Senate bets' expense reports don't match ad sums

By Karol Ilagan, Philippine Center for Investigative Journalism

Posted at Jul 18 2013 03:00 AM | Updated as of Jul 18 2013 11:00 AM

P2.28 billion spent in May 2013 elections

(First of a 2-part report)

THERE WERE late and incomplete filings, but the Commission on Elections (Comelec) is still considering the submission of election expenditure and contribution reports for the recent polls a historic high. According to Commissioner Christian Robert S. Lim, the one-page reports that used to be common in past elections have now become the exception.

But Comelec isn’t about to celebrate just yet. While the quantity or volume of the Statement of Election Contributions and Expenditures (SOCE) that the Commission received last month was indeed overwhelming, the quality or the truthfulness, accuracy, and compliance by content and form of the reports is another matter altogether.

A PCIJ review of two sets of documents submitted to the poll body – Annex H-1 of the SOCEs and advertising contracts – reveals incomparable amounts. Of those who purchased ads during the campaign, majority or 19 of the 28 senatorial candidates and four of the seven political parties reported bigger values in their SOCEs compared to the figures derived from the advertising contracts themselves. The differences in amounts ranged from a few hundreds of thousands of pesos to tens of millions of pesos.

At the same time, three winning senatorial candidates, five losing candidates, and three political parties reported a lower amount in their SOCE than the total contract cost derived from the advertising contracts submitted by media entities to Comelec.

Lim says that at core, compliance with campaign-finance rules is about transparency and accountability in elections. “You’re running for a public position, it’s a question of accountability,” he points out. “Where did you get the money? How did you spend it?”

Lim heads the poll body’s Campaign Finance Unit (CFU), which will be conducting an audit of the SOCEs by crosschecking these reports with other sets of information in the next several months. He remarks, “There’s a lot of honesty, integrity (involved), if you are able to be truthful, if you are able to comply with the law.”

Total spend: P2.28B

According to the SOCEs filed by the 33 candidates for senator and the 12 political parties that nominated them, a total of P2.28 billion was spent on the campaign, 90 percent of which went to political advertising on television, radio, newspapers, and online media during the official 90-day campaign period.

Overall, by the reckoning of candidates and parties, they spent P2.04 billion on political ads or more than P22 million daily on average from February 12 to May 11, 2013.

High spending on political advertisements is anticipated given that laws on campaign finance were precisely made to regulate and monitor it. Yet whether or not the figures declared by candidates and parties in their SOCE and the amounts enrolled in the advertising documents submitted by media entities and contractors match is a crucial point.

“We are monitoring spending because the idea there is, there’s a cap on spending,” says Comelec spokesperson James Arthur B. Jimenez. “(We) need to know whether or not the candidate respects that cap because a large chunk of campaign spending goes to media buys.”

Jimenez is referring to Republic Act No. 7166 or the Synchronized Elections Law, which authorizes a senatorial candidate nominated by a political party to spend up to a maximum of P3 per voter only or a total of P158,237,583 for the 52,745,861 registered voters in the 2013 elections. Both an independent candidate for senator and a political party, according to the law, may spend P5 per voter or a total of P263,729,305.

This doesn’t necessarily mean though that candidates who are able to raise such an amount may then spend it entirely on advertising. To ensure equal access among all candidates, another law, the Fair Election Act (Republic Act No. 9006), limits the airtime and print space that candidates and parties may buy during the campaign period.

The same law also requires all media entities to submit a copy of its advertising contracts, broadcast logs, and certificates of performance to Comelec. An ad contract, in particular, must be submitted within five days after its signing, and must be supported with a written acceptance of the candidate in case the ads were donated.

For this series, PCIJ secured a copy of these advertising documents from the Education and Information Department of the Commission (Comelec EID), as well as the SOCE submitted by candidates and parties to the Comelec CFU. (R.A. No. 7166 also requires each candidate and political party that participated in the polls to file with the Commission the full, true, and itemized SOCE within 30 days after Election Day. Failure to do so would mean they would not be allowed to take their oath of office.)

