

2001

No Implementation

Republic Act 9054, passed in March 2001 represents the ratification of the 1996 peace agreement. In Article 12 (Economy), section 5, strategic minerals are defined as uranium, petroleum, fossil fuels, mineral oils, all energy, national reserves, aquatic parks, forests, watershed reservations, and "those that may be defined as such by an Act of Congress within one (1) year" of the passing of RA 9054. In theory, the ARMM is given control over minerals not defined as 'strategic' minerals. 

The MNLF and OIC publically reject RA 9054 and claim that the GRP’s unilateral effort to define strategic minerals and keep 100% of the revenues produced by strategic minerals is a gross violation of the 1996 peace agreement.1

2002

No Implementation

The ARMM Regional Government continues to claim that the GRP violated the peace agreement with its unilateral control over natural resources in Mindanao. Examining the ARMM budget for 2002 does not provide any evidence that the ARMM was able to increase its revenue inlays from the utilization of natural resources or from taxing firms operating in the region. The total ARMM budget in 2002 was 14.3 Billion Pesos (around 342 million U.S. dollars). The revenue raised by the ARMM through taxation amounted to 2 million pesos (around 48 thousand U.S. dollars). Hence, 99.985 of the ARMM budget came from the GRP in 2002, while 0.01 came from direct regional taxation.2

2003

No Implementation

There is no budgetary evidence for 2003 that the ARMM increased its revenue inlays from utilization of natural resources or from direct taxation of firms operating in the ARMM. The total ARMM budget in 2003 was 15.7 Billion pesos (around 375 million U.S. dollars). The regional revenues raised by the ARMM amounted to 7 million pesos (around 167,000 U.S. dollars). Hence, 99.955 of the ARMM budget came from the GRP.3

2004

No Implementation

There is no budgetary evidence for 2004 that the ARMM increased its revenue inlays from utilization of natural resources or from direct taxation of firms operating in the ARMM. The total ARMM budget in 2004 was 16.1 Billion pesos (around 385 million U.S. dollars). The regional revenues raised by the ARMM amounted to 11 million pesos (around 263,000 U.S. dollars). Hence, 99.93 of the ARMM budget came from the GRP.4

2005

No Implementation

The total ARMM budget in 2005 was 18.3 Billion pesos (around 437 million U.S. dollars). The regional revenues raised by the ARMM amounted to 6 million pesos (around 143 ,000 U.S. dollars). Hence, 99.96 of the ARMM budget came from the GRP.5

By all observable counts, the ARMM Regional Government was never able to establish any substantial control over mineral utilization nor derive any substantial income tax base from the firms operating in the ARMM.6