The agreement is the first major step toward a final settlement that grants minority Muslims in the southern Philippines broad autonomy in exchange for ending the violence that has killed tens of thousands of people and crippled development. Many of the rebel leaders interviewed said a lot of work lies ahead in convincing Filipino Muslims to accept a new administrative region.
A product of 15 years of negotiations facilitated by neighboring Malaysia, which wants stability on its doorstep, the agreement sets in motion a roadmap to a final document that the Moro Islamic Liberation Front and Philippine President Benigno Aquino III's government plan to clinch before his six-year terms ends in 2016.
The signing will be witnessed by Aquino, Malaysian Prime Minister Najib Razak and rebel chairman Al Haj Murad Ebrahim, who will set foot for the first time in Manila's Malacanang presidential palace, where officials prepared a red-carpet welcome.
"That first step alone signifies a giant leap in the relations between the two sides," said the presidential adviser for the peace process, Teresita Deles.
Michael Mastura, a member of the rebel negotiating team, likened Monday's agreement to a takeoff. "But then we have to fly, reach a plateau, and move on."
Sonny Davao, deputy chief of the rebel army, said guerrilla commanders were ready to shift from armed struggle to helping build a new Muslim-administered region.
"We have to transform ourselves because we have responsibilities and obligations to our people and to Islam," said Davao, who shed his camouflage uniform for a dark coat with tie for the signing ceremony. "We are one in supporting the decision of our entire leadership."
Murad has seldom appeared in public in past years. Aquino met Murad secretly in Tokyo for the first time last year to underscore their commitment to settle the rebellion.
About 300 Muslims from Manila and southern provinces held a noisy rally outside the palace on Sunday in support of the preliminary accord, yelling "Allahu Akbar," or "God is great." They called for more development in the resource-rich but impoverished southern Mindanao region, the homeland of minority Muslims in the predominantly Roman Catholic nation.
Security has been tightened in the capital, although no disruptions were expected.
The agreement is to be signed by government negotiator Marvic Leonen and his rebel counterpart, Mohagher Iqbal. It outlines general agreements on major issues, including the extent of power, revenues and territory of a new Muslim autonomous region to be called Bangsamoro.
It calls for the establishment of a 15-member Transition Commission to draft a law creating the new Muslim-administered region. Rebel forces will be deactivated gradually "beyond use," the agreement says, without specifying a timetable.
The deal is the most significant progress in years of tough bargaining with the 11,000-strong Moro group to end an uprising that has left more than 120,000 people dead and displaced about 2 million others. Western governments have worried over the presence of small numbers of al-Qaida-linked militants from the Middle East and Southeast Asia seeking combat training and collaboration with the Filipino insurgents.
One of those extremist groups, the Abu Sayyaf, is not part of any negotiations, but the hope is that the peace agreement will isolate its militants and deny them sanctuary and logistical support they had previously received from rebel commanders.
One of those hardline commanders, Ameril Umbra Kato, broke off from the main Moro insurgents last year. Kato's forces attacked the army in August, prompting an offensive that killed more than 50 fighters in the 200-strong rebel faction.
Abu Misri Mammah, a spokesman for Kato's forces, said Sunday that his group does not recognize the peace accord.
"That's a surrender," he said. "We won't waver from our armed struggle and continue to aspire for a separate Muslim homeland that won't be a creation of politicians."
Mastura said that rebel leaders have to forge a strong peace deal that could withstand any opposition.
"It is easy, just gather a few men and disturb, because there are many firearms around. But that's not the mainstream line," Mastura said. "That is why we have to show that this is the way rather than their way."
The new Muslim region is to include an existing autonomous territory made of five of the country's poorest and most violent provinces. The Moro rebels earlier dropped a demand for a separate Muslim state and renounced terrorism.
Iqbal has said his group would not lay down its weapons until a final peace accord is concluded. He said the insurgents could form a political party and run in democratic elections to get a chance at leading the autonomous region.
Associated Press writer Oliver Teves contributed to this report.