13 th CONGRESS OF THE REPUBLIC 
) 
OF THE PHILIPPINES 
1 
First Regular Session 
) 
S E N A T E  
S. BillNo. 
Introduced by Senator Ralph G. Recto ,I 
>J 
~, 
r*4 
EXPLANATORY 
NOTE 
Political parties are vital foundations of any country’s democratic system. These 
political parties serve as the very stage on which ideals, philosophies and opinions are 
forged. Ideally, political parties serve as the venue where the intellectual and leadership 
skills of both present and future leaders are nurtured and further developed. 
However, the political party system in ow country leaves much to be desired such 
that an overhaul is not only timely but also necessary. The quality of candidates that 
political parties field during the election period reflect the level of “maturity” of the 
political party concerned. Ultimat ly, it is the Filipino people who stand to suffer from a 
poorly-chosen roster of candidates uring the election period. Oftentimes, the choice of a 
candidate to vote for becomes a hit-or-miss” proposition because of the lack of a 
screening process on who will be the best candidate to represent a political party in its bid 
for public office. 
I‘‘ 
This proposal seeks to introduce vital reforms to the political party system in our 
country. “Political turncoatism” as defined in the proposal carries with it severe legal 
implications such as prohibition from running for any elective position in the next 
succeeding election as well as disqualification from being appointed to any public 
position after the expiration of hisher current term. The proposal likewise seeks to 
institutionalize political parties through a system of accreditation and registration in order 
to avail of the benefits provided under the bill. Furthermore, a State Subsidy Fund is 
created to augment the campaign expenditures as well as the operations of the accredited 
national political parties. 
In sum, the reforms introduced by the bill are geared towards the development of 
the political environment in our country to benefit the Filipino people such that the 
approval of this measure is earnestly sought. 


I . ?  
13th CONGRESS OF THE REPUBLIC 
) 
OF THE PHILIPPINES 
First Regular Session 
‘04 
JlJL -G A10 2 1 
29 
S. Bill No. 
Introduced bv Senator Raluh G. Recto 
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AN ACT 
INSTITUTING CAMPAIGN FINANCE REFORM 
AND STRENGTHENING THE POLITICAL. PARTY SYSTEM 
AND PROVIDING FUNDS THEREFOR 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled: 
CHAPTER 1 
Declaration of Policy, Scope and Coverage 
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SE~TION 
I. 
Title. This Act shall be known as the “ Campaign Finance 
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SEC. 2. 
Declaration of Policy. It is hereby declared as policy of the State 
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to institutionalize and strengthen political parties as vital foundations of the country’s 
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democratic system. Towards this end, the State shall institute reforms in campaign 
Reform Ad Party Development Act of 2004” 
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financing through effective and transparent mechanisms designed to level the playing 
field among all candidates and political parties during elections and reduce opportunities 
for graft and corruption. As part of the State’s thrust to strengthen political party system, 
it shall uphold party loyalty and adherence to the party’s ideological principles, ideals and 
aspirations. The State shall also institute measures to professionalize political parties and 
make them viable instruments of development and good governance. 
SEC. 3. 
Purposes. The Act aims to: 
a) Institutionalize reforms in the financing of electoral campaigns so as to 
promote accountability and transparency 
b) Provide state subsidies to political parties to augment expenditures for 
campaign and party development 
c) Promote party loyalty and discipline 
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d) Support continuing voters education and civic literacy program through state 
financing 
SEC. 4. 
Coverage. The Act shall apply to duly registered national parties 
as certified to by the Commission on Elections. 
SEC. 5. 
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Definition of Terms. For purposes of this Act, the following are 
hereby defined as follows: 
a) 
“Accredited Political Parties ” refer tQ political parties of national 
character that qualify to receive state subsidy for campaign financing, 
and party development based on a set of criteria provided under this 
Act. 
b) 
“Candidate” refers to any person aspiring for or seeking an elective 
public office, who has filed a certificate of candidacy and duly 
nominated by an accredited national party, aggmpation, or coalition of 
parties. 
