REPUBLIC OF THE PHILIPPINES
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
Second Regular Session

House Bill No. 7088

Introduced by MAGDALO Party-List Representative
HON. GARY C. ALEJANO

EXPLANATORY NOTE

‘An issue paper released by the Friedrich Ebert Stiftung aptly enumerates the inherent flaws of the
country’s political party system, to wit: the lack of accountability and transparency in party financing and
expenditures; political turncoatism; and patronage culture of political parties based on financial
contributions. In furtherance of said observations, a separate study by the same Institute wars that: “/1/f
the political party system (mal-)functions in such a way, apathy, mistrust or even frustration among
citizens may spread, thus endangering the gains of a democratization process. It is clear that this is a
serious danger to a democratic system — making it one of the major challenges of Philippine politics
today.”

Cognizant of the aforesaid political situation, this measure secks to enhance the quality of our democratic
system by reforming our current political party system.

This bill seeks to:

‘*  Institutionalize and strengthen political parties in the country by introducing reforms in campaign
financing and providing financial subsidies to political parties to augment their expenditures for
campaign;

* Provide sanctions against any member of a national political party who changes party affiliation
afier being nominated by the political party otherwise known as political turcoats;

‘© Exempt voluntary contributions from any person, subject to a certain cap, from the payment of
donor's tax, and punish the giving of voluntary contributions beyond the allowable limits set by
law;

© Create a State Subsidy Fund to augment the operating funds of accredited national parties.

It is hoped that the enactment of this measure shall institutionalize and strengthen political parties as vital
pillars of the country's democratic system.

In view of the foregoing, passage of this measure is earnestly sought.

Representative
Magdalo Para sa Pilipino Party-List


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REPUBLIC OF THE PHILIPPINES
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
Second Regular Session

7088

House Bill No.

Introduced by MAGDALO Party-List Representative
HON. GARY C. ALEJANO

AN ACT
STRENGHTENING THE POLITICAL PARTY SYSTEM, APPROPRIATING FUNDS
THEREFOR AND FOR OTHER PURPOSES

Be It enacted by the Senate and the House of Representatives of the Philippines in
Congress assembled:
CHAPTER I
DECLARATION OF POLICY, PURPOSES AND COVERAGE
SECTION

Title, - This Act shall be known as “The Political Party Development Act

of 2018".

SEC. 2. Declaration of Policy. — \t is hereby declared a policy of the State to

institutionalize and strengthen political parties as vital pillars of the country’s democratic system.
‘Towards this end, the State shall institute reforms in campaign 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 the political party system, it shall uphold party loyalty and adherence to the
party’s ideological principles, platform and programs. The State shall also institute measures to
professionalize political parties and make them viable instruments of development and good

governance.

SEC. 3. Purposes. — This Act aims to:
(a) _Institutionalize reforms in the financing of electoral campaigns, so as to promote

accountability and transparency;


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(b)

()
qd)

Provide financial subsidies to political parties, to augment their expenditures for
campaign purposes and for part development;

Promote party loyalty and discipline; and

Encourage and support continuing voter’s education and civic literacy programs

through the political parties.

SEC. 4. Coverage. — This Act shall apply to political parties duly registered with and

certified to as such by the Commissions on Elections (COMELEC).

SEC. 5. Definition of terms. — The following terms as used in this Act shall be defined as

follows:

(@)

(b)

(©)
@

“Accredited political party” refers to a political party qualified to receive subsidy
for party development and campaign purposes and accredited for this purpose by
the COMELEC based on a set of criteria provided for under this Act.
“Candidate” refers to any person aspiring for or seeking an elective public office,
duly nominated by a political party, aggrupation or coalition thereof, and who has
filed a certificate of candidacy with the COMELEC.

“Commission” refers to the COMELEC.

“Campaign contribution” refers to any form of donation to any candidate,
political party, aggrupation or coalition thereof given before, during or after the
holding of elections. It includes 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, made for the purpose of influencing the results of the
elections, but shall not include services rendered without compensation by
individuals volunteering a portion or all of their time in behalf of a candidate or
political party. It also includes the use of office space, facilities, equipment, office
supplies and other materials and fixtures voluntarily donated by other persons or
who allowed their use for free, the monetary value of which shall be assessed

based on market rates prevailing in a particular area.


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©

(bh)

@

@
&)

0)

“Campaign expenditure” refers to any type of expense incurred, regardless of
source, amount and purpose, that relates, directly or indirectly, to the conduct of
an electoral campaign. It includes 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 elections. It includes the use of office space and facilities personally
owned by the candidate, the monetary value of which shall be assessed based on
market rates prevailing in a particular area.

