Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon Gity, Metro Manila.
FIFTEENTH CONGRESS

Second Regular Session

House Bit'NO.__5353_

Introduced by Representative Pedro P. Romualdo

EXPLANATORY NOTE

‘The Supreme Court has stated that gambling should be repressed as “an evil that
undenmines the social, moral and economic growth of the nation’.” For this reason,
various laws have been enacted prohibiting and punishing gambling and the operation of
gambling enterprises, among them Republic Act No. 9287, Presidential Decree No. 1602.
and Articles 195 to 198 of the Revised Penal Code.

The State has seen fit to authorize the conduct of gambling activities by
centralizing and integrating the right and authority to operate and conduct games of
chance into one corporate entity to be controlled, administered and supervised by the
Government for the purpose of raising much needed revenue for the Government. For
this purpose, the State created the Philippine Amusement and Gaming Corporation
(PAGCOR) through the issuance of Presidential Decree No. 1869, us amended.

However, Presidential Decree No. 1869, as amended, authorizes PAGCOR to
grant and issue franchises, licenses, and contracts whereby private persons and entities
are authorized to establish, maintain and operate gambling casinos, gaming clubs, online
gaming, and other similar recreation or amusement places devoted to gambling and the
playing of games of chance. As a consequence, many gambling casinos, gaming clubs,
internet/online gaming, and other places where slot machines and other gambling
paraphemalia and equipment are owned and operated by private persons and catities.

In his Separate Opinion in the consolidated cases of Del Mar v, Philippine
‘Amusement and Gaming Corporation, et al. and Sandoval I vs. Philippine Amusement
and Gaming Corporation, et al.”, former Chief Justice Reynato 8. Puno stated:

* People v. Punto, 68 Phil. 481)
? GR. Nos. 138298 and 138982, June 19, 2001.


“Our moral fiber is im tatters. There is greater reason to insist on
the principle that gambling can only be allowed by express mandate of
Congress. The world over, gambling is recognized as a vice and a social ill
which government roust minimize, if not eradicate, in pursuit of social and
economic development. In all its forms, gambling is generally proscribed
as offensive to the public morals and the public good.”

The ownership and operation of gambling casinos, gaming clubs, intemeVonline
yaming, and other similar gambling enterprises must rest with Government or
government owned and/or controlled entities. Ownership of these establishments should
not be left 10 private persons and entities.

This House Bill socks to prohibit the ownership and operation of gambling
casinos, gaming clubs, intemet/online gaming, and other similar gambling enterprises by
private persons or entities. it also seeks to disallow PAGCOR from granting franchises,
licenses, contracts or similar arrangements to private persons ot entities for the ownership
and operation of gambling casinos, gaming clubs, and other similar gambling enterprises.

So as not to violate the non-impairment clause of the Constitution, this House Bill
provides that franchises, licenses, contracts or similar arrangements granted by PAGCOR
to private persons or entities shall be respected, but shall not, however, be renewed or

extended.

Approval of this House Bill is earnestly and urgently recommended.

Pace?


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

FIFTEENTH CONGRESS
Second Regular Session

House su'Wo,__ 5859

Introduced by Representative Pedro P. Romualde

1 AN ACT

2. PROHIBITING THE OWNERSHIP OR OPERATION OF GAMBLING
5 CASINOS, GAMING CLUBS AND OTHER SIMILAR RECREATION OR
4 AMUSEMENT PLACES EXCEPT BY THE PHILIPPINE AMUSEMENT
5 AND GAMING CORPORATION AND, FOR THIS PURPOSE, FURTHER
3& AMENDING PRESIDENTIAL DECREE NO. 1869, AS AMENDED.
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Be it enacted by the Senate and House of Representatives of the Philippines
in Congress assembled:

Section 1. Declaration of National Policy. - It is hereby the declared
13. policy of the State that only the Government, through the Philippine Amusement
14 and Gaming Corporation, shall establish, operate and maintain gambling casinos,

gaming clubs and other similar recreation or amusement places devoted to

16 gambling and the playing of games of chance.