C) 
“Commission ” refers to the Commission on Elections. 
d) 
“Cumpaign Contributions” shall mean all forms of donations to any 
candidate, political party, organization or coalition, regardless of the 
source, before, during and after the holding of elections. It shall also 
include any gift, donation, subscription, loan, advance or deposit of 
money or anything of value, or those arising from a contract, pledge or 
agreement to contribute, whether or not legally enforceable, made for 
the purpose of influencing the results of the elections, but shall not 
include services rendered without compensation by individuals 
volunteering a portion of all of their time in behalf of a candidate or 
political party. It shall also include the use of facilities, equipments, 
office supplies and other materials and fixtures voluntarily donated by 
other persons, or allowed its use for free, the monetaq value of which 
shall be assessed based on market rates prevailing in the area. 
e) 
“Campaign expendifwes ” shall include all types of expenses, 
regardless of source, amount and purpose that relates, directly or 
indirectly, incurred in the conduct of an electoral campaign. It involves 
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all payments of money or anything of value or a contract, promise or 
agreement to spend, for the purpose of influencing the results of the 
election. It shall include the use of facilities personally owned by the 
candidate, the monetary value ‘of the use of which shall be assessed 
based on the market rates prevailing in the area. 
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“Disclosure requirements ” refers to the duty of all candidates national 
parties, organizations or coalitions to reveal all amount; sources and 
uses of campaign contributions. 
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“Donor” refers to any person, entity or corporation, which contributes 
money, property or any other form of material contribution to a 
candidate, political party and organizations for purposes of an election. 
“Donee” refers to any candidate, political party organization or any 
representative acting in their behalf or interest, which receives money, 
property or any other form of election contribution. 
i) 
“National Party” refers ‘to a political party, sectoral party or sectoral 
organization registered with the Commission whose constituency is 
effectively spread across the country. 
“Political Party” refers to organized group of persons pursuing the 
same ideology, political ideas or platform of government. To acquire 
juridical personality, qualify it for subsequent accreditation, and to 
entitle it to the rights and privileges herein granted to political parties, a 
political party shall first be duly registered with the Commission on 
Elections. 
“Political turncoatism ” refers to change of political party affiliation by 
any elective public official under which lhe was elected from the time 
of the election up to the last six (6) months before the succeeding 
election. Provided, That political turncoatism shall not apply in any of 
the following instances: 
1. 
merger or coalition of political parties where a candidate is a 
registered member thereoe 
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2. 
abolition of political parties where a candidate is a registered 
member thereof; 
expulsion in writing, of the registered member from his political 
party; and 
resignation or indefinite leave of any candidate from a political 
party, provided the elective public official remains independent 
during his term of 
office up to six (6) months before the 
succeeding election. 
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Provided, further that the basis of determining his party membership is the 
party of hidher choice appearing in the certificate of nomination from his 
party filed with the Commission. 
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“State Subsidy Fund” refers to the fund for party development and 
campaign activities of national parties, sourced from the annual 
General Appropriations Act. 
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“Voluntaiy Contributions ” refers to the contributions from private 
individual taxpayers and corporations allowed under existing laws. 
CHAPTER 
2 
Institutionalization of Political Parties 
SEC. 6. Registration of national parties. For purposes of this Act, any organized 
group of persons seeking registration as a national party may file with the Commission a 
verified petition attaching thereto its constitution and by-laws, platform or program of 
government, and such other relevant infomation as may be required by the Commission. 
The Commission shall after due notice and hearing, resolve the petition within ten (10) 
days from the date it is submitted for decision. 
Those who are already registered as national party may not register anew. 
However, they should manifest their desire to be entitled to the rights and privileges 
provided under this Act. All registered national parties may apply for accreditation to be 
allowed to receive state subsidies for party development and cqnpaign activities. 
