HAUSE OF REPRESENTATIVES
RECEIVED

SEVENTEENTH CONGRESS
REPUBLIC OF THE PHILIPPINES )
First Regular Session )

HOUSE OF REPRESENTATIVES

Introduced by Representative Maximo B. Ro,

House Bill No. 1695

EXPLANATORY NOTE

This bill was originally introduced as House Bill No, 2128 during the Fourteenth
Congress and as House Bill No. 49 during the Fifteenth Congress. It was approved by the
Committee on Suffrage and Electoral Reforms as substitute House Bill No. 3655 under
Committee Report No. 308 dated February 26, 2008 and was recalled for 2" reading on
September 1, 2008 during the Fourteenth Congress. For the Fifteenth Congress, it was
approved by the House of Representatives on 3" Reading and was transmitted to the
Senate on October 11, 2012 where it was not acted upon. It was also re-filed during the 16”
Congress.

This bill seeks to institutionalize and strengthen political parties in the country by
introducing reforms in campaign financing and provide financial subsidies to political parties
to augment their expenditures for campaign.

A political party is defined under Section 60 of the Omnibus Election Code as an
organized group of persons pursuing the same ideology, political ideas or platforms of
government and includes its branches and divisions. The Philippines has a multi-party
system as provided for under Section 6, letter c, Article IX of the 1987 Philippine Constitution
which states that a free and open party system shall be allowed to evolve according to the
free choice of the people.

As of April 2001, the Commission on Elections has listed eighty-two (82) registered
and accredited political parties, In the 2007 national and local elections, there were eighteen
(18) political parties who participated in the national elections while ninety-three (93)
participated in the party-list elections

A major argument against a multi-party system is the tendency of members of
political parties to change their affilations. While this is not prohibited under our laws, this
promotes divisiveness among the leaders in the community.

This bill seeks to remedy that by providing sanctions against any member of a
national political party who changes party affiliation after being nominated by the political
party otherwise known as political tumcoats.

To further empower and professionalize political parties in the country, this proposed
measure exempts voluntary contributions from any person, subject to a certain cap, from the
payment of donor's tax. Likewise, there is hereby created a State Subsidy Fund to augment
‘the operating funds of accredited national political parties.

To promote transparency and performance of mandate free from vested interest, this
bill punishes the giving of voluntary contributions beyond the allowable limits set by law. This
is not an unreasonable prohibition given its intent. Likewise, the State Subsidy Fund may be
used instead for campaign expenditures and party development.

In view of the foregoing, immediate passage of this bill is eamnestly requested

“Ih

MAXIMO B. RODRIGUEZ, JR.



SEVENTEENTH CONGRESS
REPUBLIC OF THE PHILIPPINES
First Regular Session

HOUSE OF REPRESENTATIVES

Introduced by Representative Maximo B. Rodriguez, Jr.

House Bill No.

AN ACT
STRENGTHENING THE POLITICAL PARTY SYSTEM AND APPROPRIATING FUNDS
THEREFOR

Be it enacted by the Senate and House of Representatives of the Philippines in Congress
assembled,

CHAPTER 1
DECLARATION OF POLICY, PURPOSES AND COVERAGE

SECTION 1. Title — This Act shall be known as “The Political Party Development Act of
2016”.

SEC. 2, Declaration of Policy ~ Itis 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;

(b) Provide financial subsidies to political parties, to augment their expenditures for
campaign purposes and for party development;

(c) Promote party loyalty and discipline; and
(d) 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 Commission on Elections

SEC. 5. Definition of Terms. — As used in this Act:
(a) Accredited political party refers to a political party qualified to receive subsidy for party

development and campaign purposes, accredited for this purpose by the Commission on
Elections based on a set of criteria provided for under this Act;


(b) 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 Commission on Elections;

(c) Commission refers to the Commission on Elections;

(d) 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;

(e) 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 the market rates prevailing in a particular area;

(f) COA refers to the Commission on Audit;

(g) 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 destinations of party development and campaign monies given to
them as their share in the State Subsidy Fund established under this Act;