“COA ” refers to the Commission on Audit.

“Disclosure requirement” refers to the duty of all candidates and political parties,
aggrupations or coalitions thereof to reveal the details of campaign contributions
received by them and the expenditures made on account thereof. For accredited
political parties, it includes expenditures and disposition of party development
and campaign monies given to them as their share in the State Subsidy fund
established under this Act.

“Donor” refers to any candidate, political party, aggrupation or coalition thereof
or any representative acting on their behalf or interest, to whom money, property
or any other form of contributions were made.

“Donee” refers to any candidate, political party, aggrupation or coalition thereof
or any representative acting on their behalf or interest, to whom money, property
or any other form of contributions were made.

“Fund” refers to the State Subsidy Fund established under this Act.

“Member of a party” refers to a natural person of good standing in a political
party who complied with the requirements of party membership, including the
payment of membership dues.

“Political party” refers to a political party, party-list or an organized group of
persons duly registered with the Commission, pursuing or advocating platform,
principles and policies for the general conduct of government and which

nominates and supports its members as candidates for public office.


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(m) “Political turncoatism” refers to the change of political party affiliation by an
elected official during one’s term, except within six (6) months prior to the end of
the term: Provided, That political tuncoatism shall not apply in any of the
following instances:

(1) Abolition, merger or coalition of political parties where a candidate is a
registered member thereof; and

(2) Expulsion of the elected official in writing from one’s political party:
Provided, That the cause for such does not constitute political
opportunism. Political opportunism includes any act of a party member
constituting disloyalty to the party or regular non-adherence to the party’s
ideological principles, platform and programs, as determined by the party
in accordance with its constitution and bylaws.

“State Subsidy Fund” refers to the fund for party development and campaign activities of
accredited political parties under this Act.

(n) “Voluntary contributions” refer to the contributions to candidates or political
parties, aggrupation or coalitions thereof from persons, natural or juridical, allowed under
existing laws.

CHAPTER IE
INSTITUTIONALIZATION OF POLITICAL PARTIES

SEC. 6. Registration as a Political Party. — Any organized group of persons seeking
registration as a political party may file with the Commission a verified petition attaching thereto
its constitution and bylaws, platform, principles, policies and general program of government, a
verified list of its national officials, members of the executive board, or its equivalent, and the
heads of its regional, provincial and city chapters, and such other relevant information 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.


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Political parties already registered as such with the Commission prior to the effectivity of
this Act are not required to register anew but are required to submit their intent to continue

participating in elections within a period of six (6) months after the enactment of this law.

SEC. 7. Policy Agenda and Program of Governance. ~ Political parties are mandated to
craft a clear policy agenda and program of governance consistent with their party philosophy and
ideals. The members of the political party shall endeavor to act in accordance with the defined

party platform and pursue programs to fulfill party commitments.

SEC. 8. Membership in a Political Party. — A person becomes a member of a political
party upon application duly signed, filed and accepted by the party, and upon compliance with
the basic membership requirements of the party, including the regular payment of membership

dues.

SEC. 9. Selection of Candidates. — The selection process for candidates of political
parties shall be democratized through the adoption of a process that is fair, open and transparent.

Every political party is mandated to formulate a system on the nomination and selection
of candidates, in which all party members are involved. Every political party shall submit to the
Commission its rules in governing the system on the nomination and selection of candidates not
later that one hundred eighty (180) days before the election day following the effectivity of this
Act.

Any aggrieved member of an accredited political party may file a verified complaint
before its Grievance and Arbitration Committee not later than ten (10) days after the party
convention, for violation of the rules governing the system on the nomination and selection of
candidates. The aggrieved party has the right to appeal to the Commission. Upon finding
violation of the system, the Commission shall revert the grievance to the concerned political
party. If the political party does not comply with the order of the Commission, the said party

shall be disqualified from participating in the elections.


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Every political party shall hold conventions to nominate their official candidates not
carlier than sixty (60) days before the start of the campaign period and shall not submit to the
Commission not later than the start of the election period the names of the officials of the party
authorized to nominate their official candidates.

No political party shall nominate more candidates than the number of persons required to
be voted for in an elective position nor shall any candidate be allowed to accept nominations
from more than one (1) registered politician party, except in cases of aggrupations or coalitions
thereof. Nominations made in violations hereof shall be denied due course by the Commission
and the candidates concerned shall be considered independent candidates. The nominations of
candidates of political parties shall be filed not later than the last day for filing of the certificates

of candidacy as determined by the Commission.