SEC. 7. Definition of policy agenda and program of governance.- 
National 
political parties are mandated to craft a clear policy agenda and program of governance 
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fulfill party commitments. 
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consistent with their party philosophy and ideals. The members of the national party shall 
endeavor to act in accordance with the defined party platform and pursue programs to 
SEC. 8. Selection of Candidates. The selection process for candidates shall be 
democratized through the adoption of a process that is fair, open and transparent and 
would promote participation of choice from the members of the party. Towards this end, 
each national party is mandated to formulate a merit system on nomination and selection 
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of candidates. 
The national party shall submit to the Commission its rules an merit system on 
nomination and selection of candidates not later than two hundred ten days before the 
elections. 
Any aggrieved member of the national party may file a verified complaint to it 
Grievance and Arbitration committee not later than ten (10) days after the party 
convention for the violation of the rules on merit system on nomination and selection of 
candidates. 
SEC. 9. 
Changing Political Party AfJiation. Any member of any registered 
political party who changes party affiliation after being elected on that party’s ticket shall 
be deemed to have committed political turncoatism. 
SEC. 10. Penalties of Political Turncoatism. The elected officials who have 
committed political turncoatism shall be: 
a) prohibited from running for any elective position in the next succeeding 
election immediately following the act of changing political party affiliation; 
b) prohibited from being appointed or from holding any position in any public or 
government office for three (3) years after the expiration of hisher current 
term; 
c), prohibited from assuming executive or administrative position in hisher new 
political party; 
d) refund of the amount he/she receivedlfrom hisher political party plus a twenty 
five percent (25% ) surcharge thereof. 
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CHAPTER 
3 
Political Party Finance 
SEC. 11. 
Creution of u State Subsidy Fund. There is hereby created a State 
Subsidy fund which will be exclusively used to augment the campaign expenditures as 
well as the operations of the accredited national political parties. The State Subsidy fund 
shall be used equally for two major purposes: a) campaign expenditures b) program 
operations and party development. The State Subsidy fiuld shall be appropriated in the 
General Appropriations Act. 
SEC. 12. 
Criteria for Eligibility. The Commission shall accredit political 
parties which will be eligible to receive state subsidy for party development and 
campaign financing based on the following general criteria: 
a) Political Representation which may include the number of seats gained in the 
national legislature in the most recent national elections 
b) Organizational Strength and Mobilization Capability which may include the 
number of political chapters, organizations nationwide and number of active 
and permanent members of the party. 
c) Performance and Track Record of the Party which may include the number of 
years of existence of the party as well as the ability of the party to field 
complete slate of candidates in the past three national elections. 
d) Capability to implement developmental programs for their constituents which 
may include the number of projects and programs of the national political 
parties which may be related to voters education, information campaigns on 
national issues, trainings and other constituency-building activities. 
The Commission shall promulgate specific guidelines on the accreditation of 
the political parties, which would qualify for the annual State Subsidy fund. 
The Commission and the Department of Budget and Management (DBM) 
shall promulgate guidelines to facilitate the release of the funds to each accredited 
political party. 
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SEC. 13. Distribution of the Fund for campaign subsidy and party development 
The total amount of subsidy released to each political party annually shall be 
proportional to the number of seats obtained in the most recent national elections which is 
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broken down as follows: 
a) Five percent (5%) of the State Fund shall accrue to the Commission to be used 
exclusively for monitoring purposes and conduct of information dissemination 
campaigns and voters education 
b) Forty five (45%) of the State Fund shall be proportionately distributed to 
national political parties in the Senate based on the number of seats obtained 
in the most recent general elections 
c) Fifty percent (50%) of the State Fund shall be proportionately distributed to 
national political parties in the House of Representatives based on the number 
of seats obtained in the most recent general elections. 
