Republic Act No. 11954

Also known as: Maharlika Investment Fund Act of 2023 · Maharlika Investment Fund Act · RA 11954

Definition

Republic Act No. 11954, the Maharlika Investment Fund Act of 2023, is the statute — approved on July 18, 2023 — that established the Philippines’ first sovereign wealth fund, the Maharlika Investment Fund, and created the Maharlika Investment Corporation (MIC) as “the sole vehicle for the purpose of mobilizing and utilizing the MIF for investments.” Its long title is “An Act Establishing the Maharlika Investment Fund, Providing for the Management, Investment, and Use of the Proceeds of the Fund,” with the operative short title in Section 1 being the “Maharlika Investment Fund Act of 2023.” The law was signed by President Ferdinand Romualdez Marcos Jr., with Senate President Juan Miguel F. Zubiri and House Speaker Ferdinand Martin G. Romualdez also signing the enrolled copy, and it declares a policy of generating optimal returns on invested public capital while reinvigorating job creation, accelerating poverty reduction, and promoting sustainable development of the national economy. The Fund the Act created — its remittances, leadership, and investment record — is treated in this site’s Maharlika Investment Fund entry; this entry documents the statute itself. (LawPhil — RA 11954, Wikipedia — Maharlika Wealth Fund)

The Act’s statutory architecture rests on three pillars. First, capitalization: the MIC carries an authorized capital stock of ₱500 billion — 3.75 billion common shares (₱375 billion) and 1.25 billion non-voting, non-participating, non-convertible preferred shares (₱125 billion) at ₱100 per share — with an initial common subscription of ₱125 billion from the Land Bank of the Philippines (₱50 billion), the Development Bank of the Philippines (₱25 billion), and the National Government (₱50 billion), the government share to be sourced chiefly from Bangko Sentral dividends for the first two fiscal years (up to ₱50 billion), ten percent of PAGCOR gaming income for five years, privatization proceeds, and royalties. Second, prohibition: the pension and health funds — SSS, GSIS, PhilHealth, Pag-IBIG, OWWA, and the PVAO pension fund — are “absolutely prohibited” from contributing, the Act’s answer to the public backlash against the original bill. Third, governance: a nine-member Board of Directors chaired ex officio by the Secretary of Finance, with the MIC president and chief executive as vice chair, the LandBank and DBP heads, two regular directors, and three independent directors from the private sector. (LawPhil — RA 11954)

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Also Known As

Maharlika Investment Fund Act of 2023
Maharlika Investment Fund Act
RA 11954

Examples and Analogies

Charter and vessel: RA 11954 is to the Maharlika Investment Fund what articles of incorporation are to a corporation — the Act supplies the legal machinery (fund, corporation, board, prohibitions, audit regime), while the fund itself, covered by this site’s Maharlika Investment Fund entry, is what the machinery has since built.
A trust deed that names its own rivers: the Act does not simply appropriate money; it assigns specific funding streams — state-bank subscriptions, two years of Bangko Sentral dividends capped at ₱50 billion, a five-year slice of PAGCOR income, privatization proceeds, and royalties — the way a trust deed channels defined watercourses into a single reservoir. (LawPhil — RA 11954)
Prohibition as drafting: the most consequential sentences in the law are negative ones — pension funds “absolutely prohibited” from contributing, no Philippine government guarantee of MIC bonds — drafted in direct response to the political alarm the original bill triggered. (LawPhil — RA 11954)
Verified statutory data:
Approval: July 18, 2023, by President Ferdinand Marcos Jr.; no veto or line-item action on the enrolled bill is recorded
Authorized capital: ₱500 billion — common ₱375 billion, preferred ₱125 billion (Section 6)
Initial common subscription: ₱125 billion — LandBank ₱50 billion, DBP ₱25 billion, National Government ₱50 billion
Board: nine members — Finance Secretary (ex officio chair), MIC president and chief executive (vice chair), LandBank and DBP heads, two regular directors, three independent directors (Section 20)
Safeguards: COA audit plus special audit every five years (Section 36); external auditor limited to three consecutive years (Section 35); administrative expenses capped at two percent of funds under management (Section 11)
IRR: Section 54 required implementing rules within ninety days; a revised IRR was promulgated on November 10, 2023