Contract details

A fully accomplished advertising contract should be able to provide details such as the advertiser or who paid for the ad, for whom the ad was bought or the beneficiary candidate, when the contract or booking order was made, the media entity, advertising agency, start and end of publication, number of ad spots and duration, medium, contract cost, package/net cost, tax to be withheld, and material to be used in the ad.

Meanwhile, the Summary Report of Expenditures or Annex H-1 of the SOCE, if it is filled out properly, should indicate the amount that a candidate or party spent for “Newspaper, radio, TV & other advertisements to promote the candidacy, including website/internet ad placements.”

All these mean the Comelec CFU will be plowing through mountains of data in the coming months. The submissions made by senatorial candidates and their political parties that PCIJ photocopied alone consumed over 25 reams of bond paper. At 500 leaves of paper per ream, that amounts to at least 12,500 pages. This has yet to include many more reams of paper used for reproducing the advertising contracts and other records that media entities were required to submit to Comelec.

In the PCIJ review, Samson S. Alcantara of the Social Justice Society emerged as the only candidate whose ad spending is the same in both his SOCE and ad contract: a black-and-white print advertisement worth P13,440.

No ad expense

Four candidates (Greco B. Belgica, Marwil N. Llasos, John Carlos ‘JC’ G. de los Reyes, and Christian M. Señeres) and three parties (Akbayan, Partido Demokratiko Pilipino-Lakas ng Bayan, and Social Justice Society) said they did not spend any money on political advertisements. This was validated by the absence of ad contracts made in their name.

PCIJ also found no contracts for the Democratic Party of the Philippines and the Makabayang Koalisyon ng Mamamayan, two parties that had not submitted their SOCEs as of June 29, 2013.

In the meantime, the SOCEs filed by three newly elected senators enrolled smaller spending on ads, compared to the amounts in the advertising contracts drawn in their favor:

- Alan Peter S. Cayetano, P129 million in SOCE vs. P134.2 million in ad contracts;
- Joseph Victor ‘JV’ G. Ejercito, P133.3 million vs. P134.2 million; and
- Antonio ‘Sonny’ F. Trillanes IV, P27.3 million vs. P28.8 million.

Similarly, five candidates who did not win reported smaller ad spending in their SOCE, compared with the values derived from ad contracts:
- Juan ‘Jack’ C. Ponce Enrile Jr., P135.9 million in SOCE vs. P213.5 million in ad contracts;
- Edward S. Hagedorn, P20 million vs. P36 million;
- Ma. Ana Consuelo ‘Jamby’ A.S. Madrigal, P26 million vs. P73 million;
- Ramon ‘Jun’ Magsaysay Jr., P57.2 million vs. P94 million; and
- Eduardo ‘Brother Eddie’ C. Villanueva, declared zero ad spending vs. P68,584.32.

Interestingly, if the amount derived from Enrile’s advertising contracts were to be proven as the amount he actually spent, he would be over the authorized expenditure limit by about P55 million.

Three political parties also declared smaller ad spending in their SOCE than the amounts derived from their ad contracts:
- Laban ng Demokratikong Pilipino (LDP), P33 million in SOCE vs. P61 million in ad contracts;
- Nationalist People’s Coalition (NPC), P29.7 million vs. P47.4 million; and
- United Nationalist Alliance (UNA), P55 million vs. P59.6 million.

The contract costs listed in this story are the amounts recorded under the name of a certain candidate whenever he/she or his/her donor pays for an ad. Excluded are those paid for by the political party that nominated the candidate.

If a party bought an ad for its nominee, the amount is counted against the party and not the candidate. This is because parties are also allowed to incur their own, separate election expenses and are subject to airtime and spending limits provided in law.