SEC. 14. Schedule of Release of Money from the State Subsidy Fund. For purposes 
of this Act, the funds, which will be released for a non-election year will be exclusively 
used for party development activities. The funds for campaign subsidy shall be released 
only during an election year. The Commission shall inform the accredited national 
parties of the schedule of release as well as the amount of the subsidy allocated at the 
start of every fiscal year. 
SEC. 1.5. Management of Subsidy funds for campaign and party development. 
The political parties that availed state subsidy shail maintain a separate financial account 
for the funds used to finance campaign activities and party development. 
Each political party shall submit to the Commission a detailed program of 
activities as well as the breakdown of expenditures drawn from the state subsidy provided 
hereon, by the end of December of every fiscal year. 
No political party is allowed to use the subsidy for other purposes, which are not 
provided under this Act. 
SEC 16. Allowable Party Development Activities. Due to the vital role played by the 
national parties in the country’s political development and in order to promote 


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professionalism and accountability among members of the party, the following party 
development activities shall be allowed 
a) Party administration, recruitment and civic education; 
b) research and policy development; 
c) education and training o f  members; 
d) institution building and constituent outreach program and 
e) other reasonable logistical and operational expenses that are essential in 
strengthening the party. 
SEC. 17. Allowable Campaign Expenditures. The accredited political parties are 
authorized to use the State subsidy funds for the following campaign activities: 
a) Party's operating expenses, which may include hiring of personnel, 
professional secretariat, setting up of headquarters and other relevant electoral 
expenditures; 
b) Traveling expenses of the candidates and campaign personnel in the course o f  
the campaign and for personal expenses incident thereto; 
c) Information dissemination and advochcy campaigns of political party 
d) Production and distribution of electoral paraphernalia and other propaganda 
materials 
e ) Other expenditures stipulated under Sec 102 of the Omnibus Election Code 
SEC. 18. -Limits on Voluntay Contributions . Voluntary Contributions to any 
national, political party shall be exclusively used for campaign expenditures and be 
limited to the following: 
a) Individual contribution shall not exceed the amount o f  ONE " D R E D  
THOUSAND PESOS( PlO0,OOO.OO) 
b) A corporation can contribute up to a maximum amount of FIVE HUNDRED 
THOUSAND PESOS ( P500,OOO.OO) 
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SEC. 19. Period of Voluntaiy Contributions to National Party. Any voluntary 
contribution to a national party shall be deposited kdh any reputable bank within six 
months prior to the campaign pehod but not later thm fipieen (15) days before the 
election day. For this purpose, each national party shall open an account with any 
reputable bank that shall issue a corresponding receipt to the contributor on the amount 
contributed. 
The Commission shall cause the publication of the account of any national party 
in any newspaper of general circulation within a reasonable time as may be specified 
under the Implementing Rules and Regulations of this Act. 
SEC. 20. Fiscal incentives for Individuals and Corporate Donors. Individual and 
corporate donors providing campaign contributions shall be allowed to avail of tax 
deduction equivalent to 100% of the amount of the said donation. 
Individual and corporate donors may contribute to any accredited national 
political party of their choice. In order to avail of the fiscal incentives herein provided 
under this Act, the Commission shall issue a certification of the amount of contribution 
given by individual and corporate donors, which shall be presented to the Bureau of 
Internal Revenue (SIR) 
so as to be allowed to avail of tax deductions. 
SEC 21. Lead Agency. The Commission on Elections is hereby mandated as the 
independent regulatory agency charged with administering and enforcing the provisions 
of the Act. 
CHAPTER 
4 
Public Disclosure and Auditing of the Fund 
SEC 22. Audit of the Fund. The Commission on Audit (COA) shall examine the 
financial reports of the national parties on the utilization of the h d .  The auditing of all 
the financial accounts of parties shall be based on a reasonable time specified by COA. 
Voluntary contributions to any national political party shall be accounted for 
separately under a different set of books of accouits which shall be open to inspection by 
COA as may be requested by the Commission. 
