Republic of the Philippines
HOUSE OF REPRESENTATIVES
Constitution Hills, Quezon City

EIGHTEENTH CONGRESS.
Second Regular Session

HOUSE BILL No, 7883

Introduced by REP. FAUSTINO ‘INNO’ A. DY V, REP. ANTONIO “TONYPET” T.
ALBANO, REP. ED CHRISTOPHER S. GO, REP. IAN PAUL L. DY, REP. ALYSSA
SHEENA P. TAN, REP. FAUSTINO MICHAEL CARLOS T. DY III and
REP. ALLAN U. TY

EXPLANATORY NOTE

The Philippines Charity Sweepstake Office (PCSO), invoking Republic Act (R.A.) No.
1169 or its Charter, which does not mention the operation of Small Town Lottery, took upon
itself to issue the pertinent Board Resolution and the Implementing Rules and Regulations
(IRR) governing the holding of Small Town Lottery (STL) in different localities and under the
auspices of different Authorized Agent Corporations (AACS). In the issuance of the IRR, local
government units (LGUs) have not been consulted, much less heard of their concerns about the
holding or operation of STL in their respective jurisdictions.

Meanwhile, given the twin objectives of STL: a) to help stamp out jueteng, and b) to
decentralize or democratize the national lottery into a “grassroots-based lottery and charity at
the local levels,!” \ocal government units (LGUs) have not been involved in its operations,
much less its regulation. The non-involvement of LGUs is due to PCSO’s reluctance to involve
them based on the absence of any law which allows them to operate and regulate the numbers
game.

Unlike the operation of cock-fighting or sabong, the 1991 Local Government Code
(LGC) does not expressly grants LGUs the power and authority to operate, regulate, or
supervise the holding of STL in their respective jurisdictions.

‘ huttps://www pcso.gov.ph/Games/SmallTownLottery.aspx


Considering, however, the decentralized nature of the numbers game and multitude of
operators or AACs, LGUs are in a better position to regulate and supervise the operation of
STL. As situations in the different LGUs differ and cultural nuances of their communities are
not uniform, the operation and holding of STL should not be centralized and regulated by a
single agency.

Further, considering that the income derived from STL comes from the LGUs where
STL operates, the LGUs must benefit from the same and must dictate how such income will be
used to support their local development programs and interventions. Presently, the prizes for
every lottery differ from every locality and depends on the number of bettors. Hence, PCSO,
even with its AACs, will not be able to better monitor transparency and accountability.

Itis, therefore, highly desirable and beneficial that a law must be enacted, amending the
LGC, to allow and authorize LGUs to operate, supervise, and regulate STL. By giving LGUs
such power, the twin objectives of STL will be met, their capacity to raise local funds will be
enhanced, and decentralization as a State policy is upheld.

In view of the foregoing, the passage of this measure is earnestly sought.

ee: “TONYPET” T. REP. ED CHRISYOPHER S. GO

ALBANO 2™ District, Isabela
15T District, Isabela
REP.AAN PAL. DY REP. ALYSSA SHEENA P. TAN
3" District, Isabela 44 Distfict, Isabela

STINO ‘INNO’ A. DY V
6" District, Isabela

REP. .TY
LPG Marketers Asso¢iation, Inc. Party List


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Constitution Hills, Quezon City

EIGHTEENTH CONGRESS
Second Regular Session

HOUSE BILL No. _7888

Introduced by REP. FAUSTINO ‘INNO’ A. DY V, REP. ANTONIO “TONYPET” T.
ALBANO, REP. ED CHRISTOPHER S. GO, REP. IAN PAUL L. DY, REP. ALYSSA
SHEENA P. TAN, REP. FAUSTINO MICHAEL CARLOS T. DY III and
REP. ALLAN U. TY

AN ACT AUTHORIZING LOCAL GOVERNMENTS TO GRANT FRANCHISES
AND TO OPERATE SMALL TOWN LOTTERIES TO GENERATE LOCAL
REVENUES FOR PUBLIC HEALTH EMERGENCIES AND CALAMITIES, AND TO
AUGMENT LOCAL FUNDS FOR THE IMPLEMENTATION OF THE UNIVERSAL
HEALTH CARE ACT, EDUCATION, ENVIRONMENT AND SOCIAL WELFARE
PROGRAMS, AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 7160,
OTHERWISE KNOWN AS THE 1991 LOCAL GOVERNMENT CODE, AND FOR
OTHER PURPOSES

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

SECTION 1. Title of the Act. - This Act shall be known as the Local Government Small
Town Lotteries Act.

SECTION 2. Rationale. The purpose of this Act is to generate funds for concerned LGUs
from local or small town lotteries (STL) and other similar activities that are province-wide or
city-wide in scope, and to make such funds readily available for public health emergencies
and national and local calamities, as well as augment the LGUs’ other locally-generated
revenues for its devolved services, particularly for local programs on health, education,
environment and social welfare services, and for the implementation of priority programs of
the Office of the President, such as the operation of Malasakit centers.


