Privilege Speech Vs. Villar's Alleged Violation of Anti-Graft Law

Let me share with the readers the privilege speech delivered by Joker Arroyo in August 1998 against Villar’s alleged violation of anti-graft law. I find this speech significant and relevant in view of Villar’s declaration that he is equipped with tested experience and competence to lead the country once elected President.

I rise on a question of collective privilege on a constitutional issue that affects the integrity of the House and it is very ripe to continue existing.
In the course of the fight for the speakership, Rep. Agapito Aquino, chairman of the reform bloc, raised questions regarding the fitness of Rep. Villar to seek the speakership. Rep. Villar chose to answer the charges but he was overwhelmingly elected Speaker by this House.

Successful election, however, does not answer the questions nor lay to rest charges of wrongdoing, not in government of laws.

We had a colleague, we still have a colleague in the person of Congressman Jalosjos. He was elected by his district but that did not erase his conviction. So, drawing a parallel election does not wipe out the offense.

The questions raised, nay, the charges against Speaker Villar are constitutional in character. And our duty as members of the legislature is peremptory and clear. We took oath to support and defend the Constitution and uphold the laws.

The Constitution has been violated, laws have been broken. If we are to continue in the capacity of public officials, if this Chamber is to continue in its very character as legislature, an indispensable pillar in the system of checks and balances, then we must come to the Constitution’ s defense and the vindication of the laws.

I hesitated long and pondered hard whether to raise these questions for fear of being accused of sour-graping and being a poor sport. But this has nothing to do with sports. Our duty is clear, there are charges of illegalities, the charges must be heard and answered. I am reminded of the case of Speaker Newt Gingrich of the United States House of Representatives. He was investigated by the United States House of Representatives for I think collecting some fees of books he wrote while Speaker (I am not too sure of the facts). But one thing I am sure of is this, the House after hearing censured its own Speaker and penalized him with a penalty was meted out. In other words, there are precedents and we must not hesitate to do our duty.

Article XI of the Constitution is titled “Accountability of Public Officers” it proscribes in Section 16 that:

“No loan, guaranty, or other form of financial accommodation for any business purpose may be granted, directly or indirectly, by any government or controlled bank or financial institution to the President, the Vice President, the Members of the Cabinet, the Congress, the Supreme Court, and the Constitutional Commission, the Ombudsman, or to any firm or entity in which they have controlling interest, during their term."

Charge I. Low cost housing is totally dependent on government agencies such as PAG-IBIG, National Home Mortgage Finance Corporation (NHMFC), SSS, GSIS, and other government financial institutions.

Speaker Villar and the companies of which he is President or Chairman, or where he has a controlling interest, are the biggest low-cost housing developers in the country. To be more specific, it is the Camella and Palmera Homes and its principal subsidiaries, the Household Development Corporation and Palmera and Communities Philippines.

In violation of the constitutional injunction, these companies were given financial accommodations by government banks or financial institutions, among them, PAG-IBIG and the National Home Mortgage Finance Corporation among others, during Speaker Villar’s term as Representative from 1992 to 1998 to finance their business purposes.

Charge II. Representative Villar, from 1992 to 1998 did not divest himself of his interests in, nor did he sever his connections with, the companies aforestated. They obtained financial accommodations from the above government financial institutions while he was a Member of Congress. Since he did not, therefore, such companies were forbidden from entering into such financial arrangements.

Because of our Constitution, Republic Act No. 6713 known as the “Code of Conduct and Ethical Standards for Public Officials” states in Section 9:

“Divestment. – A public official or employee should avoid conflicts of interest at all times. When a conflict of interest arises, he shall resign from his position in any private business enterprise within thirty (30) days from his assumption of office and/or divest himself of his shareholdings or interest within sixty (60) days from such assumption.. .”

Charge III. Nor has Speaker Villar, up to now, I am saying up to now, divested himself of his interests in, nor has he severed his connections with, the companies aforestated. Speaker Villar is in no hurry to divest because he has declared that he is under no obligation to do so. A continuing violation.

