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

EIGHTEENTH CONGRESS
First Regular Session
HOUSE BILL No. _0410

INTRODUCED BY REPRESENTATIVE XAVIER JESUS D. ROMUALDO

EXPLANATORY NOTE

This measure, in the main, seeks to withdraw from the Philippine Amusement and
Gaming Corporation (PAGCOR) the authority to grant franchises and licenses for the
establishment and operation of gaming enterprises. Consequently, persons who wish to
engage in such an enterprise must first obtain a franchise from Congress.

Under this measure, the PAGCOR may issue licenses to operate gaming
establishments; however, a prospective gaming operator must first obtain a franchise
from Congress. Unless and until the prospective gaming operator is granted a
legislative franchise, the PAGCOR cannot issue a license to operate. Nonetheless, this
bill provides that existing gaming franchises, licenses, contracts, and other similar
arrangements granted by or entered into by the PAGCOR shall remain unimpaired and
shall continue in full force and effect until they expire or the term of the PAGCOR’s own
franchise to establish, operate, regulate, and issue licenses to operate to gaming
establishments expires, whichever comes earlier.

In addition, this measure seeks to amend Section 15 of Presidential Decree No. 1869,
which provides that the funds of the PAGCOR that may be audited is limited to the 5%
franchise tax and the 50% of the gross earnings of the PAGCOR pertaining to the
government as its share. Under this measure, all funds and transactions, including
revenues, income, and expenditures, of the PAGCOR shall be subject to audit by the
Commission on Audit.

Gambling is widely considered to be reprehensible and even immoral. On the other
hand, it is a reliable source of revenue for the Government and a significant source of
funding for social and development projects and programs. Allowing the operation of
gaming establishments in the country is thus a policy question that involves a delicate
balancing of interests, which should be decided by the Members of Congress, who
represent and are accountable to the people.

In view of the foregoing, the support of the Members of Congress for the prompt and

timely passage of this measure is earnestly sought.

XAVIER JESUS D. ROMUALDO


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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila
EIGHTEENTH CONGRESS
First Regular Session

HOUSE BILL No. _0410

INTRODUCED BY REPRESENTATIVE XAVIER JESUS D. ROMUALDO

AN ACT
FURTHER AMENDING PRESIDENTIAL DECREE NO. 1869, AS AMENDED, AND
FOR OTHER PURPOSES

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

Congress assembled:

SECTION 1. Section 3 of Presidential Decree No. 1869, as amended, is hereby further

amended to read as follows:

Section 3. Corporate Powers. - The Corporation shall have the

following powers and functions, among others:

(a) to prescribe its By-Laws;

(b) to adopt, alter, and use a corporate seal;

(c) to own real or personal property, to sell, alienate, mortgage, encumber,

or otherwise dispose of the same;

(d) to make contracts and to sue and be sued;


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(e) to employ such officers and personnel as may be necessary or proper to

carry on its business;

(f) 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;

(g) to import, buy, sell, or otherwise trade or deal in merchandise, goods,
wares, and objects of all kinds and descriptions that may be necessary or

proper to carry out the purposes for which it has been created;

(h) 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 as 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;

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

securities issued or guaranteed by the Government of the Philippines;


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(k) to perform such other powers and functions as may be provided by law;

and

(I) to do anything and everything necessary, proper, desirable, convenient
or suitable for the accomplishment of any of the purposes or the
attainment of any of the objects or the furtherance of any of the powers
herein stated, either alone or in association with other corporations, firms
or individuals, and to do every other act or thing incidental, pertaining to,
growing out of, or connected with, the aforesaid purposes, objects or

powers, or any part thereof.

PROVIDED, THAT, NONE OF THE POWERS STATED ABOVE SHALL BE
UNDERSTOOD AS GIVING AUTHORITY TO THE CORPORATION TO
GRANT LICENSES, CONTRACTS, OR OTHER SIMILAR
ARRANGEMENTS TO PRIVATE PERSONS OR ENTITIES FOR THE
ESTABLISHMENT OR OPERATION OF ANY GAMBLING OR GAMING
ENTERPRISE WITHOUT THE LATTER FIRST BEING GRANTED A

FRANCHISE FROM CONGRESS.

