REPUBLIC OF THE PHILIPPINES
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
Third Regular Session

House Bill No. 8345

Introduced by MAGDALO Party-List Representative
__HON. GARY C. ALEJANO

EXPLANATORY NOTE

On March 1935, then President Manuel L. Quezon approved Act 4130 - the law passed
by the Philippine Legislature in October 30, 1934 creating the Philippine Charity
Sweepstakes, replacing the then National Charity Sweepstakes. It aims to raise funds for
the promotion of public health and general welfare. The mandate of the Sweepstakes
found acceptance among the Filipino people; its humanitarian mission readily won
public trust and support.

The traditional Sweepstakes has been the bread and butter of the PCSO. It has been
their sole source of revenue for over fifty (50) years. However, PCSO has instituted
several programs that are not in sync or not supported by their mandate. Thus, there is
a need to amend the 83-year old charter of the PCSO to strengthen the agency's
mandate to adopt and incorporate in their programs emerging worldwide trends in
sweepstakes and lottery management that we can learn from and utilize to generate
additional revenue for their services.

This measure therefore seeks to modernize the PCSO Charter to adapt to the changing
system of and emerging variations of lotteries and similar activities. Likewise, the Bill
also

seeks to strengthen the Charter by one, making the PCSO more accountable to the
public, and two, limiting its discretion in the distribution of its funds.

Hence in order to promote and strengthen PCSO and to generate additional funds for
charity, the immediate enactment of this measure is earnestly sought.

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Magdalo Para sa Pilipino Party-List


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REPUBLIC OF THE PHILIPPINES
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
Third Regular Session

House Bill No. _ 8345

Introduced by MAGDALO Party-List Representative

AN ACT
CREATING THE PHILIPPINE CHARITY OFFICE

Be it enacted by the Senate and the House of Representatives of the Philippines in
Congress assembled:

SEC. 1. Short Title.- This Act shall be known and cited as the “ Philippine Charity
Office Act of 2018.”

SEC.2. Purpose.- Consistent with the mandate of the State to provide for the welfare
of its people, the government shall operate lotteries, sweepstakes and other similar activities
to maximize revenue for the purpose of raising and providing funds for health programs,
medical assistance and services, and related charities.

SEC.3. Philippine Charity Office.- There is hereby created a body corporate to be
known as the Philippine Charity Office, hereafter referred to as the Office, with a primary
mandate of raising revenues to fund for health programs, medical assistance and services, and
related charities of the government.

Unless specified in this Act, the Office shall be the sole entity authorized to promote,
organize, operate, hold and conduct lotteries, sweepstakes and other similar activities in the
country.

SEC.4. Powers and Functions of the Office.- The Office shall have the following
powers and functions, subject to applicable laws, rules, and regulations, and in connection
with its operations authorized by the provisions of this Act, or as are essential to the proper
conduct of such operations:

1, Sue and be sued;

2. Adopt and use a seal;

3. Lease or own real and personal property, and sell or otherwise dispose of the
same;

4, Acquire and hold such assets and incur such liabilities, whether domestic or
foreign, in such terms and conditions as it may deem appropriate for the
accomplishment of its purposes;

5. Enter into contracts.


SEC.S. Power and limitations to engage in investments, programs, projects and
activities. The Office may engage in health and welfare-related investments,
programs and activities which may be profit-oriented, by itself or in collaboration,
association or joint venture with any person, association, company or entity, whether
domestic or foreign, except operate, hold and conduct lotteries, sweepstakes and other
similar activities, for the purpose of providing for permanent and continuing sources
of funds for health programs, including the expansion of existing ones, medical
assistance and services, and/or charitable grants: Provided, That such investments will
not compete with the private sector in areas where investments are adequate, as may
be determined by the National Economic and Development Authority.

The Office may undertake any other activities that will enhance its funds
generation operations and funds management capabilities. Subject to the same
limitations provided for in the preceding paragraph.

SEC.6. Board of Directors.- The Office shall have a Board of Directors to be
composed of five (5) members, all of whom shall be citizens and residents of the
Philippines, without political affiliation, who shall be appointed, and whose term of
office shall be fixed, by the President. The members shall elect from among
themselves the Chairman of the Board.