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SEC. 23. Party Ethics. In exchange for state subsidy, national political parties that 
qualify to avail of the fun4 shall institute internal control mechanisms to promote 
accountability and transparency. 
Said national political parties shall likewise develop and enforce an internal code 
of conduct and ethical standards for its party members to uphold the values and standards 
of public life, and to formulate and implement disciplinary procedures for party members. 
Provided, That said program for internal controls, ethical standards and disciplinary 
procedures shall all be duly submitted to the Commission and made available to the 
public. 
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Tn addition, no political party should sponsor and select a candidate, who has been 
either convicted by any court for any criminal offense. 
SEC. 24. Full Disclosure of Funds and Sources ofExpenditures . The officials of 
the registered national political party shall submit a sworn statement of their assets and 
liabilities to the Commission regardless of whether or not they hold public office. Said 
documents shall form part of public record. 
All national parties and candidates shall be required to make public disclosure of 
all contributions as well as expenditures incurred for the utilization of the fund through 
the official website of the Commission and/or in a publication of general circulation. 
Specifically, the following shall be reported: 
1. 
The amount of contribution, on the date of bank receipt, and the full name 
and exact address of the person from whom the contribution was received; 
included in the pre-election disclosures to the Commission. Aside from 
these contributions, they must h i s h  the Commission of its full report of 
expenditures and receipts incurred during the campaign including those, 
which are drawn from the State Subsidy Fund. 
2. 
Post election disclosure statements must be submitted to the Commission 
within thirty (30) days after the day of the election. Late submissions shall 
be subject to fine, but the Commission will only consider waiver of fines 
upon good and valid causes for late filing. 
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3. 
Detailed breakdown of expenditures for the party development activities 
which are funded out of the State Subsidy Fund. The accomplishment 
financial report for the party development activities shall be submitted 
annually, at the end of every fiscal year. The subsidy for the succeeding 
year will not be released without the submission of the said report of the 
preceding year. 
SEC. 25. 
Prohibited Acts. The folldwing shall be punishable: 
1. 
Misuse of funds received by national parties both from the State and 
voluntary contributions which goes beyond the allowable expenditures set 
under this Act and other existing laws. 
2. 
Inability to account for all incoming contributions from whatever source 
and or failure to submit pre-elect ion as well as post-election disclosure 
statements to the Commission; and 
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False reporting or any misrepresentation in the financial statement reports. 
SEC. 26. 
Penalties. a ) Any candidate or officer of any national party who 
violate Section 25 of this Act shall constitute an election offense without prejudice to the 
imposition of other penalties under existing laws b) Failure of any national party to 
comply to any of the documentary requirements set forth in this Act shall be subject to 
.administrative sanctions which the Commission may impose, including temporary or 
permanent cancellation of the party’s registration, as well as payment of fines consistent 
with existing laws and regulations., 
SEC. 27. 
Appropriations. 
The amount of THREE “ D R E D  
FIFTY 
MILLION (P350,000,000.00) shall be initially appropriated in the General 
Appropriations Act for the implementation of this Act. 
SEC. 28. Applicability. The provisions of Batas Pdmbansa Blg 881, as amended, 
otherwise known as the “Omnibus Election Code of the Philippines,” and other election 
laws not inconsistent with this Act shall apply. 
SEC. 29. Rules and Regulations. The Commission shall promulgate the necessary 
rules and regulations to effectively implement the provisions of this Act. 
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SEC. 30. Repealing Clause. All laws,orders issuances, rules and regulations or 
part threof inconsistent with the provisions of this Act are hereby repealed, modified or 
amended accordingly 
SEC. 31. Separability Clause. If any part of this :Act is held invalid or 
unconstitutional, the other parts of provisions thereof shall remain valid and effective. 
SEC. 32. Effectivity. This Act shall take effect fifteen (15) days from its 
publication in the Official Gazette or in at least 2 national newspapers of general 
circulation, whichever comes first. 
Approved, 
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