Citizens’ Battle Against Corruption motorcade (political campaign in the Party-list election of the 2022 Philippine House of Representatives elections) in Barangay Poblacion, Baliuag | Photo by FBenjr via Wikimedia Commons
The professed and declared objective of any candidate is to help and improve the situation of their constituencies. The personal benefits he knows and that may have mainly propelled him to run for office are either subdued or intentionally buried in his public pronouncements.
Winning in the election is the ultimate objective and reward of campaigning for that public office. Losing in the election, however, has its benefits while necessarily resulting in frustration. It also has its financial benefits. The losing candidates become publicly known, which can be a significant capital in the next election.
Like Archimedes, who was overcome with ecstasy when he discovered the idea of buoyancy, an acquaintance of mine came up with what he considered an excellent idea to earn money. He found the idea after listening to a political debate. He will be campaigning for public office, maybe a national office, in the Philippines after the May 9, 2022 election, even if he knows that he will probably not win. He plans to start campaigning for some candidates now. He may earn some extra bucks from the candidate’s political party or group or the candidate himself. That way, he will meet more prospective voters and be known. He will have better chances of getting more donations for his future campaign by being publicly known.
It may turn out to be a financially profitable venture, win or lose. Chances are it will.
Part of campaign contributions given to support a candidate’s pursuit of public office in the Philippines may ultimately redound to the personal benefit of the candidate, win or lose.
In the Revenue Memorandum Circular (RMC) No. 22-2022 issued on February 21, 2022, the Bureau of Internal Revenue (BIR) reminded individual candidates, political parties/party-list groups, and campaign contributors about complying with the requirement under prior BIR regulations, including registration with the BIR, issue of official receipts, and withholding taxes. I will deal only with the candidates as they may directly reap the financial benefits of the campaign donations entrusted to them.
“Winning in the election is the ultimate objective and reward of campaigning for that public office. Losing in the election, however, has its benefits while necessarily resulting in frustration. It also has its financial benefits.”
Such regulations require individual candidates to submit (a) the required BIR registration form, (b) any identification issued by an authorized government body, and (c) Certificate of Candidacy from the Commission on Elections (COMELEC).
My acquaintance is more concerned with what he will get after the election, not so much about the requirements of registration and the others, including reporting. He understands that he can only financially benefit if he complies with the legal requirements.
How can he personally benefit from the proceeds of the campaign contributions? Per the cited RMC, the campaign contributions are not considered income of the candidate for income tax purposes of the candidate because they were given “not for the personal expenditure/enrichment of the concerned candidate, but to utilize such contributions for his/her campaign.” It follows, thus, that if the contributions are spent before and after the campaign period, they are not tax-exempt. They are the candidate’s income that must be reported and for which the candidate must pay the corresponding income tax.
It is where the candidate, winner or loser, personally benefits. Several years back, a candidate elected to office ordered the return of surplus campaign contributions to the donors. In response to questioning as reported in a daily newspaper in the Philippines, a candidate who lost in the 2016 elections admitted that he decided to keep (instead of returning to the donors) the excess campaign funds of 50 million pesos, reported it as income and paid the BIR 9.7 million pesos in income taxes.
“Would it not be better to distribute surplus campaign donations to non-profits promoting and advancing government social functions? Or, maybe make them part of the public funds for public benefits?”
Apparently, there is no rule limiting the candidate to use the surplus funds, minus the taxes paid for it, for whatever purpose(s) he decides. It is no longer campaign funds treated as personal income after the campaign period.
In this regard, it is perhaps relevant as a way of illustration/comparison that the Federal Election Campaign Act (FECA) of the United States, as cited in the Congressional Research Service’s “Campaign Contributions and the Ethics of Elected Officials: Regulation Under Federal Law” (July 2016), prohibits converting campaign funds for personal use. The following are expenses for personal use: “home mortgage, rent, or utility payments; clothing purchases; noncampaign-related car expenses; country club membership; vacation; household food; tuition payments; admission to sporting events, concerts, theater, or other entertainment not associated with the campaign; and health club fees.” These expenses are undoubtedly personal.
Would it not be better to distribute surplus campaign donations to non-profits promoting and advancing government social functions? Or, maybe make them part of the public funds for public benefits?
Until there is a change in the rules, my acquaintance or any other prospective candidate with financial profit in mind may seriously consider running. The chances of winning is a secondary consideration. It may be a reason why specific individuals have become perennial candidates.
ABOUT THE AUTHOR: Manuel B. Quintal, ESQ., has practices law in New York since 1989. He is active in the community as a member, an officer, or a legal adviser of various professional, business, and not-for-profit organizations. He was a columnist of Newstar Philippines, an English language weekly newspaper published in New York, from 2006-2009. He was Executive Editor of International Tribune, an English language weekly newspaper for the Asian community, based in New York, from 2010 to 2012. He is admitted to practice law in the Philippines and New York State. He has graduate degrees in Political Science and an LL.M. major in International Law.