Unclear if gross

Not all the ad contracts submitted to Comelec were clear if the amounts were gross amounts or net of taxes, however. PCIJ encoded the gross amount (“contract cost”) when this appeared in the documents, inclusive of the 12-percent value-added tax and the five-percent withholding tax. For documents without a breakdown of gross and net costs of the ads, PCIJ encoded the amount enrolled in the contract.

In the cases of Cayetano, Ejercito, Enrile, Hagedorn, Madrigal, Magsaysay, Villanueva, LDP, and NPC, both the gross and net amounts of the ads booked in their favor – according to advertising contracts – were over and above the ad spending they declared in their respective SOCEs.

Cayetano did not specify the amount he spent for ads in Annex H-1 of his SOCE. PCIJ computed his ad expenditure from the breakdown of expenses he provided in a separate document in his statement.

Trillanes and UNA, meanwhile, reported amounts that were lower than the contract cost. These ended up higher, however, when compared with the package or net cost derived from the ad contracts.

In addition, data from Nielsen media showed that the indicative cost of TV ads aired in favor of Cayetano, Trillanes, Enrile, Hagedorn, Magsaysay, and Villanueva were bigger than the ad spending they declared in their SOCEs.

Who benefits?

Nielsen’s monitoring, however, counts an advertisement to a candidate or party if such candidate or party appears in the ad, regardless of who actually paid for the ad.

For instance, NPC does not appear in Nielsen’s monitoring reports, but advertising contracts showed that the party bought ads for Enrile and partymate Lorna Regina ‘Loren’ B. Legarda.

PCIJ’s review did not find contracts showing a political party donating advertisements to Cayetano, Trillanes, Hagedorn, and Magsaysay.

Instead, their ads were either paid by them or by their donors, according to the contracts.

Enrile, Hagedorn, Madrigal, Magsaysay, and UNA have not responded to PCIJ’s letter-requests as of this writing.

Queried if he would be aware of possible reasons that could explain the difference in amounts, Ejercito simply replied that he has “submitted my SOCE to the best of my knowledge and abilities, through the help of my staff, similar to what I have done with my Statements of Assets,
Liabilities, and Net (W)orth.”

Discounts, rate cards

Trillanes meanwhile said that the amounts indicated in the SOCE he filed were “based on the Official Receipts issued by the media companies evidencing actual payments made for my political advertisements.”

He added that “discounts from the contract prices were given in my favor through the efforts of the ad agencies and/or media buyers who handled our account,” which he said could be one reason for the discrepancy between the amounts in his SOCE and those in documents submitted by media agencies.

“Some networks also reflected the rate stated in their rate cards (with the discounts not yet deducted) in the gross amounts they reported to the Comelec EID,” said Trillanes. “Likewise, my SOCE reflects the net amount which I paid for the political advertisements, with the withholding taxes and agency fees and/or commissions, reported separately.”

PCIJ then asked Trillanes what type of discounts were given and whether these discounts are different from the 30-, 20-, and 10-percent discounts that TV and radio networks and print publications should provide as per Comelec rules. Comelec’s Jimenez, for one, says that such freebies or "free time" should also be reported as contribution. Trillanes has yet to respond to PCIJ’s follow-up query.

Janet Vicente of the NPC secretariat, for her part, said that the amount the party declared in its SOCE reflects the entire and actual ads it booked during the campaign. Vicente, who prepared the NPC’s SOCE, also confirmed that the party spent P29 million in political ads for the benefit of candidate Enrile. She said NPC donated P1.8 million, which was spent on ads, to Legarda.