The members of the Board shall be entitled to per diem for their actual
attendance in board meetings and reimbursement for actual and reasonable expenses
and incentives as authorized by the Governance Commission for Government-Owned
or -Controlled Corporations (GCG) pursuant to Republic Act No. 10149.

‘The Board shall meet at such times as may be necessary or expedient for the
transactions of its business and the meetings shall be held at such place and time and
on such days as the Board determines.

SEC.7. Disqualification and Liability of the Directors of the Board.- No
person convicted of any crime involving moral turpitude, or a violation of this Act,
shall qualify as a director of the Board.

Directors who willfully and knowingly vote for or assent to patently illegal or
unlawful acts of the Office, or who are guilty of gross negligence or bad faith in
directing the affairs of the Office, or acquire any personal or pecuniary interest in
conflict with their duty as such directors shall be disqualified for the position, and
shall be liable jointly and severally for all damages resulting therefrom suffered by the
Office, and other persons.

SEC.8. Powers and Functions of the Board.- ‘The Board shall have the
following powers and functions:

1. Adopt policies and implement programs to promote the charitable
activities of the government.

2. Control and supervision over the operations of all lotteries, sweepstakes
and similar activities throughout the country.


3. Establish rules and regulations governing the establishment, operation and
conduct of all lotteries, sweepstakes and similar activities throughout the

country.

4. Adopt programs, measures and schemes for the elimination of illegal
numbers game.

5. Issue licensing to agents and determine the amount and manner of
compensation.

. Apportion its revenues in accordance with the provision of this Act.

Make a continuous study and investigation of the lottery in country.

Hear and decide on appeal any approval or denial by the General Manager

of the licensing or suspension, or of any renewal or revocation or refusal to

renew the license of a lottery agent or Authorized Agent Corporation

(AAC)

9. Consistent with the purpose of this Act, to determine and approve the most
effective organizational framework and its staffing pattern; to fix the
salaries and determine the reasonable allowances, bonuses, and other
incentives of its officers and employees as may be recommended by the
General Manager, and to prescribe the manner of hiring and compensating
on a contractual basis such sales and other personnel as may be required
for its operations, subject to pertinent civil service and compensation laws.

10. Promulgate and implement such rules and regulations necessary to
implement this Act.

11. Do and perform any and all things that may be necessary or proper to carry

out the purpose of this Act.

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SEC.9.General Manager.- The General Manager shall be appointed by the Board of
Directors and he/she can be removed or suspended only for cause as provided by law. He/She
shall have the direction and control in all matters which are not specifically reserved for
action by the Board. Subject to the approval of the Board of Directors, he/she shall also
appoint the personnel, except the Auditor and the personnel of the Office of the Auditor who
shall be appointed by the Chairman of the Commission on Audit

SEC.10. National Lotteries.- No person or entity may operate, hold and conduct
national lotteries, sweepstakes and other similar activities except for the Office. National
lotteries, sweepstakes and other similar activities are to be operated nationwide and/or region
wide and on such type, frequency, price of tickets and prizes determined by the Board. If
feasible, the Office may conduct sweepstakes and similar activities in provinces, cities and
municipalities

SEC. 11. Online Lotteries. The Office may promote, operate, hold and conduct
online lotteries through internet or any form of remote technological communication that
hereafter may be discovered. For this purpose, the Office shall operate and maintain a secured
‘computer system to operate the online lotteries.

‘The Board shall issue rules and regulations for the operation of online lotteries subject
to the provision of Republic Act No. 8484 (Access Devices Regulations Act of 1998),
Republic Act No. 10173 (Data Privacy Act of 2012), Republic Act No. 10175 (Cybercrime
Prevention Act of 2012), and other pertinent laws.


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SEC.12. Local Lotteries.- The Board may establish lotteries which shall only be
operated, held and conducted locally, within a municipality, city and province. The Board
may grant licenses to agents, to be called the AACs, for the operation and conduct of local
lotteries; Provided, That, The license herein granted is merely an extension of the authority to
operate lotteries granted solely to the Office by this Act; Provided, Further, That the Board
shall retain control and supervision in the operation, holding and conduct of all local lotteries,
including its ACs.

