Campaign finance relates to resources, monetary or in-kind, obtained and used by political parties and candidates to win voter support at the campaign stage. Regulation of campaign finance encompasses rules on the following components: contributions, expenditures, disclosures and audit, and enforcement and sanctions. Effective regulation contributes to the integrity of democratic principles and institutions, and guards against corruption.
In Asia, challenges in regulation include the absence of comprehensive rules, intersections between business and politics, and rules that discourage competition. Challenges in Southeast Asia point to legislative shortcomings, particularly to mitigate undue influence of business interests, and weak regulatory oversight.
Campaign finance regulation in the Philippines faces several issues, including the absence of rules on contribution limits, abuse of state resources benefiting incumbents, unrealistic expenditure limits vis-a-vis the cost of lawful election propaganda, legal loophole that allow premature campaigning, and weak audit capacity and lenient enforcement of rules by the implementing agency.
In 2025, the Philippines scored 32 out of 100 and ranked 120 out of 182 countries in the Corruption Perceptions Index, indicating a high level of perceived corruption and serious corruption issues in the public sector. This finding is unsurprising considering the alleged misappropriation of public funds allocated for flood control projects intended to mitigate typhoon-induced disasters. The controversy led to the declaration of the anti-political dynasty and party-list system reforms as priority legislative measures, which have yet to be enacted as of date of publication. Campaign finance reforms, however, have lagged behind in the legislative agenda. Meanwhile, two campaign finance issues remain in the background despite their close link to the corruption controversy.
Based on Section 13 of Republic Act 9369, which incidentally bears the title of “Official Ballot” as it regulates the design and printing of ballots, any person who files a certificate of candidacy (CoC) within the period set by the Commission on Elections (Comelec) shall only be considered as a candidate at the start of the campaign period. The Supreme Court, in Penera v. Comelec (2009), held that there is no “candidate” before the start of the campaign period pursuant to RA 9369, and acts committed before said period are considered free exercise of expression, “even if constituting election campaign or partisan political activities”.
Prior to the enactment of RA 9369 and Penera, persons were considered candidates upon the filing of CoC. Candidates are prohibited to engage in premature campaigning—election campaign or partisan political activity before the start of the campaign period—under Section 80 of the Omnibus Election Code (OEC). Violation of this rule may lead to the disqualification of a candidate and constitutes an election offense. In practice, aspirants filed their CoCs near the deadline as the campaign period starts immediately thereafter. As they were not considered as candidates, aspirants engaged in activities that resemble campaigning under the protection of free expression.
The law, as currently interpreted in Penera, however has effectively rendered premature campaigning legal and allowed corresponding expenditures over an extended pre-campaign period—four months for national positions and five months for local positions—due to the earlier schedule for the filing of CoCs. Expenditures, such as television advertisements announcing a person’s aspirations for public office, are neither classified nor computed as campaign expenditures, but are treated as expenditures in the exercise of the freedom of expression, applying the Supreme Court’s interpretation.
These expenditures are substantial. For example, in the 2025 elections, expenditures from the date of filing of CoCs to year-end—around one to two months before the start of the campaign period—were calculated at PHP6 Billion (USD100.81 Million) before legally mandated discounts. In the 2019 elections, expenditures of aspirants for a Senate seat generally exceeded half of the total net worth of aspirants, indicating substantial amounts of undeclared wealth or private donations.
This year, a Senator raised the same argument—he is not a candidate at the time of receipt of contributions—to justify the non-declaration of PHP75 Million (USD1.26 Million) from three contributors, despite his clear statements that the contributions were earmarked and utilized for his bid for a Senatorial seat.
The Penera decision reflects a heavy reliance on the temporal aspect of regulation when it upheld that there is no candidate prior to the campaign period and acts committed before said period are in the lawful exercise of free expression, even when they resemble election campaigning or partisan political activity. This interpretation effectively placed said acts outside the scope of campaign finance regulation and gives limited weight to the functional aspect, which considers the purpose of such acts. As an alternative approach, the provisions of the OEC may be read to harmonize both aspects, since it defines the campaign period while likewise specifying election campaign and partisan political activity as acts designed to promote the election or defeat of a particular candidate. The dissenting opinion of J. Chico-Nazario in Penera championed this view by examining whether the complained act was for the purpose of soliciting votes for election, and concluded that same act may result to the disqualification of a candidate when the campaign period begins.
Suffice it to state at this point that the Penera doctrine has constrained the effective regulation of campaign finance by leaving a wide gap in addressing the undue influence of business interests. Two pathways remain as plausible remedies. First, judicial recourse may be pursued to re-examine the doctrine, subject to the requirements of locus standi. Second, following the prevailing interpretation, legislative action may be undertaken by amending Section 13 of RA 9369, a reform that may be incorporated into the anti-political dynasty priority measure, which likewise seeks to define the term “candidate”.
It recently came to light that in the 2022 elections, another Senator accepted contributions amounting to PHP30 Million (USD 504 Thousand) from a natural person, who served as President of a juridical entity engaged in government projects involving the construction or maintenance of flood control structures. Section 95(c) of the OEC prohibits natural and juridical persons, who hold contracts to supply the government with goods or services or to perform construction or other works, from directly or indirectly making contributions for partisan political activity. Following its investigation, Comelec reasoned that it could not pierce the corporate veil without clear evidence of fraud or bad faith, and consequently treated the contribution as having been made in the contributor’s personal capacity. This conclusion was reached notwithstanding that the contributor served as President of the juridical entity and owned 99.33% of its shares as of 2025.
The doctrine of piercing the veil of corporate entity, as an equitable remedy, allows courts to disregard the juridical personality of a corporation to reach assets of its shareholders in satisfaction of claims against the former. It is applied in three circumstances: 1) when the juridical entity is used as a vehicle for the evasion of an existing obligation, 2) when the juridical entity is used to protect fraud, and 3) when the juridical entity is a mere alter ego or business conduit of a person or another entity. In the present context, the doctrine offers useful guidance in assessing the relationship between the contributor and juridical entity, particularly where indicia of control are evident.
More importantly, however, Section 95(c) prohibits the indirect perpetration of the prohibited act. The provision reflects the legal maxim quando aliquid prohibetur ex directo prohibetur et per obliquum—what cannot be done directly cannot be done indirectly. Considering the shares and position of the contributor in the juridical entity, it is reasonable to treat the latter as an alter ego or business conduit of the former. In such circumstances, the burden shifts to the contributor to refute the conclusion. Absent such rebuttal, the contribution may be properly characterized as an indirect prohibited contribution for partisan political activity under Section 95(c) of the OEC.
Further analysis of the impact of a final ruling to campaign finance regulation must await resolution by the Supreme Court, before which the case is currently pending.
The high level of perceived corruption and serious corruption issues in the Philippines underscore the continuing need for effective campaign finance regulation. Yet legislative action in this area has tended to reflect political interests while remaining slow to address key regulatory gaps. The implementation of existing rules is likewise constrained by interpretative “legal loopholes”, particularly in the definition of a candidate and its consequences, as well as in the regulation of prohibited contributions. While this piece has focused on closing these “legal loopholes” by proposing alternative arguments and identifying pathways, comprehensive reforms in campaign finance regulation are essential to meaningfully safeguard against political corruption.
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