Usage Scenarios

1. Establishing the Maharlika Investment Corporation

The Act’s first operational use was corporate creation: the MIC was constituted as a government-owned and controlled corporation — the sole vehicle for mobilizing the MIF — with the purposes, powers, and investment parameters the statute enumerates, from foreign-currency and fixed-income instruments to infrastructure and corporate equities. (LawPhil — RA 11954)

2. Subscribing Government Capital

LandBank and the DBP used the Act’s subscription machinery to become founding shareholders, and the statute disciplines every future government financial institution that follows: GFI investments in the MIF are capped at twenty-five percent of net worth, annual reporting on performance and risk exposure is required, and the pension funds are barred outright. (LawPhil — RA 11954)

3. Governing the Fund

The Board scenario is scripted by Section 20 and Section 22: the President appoints the president and chief executive (three-year term), the two regular directors, and the three independent directors, and may remove them for disqualification, incapacity exceeding six months, or fraudulent and illegal acts — while the Finance Secretary chairs the board ex officio rather than the President himself. (LawPhil — RA 11954)

4. Congressional Oversight and Audit

The Act institutionalizes its own surveillance: a Joint Congressional Oversight Committee receives quarterly investment reports under confidentiality, while the Commission on Audit examines the corporation annually and conducts a special audit every five years, alongside an internal auditor reporting to the Board and a rotating internationally recognized external auditor. (LawPhil — RA 11954)

5. Rule-Making and Judicial Review

Section 54 tasked the Treasurer of the Philippines, in consultation with the founding GFIs, with promulgating implementing rules within ninety days — culminating in the Revised Implementing Rules and Regulations of November 10, 2023 — and the Act has since been tested in the Supreme Court, both at the certification stage and after enactment. (LawPhil — Revised IRR of RA 11954, Wikipedia — Maharlika Wealth Fund)

Strategies

Legislate the guardrails with the mandate: rather than leaving safeguards to later regulation, the Act hard-codes Santiago Principles adherence, published investment policies and risk plans, auditor rotation, a two-percent administrative cap, and a prohibition on government guarantees of MIC bonds into the statute itself. (LawPhil — RA 11954)
Prohibition-first funding design: the drafters’ decisive amendment strategy was subtraction — removing the pension funds as mandatory contributors and then barring them absolutely — which converted the bill’s loudest liability into a statutory guarantee. (Wikipedia — Maharlika Wealth Fund)
Speed through certification of urgency: the measure moved from filing to House passage in seventeen days on a presidential certification of urgency, a deliberate legislative strategy whose constitutional price was litigated within months. (Wikipedia — Maharlika Wealth Fund)
Dividend and reporting discipline: the Board may declare dividends only in accordance with law and Republic Act No. 7656, and contributing GFIs must report annually on the performance and risk exposure of their placements — statutory levers meant to keep returns flowing back to the Treasury. (LawPhil — RA 11954)
Reserve the levers to Congress: the Joint Congressional Oversight Committee and the five-year special-audit cycle keep the legislature and the audit institution structurally inside the fund’s life, so that modification happens by oversight and by statute rather than by board discretion. (LawPhil — RA 11954)