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SECTION 3. BOOK Ill, TITLE Ill, CHAPTER Ill, ARTICLE Il OF R.A. NO. 7160,
OTHERWISE KNOWN AS THE 1991 LOCAL GOVERNMENT CODE, IS HEREBY
AMENDED to add a new item in Section 458 (a) (3) (VIII) to read as follows:

Section 458. Powers, Duties, Functions and Compensation.
(a) The sangguniang panlungsod, as the legislative body of the city, shall enact
ordinances, approve resolutions and appropriate funds for the general welfare of the
city and its inhabitants pursuant to Section 16 of this Code and in the proper exercise
of the corporate powers of the city as provided for under Section 22 of this Code, and

shall:
Xxx

“(3) Subject to the provisions of Book II of this Code, enact ordinances granting
franchises and authorizing the issuance of permits or licenses, upon such
conditions and for such purposes intended to promote the general welfare of the
inhabitants of the city and pursuant to this legislative authority shall:

(xxx;

(ii) xxx;

(iii) xxx;

(iv) xxx;

(¥) xxx;

(vi) xxx;

(vii) xxx;

(VII) UPON APPROVAL BY A MAJORITY VOTE OF ALL THE
MEMBERS OF THE LOCAL SANGGUNIANG PANLUNGSOD
OF HIGHLY-URBANIZED AND INDEPENDENT CITIES, AND
AS APPROVED BY THE CITY MAYOR, GRANT A
FRANCHISE TO ANY PARTNERSHIP, CORPORATION, OR
COOPERATIVE TO OPERATE SMALL TOWN LOTTERY
(STL) OR OTHER SIMILAR ACTIVITIES WITHIN ITS
JURISDICTION TO GENERATE LOCAL REVENUES TO
AUGMENT ITS LOCAL FUNDS FOR PUBLIC HEALTH
EMERGENCIES AND CALAMITIES, AND FOR THE
DEVOLVED SERVICES FOR HEALTH, EDUCATION,
ENVIRONMENT AND SOCIAL WELFARE AND
DEVELOPMENT PROGRAMS OF THE CITY AND ITS
COMPONENT BARANGAYS; PROVIDED THAT PRIORITY
WILL BE GIVEN TO THE IMPLEMENTATION OF THE
UNIVERSAL HEALTH CARE PROGRAM, THE PRESIDENT’S
PRIORITY PROGRAMS, UPGRADING OF ITS HOSPITALS;
AND PROVIDED FURTHER THAT SUCH FUNDS SHALL NOT
BE USED FOR PERSONAL SERVICES AND TRAINING
PROGRAMS.


SECTION 4. BOOK III, TITLE IV, CHAPTER III, ARTICLE III OF R.A. NO. 7160,
OTHERWISE KNOWN AS THE 1991 LOCAL GOVERNMENT CODE, IS HEREBY
AMENDED to add a new item in Section 468 (a) (4) (III) to read as follows:

Section 468. Powers, Duties, Functions and Compensation.
(a) The sangguniang panlalawigan, as the legislative body of the province, shall enact
ordinances, approve resolutions and appropriate funds for the general welfare of the
province and its inhabitants pursuant to Section 16 of this Code in the proper exercise
of the corporate powers of the province as provided for under Section 22 of this Code,
and shall:
Xxx
“(4) Subject to the provisions of Book Il of this Code, grant franchises, approve
the issuance of permits or licenses, or enact ordinances levying taxes, fees and
charges upon such conditions and for such purposes intended to promote the
general welfare of the inhabitants of the province, and pursuant to this
legislative authority, shall:
(i) xxx;
(ii) 20x;
(11) UPON APPROVAL BY A MAJORITY VOTE OF ALL
THE MEMBERS OF THE LOCAL SANGGUNIANG
PANLALAWIGAN, AND AS APPROVED BY THE
PROVINCIAL GOVERNOR, GRANT A FRANCHISE TO
ANY PARTNERSHIP, CORPORATION, OR
COOPERATIVE TO OPERATE SMALL TOWN LOTTERY
(STL) OR OTHER SIMILAR ACTIVITIES WITHIN ITS
JURISDICTION TO GENERATE LOCAL REVENUES TO
AUGMENT ITS LOCAL FUNDS FOR PUBLIC HEALTH
EMERGENCIES AND CALAMITIES, AND TO FINANCE
THE DEVOLVED SERVICES FOR HEALTH,
EDUCATION, ENVIRONMENT AND SOCIAL WELFARE
AND DEVELOPMENT PROGRAMS OF THE PROVINCE,
ITS COMPONENT CITIES, MUNICIPALITIES AND
BARANGAYS; PROVIDED THAT PRIORITY WILL BE
GIVEN TO THE IMPLEMENTATION OF THE
UNIVERSAL HEALTH CARE PROGRAM, THE
IMPLEMENTATION OF THE PRESIDENT’S PRIORITY
PROGRAMS, UPGRADING OF ITS DISTRICT AND
PROVINCIAL HOSPITALS; AND PROVIDED FURTHER
THAT SUCH FUNDS SHALL NOT BE USED FOR
PERSONAL SERVICES AND TRAINING PROGRAMS.