18 Seclion2. Withdrawal of Authority to Grant or Renew Franchises and

Licenses Granted to Private Persons. - Any provision of law to the contrary

20 notwithstanding, the Philippine Amusement and Gaming Corporation shall, upon
21 the effectivity of this Act, be prohibited from granting, renewing or extending
22 franchises, licenses, contracts or other similar arrangements to private persons or
22 emtities for the establishment, operation and maintenance of gambling enterprises.
24 Further, the Philippine Amusement and Gaming Corporation shall, upon the
25 effectivity of this Act, be probibiteé from entering into or concluding any


me

investment agreement, joint venture agreement, management agreement, agency
agreement, or any other form of contract or agreement which would authorize any
private person or entity, whether directly or indirectly, to engage in a gambling

caterprise.
For purposes of this Act a gambling enterprises shall include:

(a) Gambling casinos, gaming clubs, internet/online gaming,
and other similar recreation or amusement places devoted to gambling,

and the playing of games of chance; and

{b) The operation of slot machines and other gambling
paraphernalia and equipment.

Section 3. Respect for Existing Franchises, Licenses and Contracts, -
Franchises, licenses, contracts or other similar arrangements granted by, or entered
into, with private individuals or entities for the establishment, operation and
maintenance of gambling casinos, gaming clubs and other similar recreation or
amusement places devoted to gambling and the playing of games of chance before
the effectivity of this Act shall be respected and shall remain in force until their
expiration, Such franchises, licenses, contracts or other similar arrangements shalt

not be renewed or extended.

Section 4. Amendments to Presidential Decree No. 1869, as amended. -
(a) Section 3 of Presidential Decree No. 1869, as amended, is hereby
further amended to read, as follows:

“Section 3. Corporate Powers, - The Corporation shaft have

the following powers and functions, among others:

“a, _ to prescribe its By-Laws;

“b. to adopt, alter and use a corporate seal;
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to own real or personal property, and to sei,
alienate, mortgage, encumber or otherwise dispose

of the same;
to make contracts, and to sue and be sued;

to employ such officers and personne! as may be
necessary or proper to carry on its business;

to acquire, lease or maintain, whether on land,
water or air, personal property and such other
equipment and facilities as may be necessary or
proper to carry out its purposes;

to import, buy, sell, or otherwise trade or deal in
merchandise, goods, wares and objects of afl kinds
and descriptions that may be necessary or proper
to carry out the purposes for which it has been
created;

to enter into, make, conclude, perform, and carry
out contracts of every kind and nature and for any
lawful purpose which are necessary, appropriate,
proper or incidental to any business or purpose of
the [Corporation] PAGCOR, [including but not
limited to investment agreements, joint venture
agreements, management agreements, agency
agreements, whether ag principal or as an agent,
manpower supply agreements, or any other similar
agreements or arrangements with any person, firm,
association or corporation)."

to borrow money from local or foreign sources as
may be necessary or proper for its operations;

to invest its funds as the Corporation may deem
necessary or proper in any activity related to its
principal operation, tineluding in any bonds or


1 securities issued or guaranteed by the Government

2 of the Philippines

3 “k. to perform such other powers and functions as
4 may be provided by law; and

5 “to do anything and everything necessary, proper,
6 desirable, convenient or suitable for the

accomplishment of any of the purpose or the

8 attainment of any of the objects or the furtherance

3 of any of the powers herein stated, [either alone or

10 in association with other corporations, firms ér

" individuals] and to do every other act or thing

2 incidental, pertaining to, growing out of, or

13 connected with, the aforesaid purposes, objects or

14 powers, or any part thereof.

15

18 “PROVIDED, THAT, NONE OF THE POWERS STATED
v7 ABOVE SHALL BE UNDERSTOOD AS A GRANT OF
18 AUTHORITY TO THE CORPORATION TO GRANT
19 FRANCHISES, LICENSES, CONTRACTS OR OTHER
20 SIMILAR ARRANGEMENTS TO PRIVATE PERSONS OR
24 ENTITIES FOR THE ESTABLISHMENT OR OPERATION OF
2z ANY GAMBLING ENTERPRISE.”

23

24 (b) Section 10, Title IV of Presidential Decree No. 1869 is hereby

25 amended to read, as follows:

27 “Section 10. Nature and Term of Franchise. - Subject to the
28 terms and conditions established in this Decree, the Corporation is
23 hereby granted from the expiration of its original term on July 11,

2008, another period of twenty-five (25) years, renewable for another
a twenty-five (25) years, the rights, privileges and authority to operate
32 [and license] gambling casinos! gaming clubs and other similar



n

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o

Tecreation or amusement places, gaming pools, ic. basketball,
football, bingo, etc. except jai-alai, whether on land or sea, within the
territorial jurisdiction of the Republic of the Philippines: Provided,
‘That the corporation shall obtain the consent of the local government
unit that has territorial jurisdiction over the area chosen as the site for

any of its operations.