(h) Donor refers to any person, natural or juridical, who contributes money, property or any
other form of material contribution to a candidate, political party, aggrupation or coalition
thereof,

(i) 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;

(j) Fund refers to the State Subsidy Fund established under this Act;

(k) Member of a party refers to a natural person of good standing in a political party who
complies with the requirements of party membership, including the payment of membership
dues;

(|) National political party refers to a political party or an organized group of persons duly
registered with the Commission, whose constituency is effectively spread across the
geographical territory of all or a majority of the administrative regions of the Philippines,
pursuing or advocating platform, principles and policies for the general conduct of
government and which, as the most immediate means of securing their adoption and
implementation, regularly nominates and supports its members as candidates for public
office;


(m) Political opportunism refers to 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 by-laws;

(n) 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;

(0) Political turncoatism refers to the change of political party affiliation by a party member
a period of one year before or after any national elections. Any party member may
legitimately change party affiliation only on the second year of a three-year term. Provided,
That political turncoatism 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;

(p) State Subsidy Fund refers to the fund for party development and campaign activities of
accredited political parties under this Act;

(q) Voluntary contributions refer to the contributions to candidates of political parties,
aggrupations or coalitions thereof from persons, natural or juridical, allowed under existing
laws

CHAPTER II
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 by-laws, 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 thirty
(30) days from the date it is submitted for decision.

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.

‘Once a political party is registered with the Commission It shall acquire legal
personality with powers essential and necessary to carry out its mandate and obligation
under this law and other related electoral laws. This power shall include the power to enter
into contracts, to acquire properties through purchase, lease, and other modes of
acquisitions, to open bank accounts under its name, and to employ staff and personnel in
relation to its campaign and party development activities

SEC. 7. Policy Agenda and Program of Governance. — Political parties are mandated to
craft a clear policy agenda and program of governance consistent with 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 approved by the party, and upon compliance

4


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 governing the system on the nomination and selection of
candidates not later than 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 to
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 of
a 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.

Every political party must hold conventions to nominate their official candidates not
earlier than fifteen (15) days before the filing of candidacy and shall 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 political party, except in cases of
aggrupations or coalitions thereof. Nominations made in violation 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 and By-Laws; 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:

(a) Up to One Million Pesos (P41 ,000,000.00) from a natural person and up to Ten Million
Pesos (P10,000,000.00) from a juridical person is 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. 7168,
otherwise known as “The Synchronized National and Local Elections Act” shall be exempt
from the donor's tax.

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

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 @ corresponding receipt to the

5)


contributor on the amount deposited, and shall submit to the Commission a statement of
account of every political party with deposits.

The Commission shall cause the publication of the account of all political parties in
any newspaper of general circulation within a reasonable time as it may determine.

SEC. 13. Penalties for Political Turncoatism. — Political turncoats shall be deemed to
have forfeited their elective office if they change their political party affiliation one (1) year
before and one (1) year after any national elections. The following penalties shall thus be
imposed on persons found to have committed this violation

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

(b) Disqualification 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;

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

(d) Refund of any and all amounts received from one’s former political party, plus a
twenty-five percent (25%) surcharge thereon.

Sec. 14. Petition for Disqualification. — Any citizen of voting age or any candidate, political
party, aggrupation or coalition thereof may file with the Commission, upon 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.

SEC. 15. Authorized Expenses of 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 Ill
STATE SUBSIDY FUND

SEC. 16, 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 political
parties. The fund shall be used directly and exclusively for the following purposes:

(a) Party development;
(b) Campaign expenditures, and
(c) Information dissemination and monitoring activities of the Commission

SEC. 17. 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:

(a) Party administration, recruitment and civic education;

(b) Research and policy development;

(c) Education and training of members;

(d) Institution building and constituent outreach program; and

(e) Other reasonable logistical and operational expenses that are essential in
strengthening the party.


