Campaign contributions by corporations are absolutely illegal

The response to my query about the legality and ethics of San Miguel Corporation's lending or renting of its planes and helicopters to Grace Poe in the current election campaign ("Offputting commercials in GMA debate broadcast," Times, 25 February 2015) was swift and unequivocal.

I have learned and I have been told that both the Corporation Code of the Philippines and the Omnibus Election Code declare that political contributions by corporations are absolutely illegal.

SEC legal opinion

According to my colleague and fellow Times columnist Emeterio Perez, the Securities and Exchange Commission (SEC) has already issued its legal opinion on the matter of political contributions by companies.

On July 27,2015, the SEC declared that political donations by companies are illegal. It quoted the governing provisions of both the Corporation Code and the Omnibus Election Code to back its legal opinion.

Citing the pertinent provisions of the Corporation Code, the SEC said: "There is an absolute prohibition for corporations, both foreign and domestic, from giving donations to any political party, candidate or for the purpose of any partisan political activity."

In Section 95 of the Omnibus Election Code of the Philippines, it explicitly warns corporations against giving political contributions.

MOA of Comelec and SEC

On October 19, 2015, the Commission on Elections (Comelec) and the SEC signed a memorandum of agreement to strengthen their monitoring of campaign contributions, especially from private companies, in the 2016 elections.

The agreement, signed by Comelec Chairman Juan Andres Bautista and SEC Chairperson Teresita Herbosa, paves the way for the sharing of information in order to determine illegal contributions by SEC-registered firms.

"Under the MOA, the Comelec will provide the SEC with information on corporations and other SEC-registered entity that have engaged in partisan political activities."

For its part, the SEC will provide information on SEC-registered companies that have been granted secondary permits to check if they violated the Omnibus Election Code (OEC).

"With this MOA, we can request from the Comelec any document that a candidate may have filed that would give or show a list of his donors or contributors," Herbosa said.

Our election laws also prohibit any person from soliciting or receiving any contribution from any of the identified persons or entities.

A violation of the provisions of the election code is considered an election offense, which carries a penalty of one to six years imprisonment, removal of the right to vote, and disqualification from public office.

Seemingly conflicting provisions

In a report to clients by Pricewaterhouse Coopers dated 17 September 2015, it noted:

"Under Section 36 (9) of the Corporation Code of the Philippines (CCP), corporations are allowed to make reasonable donations, including those for the public welfare or for hospital, charitable, cultural, scientific, civic, or for similar purposes, provided that no corporation, domestic or foreign, shall give donations in aid of any political party or candidate or for purposes of partisan political activity�.

"However, under Section 95 of the Omnibus Election Code (OEC), only certain corporations or juridical entities are prohibited to make such donations. These include public or private financial institutions, and juridical persons operating a public utility or in possession of or exploiting any natural resources of the nation."

Is there a conflict between these two laws? If yes, which provision would prevail?

In its legal opinion of July 2015, the SEC clarified that the provision of the CCP was not repealed or amended by Section 95 of the OEC. There is no conflict between the two provisions and they can be harmonized.

Even so, corporate lawyers can argue that a corporation may still donate now without violating the Corporation Code provision. In a 2009 Supreme Court (SC) ruling, the SC held that a person who files a certificate of candidacy is not a candidate until the start of the campaign period.

So, if a corporation is planning to fund the infomercial of a political aspirant, it can donate before the campaign period starts without violating the CCP provision. This explains why there was so much political campaign advertising on TV and radio long before the start of the campaign period.

PCIJ and William Gatchalian

In a three-part series on corporate campaign donations in the 2013 elections, the Philippine Center for Investigative Journalism (PCIJ) reported that top executives of firms barred from making campaign donations funded Senate bets and parties in the elections.

One prime example cited by PCIJ was plastics king William T. Gatchalian, a businessman who learned to invest in politics as well during the campaign for the presidency of former president Joseph Estrada in 1998.

During the 2013 election campaign, Gatchalian donated P20.9 million to the opposition coalition, the United Nationalist Alliance (UNA). He also donated P10 million to Estrada's party, Pwersa ng Masang Pilipino (PMP), which was part of UNA.

Now, Gatchalian is backing Grace Poe's candidacy for president.

SMC lending of aircraft covered by ban

According to lawyers, San Miguel's lending of its aircraft to Ms. Poe's campaign falls under the prohibition of our laws.

The separate issue of stockholders' complaints against SMC's taking a partisan interest in the elections can be the subject of a formal complaint with the SEC.

San Miguel has not commented on the point I raised that the company must maintain a strict distinction between Mr. Ramon Ang and the corporation, because "their interests, political or otherwise, are not identical." Mr. Ang is free to donate his own money and assets to Ms. Poe's campaign, but not those of SMC.

Grace Poe tried to defend her use of SMC air assets by saying that (1) others, including president Aquino have also availed themselves of these assets of San Miguel; (2) she pays for the aviation fuel in her campaign trips; and (3) she gives the pilots a tip after every campaign sortie.

This is incredibly naA�ve and laughable. I feel ashamed for our country that she is being considered (at least for now) as a serious candidate for the presidency, and that many are enabling her to flout the law and the Constitution via campaign donations.

Plutocrats and oligarchs cast a menacing shadow on the 2016 elections, and they could destroy our republic if they are not stopped.

Source: Manila time

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