SECTION 5. Disposition of Gross Receipts and Mandatory Contributions. - From the gross
receipts from the sale of tickets for small town lottery (STL) or other similar activities, shall be
deducted the printing cost of such tickets, which in no case shall exceed two percent (2%) of

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such gross receipts, including the cost of the documentary stamp taxes (DST) to arrive at the
net receipts. The STL or other similar local lottery tickets shall be printed by the Province,
HUC or the Independent City, as the case may be, and shall be considered as local government
securities to which they shall be made accountable, for the purpose of penalizing forgery or
alteration.

The net receipts, or 98% of the gross receipts shall be allocated as follows:

A. Fifty-five percent (55%) shall be set aside as a prize fund for the payment of prizes,
including those for the LGU or agency commission of its local franchise operators and
sellers of winning tickets, and the relevant withholding and BIR taxes. Prizes not claimed
by the public within one year from date of draw within the HUC/independent city or
province, as the case may be, shall be considered forfeited and shall form part of the charity
fund for disposition as stated below. Alll prizes below P10,000.00 shall be exempt from all
taxes.

B. Thirty-five percent (35%) shall be set aside as the local charity fund with the following as
mandatory contributions:
1. For Provinces:

a. Province’s share: - ™
'b. Component cities and municipalities’ share: - 5%
¢. Barangays’ share: = 3%
4. Congressional District's share Fa 41396)
(The share will be divided equally among congressional
districts within the LGU where the STL is operating)
e. Provincial Philippine National Police - %
f. LGUs’ Priority programs 15%

Total LGUs’ STL Charity Fund: 35%

2. For Highly-Urbanized Cities or Independent Cities:

a. HUCIICs’ share: - 10%
b. Component Barangays’ share: - 5%
c. Congressional District’s share: aya: 2496
(The share will be divided equally among congressional
districts within the LGU where the STL is operating)
4. City/Mun. Philippine National Police’s share: te), 12%
e. LGUs’ Priority programs -

Total LGUs’ STL Charity Fund:

The 15% share to be set aside for the LGUs’ Priority Programs shall be allocated
for the following mandatory contributions:


1. Public Health Emergency/ Calamity Fund %
2. Universal Health Care (UHC) 4%
3. President’s Priority Programs 4%

Provided, that the President shall identify the priority programs to be funded
through an Executive Order

4. Other LGUs’ priority programs to be approved
by the local sanggunian, as recommended by
the local chief executive or barangay captain,
as the case may be. %

C. The remaining ten percent (10%) shall be used as operating funds.

The disbursement of shares from the STL shall be subject to the usual auditing rules and
regulations.

SECTION 6. Implementing Rules and Regulations. The Department of the Interior and Local
Government, together with the League of Provinces of the Philippines (LPP) and the League of
Cities of the Philippines, shall draft the General Implementing Rules and Regulations (IRR) of
this Act within sixty (60) days from the approval of this Act.

SECTION 7. Special Local Ordinance. - The sangguniang panlalawigan or sanggunian
panlungsod, as the case may be, shall pass an ordinance promulgating the rules and regulations
for the holding of the province or city-wide STL in their respective jurisdictions. Such
ordinance shall—
(a) fix the number and price of the tickets for the same and the number of tickets;
(b) fix the number and amount of the prizes;
(c) fix the date when the sale of tickets shall close; and
(d) designate the dates and place or places within its jurisdiction where such STL shall
be held;
(c) set the amount of franchise fees and other permits (such as business permits);
(f) provide measures for supervision and control over STL franchise operators to ensure
they comply with law, ordinances, and other regulations.
(g) penalize any person, partnership, cooperative or corporation who—
(g.1) illegally sell unauthorized tickets;
(g.2) sell tickets at a price greater than the price stated on the ticket;
(g.3) being officers or employees and beneficiaries of the charity fund, use
such funds for purposes other than those allowed herein.

SECTION 8. Repeating Clause. — The provisions of R.A. No. 7180, otherwise known as the
1991 Local Government Code mentioned in Sections 3 and 4 herein are hereby amended. All
other laws, executive orders, rules, and regulations or any part thereof inconsistent herewith are
deemed repealed or modified accordingly.


SECTION 9. Separability Clause. — If any part or provision of this Act shall be declared
unconstitutional and invalid, such declaration shall not invalidate other parts thereof, which
shall remain in full force and effect.

SECTION 10. Effectivity. — This Act shall take effect fifteen (15) days after its publication in
the Official Gazette or in two (2) newspapers of general circulation.

Approved.