SEC. 10. Contents of Certificate of Nomination. ~ The certificate of nomination shall
state that the person issuing the nomination is the duly authorized representative of the political
party as provided for in its constitution or bylaws; that the person named therein is the official
candidate of the party for the elective position stated; and that he has accepted the said
nomination. The certificate of nomination shall be subscribed under oath by the duly authorized

representative of the political party.

SEC. 11. Limits on Voluntary Contributions. — Voluntary contributions to any political
party shall be limited to the following maximum amounts:

(@) _Up to One million pesos (P1.000,000.00) from a natural person and up to Ten
million pesos (P10,000,000.00) from a juridical person who/which allowed to make a voluntary
contribution under existing laws; and

(b) Any contribution in cash or in kind to any political party for campaign purposes,
duly reported to the Commission in accordance with Section 13 of Republic Act No. 7166, shall
be exempt from the donor's tax.

‘No foreign national or entity shall be allowed to give contributions to any political party.


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SEC. 12. Voluntary Contributions to Party; How Made. ~ Voluntary contributions to a
political party shall be deposited by the contributor to the account of the party with any reputable
bank accredited by the Commission at any time but not later than fifteen (15) days before the day
of election. The accredited banks shall issue a corresponding receipt to the contributor on the
amount deposited, and shall submit to the Commission a statement of account of all political

parties in any newspaper of general circulation within five (5) days before the elections.

SEC. 13. Political Turncoatism. — Any elected official of a political party who changes

party affiliation, after being nominated by the party, shall be deemed to have committed political

turncoatism except within six months prior to elections.

SEC. 14. Penalties for Political Turncoatism. ~ Political turncoats shall be:

(a) Deemed to have forfeited their elective office, if they change their political party
affiliation, except within six (6) months prior to elections;

(b) Disqualified from running for any elective position in the succeeding election
immediately following the act of changing political party affiliation;

(©) Prohibited from being appointed or from holding any position in any public or
government office for three (3) years after the expiration of the current term/office;

(@) Prohibited from assuming any executive or administrative position in the new
political party; and

(©) Directed to refund any and all amounts received from his former political party,

plus a twenty-five (25%) surcharge thereon.

SEC. 15. Petition for Disqualification. — Any citizen of voting age, or any candidate,
political party, aggrupation or coalition thereof, may file with the Commission, within fifteen
(15) days from the filing of the certificate of candidacy and before proclamation, a petition to

disqualify a candidate on the ground of political turncoatism as defined in this Act.


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SEC. 16. Authorized Expenses of National Political Parties and Candidates. ~ The
amount that a political party and a candidate may spend for every election campaign shall be
‘Twenty pesos (P20.00) for every voter currently registered in the constituency or constituencies
of candidacy. The Commission shall adjust the authorized amount based on the consumer price
index (CPI) every three (3) years following the effectivity of this Act.

CHAPTER III
STATE SUBSIDY FUND

SEC, 17. Establishment of a State Subsidy Fund. — There is hereby established a State
Subsidy Fund which shall be used to augment the operating funds of the accredited national
political parties. The fund shall be used directly and exclusively for the following purposes:

(a) Party development; and

(b) Campaign expenditures.

SEC. 18. Allowable Party Development Activities. — Due to the vital role played by the

political parties in the country’s political development and in order to promote professionalism

and accountability among members of the parties, the following party development activities
shall be allowed to be funded out of the State Subsidy Fund:

(@) Party administration, recruitment and civic education;

(b) Research and policy development;

(©) Education and training of members;

(@) Institution building and constituent outreach program; and

(©) Other reasonable logistical and operational expenses that are essential in

strengthening the party.

SEC. 19, Allowable Campaign Expenditures. ~ The accredited authorized parties are
authorized to use the subsidy given to them only for the following campaign activities:
(@) Operating expenses of the party which may include the hiring of personnel,

professional secretariat, setting up of headquarters and other relevant electoral expenditures;


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(b) Travelling expenses of the candidates and support personnel in the course of the
campaigns, and for personal expenses incident thereto;

(©) Information dissemination and advocacy campaigns of the political party;

(d) Production and distribution of electoral paraphernalia and other propaganda
materials; and

(©) Other expenditures as allowed under Section 102 on Lawful Expenditures of the

Omnibus Election Code.