Charge IV. Speaker Villar controls the Capitol Bank. Mrs. Villar is the chief executive officer. The Capitol Bank received loans, financial accommodations and guarantees from the Bangko Sentral ng Pilipinas from 1992 to 1998 while he was a Representative. That is constitutionally forbidden.

To sum it up, the constitutional prohibition is very simple. If a Representative has a controlling interest in a firm or entity, that firm or entity cannot be extended a loan, a guaranty, or a financial accommodation for any business purpose from any government financial institution.

If that firm or entity would like to obtain a loan, a guaranty or a financial accommodation from a government financial institution, that firm or entity must first relieve itself of the controlling interest of the Representative.
It is my humble submission that Speaker Villar did not do either.

Republic Act No. 3019, otherwise known as the Anti-Graft and Corrupt Practices Act, provides in Section 6 therefore as follows:

“Sec. 6. Prohibition on Members of Congress. – It shall be unlawful hereafter for any Member of the Congress during the term for which he has been elected, to acquire or to receive any personal or pecuniary interest in any specific business enterprise which will be directly and particularly favoured or benefited by any law or resolution authored by him previously approved or adopted by the Congress during the same term.

The provision of this section shall apply to any other public officer who recommended that initiation in Congress of the enactment or adoption of any law or resolution, and acquires any such interest during his incumbency.”

In other words, even if he was not the principal author, if he did ask or initiated the enactment of such a law, he is covered by the prohibition.
Simply put, during our term of office, each one of us, it shall be unlawful for us to author any law or resolution that would benefit or favor us. The above prohibition shall apply even to that representative who just recommended, not even authored, the enactment of such law that benefited him.

Charge V. Representative Villar, in his bid for the speakership, prepared a propaganda kit that he distributed to Congressmen and media. I think you were given copies of the one. It is entitled “Manny B. Villar, Jr., Achiever and Visionary Leader,” and [in] the “Legislative Performance of Congressman Manny B. Villar, Jr.” Representative Villar unequivocally said that he “incorporated in the landmark Comprehensive and Integrated Shelter Finance Act, Republic
Act No. 7835, the recapitalization of the National Home Mortgage and Finance Corporation and the amendment to the Agri-Aqua Law to include housing investment.”
Speaker Villar’s companies are engaged in housing. He thereby violated the Anti-Graft Law.

The aforementioned Act, which incorporates H.B. No. 6145, co-authored by then Representative Villar mandates “banks to extend to housing loans not utilized for agriculture and agrarian reform credit.” In other words, loanable funds for agriculture and agrarian credit are to be re-channeled to housing, Speaker Villar’s business.

Representative Villar co-authored H.B. No. 11005 which “increased the capital of the National Home Mortgage and Finance Corporation” and is the main source of funding of Speaker Villar’s companies. President Estrada admitted that the National Home Mortgage and Finance Coporation is presently bankrupt. He said that to the following: LAMP President Edgardo Angara, Congressman Agapito Aquino, Presidential Legislative Liaison Officer Jimmy Policarpio, former Congresman Miguel Romero and myself. The President no less said that it is bankrupt. Increasing the capitalization of a bankrupt GFI benefited Representative Villar’s housing companies.
In the same propaganda kit of Speaker Villar, it states that “also passed by the House were Villar’s measures to make Pag-ibig Find contributions compulsory and to increase housing investments with the SSS.” Pag-ibig is a main source of funding of Speaker Villar’s companies.

In a word, Representative Villar’s legslation from 1992 to 1998 were designed to benefit his business, a violation of the Anti-Graft Law.
Now, the same provision of the Anti-Graft and Corrupt Practices Act, provides in the third paragraph of Section 6 thereof, as follows:

It shall likewise be unlawful for such member of Congress or other public officer, who, having such interest prior to the approval of such law or resolution authored or recommended by him, continues for thirty days after such approval to retain such interest.

Charge VI. When those bills that Representative Villar introduced or co-authored were enacted into law, he did not divest himself of his interest in his companies that benefited therefrom.