Bigger SOCE amounts

The discrepancies in figures also went the other way, however: higher amounts declared in SOCEs compared to those that appeared in advertising contracts. Among the winning senatorial candidates, those who wound up with such a discrepancy were:

- Juan Edgardo ‘Sonny’ M. Angara, P109.6 million in SOCE vs. P85.8 million in ad contracts;
- Paolo Benigno ‘Bam’ A. Aquino IV, P124.2 million vs. P109.9 million;
- Ma. Lourdes Nancy S. Binay, P120.4 million vs. P114.2 million;
- Francis Joseph ‘Chiz’ G. Escudero, P97.7 million vs. P48.3 million;
- Gregorio ‘Gringo’ B. Honasan II, P15 million vs. P10.8 million;
- Lorna Regina ‘Loren’ B. Legarda, P79 million vs. P77.6 million;
- Mary Grace Poe-Llamanzares, P117.7 million vs. P99.1 million;
- Aquilino Martin ‘Koko’ L. Pimentel, P73.6 million vs. P62.1 million; and
- Cynthia A. Villar, P125.5 million vs. P97.6 million.

Of the candidates who failed in their senatorial bids, those who reported higher ad spending in their SOCEs than the figures reflected by ad contracts were:

- Ana Theresia ‘Risa’ Hontiveros-Baraquel, P86.6 million in SOCE vs. P69.4 million in ad contracts;
- Teodoro ‘Teddy’ A. Casiño, P11.3 million vs. P10.5 million;
- Margarita ‘Tingting’ R. Cojuangco, P5 million vs. zero;
- Baldomero ‘Bal’ C. Falcone, P26,948 vs. zero;
- Richard ‘Dick’ J. Gordon, P4.8 million vs. P2.3 million;
- Ernesto M. Maceda, P29.8 million vs. P27.8 million;
- Ma. Milagros ‘Mitos’ H. Magsaysay, P11.8 million vs. P10.7 million;
- Ramon E. Montaño, P593,000 vs. zero;
- Ricardo ‘Dick’ L. Penson, P16.4 million vs. P7.7 million; and
- Juan Miguel ‘Migz’ F. Zubiri, P70 million vs. P58.8 million.

Similarly, significant differences were recorded in the reports covering three political parties:

- Bangon Pilipinas Party, P51.3 million in SOCE vs. P13.8 million in ad contracts;
- Liberal Party, P142.6 million vs. P92.5 million; and
- Nacionalista Party, P99.4 million vs. P65.2 million.

Quality in question

Ultimately, says Commissioner Lim, the actual number and cost of advertisements will be considered when the Comelec audits the SOCEs filed by candidates and parties. He says that the CFU will verify records, request additional documents, and may ask a candidate or party to explain.

For sure, the quality of the submission of media entities may be one reason for discrepancies in the ad contract figures and those declared by candidates in their SOCEs. Lim himself says that advertising contracts may not reflect the actual number of ads aired for a candidate or party.

He offers other possible explanations, though: “It’s possible that a candidate made an advanced booking, but he or she cancelled it or the ads were not aired, so there may be reduction in cost. It’s possible that the contracts reflect a bigger amount, but the SOCE bears a smaller amount because certain ads were not aired. Now, we have to look at the broadcast logs to check whether or not the booked ads were indeed aired.”

Tricky docs

Jimenez also says that advertising contracts can be tricky because modifications done on a particular ad booking may not exactly be reflected in the document. Aside from being the Commission’s spokesperson, Jimenez heads the Comelec EID, which receives the advertising documents from media entities.

“It’s possible that the contract cost is x in value, but the report may actually be x plus 10 or x minus 10, right?” he notes. “It depends.”

Echoing Lim, Jimenez says a candidate could have made a big booking up early on but then downgraded later. This is why Comelec requires “overlapping” documents from media entities, he says.

Jimenez explains that in case the advertising contract is not fully implemented, Comelec can check against the certificates of performance and broadcast logs, which would then indicate the actual number of spots, actual duration of time, and the program where the ad aired.

“(An) advertising contract gives you an idea of how many ads a candidate plans to book,” he says, “but broadcast logs will ultimately show you how many were actually aired.”

A PCIJ review of the documents secured from the Comelec EID, however, shows that not all ad contracts are paired with broadcast logs and vice-versa. Too, broadcast logs and certificates of performance generally do not include the corresponding amount paid for the ads that were actually aired. The CFU may thus find it difficult to track which ads to count in its audit.