SEC. 20. Accreditation. — A political party eligible in accordance with Section 21 hereof,
and which desires to be entitled to the rights and privileges as recipients of the subsidy provided
for under this Act, may apply for accreditation by the Commission, under such rules and

regulations as the Commission shall prescribe consistent with the provisions of this Act.

SEC. 21. Criteria for Eligibility. — The Commission shall accredit political parties
eligible to receive subsidy from the State Subsidy Fund based on the following general criteria:

(a) Political representation, consisting of the incumbent President, Vice President,
Members of Congress, Governors and City Mayors;

(6) Organizational strength and mobilization capability, which may include the
number of political chapters, organizations nationwide and number of permanent members of the
party paying their dues; and

(©) Performance and track record of the party, which may include its performance in

the past elections and its ability to field candidates in the coming elections.

SEC. 22. Effects of Accreditation. ~ A duly accredited political party shall be entitled to
the rights and privileges accorded under this Act. Likewise, the accredited national political party
shall be subject to the regulations set forth in this Act and its implementing rules as prescribed by

the Commission.


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SEC. 23. Distribution of the Fund, ~ The total amount of the State Subsidy Fund
released annually shall be distributed as follows:

(a) Five percent (5%) of the fund shall accrue to the Commission, to be used
exclusively for monitoring purposes and the conduct of information dissemination campaigns
and voter's education;

(b) Thirty percent (30%) of the fund shall be proportionately and ratably distributed
to accredited political parties represented in the Senate based on the number of seats obtained in
the most recent general elections; and

(©) Sixty-five (65%) percent of the fund shall be proportionately and ratably
distributed to accredited political parties represented in the House of Representatives based on
the number of seats obtained in the most recent general elections.

The share of each of the accredited political parties in the State Subsidy Fund shall be
released only upon proof that the concemed party has raised an amount equal to its share in the
fund from membership dues and voluntary contributions: Provided, That the party concerned
that fails to raise an amount equal to its share in the fund shall only receive an amount equal to
the amount raised from membership dues and voluntary contributions: Provide further, That the
balance, if any, from the share in the fund of the party concerned shall be forfeited and reverted

to the general fund of the government.

SEC. 24. Schedule of Releases from the Fund. — For purposes of this Act, all releases
from the State Subsidy Fund during a nonelection year shall be used exclusively for party
development activities. Funds released during an election year shall be divided as follows:
seventy-five percent (75%) shall be used for campaign expenditures, and twenty-five percent
(25%) for party development activities. The Commission shall inform the accredited political
parties of the schedule of releases as well as the amount of the subsidy allocated at the start of

every fiscal year.

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SEC. 25. Management of the Subsidy. — The accredited political parties availing of the
subsidy shall maintain a separate financial account for the funds used to finance campaign
activities and party development, respectively.

Every accredited political party shall submit to the Commission a detailed program of
activities as well as the breakdown of expenditures drawn from the fund by the end of December
of every fiscal year. No accredited political party shall be allowed to use the subsidy for purposes
other than those indicated in this Act.

CHAPTER IV
DISCLOSURE AND PERFORMANCE MONITORING

SEC.26. Audit of the State Subsidy Fund. ~ The COA shall examine the financial
reports of the accredited political parties on their use of the State Subsidy Fund. Membership
dues and voluntary contributions to any accredited political party shall be accounted for
separately under a different set of books of accounts, which shall be open ti inspection by the

COA.

SEC. 27. Party Ethics. ~ Accredited political parties shall institute internal control
mechanisms to promote accountability and transparency. Accredited political parties shall
likewise develop and enforce an internal code of conduct and ethical standards of its party
members to uphold the values and standards of public life, and to formulate and implement
disciplinary procedures for party members: Provided, That the said program for internal
controls, ethical standards and disciplinary procedures shall be duly submitted to the
Commission and made available to the public. No political party shall select and nominate a

candidate who has been convicted by final judgment for any criminal offense.

SEC. 28. Full Disclosure. — The officials of every accredited political party shall submit
a sworn statement of their assets and liabilities to the Commission which shall be made available
to the public at least six (6) months before elections, All accredited political parties and their
candidates shall also be required to submit with the Commission and make a public disclosure of
all contributions as well as expenditures incurred for the use of State Subsidy fund thirty (30)

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days after the elections. All these disclosures shall be made through the official website of the

Commission and published in a newspaper of general circulation.