The Local Government Units (LGUs) having jurisdiction over the area shall be
consulted before local lotteries may be operated within their locality. The LGUs shall be
entitled to 7% of the Gross Sales/Receipts obtained from their locality, of which, 2% shall go
to the Barangay, 4% to the municipality or city and 2% to the province. The amount received
by the LGUs shall only be used to fund their healthcare or medical programs and services;
Provided, That the municipality or city shall appropriate 20% of their share for the programs,
activities and projects of their respective Peace and Order Councils.

Without dispensing with the authority of the Commission on Audit (COA), the Office
may conduct an audit as to the proper use of funds received by the LGUs. The release of
shares of LGUs shall automatically be suspended if there is a finding of any irregularity in the
use of funds based on a COA Report or audit of the Office.

The Board shall issue the necessary rules and regulations for the operation, holding
and conduct of local lotteries.

SEC.13. Licensed Authorized Agent Corporations.- AACs shall be corporations,
wholly owned by Filipinos, and duly registered with the Securities and Exchange
Commission (SEC) or with the Cooperative Development Authority (CDA). A non-
refundable license fee and cash bond shall be required from all AACs before they may be
granted a license, The Board may provide additional qualifications of and requirements from
AACS and impose conditions on their license. License granted shall be exclusive to the
license AAC and cannot be transferred nor assigned. No license shall be granted to an AAC
covering more than one locality. An AAC can only operate within the locality specified under
its license.

Licensed AACs shall be directly and solely liable for any complaint or liability that
may arise from their transactions with the public.

SEC.14. Lottery Agents.- The Board shall authorize agents to sell tickets, including
online lottery tickets. Only natural persons, not politically affiliated, may be authorized as
lottery agents. No person convicted of crimes involving moral turpitude shall be licensed.
Licensed agent shall be of legal age and shall not employ any person below 18 years old to
sell or vend tickets. License granted shall be exclusive to the licensee agent and is not
transferable or assignable.

An agent shall only operate on the location stated in its license and no license shall be
extended for more than one location.

Before a license may be issued, all agents shall give a bond, fee, guarantee, or other
security instrument in the amount and in such form as the Board may from time to time


8

determine. The Board may likewise impose certain qualifications, requirements and
obligations to agents.

Lottery agents shall be entitled to a commission to be determined and set by the Board
provided; it should not be less than 5% of the cost of the ticket. Likewise, the agent shall be
entitled to a share of .5% on the winning ticket.

Licensed agents shall be directly and solely liable for any complaint or liability that
may arise from their transactions with the public.

SEC.1S. Suspension and Revocation of License. The Office shall suspend, revoke
or refuse to renew the license of AACs or Lottery Agents on the following grounds:

a)

Failure to maintain the qualifications, requirements and conditions imposed by
this Act and the Rules and Regulations and issuances issued by the Office.

Failure to file the required bond, pay the necessary fees and or charges within the
period prescribed by the Office.

Failure to account the tickets received and the proceeds of the sale or to file a
return, report or keep records as required by the Office.

Any act of fraud, deceit, misrepresentation or any conduct prejudicial to public
confidence.

) Conviction of any offense involving moral turpitude.

f) Violation of any provision of this Act or the terms of the license.

2) Other grounds that the Office established under its Rules and regulations and
issuances.

b)

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d)

The General Manager shall temporarily suspend a lottery agent or AACs pending an
investigation or hearing.

SEC.16. Prohibited Acts.-

a) No ticket shall be sold or prize be paid to a minor, any member of the Board,
officer or employee of the Office, lottery agents and their employees, shareholder,
officer or employee of the AACS, or to any person, employee or officer of any
entity that is providing services or goods directly related in the operation, conduct,
holding of lotteries, sweepstakes and other similar activities.

b)

No lottery agents and AACs including all their officers and employees shall
extend credit or lend money to a person for the purchase of tickets.