“A lot of ad bookings are immediate,” allows Jimenez. “The PR person will call and ask you to book and air an ad in reaction to the dynamics of the campaign. So that’s been a problem. That’s been something that we notice from before, but for the most part because they submit broadcast logs and certificates of performance, we do get a clear picture of what the ad spend is like.”

Paid TV guestings

Then again, those inside Comelec seem to be aware of all sorts of other reasons why the figures don’t quite match. Lim, for instance, says another source of such a discrepancy could come from paid TV guestings. He says that a candidate may have appeared in an interview and paid for it, but networks may not have reported it because it is unlike the typical advertisement that airs in between shows.

Jimenez, though, says that the Comelec EID requires networks to submit reports on paid TV guestings because these are tantamount to campaigning. “If a guesting is paid, then it should be reported as expenditure and media entities must submit documents,” he says. “If the guesting or airtime is a donation, then the candidate must issue a written acceptance of the donation and it should also be reported as a contribution in his/her SOCE.”

So far, Jimenez says he has only seen one such report – an advertising contract for Risa Hontiveros’s guesting on ABS-CBN’s “Gandang Gabi Vice.” Yet, he says, Koko Pimentel and Ernesto M. Maceda had also appeared on TV5’s “Wowowee.”

Based on the documents gathered by PCIJ, it could also be that certain broadcast networks and print publications that aired and published political advertisements during the campaign period, as recorded in Nielsen Media’s database, have simply not submitted contracts.

While documents from major networks such as ABS-CBN 2, GMA-7, and TV5 are on file with the Comelec EID, Nielsen data show that political ads were aired and printed in roughly 12 TV networks, 25 radio networks, and 20 publications.

In the advertising documents gathered from Comelec EID as June 14, 2013, PCIJ found submissions from only nine TV networks, 12 radio networks, and two publications. And Nielsen’s monitoring does not yet include ads aired on regional and local stations. (See Table)

Production costs

Coincidentally, Mina Pangandaman, campaign coordinator of Sonny Angara, offered that the “discrepancy can probably be explained by the timing difference in reporting.”

But several of those who ran in the 2013 senatorial race have also pointed to other items included in the amount reported in their SOCE as another reason why their declarations ended up higher than what was derived from the advertising records.

Cynthia Villar, for example, said that the difference between the cost of campaign advertisements reflected in her SOCE and the cost derived from the contracts “could probably be attributed to the non-inclusion of the production, creative, and related costs in the reports of the networks.”

Bam Aquino meantime said that the difference may be because of “other contracts that the EID may have yet to see” and “payments made to other advertisement/media-related suppliers which include some productions costs, placement fees and printing expenses.”

Teodoro ‘Neil’ V. Llamanzares, who headed Grace Poe-Llamanzares’s campaign finance team, said that the “difference would be in the 12-percent VAT that we included in the cost of the ad placements.”

Llamanzares – the newly elected senator’s husband – also said the remaining balance “would cover the other expenses related to advertising, such as media agency fees, TV commercial production, post-production, and broadsheet and tabloid print ads.”

Lawyer Teddy Rigoroso said as much when he responded on behalf of the campaign team of Risa Hontiveros. Saying that the candidate’s report of expenses was based on official receipts issued by suppliers and service providers, Rigoroso explained, “Without reference to a specific advertising contract, these official receipts reflect the sum of two amounts, i.e., the total contract cost and the additional cost for value-added tax (VAT).”

He added that the amounts reported as expenses for advertisements include other costs like “commission of agencies and production costs, whenever applicable, because these are all treated as campaign expenses by the Comelec and are covered by official receipts.” – With research and reporting by Malou Mangahas, Miguel Gamara, Charmaine Manay, Rosemarie Corpin, Fernando Cabigao Jr., and Charmaine Lirio, July 2013, PCIJ