SEC. 29. Other Reports. — The following shall be reported by the accredited political
parties and their candidates:

The amount of contributions for the elections, the date of receipt by the bank or
by the duly authorized representative of the party and the full name and exact address of the
person, whether natural or juridical, from whom the contribution was received;

(b) A fill report of expenditures and receipts incurred during the campaign, including
those which were drawn from the State Subsidy Fund, if any;

(©) Post-election disclosure statements as required under existing laws, which must
be submitted to the Commission within thirty (30) days after election day. Late submission shall
be penalized with a fine in such amounts as may be determined by the Commission; and

(@) Detailed breakdown of expenditures 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 covering the preceding year.

SEC. 30. Failure to Comply with Disclosure and Reporting Requirements. - Failure of
the accredited political party to comply with the provisions of this Act will result in its
disqualification from receiving its share in the State Subsidy Fund. The said unused funds shall
revert to the General Fund of the National Treasury, and all the rights and privileges to which the
party would have been entitled under this Act shall be forfeited.

SEC. 31. Performance Monitoring and Reporting System. - The Commission and the
COA shall jointly design and implement, in consultation with political parties, aggrupations or
coalitions thereof, accredited citizens' arms, the private sector and nongovernmental
organizations, and other government agencies, an integrated political party development and

campaign subsidy performance monitoring and reporting system. The performance and

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monitoring system shall identify, define and operationalize a system of performance indicators
and measures for party development and campaign subsidy deployment.

The Commission and the COA shall, based on the results of the system, publish and
disseminate annual reports on the development of political parties that have received subsidies

and on the distribution, use and results of the campaign subsidies provided to political parties.

SEC. 32. Publication and Dissemination of the Political Party Development and
Campaign Subsidy Performance Reports - The political party development and campaign
subsidy performance reports shall be submitted to both the Senate and the House of
Representatives of the Congress of the Philippines not later than June 30 of every year, and shall
be made available to the public via the internet and mass media as a guide for the citizenry in
evaluating political parties for the purpose of participating in their program of activities, and in

supporting, affiliating with, or joining them.

CHAPTER V
MISCELLANEOUS PROVISIONS

SEC. 33. Punishable Acts. - The following acts shall be punishable:

(a) Misuse of funds received by political parties, both from the State Subsidy Fund
and from voluntary contributions;

(>) — Giving of voluntary contributions that goes beyond the allowable limits set under
this Act and other existing laws;

(©) Inability to account for all incoming contributions from whatever source;

(d) Failure to submit pre-election as well as post-election disclosure statements to the
Commission; and

(©) False reporting or any misrepresentation in the financial statement reports.

SEC. 34. Penalties. —
(a) Any candidate or official of any political party who violates any provision of this
Act shall be punished with imprisonment of not less than six (6) years but not more than twelve

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(12) years or a fine ranging from One hundred thousand pesos (P100,000.00) to Five hundred
thousand pesos (P500,000.00), or both, at the discretion of the court. He shall likewise be
disqualified to hold public office. Any political party that violates any provision of this Act shall
pay a fine of not less than Five hundred thousand pesos (PS00, 000.00) but not more than Five
million pesos (P5, 000,000.00).

(b) Any political party that fails to comply with any of the documentary requirements
set forth in this Act shall be subject to administrative sanctions by the Commission, which shall

include temporary or permanent cancellation of the party's registration as well as payment of

fines consistent with existing laws and regulations.
SEC. 35. Appropriations. - The amount necessary for the implementation of the

provisions of this Act shall be included in the annual General Appropriations Act.

SEC. 36. Lead Agency. - The Commission is hereby mandated as the independent

regulatory agency charged with administering and enforcing the provisions of this Act.

SEC. 37. Applicability - The provisions of Batas Pambansa Blg. 881, as amended,
otherwise known as the "Omnibus Election Code of the Philippines", and other election laws not

27 inconsistent with this Act shall apply suppletorily.

SEC. 38. Rules and Regulations. - The Commission shall promulgate the necessary rules

and regulations to effectively implement the provisions of this Act.

SEC. 39. Separability Clause. - \f any part of this Act is held invalid or unconstitutional,
the other parts or provisions hereof which are not affected thereby shall remain valid and

effective.

SEC. 40. Repealing Clause. ~ All laws, orders, issuances, rules and regulations or parts
thereof inconsistent with the provisions of this Act are hereby repealed, modified or amended
accordingly.

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2 SEC. 41. Effectivity Clause. - This Act shall take effect fifteen (15) days after its

3 publication in at least two (2) national newspapers of general circulation.

Approved,

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