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No name of any government official or employee shall appear on the ticket or play
slip of any lottery game or on any prize or on any instrument used for the payment
of prizes.

Commission of the above-mentioned prohibited acts shall be penalized by not less
than one (1) year but not more than three (3) years imprisonment and a fine of not less than
Five Hundred Thousand Pesos but not more than One Million Pesos.


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Any person, in case of Corporation its officers, who operate, hold, conduct, any
lottery, sweepstakes or similar activities without being a licensed agent or an AAC, shall be
penalized by imprisonment of not less than six (6) years but not exceeding twelve (12) years
and a fine of not less than Five Million Pesos but not more than Ten Million Pesos. All
proceeds capable of monetary value received form such prohibited activities shall be forfeited
in favor of the Office and to form part of its Charity Fund.

SEC.17. Audit of Accounts and Transactions.- An annual audit shall be conducted
by the Office on all its all lottery agents and AACs; Provided, that, the Office may conduct an
audit anytime at its discretion and shall have visitorial power over the premises of the lottery
agents and AACS.

The COA may its discretion conduct an audit on all accounts and transactions of the
Offfice and its lottery agents and ACs. The COA, in the conduct of its function, shall have
free and unhampered access to the premises, documents, papers and effects of the Office and
its lottery agents and AACs.

The presence of a COA representative shall be required during the drawings or
selection of winning tickets, otherwise the drawings or selections shall be void.

SEC.18.Taxes.- A tax equivalent to 10% shall be imposed on the prize of winning
tickets to be withheld by the Office. No other tax, charges, lien or deductions shall be
imposed except as provided under this Act.

SEC.19, Allocation of Revenues.- The primary cost of tickets for lotteries,
sweepstakes and other similar activities shall not exceed two 2% of the sales receipts of such
tickets. The sales receipts deducted by the printing cost shall constitute the net receipts, which
in addition to other income of the Office, shall be allocated as follows:

1, 55% shall constitute the prize fund, which shall be used for the payment of prizes,
commission of AAC and lottery agents, and taxes on prizes.

Prizes not claimed by the public within one year from date of draw shall be
considered forfeited, and shall form part of the charity fund.

2. 30% shall constitute the charity fund, which shall be used for health care or
medical programs and services, and related charities of national character.

3. 15% shall constitute the operating fund, which shall be used for the payment of

operating expenses and capital expenditures of the Office, and of other taxes and
duties.

All balances of any funds shall revert and form part of the charity fund.

SEC. 20. Charity Fund.- The balance of the charity fund, after deducting the
mandatory contributions provided by law, shall be distributed as follows:

1. 75% shall be deposited to the Philippine Health Insurance Corporation
(PHILHEALTH) to be used for medical assistance to indigents and low income


individuals, in addition to and separate from the individual’s benefits under the
National Health Insurance Program.

2. 15% shall be deposited to public hospitals, rural health care units, and other public
healthcare facilities to be used for medical and healthcare-related purposes,
including purchase of ambulances.

3. 8% shall be deposited to the Department of Health to be used for free distribution
of medicine, and medical equipment such as wheelchairs, and for similar purpose.

4. 1% shall be deposited to the Philippine Council for Health Research and
Development.

SEC.21. Separability Clause.- If any provision of this Act shall be declared invalid or
unconstitutional, the remaining part or provisions not otherwise affected shall remain in
force.

SEC.22. Repealing Clause.- Republic Act No. 1169, as amended by Batas Pambansa
Bld. 42, is hereby repealed. Any law, decree, ordinance, administrative circulars not
consistent with any provision of this Act is hereby amended, repealed or modified
accordingly.

SEC.23. Transfer of Powers. All powers, duties and functions vested by law in the
Philippine Charity Sweepstakes Office not inconsistent with the provision of this Act shall be
deemed transferred to the Philippine Charity Office. All references to the Philippine Charity
‘Sweepstakes Office in any law or special charters shall be deemed to refer to the Philippine
Charity Office.

SEC. 18. Effectivity. - This Act shall take effect after fifteen (15) days from its
publication in the Official Gazette or in at least two (2) newspaper of general circulation.

Approved,