MANILA, Philippines – “The Maharlika Investment Fund Act of 2023 is a disaster waiting to happen.” That’s how a petition filed before the Supreme Court describes the controversial sovereign wealth fund, which it aims to stop on the basis of being unconstitutional.

Filed by Senate Minority Floor Leader Aquilino “Koko” Pimentel III, Bayan Muna Party-list Chairperson Neri Colmenares, and other Bayan Muna representatives, the petition wants the Supreme Court to:

• immediately stop the implementation of the law through a temporary restraining order, writ of preliminary injunction, or status quo ante order
• conduct oral arguments (READ: FAST FACTS: What is the Maharlika Investment Fund?)

The petitioners warn that the Maharlika Investment Fund Act is a “dangerous law” that would transfer hundreds of billions of public money into a fund managed by the “untransparent Maharlika Investment Corporation” – all in an economic environment that they highlight is marred by a budget deficit, high inflation rate, and worrying unemployment and underemployment.

They also argued that lawmakers from both the House of Representatives and Senate rushed the bill after President Ferdinand Marcos Jr. certified the measure as urgent, even in the absence of any calamity or emergency. 

“Are we to continually allow presidential certifications of emergency issued by so many administrations for decades, to circumvent and shortcut Article VI Section (26) (2) of the 1987 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 its Members three days before its passage’?” the petitioners asked.

The petition also pointed out that both the House of Representatives and the Senate violated the “no amendment” clause, in part due to mistakes left in the measure even after it had passed Congress on third reading.

“The result was a disaster, as the Approved Bill was subjected to public criticisms by members of both Houses themselves, for so many defects and incongruences,” the petition, filed on Monday, September 18, read.

Respondents named in the petition were Excecutive Secretary Lucas Bersamin, Finance Secretary Benjamin Diokno, the Senate, and the House of Representative.

Maharlika’s other flaws

But aside from these violations of the Constitution, the petition also criticized the law for not having passed the “test of economic viability.”

Treasurer of the Philippines Rosalina De Leon earlier submitted a three-page “business proposal” in an attempt to defend the Maharlika Investment Corporation’s (MIC) viability. And although the proposal promised a return of 6.51% to 10.78%, it didn’t fully disclose the details used in the simulations that generated these figures.

If the government would allow a simple three-page business proposal to prove economic viability, the petitioners said, then this requirement would be easily circumvented.

This is worrying because the MIC will manage billions in public funds. Already, the Land Bank of the Philippines and the Development Bank of the Philippines have given P75 billion for the start-up capital of the MIC.

More funding for Maharlika is also set to come from the Bangko Sentral ng Pilipinas (BSP). The central bank is required by law to remit 100% of its dividends for two years to the MIC – money which is usually either remitted to the government to fund the national budget, or kept within the bank to build up enough capital to keep the economy stable.

However, by requiring the BSP to remit dividends to fund the MIC, the petitioners argued that the BSP will lose its independence as there will be a “lasting, if not permanent, connection between BSP and the Maharlika Investment Fund.”

“The Bangko Sentral is now obligated to earn not for itself but for the Maharlika Investment Corporation,” the petition read.

These criticisms, however, haven’t stopped the government from quickly moving to set up the fund, which is expected to start operations by end-2023. – Rappler.com