SEC. 2. Section 8 of the same Decree is hereby amended to read as follows:

Section 8. Registration. — All persons primarily engaged in THE
gambling OR GAMING BUSINESS, together with their allied businessES,
with A [contract or franchise] LICENSE TO OPERATE from the
Corporation, shall OBTAIN A LEGISLATIVE FRANCHISE BEFORE THEY

MAY register and affiliate their businesses with the Corporation. The


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Corporation shall issue the corresponding certificates of affiliation upon
compliance by the registering entity with the promulgated rules and

regulations thereon.

SEC. 3. Section 10 of the same Decree, as amended, is hereby further amended

to read as follows:

Section 10. Nature and Term of Franchise. — Subject to the terms
and conditions established in this Decree, the Corporation is hereby
granted, from the expiration of its original term on July 11, 2008, FOR
another period of twenty-five (25) years, [renewable for another twenty-five
(25) years,] the right, privilege, and authority to ESTABLISH AND []
operate BY ITSELF, REGULATE, and ISSUE licenses TO OPERATE TO
gambling casinos, gaming clubs and other similar recreation or amusement
places, and gaming pools, i.e. basketball, football, bingo, [ete] POKER
CLUBS, AND E-GAMES, except jai-alai, whether on land or sea, within the
territorial jurisdiction of the Republic of the Philippines; PROVIDED, THAT
PRIOR TO THE ISSUANCE BY THE CORPORATION OF A LICENSE TO
OPERATE A GAMBLING CASINO, GAMING CLUB AND OTHER
SIMILAR RECREATION OR AMUSEMENT PLACE, OR GAMING POOL,
A FRANCHISE SHALL FIRST BE OBTAINED FROM AND GRANTED BY
CONGRESS: Provided, FURTHER, That the corporation OR ITS
LICENSEE 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.


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The operation of slot machines and other gambling paraphernalia and
equipmentt,] 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 AND authorized by BOTH

the Corporation and by the local government unit concerned.

The authority and power of the CORPORATION [PAGCOR] to [authorize,
license and regulate] ESTABLISH, OPERATE, REGULATE, AND ISSUE
LICENSES TO OPERATE games of chance, 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 laws 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

CORPORATION [PAGCOR].

SEC. 4. Section 15 of the same Decree, as amended, is hereby amended to read

as follows:


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SEC. 15. Audit[or]. - The Commission of Audit for any government
agency that the Office of the President may designate shall appoint a
representative who shall be the Auditor of the Corporation and such
personnel as may be necessary to assist said representative in the
performance of his duties. The salaries of the Auditor or representative and
his staff shall be fixed by the Chairman of the Commission on Audit or
designated government agency, with the advice of the Board, and said
salaries and other expenses shall be paid by the Corporation. The funds of
the Corporation to be covered by the audit shall be limited to the 5%
franchise tax and the 50% of the gross earings pertaining to the
Government as its share] SHALL AUDIT ALL FUNDS AND
TRANSACTIONS, INCLUDING REVENUES, INCOME, AND

EXPENDITURES, OF THE CORPORATION.

SEC. 5. Non-Impairment of Existing Franchises, Licenses, and Contracts. — All
franchises, licenses, contracts, and other similar arrangements granted by or entered
into by the Philippine Amusement and Gaming Corporation (PAGCOR) 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
remain in full force and effect until their expiration; Provided, that these shall not exceed
the term of the PAGCOR's franchise. Thereafter, such licenses, contracts, and other
similar arrangements shall not be renewed or extended, unless the licensee, contracting
party, or grantee, as the case may be, is granted a legislative franchise by Congress;
Provided, further, any such franchise may, by law, be altered, amended, or repealed

when the common good so requires.


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SEC. 6. Separability Clause. — If any provision of this Act is declared invalid or
unconstitutional, the other provisions not affected thereby shall remain in full force and

effect.
SEC. 7. Repealing Clause. — All laws, decrees, executive orders and issuances,
rules and regulations, and other issuances, or parts thereof, that are inconsistent with

the provisions of this Act are hereby repealed or modified accordingly.

SEC. 8. Effectivity Clause. - This Act shall take effect fifteen (15) days after its

publication in the Official Gazette or a newspaper of general circulation.

Approved,