Now, Republic Act 6713, known as the Code of Conduct and Ethical Standards for Public Officials provides in Section 3 (j):

Section 3 (j) “Divestment” is the transfer of title or disposal of interest in property by voluntarily, completely and actually depriving or dispossessing oneself of his right or title to it in favour of a person or persons other than his spouse and relatives as defined in this Act.

Charge VII. Manuela Corporation applied for and was granted a loan of P1 billion by the SSS, a government financial institution. Another P2 billion loan would be syndicated with another government financial institution, the GSIS. Total syndicated loan from the two GFIs: P3 billion.

Manuela Corporation, a housing and realty corporation, is owned by the family of the wife of Speaker Villar. An indirect financial accommodation. Again, the same Code of Conduct and Ethical Standards for Public Officials states in Section 3 (k) thereof:
Section 3 (k) “Relatives” refers to any and all persons related to a public official or employee within the fourth civil degree of consanguinity or affinity, including bilas, inso, or balae.

SSS, historically and as a matter of public policy does not extend direct loans to any company. It extends loans to banks or to public or private financial institutions but not directly to business enterprises. The direct loan to Manuela Corporation is a first in SSS history.

Charge VIII. Manuela Corporation owes the Capitol Bank, which also owned by Speaker Villar, P150 million. There may be nothing wrong with that because both are private entities. However, out of the P3 billion earmarked to liquidate the P150 million Capitol Bank loan to the failing Manuela Corporation. In other words, it is a financial accommodation extended by GFIs to relieve Capitol Bank, owned by Speaker Villar, of the P150 million loan. Another indirect financial accommodation.

Charge IX. The Comprehensive Agrarian Reform Program (CARP) is being undertaken in obedience to a constitutional mandate. All lands covered by CARP cannot be used for residential, agricultural, industrial or other uses unless a clearance, conversion, or exemption for a particular property is first issued by DAR.

Speaker Villar’s companies are developing or have developed 5,950 hectares or almost 60,000,000 square meters of CARP lands into residential subdivision without the appropriate DAR issuances that would authorize such lands to be used for residential purposes. A traducement of the constitutionally directed CARP law.

Article XIII of the Constitution, in Sections 4,5,6,7 and 8 states with clarity what the agrarian reform program is all about.

Just to give you an idea about how big 60,000,000 square meters is – my constituency of Makati is only one-third of that size. It is only roughly 21,000,000 square meters. If you add the entire area of Las Piñas and Makati, that is the residential subdivisions covered by the companies of Speaker Villar.

The House cannot reform itself, much less even operate effectively if a cloud of doubt hangs over the Speaker of the House. It is to the interest of the Speaker and the Members no less if these concerns are addressed frontally and resolved forthwith to clear the path for meaningful reforms.

Public office is a public trust. We, the representatives of the people pay a price for getting elected to public office. The Constitution imposes on us certain constraints which we must follow to the letter.

Let me allude to the Members of Congress who are barristers – the Constitution forbids us, lawyers, from appearing in court. In my case, for instance, I was a practitioner up to 1992. I got elected to the House so I stopped practicing, or in other words, I no longer appear in court. That is the price I have to pay. I think I was earning adequately in the practice of law, but I have to make a choice. Do I want to be a lawyer or I want to be a Congressman? If I want to continue being a lawyer, then I must not be a Congressman. If I have to be a Congressman then I must stop lawyering. That is what the Constitution says.

So in the case of Speaker Villar, it is simple. If he wants to go/continue in business and deal with government financial institutions, he can do so but he cannot also be a Congressman. If he wants to be a Congressman, then he must not be in business which deals with the government. We have to pay a price.

So, this case is a learning experience for us all. Whatever the outcome, it will show the things we can do, the things we cannot do, and the things we must do.
I would propose that the House of Representatives constitute itself into a Committee of the Whole to hear the charges and the Speaker’s defense.

He will have a trial that is more than fair to him for he will be judged by the very peers who elevated him to be the first among equals, only this time they will judge him according to the law.

I will never seek the speakership again nor in any manner challenge the leadership of Speaker Villar except on this specific issue of constitutional breach that calls into question the rule of law.

This is how important it is. So I rest my cause.