Terrorism is everywhere even the most powerful and influential countries are attacked by terrorists and their only intention is bound by their criminal ideology. Marawi City fell as prey to the unreasonable and barbaric means of terrorists funded by drug lords and oligarchs who are startled with Duterte’s war on drugs. Federal government gives each state liberty to handle terrorism that best suits their locality. Every region is diverse with respect to its history and culture. Mindanao has become the nest of terrorists as most of attacks are perpetrated in the island. The largest island of the country is nearest to Indonesia and Malaysia where international terrorists take refuge and prepare for more demonizing acts of terrorism in Asia and elsewhere in the world. Federalism is the key to resolve local and international woes concerning rebellion and terrorism. In this new form of government Mindanaoans can lead their own state, create policies and laws independent from other states and most of all, Mindanaoans can benefit from their own resources as most of income can be retained to sustain the needs of state for development, growth, and commerce. A stronger, timely and effective policy against terrorism can be easily crafted with Federal form of government. Security and defense best start in from state to national government. In mid 2000’s a proposal for separation of Mindanao from the two major Philippine islands emerged but did come into realization because it’s a pure hearsay, yet a considerable number of Filipinos nodded in agreement with the idea of separation. Today, instead of separation, it is encouraged and urged that Federalism be immediately implemented as one of the solutions in the Filipinos’ plight against terrorism.