The operation of slot machines and other gambling
paraphernalia and equipment, shall not be allowed in establishments
open or accessible to the general public unless the site of these
operations are three-star hotels and resorts accredited by the
Department of Tourism authorized by the corporation and by the local

government unit concerned.

The authority and power of the PAGCOR to fauthorize, license
and regulate] OPERATE, games of cards and games of numbers
shall not extend to: (1) games of chance authorized, licensed and
regulated or to be authorized, licensed and regulated by, in, and under
existing franchises or other regulatory bodies; (2) games of chance,
games of cards and games of numbers authorized, licensed, regulated!
by, in, and under special taws such as Republic Act No. 7922; and (3)
games of chance, games of cards and games of numbers like
cockfighting, authorized, licensed and regulated by local government
units. The conduct of such games of chance, games of cards and
games of numbers covered by existing franchises, regulatory bodies
or special laws, to the extent of the jurisdiction and powers granted
under such franchises and special laws, shall be outside the
[licensing] authority [and regulatory powers] of the PAGCOR

(c) Section 11 of Presidential Decree No. 1869, as amended, is hereby
amended to read, as follows and renumbered accordingly:


aoa on =

a

14
15
16
7
18
19
20
2

23
24
28
26
7
28
28
30
3t
32

Section 11. Scope of Franchise. - In addition to the rights and
privileges granted it under the preceding Section, this Franchise shall
entitle the Corporation to do and undertake the following:

[1. Enter into operating and/or management contracts with any
registered and accredited company possessing the knowledge, skill,
expertise and facilities to insure the efficient operation of gambling,
casinos; provided, that the service fees of such management and/or
operator companies whose services may be retained by the
Corporation shall not be in the aggregate exceed ten (10 %) percent
of the gross income;

(2.) 1. Purchase foreign exchange that may be required for the
importation of equipment, facilities and other gambling
paraphernalia indispensably needed or useful to insure the
successful operation of gambling casinos;

[3.] 2. Acquire the right of way or access to or thes public land,
public waters or harbors, including the Manila Bay Area; such
right shall include but not be limited to the right to lease and/or
purchase public lands, government reclaimed lands, as well as
lands of private ownership or those leased from the Government.
This right shall carry with it the privilege of the Corporation to
utilize piers, quays, boat landings, and such other pertinent and
related facilities within these specified areas for use as landing,
anchoring or berthing sites in connection with its authorized

casino operations;

[4.] 3. Build or construct structures, buildings, castways, piers,
decks, as well as any other form of landing and boarding facilities

for its floating casinos;


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[5.1 4. To do and perform such other acts directly related to the
efficient and successful operation and conduct of games of chance

in accordance with existing laws and decrees.

Paragraph 3, Section 13 of Presidential Decree No. 1869 is hereby

amended to read, as follows and renumbered accordingly:

“3, Dividend Incomes. - Notwithstanding any provision of law to the
contrary, in the event the Corporation should declare a cash dividend,
that portion of the dividend income corresponding to the participation
of the private sector shall, as an incentive to the beneficiaries, be
subject only to a final income tax rate of ten (10%) percent in lieu of
the regular income tax rates. The dividend income shall not in such
case be considered as part of beneficiaries’ taxable income; provided,
however, that such dividend income shall be totally exempted from
income or other forms of taxes if invested within six (6) months from
‘the date the dividend income is received, in the following:

[a. operation of the casino(s) or investments in any affiliate

activity that will ultimately redound to the benefit of the Corporation
or any other corporation with whom the Corporation has any existing
arrangements in connection with or related to the operations of the

casino(s);]

{b.] a. Government bonds, securities, treasury notes, or

debentures; or

[c.] b. BOI registered or export-oriented corporation(s).”

Section 5. Repealing Clause. — Sections 8 and 9, Title Ill, are hereby
repealed. Further, all laws, decrees, executive orders or niles and regulations
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contrary to or inconsistent with the provisions of this Act are hereby repealed or
modified accordingly.

Scetion 6. Separability Clause. — If any provision of this Act is declared
invalid or unconstitutional, the other provisions not affected thereby shall continue

io be in full force and effect.

Section 7. _Effectivity.— This Act shall take effect fifteen (15) days after its

publication in at least two (2) newspapers of general circulation.