SEC.18, Allowable Campaign Expenditures. - The accredited political parties are
authorized to use the subsidy given to them only for the following campaign activities:

(a) Operating expenses of the party which may include the hiring of personnel,
professional secretariat, seting up of headquarters and other relevant electoral
expenditures;

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

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

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

(e) Other expenditures as allowed under Section 102 on Lawful Expenditures of the
Omnibus Election Code.

SEC. 19. Accreditation. — A political party eligible in accordance with Section 20 hereof,
and which desires to be entitled to the rights and privileges as recipient 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. 20. 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;

(b) 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

(c) 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. 21. Effects of Accreditation. ~ A duly accredited political party shall be entitled to the
rights and privileges accorded under this Act. Likewise, the accredited political party shall be
subject to the regulations set forth in this Act and its implementing rules as prescribed by the
Commission

SEC. 22. 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 voters’
education;

(b) Thirty percent (30%) of the fund shali 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

(c) Sixty-five percent (65%) 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 concerned party has raised an amount equal to its share in

i


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:
Provided, 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. 23. Schedule of Releases from the Fund. — For purposes of this Act, all releases
from the State Subsidy Fund during a non-election 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.

SEC. 24, 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.
DISCLOSURES AND PERFORMANCE MONITORING

SEC. 25. 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 to inspection by the COA.

SEC. 26. Party Ethics. - Accredited political parties shall institute internal control
mechanisms to promote accountability and transparency. Accredited political parties shall
likewise develop and enforce an intemal 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 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. 27. 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 to the Commission and make a public
disclosure of all contributions as well as expenditures incurred for the use of the State
Subsidy Fund thirty (30) 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. 28. Other Reports. - The following shall be reported by the accredited political
parties and their candidates:

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


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

nd

(d) Detailed breakdown of expenditures for the party development activities charged
against the State Subsidy Fund. The financial report covering 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. 29. 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 of 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. 30. 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 non-governmental
organizations, and government agencies, an integrated political party development and
campaign subsidy performance monitoring and reporting system. The performance and
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 implementation 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. 31. 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. 32, Prohibited Acts. - The following acts shall be prohibited:

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

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

(c) 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

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

SEC. 33. 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
(12) years or a fine ranging from One Hundred Thousand Pesos (P100,000.00) to Five
Hundred Thousand Pesos (P500,000.00), or both, One shall likewise be disqualified to hold

9


public office. Any political party that violates any provision of this Act shall pay a fine of not
less than Five Hundred Thousand Pesos (P500,000.00) 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.

These penalties shall be applicable only to the punishable acts as stated in Section 32
and not to political turncoatism.

SEC. 34, Lead Agency. ~ The Commission is hereby mandated to administer and enforce
the provisions of this Act.

For this purpose, there is hereby created, within the Commission, a Political Party and
Campaign Finance Department, which shall perform the following functions:

1. Assist the Commission in the registration and accreditation of political parties as
provided in this Act and in other related laws;

2. Receive, compile and safekeep all records and documents pertaining to political
parties, including their organizational and financial reports;

3. Conduct examination, investigation and audit activities to determine compliance with
the requirements of applicable laws and rules and to recommend appropriate action/s
to the Commission

4, Perform such other functions as may be found necessary by the Commission.

SEC. 35. Rules and Regulations. — Within thirty (30) days from its effectivity, the
Commission shall promulgate the necessary rules and regulations to effectively implement
the provisions of this Act, including those that shall provide for the proper organization of the
Commission, in view of the creation of the Political Party and Campaign Finance
Department

SEC. 36. Appropriations. - The amount necessary for the implementation of the provisions
of this Act shall be included in the annual General Appropriations Act.

SEC. 37. Applicability of Batas Pambansa Blg. 881. — The provisions of Batas
Pambansa Big. 881, as amended, otherwise known as the “Omnibus Election Code of the
Philippines", and other election laws not inconsistent with this Act shall apply suppletorily.

SEC. 38. Separability Clause. — If 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. 39. 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.

SEC. 40. Effectivity Clause. - This Act shall take effect fifteen (15) days after its
publication in at least two (2) national newspapers of general circulation.

Approved,