Fiscal Autonomy

Section 1. The Autonomous Region shall have the power to create its own sources of revenues and to levy taxes, fees and charges, subject to such guidelines and limitations as the Constitution and this Organic Act may provide, consistent with the basic policy of local autonomy.

Section 2. In enacting revenue-raising measures, the Regional Assembly shall observe the principle of uniformity and equity in taxation and shall not impose confiscatory taxes and fees of any kind. Income taxation, however, shall be solely the concern and prerogative of the National Government.

The Regional Assembly shall not revoke or amend, directly or indirectly, any city or municipal ordinances imposing taxes or fees on purely local businesses.

No tax, impost or assessment shall be imposed or charged upon goods or merchandise coming into, going out of, or passing through the Autonomous Region to other places of the Philippines, and vice versa.

Section 3. All corporations, partnerships, and other business entities directly engaged in business in the Autonomous Region shall pay through the Regional Government that portion of their annual income tax corresponding to the net income generated from business done in the area of autonomy.

All corporations, partnerships or business entities directly engaged in business in the Autonomous Region shall pay their corresponding taxes, fees, and charges in the province, city, or municipality where the establishment is doing business.

Section 4. The sources of revenues of the Autonomous Region shall include, but are not limited to, the following:

(1) Taxes, except income taxes, imposed by the Regional Government;

(2) Fees and charges imposed by the Regional Government;

(3) Appropriations, internal revenue allotments and other budgetary allotments from the National Government;

(4) Shares in revenues generated from the operations of public utilities within the Autonomous Region; and

(5) Block grants derived from economic agreements or conventions authorized by the Autonomous Region, donations, endowments, foreign assistance, and other forms of aid, subject to the Constitution and national policies.

Section 5. The total collections of a province or city from national internal revenue taxes, fees and charges, and taxes imposed on natural resources, shall be distributed as follows:

(a) Thirty percent (30%) to the province or city;

(b) Thirty percent (30%) to the Regional Government; and

(c) Forty percent (40%) to the National Government.

The thirty percent (30%) share of the province shall be distributed equally as follows: ten percent (10%) to the province, ten percent (10%) to the municipality and ten percent (10%) to the barangay.

The thirty percent (30%) share of the city shall be distributed as follows: twenty percent (20%) to the city and ten percent (10%) to the barangay.

The province or city concerned shall automatically retain its share and remit the seventy percent (70%) to the Regional Government, which shall, after deducting its share, remit the balance to the National Government on a monthly basis.

The remittance procedure within the Autonomous Region shall be in accordance with the rules and regulations promulgated by the Regional Government, and remittances to the National Government by the rules and regulations promulgated by the Department of Finance.

Section 6. Subject to the Constitution and national policies, 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. These economic agreements shall be authorized by regional legislation or by executive agreement. Pursuant to specific recommendations from the Regional Planning and Development Board, the Regional Government shall assist local government units in their requirements for counterpart funds for foreign assisted projects.

Section 7. Donations or grants to the Regional Government exclusively to finance, to provide, for, or to be used in undertaking projects in education, health, youth and culture, and in economic development, shall be deductible in full in determining the taxable income of the donor or grantor.

Section 8. The Regional Assembly may grant exemptions from regional taxes, only with the concurrence of a majority of all the Members of the Assembly.

Section 9. Foreign loans may be contracted only in accordance with the provisions of the Constitution and national laws: Provided, That the Regional Governor may contract domestic loans subject to the approval by the Regional Assembly.

Ancestral Domain, Ancestral Lands and Agrarian Reform

Section 1. Subject to the Constitution and national policies, the Regional Government shall undertake measures to protect the ancestral domain and the ancestral lands of indigenous cultural communities.

All lands and natural resources in the Autonomous Region that have been possessed or occupied by indigenous cultural communities since time immemorial, except when prevented by war, force majeure, or other forms of forcible usurpation, shall form part of the ancestral domain. Such ancestral domain shall include pasture lands, worship areas, burial grounds, forests and fields, mineral resources, except: strategic minerals such as uranium, coal, petroleum, and other fossil fuels, mineral oils, and all sources of potential energy; lakes, rivers and lagoons; and national reserves and marine parks, as well as forest and watershed reservations.

Lands in the actual, open, notorious, and uninterrupted possession and occupation by an indigenous cultural community for at least thirty (30) years are ancestral lands.

Section 2. The constructive or traditional possession of lands and resources by an indigenous cultural community may also be recognized subject to judicial affirmation, the petition for which shall be instituted within a period of ten (10) years from the effectivity of this Act. The procedure for judicial affirmation of imperfect titles under existing laws shall, as far as practicable, apply to the judicial affirmation of titles to ancestral lands.

The foregoing provisions notwithstanding, titles secured under the Torrens system, and rights already vested under the provisions of existing laws shall be respected.

Section 3. As used in this Act, the phrase "indigenous cultural community" refers to Filipino citizens residing in the Autonomous Region who are:

(1) Tribal peoples whose social, cultural and economic conditions distinguish them from other sectors of the national community and whose status is regulated wholly or partially by their own customs or traditions or by special laws or regulations; and

(2) Bangsa Moro people regarded as indigenous on account of their descent from the populations that inhabited the country or a distinct geographical area at the time of conquest or colonization and who, irrespective of their legal status, retain some or all of their own socioeconomic, cultural and political institutions.

Section 4. The customary laws, traditions, and practices of indigenous cultural communities on land claims and ownership and settlement of land disputes shall be implemented and enforced among the members of such community.

Section 5. The Regional Government shall require corporations, companies and other entities within the ancestral domain of the indigenous cultural communities whose operations adversely affect the ecological balance to take the necessary preventive measures and safeguards in order to maintain such a balance.

Section 6. Unless authorized by the Regional Assembly, lands of the ancestral domain titled to or owned by an indigenous cultural community shall not be disposed of to nonmembers.

Section 7. No portion of the ancestral domain shall be open to resettlement by nonmembers of the indigenous cultural communities.

Section 8. Subject to the Constitution and national policies, the Regional Assembly shall enact an Agrarian Reform Law suitable to the special circumstances prevailing in the Autonomous Region.