Security and Safety Measures

Layered audit regime: an internal auditor under the Board (Section 34), an internationally recognized external auditor limited to three consecutive years (Section 35), and COA audit plus a special audit every five years (Section 36) compose the Act’s redundancy against concealment. (LawPhil — RA 11954)
Transparency duties: the Act opens Board and advisory officials’ statements of assets, liabilities and net worth to the public (Section 39) and requires published investment policies (Section 17) and risk-management plans (Section 18), alongside expressed adherence to the Santiago Principles for sovereign wealth funds. (LawPhil — RA 11954)
Exposure and expense caps: GFI contributions are capped at twenty-five percent of net worth (Section 12) and administrative expenses at two percent of funds under management (Section 11) — numerical fences against mission creep. (LawPhil — RA 11954)
No sovereign guarantee: “In no instance shall the Philippine government guarantee any Bonds issued by the MIC” (Section 10) — a firewall separating the fund’s credit from the Republic’s. (LawPhil — RA 11954)
Risk committee, penalties, and whistleblowers: a standing Risk Management Committee (Section 26), penal provisions for graft and false certifications, and whistleblower protection (Sections 44–48) complete the statute’s internal-control architecture. (LawPhil — RA 11954)

Historical Context

The Act was born of remarkable legislative speed. House Bill 6398 was filed in late November 2022 by seven lawmakers including Speaker Martin Romualdez and Ilocos Norte Representative Sandro Marcos; its original draft would have obliged the pension funds GSIS and SSS to co-fund the vehicle, and after a public backlash — reported on December 9, 2022 under the headline “GSIS, SSS dropped as Maharlika fund backers; BSP steps in” — the authors removed them. President Marcos certified the bill urgent, the House passed it on December 15, 2022 by 279 votes to 6 (seventeen days from filing), the Senate followed on May 31, 2023 with 19 in favor, Risa Hontiveros against, and Nancy Binay abstaining, and the enrolled bill — transmitted to Malacañang on July 5, 2023 — was signed into law on July 18, 2023, without any recorded veto. (Wikipedia — Maharlika Wealth Fund)

Implementation followed the statute’s Section 54 command: after the first implementing rules drew criticism and were set aside — a course correction documented in this site’s Maharlika Investment Fund entry — a Revised Implementing Rules and Regulations was promulgated on November 10, 2023 by the Bureau of the Treasury under Deputy Treasurer Sharon P. Almanza as officer-in-charge, in consultation with LandBank and the DBP. The economic argument continued regardless: in June 2023 faculty of the University of the Philippines School of Economics had warned that the measure “violates fundamental principles of economics and finance,” and the petitioners of September 2023 carried the objection into court. (LawPhil — Revised IRR of RA 11954, Wikipedia — Maharlika Wealth Fund)

Challenges and Controversies

The Pension-Fund Backlash

The earliest controversy was the original draft’s use of workers’ retirement money: GSIS and SSS were listed as mandatory contributors until opposition from economists and business groups forced their removal in December 2022 — the single change that most reshaped the statute, later hardened into the Act’s absolute prohibition on pension-fund contributions. (Wikipedia — Maharlika Wealth Fund, LawPhil — RA 11954)

Urgency and Legislative Speed

A February 2023 petition asked the Supreme Court to nullify the President’s certification of urgency, arguing no public calamity or emergency was stated; the Court dismissed it in May 2023 because the petitioners “failed to present to Court any fact establishing the existence of an actual case or controversy.” The seventeen-day House passage remains the standing exhibit in debates over certified legislation. (Wikipedia — Maharlika Wealth Fund)

Constitutionality Petitions

On September 18, 2023, former senators and party-list representatives — Koko Pimentel, Ferdinand Gaite, Neri Colmenares, and Carlos Isagani Zarate — filed a 56-page petition asking the Court to declare the Act unconstitutional, contending that it “entrusts hundreds of billions in public funds to unknown fund managers and an amorphous nine-member Board of Directors.” The petition stands as the Act’s principal judicial test on record. (Wikipedia — Maharlika Wealth Fund)

Economic Critique and Opportunity Cost

Beyond the courtroom, the Act’s durable controversy is allocative: whether ₱75 billion of state-bank capital earns more inside a new wealth fund than it would have lent to farmers and enterprises through LandBank and the DBP themselves — the UP School of Economics critique of June 2023, echoed in the observation that the National Government’s own ₱50 billion subscription had not been released years after enactment. (Wikipedia — Maharlika Wealth Fund)