SC asked to declare measure unconstitutional
SENATE Minority Leader Aquilino Pimentel III, Bayan Muna chairperson Neri Colmenares and former militant lawmakers Carlos Isagani Zarate and Ferdinand Gaite yesterday questioned the constitutionality of the controversial Maharlika Investment Fund (MIF) Act of 2023 and asked the Supreme Court (SC) to permanently stop its implementation.
In their petition for certiorari and prohibition with urgent prayer for the issuance of a temporary restraining order or preliminary injunction or a status quo ante order, the petitioners told the High Court that the approval of the “dangerous law” should be voided because it was passed in violation of Section 26 (2), Article VI of the 1987 Constitution.
They also raised two other arguments before the SC: that the creation of the Maharlika Investment Corporation (MIC) under Republic Act 11954 did not comply with the test of economic viability as mandated under Section 16, Article XII of the Constitution, and that the law violates the independence of the Bangko Sentral ng Pilipinas (BSP) as provided for under Section 20, Article XII of the Constitution.
Named respondents in the petition are Executive Secretary Lucas Bersamin, Finance Secretary Benjamin Diokno, the House of Representatives, and the Senate.
RA 11954 was signed into law by President Marcos Jr. on July 18, 2023 amid objections from various sectors, including lawmakers.
Malacañang, the Department of Finance and the leadership of the Senate and the House have yet to react on the petition as of printing time.
In their motion, the petitioners stressed: “RA 11954 is a dangerous law as it entrusts hundreds of billions in public funds to unknown fund managers and an amorphous nine-member Board of Directors, six of whom remain unidentified until now.”
They also questioned the timing of the law’s enactment, pointing out that the country has a budget deficit of P1.6 trillion, with a high inflation rate of 6.1 percent, poverty incidence rate of 18.1 percent, and massive unemployment and underemployment.
“And, more importantly, in a country that has yet unchecked and unbridled corruption in the government… a sovereign wealth fund and un-transparent Maharlika Investment Corporation has no place in a country that is still plagued with corruption,” they added.
CERTIFICATION
In their plea, the petitioners argued that the President’s certification of the measure as urgent when it was still pending at the House of Representatives and the Senate was void for failure to meet the three constitutional requirements for its valid exercise, namely that there must exist a public calamity or public emergency at that time of certification, the necessity of the immediate enactment of a law to meet such public calamity or emergency, and such “immediacy” would justify doing away with the necessary legislative requirement of three readings on separate days.
They said the certifications was only meant to circumvent and shortcut Article VI Section 26 (2) of the Constitution, which requires that for a bill to become a law, it must “pass three readings on separate days, and printed copies thereof in its final form have been distributed to members three days before its passage.”
“The Honorable Court is asked to put to rest this regularly practiced grave abuse of discretion and ensure that this presidential prerogative be exercised only when the constitutional requisites for the exercise of that power are attendant,” they said.
They stressed that “the Maharlika Investment Fund of 2023… requires intense congressional scrutiny, genuine consultation with stakeholders, and a careful study by independent economic experts. Both Houses of Congress, however, went on the opposite direction and rushed the Maharlika bills and short-circuited the constitutionally mandated legislative processes, through an unnecessary and constitutionally infirm presidential certification of urgency.”
To prove their point, they highlighted the fact that the House adopted the “approved Senate Bill” without subjecting it to due diligence scrutiny or at least giving a photocopy of the bill to lawmakers who were voting whether to adopt or not the Senate approved bill.
“Petitioners ask this Honorable Court to intervene in this constitutional transgression and put a stop to this practice especially on such a dangerous law as the Maharlika Investment Fund Act of 2023. While all these practices may have been tolerated for years, this is not a reason to allow this travesty to continue. There has got to be a better reason than tradition,” they said.
‘NO AMENDMENT CLAUSE’
The petitioners also argued that the Senate violated the “no amendment” clause of Section 26 (2), Article VI of the Constitution “when it amended an already approved Bill and submitted to the President a version of Senate Bill 2020 which is different from the Senate approved bill. The enrolled bill which was transmitted by the Senate and signed by the President of the Philippines was not the version approved by the Senate on third reading and adopted by the House of Representatives on May 31, 2023.”
“Clearly, there is no argumentation necessary to show that the constitutional prohibition on the amendment of a bill that has been approved on third and final reading has been brazenly violated,” the petitioners said, adding that even in matters of style, a legislative measure can no longer be touched as to substance after it has been “finally” approved.
Pimentel and other senators have questioned the decision of the Senate leadership to allow members of the Senate Secretariat to amend the version that was approved in plenary by merging two provisions into one based on the instructions of Sen. Mark Villar, the Senate proponent of the measure.
ECONOMIC VIABILITY
As to its economic viability, the petitioners dismissed the three-page Business Proposal for the Maharlika Investment Fund submitted by National Treasurer Rosalia De Leon which said that the MIC may generate a return on equity of around 6.51 percent to 10.78 percent.
They said that the “computation on which the estimated returns were based was not even provided in order for Congress, and also the public, to study and review such basis.”
The petitioners further argued that RA 11954 violated the independence of the BSP since the Monetary Board (MB) is now ordered to contribute 100 percent of its dividends to the MIC.
“More importantly, the Monetary Board has to carry favor from the President and ask for his approval should they believe that their fiscal, as well as the economic conditions, merit the reduction of their contribution,” they said.
“The Monetary Board, therefore, despite its power to determine policies, is now subjected by the law, to the discretion of the President,” they also said.
Further, t hey argued that the enactment of RA 11954 will create a lasting, if not permanent, connection between the BSP and the MIF.
“In effect, violating the independence of the Bangko Sentral ng Pilipinas as the central monetary authority of the country, the Bangko Sentral is now obligated to earn not for itself but for the Maharlika Investment Corporation,” the petitioners said.
Proponents of the MIF had originally planned to use state assets in the establishment of the sovereign wealth fund. But because of the controversy generated by the proposal, economic managers crossed out the Government Service Insurance System and the Social Security System as sources for the Maharlika seed fund.
Aside from the GSIS and SSS, the government also gave up on using remittances from the PhilHealth, Pag-IBIG Fund, Overseas Workers Welfare Administration and the Philippine Veterans Affairs Office Pension Fund.
The Maharlika fund’s seed money will be taken from the Land Bank of the Philippines, the Development Bank of the Philippines and the Bangko Sentral ng Pilipinas.
Last September 15, the Land Bank of the Philippines and the Development Bank of the Philippines said they have already remitted their P75 billion contribution each to the MIC.
EXPECTED
Solicitor General Menardo Guevarra said he was not surprised with the filing of the petition before the SC. He said he was actually expecting that a legal challenge will be raised with the High Court.
“The filing of such petition is expected given the significant public interest surrounding the creation of the Maharlika Investment Fund,” Guevarra said when sought for comment.
Guevarra said ever since the law was signed by the President, his office has been waiting for legal challenges assailing its passage.
“The Office of the Solicitor General has been closely monitoring the public debates surrounding the fund to identify any legal issues of paramount importance that may be brought before the Supreme Court,” he said.
