SENATOR JOEL VILLANUEVA (JV): There being no more speech in contra, I move that we close the period of general debate, Mr. President.
SENATOR JUAN MIGUEL ZUBIRI (JMZ): There be no objection, the motion is appoved
JV: Mr. President, before we proceed with the period of amendments, I move that we recognize the distinguished gentleman from the great province of Sorsogon, Senator Chiz Escudero.
JMZ: Our distinguished colleague, Senator Francis ‘Chiz’ Escudero is recognized.
SENATOR CHIZ ESCUDERO (CHIZ): Thank you, Mr. President. Mr. President, I rise to make a manifestation by way of amicus curiae, in order, as a friend of the Senate and of Congress, to make of record, perhaps fatal procedural and substantive mistakes that we may be committing but can still correct, prior to the final approval, of this measure by both Houses of Congress.
Let me begin, Mr. President, by placing on record, the provisions cited earlier in the committee hearings and in the debates. Article 12 Section 16 of the Constitution states that Congress shall not, except by general law, provide for the formation, organization, or regulation of private corporations. Government-owned or controlled corporations may be created or established by special charters in the interest of the common good and subject to the test of economic viability. I submit Mr. President that the creation of any GOCC has three requirements: number one, it must be through an act of Congress; number two, it must be for the common good; number three, it must pass the test of economic viability.
Now, Mr. President, insofar as having a special charter is concerned, that is completely complied with by an act of Congress should this be passed. Number two, that it is for the common good, this was discussed, Mr. President, in the ConCon debates, wherein someone asked, “Is it okay to organize a Government-Owned and Controlled Corporation that will compete with the private sector or shall we limit GOCC, only to perform those functions that the private sector cannot or is not willing to perform and is for a stated public purpose, such as providing utilities or utility services, or social services, that the private sector don’t find to be profitable enough for them to do themselves.”
Mr. President, clearly the intention of this sovereign wealth fund, is to perform functions that the private sector is already performing now. But it still has a governmental function but might have to be clarified in the provisions of the measure. And third, Mr. President, your honor, the test of economic viability, must be passed as well. Mr. President, I would like to place and insert into the records the ConCon debates with respect to this phrase when it was inserted by then ConCon Delegate Ople when he described it by saying, “GOCCs cannot be created as a rule but only as an exception, and they must pass the test of economic viability.”
This particular, Mr. President, ConCon debate clause was quoted by the Supreme Court in the July 2006 case of the MIAA vs the Court of Appeals wherein they specifically explained and cited that Congress must evaluate and must be able to decide that indeed the creation of the GOCC passed that, passed the test of economic viability. I would like to submit to the records as well the entire case in ratio decidendi of the 2006 MIAA vs CA case for reference.
Now, Mr. President, I submit that the document supposedly complying with the test of economic viability is not compliant with the demands and requirements of the Constitution. Senator Koko Pimental, our Minority Leader, earlier said, it is a prejudicial question. My position, Mr. President, is that it is a condition precedent before we vote on and approve and create this GOCC. I would like to insert and into the records as well, Mr. President, for reference, the three-page document submitted in compliance supposedly with my demand to submit a test of economic viability entitled business proposal for the Maharlika Investment Fund, together with the covering letter dated 21 February 2023 addressed to the Honorable Senator Mark A. Villar, signed by the Treasurer of the Philippines Rosalia V. De Leon.
Mr. President, your honor, I submit that it is not compliant because all it talks about is an investment in securities and equities. When the DBM Secretary in the newspaper today said that they will be investing in the 194 infrastructure flagship projects of the administration so clearly this document is already insufficient, incomplete because it has not discussed the economic viability of investments in these infrastructure flagship programs which might not have an ROI.
Now let me place for the record, Mr. President, exactly what is meant by the “test of economic viability.” If I may quote, the term test of economic viability refers to a method of evaluating the financial feasibility of a certain business idea or project. This test assesses whether a particular project has the potential to generate enough revenue to cover its cause and operate profitably. Typically, the test of economic viability involves analyzing the market demand, competition, profit margins, operating costs, and other financial factors that affect the success of the proposed venture. The test of economic viability is often used by investors and other stakeholders.
In our case, Mr. President, a requirement imposed by the Constitution. I submit, Mr. President, is to deem it insufficient because the business proposal for the Maharlika Fund did not even include in the computation the 2 percent overhead cost of the MIC in running the fund. Further, Mr. President, if I may quote, the meaning of the test of economic viability for a sovereign wealth fund, the test of economic viability for a sovereign wealth fund refers to the assessment of whether the fund’s investments and operations are financially-sustainable and profitable in the long term. This involves evaluating the funds’ ability to generate returns that meet or exceed its financial obligations such as paying dividends to the government or supporting the country’s economic development goals as I have stated in my interpellation before. What is the rate of return of the mandated government agencies that we require to invest in this fund?
To continue Mr. President, the viability test usually involves analyzing various factors such as the following, size of the fund, investment strategy, governance, diversification, risk management, and returns. It should also take into account the size of our economy vis-a-vis other economies so that we would be able to find out exactly if it would be economically sustainable and feasible.
Mr. President, I submit that there is still time for us to comply with the Constitutional requirement, in order to avoid constitutional scrutiny and the possibility of this law being struck down, for being non-compliant with the condition precedent, required, and enshrined in our Constitution. I do not fault anyone, Mr. President, your honor because this is a new provision inserted by the framers of the 1987 Constitution and not found in the previous Constitution of 1935 and 1973.
Quite frankly, there are only two cases that made mention of this but did not even define exactly what it should contain. This government has an opportunity, Mr. President, to actually define it, not only define but also specify who is supposed to prepare it. The documents submitted, Mr. President, is not even signed, although it has the covering letter, it is not even signed. And although our National Treasurer, Ma’am Lea, is competent in what she is doing. I doubt if her office is the one that should be doing this test of economic viability short of the NEDA itself. Or even through the NEDA ICC.
Henceforth, Mr. President, when we create another GOCC, we would be asking the same questions to be proper I guess, for us to settle this early. I would not be the one to go to the Supreme Court to question this, Mr. President, but should someone do so, I think and I look at it as an opportunity to clarify that provision of the Constitution so that the Senate and this Congress may be guided accordingly with respect to its future actions and how we should go about creating new Government-Owned and Controlled Corporations.
Thank you, Mr. President. I submit.