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EIGHTEENTH CONGRESS OF THE. ) : RECEIVED
REPUBLIC OF THE PHILIPPINES ) DATE:
First Regular Session ) TINE
HOUSE OF REPRESENTATIVES
H.B,No, 4528

Introduced by Rep. Vilma Santos-Recto
6" District of Batangas

AN ACT
CREATING THE PHILIPPINE AMUSEMENT AND GAMING COMMISSION
(PAGCOM), AUTHORIZING THE APPROPRIATION OF FUNDS THEREFOR,
AND FOR OTHER PURPOSES

EXPLANATORY NOTE

This bill seeks to separate the regulatory function of the Philippine Amusement and
Gaming Corporation (PAGCOR) from its role as operator of gaming activities. These
distinct functions should not be placed under one agency in order to maintain a separation of
powers and uphold a system of checks and balances.

There should be a clear separation between the regulatory and proprietary activities of
PAGCOR in order to achieve a level playing field with other private gaming corporations.
The government also has no business running gambling facilities. Instead, the government
should adopt the policy that its role should only be steering and not rowing. This means
government should deal with coordination and control of gaming entities but should not get
involved in direct gaming operation.

The delineation of functions will also allow the regulatory agency to focus on the
supervision and monitoring of gaming operators to ensure that they comply with the
established rules and regulations including compliance with the required remittance of
government share to the National Treasury.


Under the bill, the present PAGCOR is abolished while a Philippine Amusement and
Gaming Commission (PAGCOM) is created which will discharge the function of regulating
the gaming operations in the country.

‘The existing PAGCOR casinos shall be privatized by the Privatization and
Management Office (PMO) and proceeds from such privatization shall be remitted to the
National Treasury and shall form part of the General Fund to be available for expenditure
upon authorization of Congress through the annual General Appropriations Act (GAA).

The gaming facilities shall focus on foreign tourists. A license shall be issued to
gaming operators only in Local Government Units (LGUs) where the tourist arrivals as
certified by the Department of Tourism are 100,000 foreign tourists per annum or more.
Furthermore, in order to discourage locals from patronizing the casino, a minimum of Php
1,000 entrance fee shall be charged to residents.

‘The PAGCOM shall collect from casino operators five percent (5%) as gross revenue
tax. Further, after such deduction, PAGCOM shall collect additional twenty-five percent
(25%) from the aggregate gross earnings, which shall be earmarked for the priority projects
of the LGU hosting the gaming facility; the creation of a Trust Fund in the Department of
Social Welfare and Development intended for the establishment and operation of
rehabilitation centers for the treatment of addictions including compulsive gambling, drug
dependency and alcoholism, among others; PAGCOM’s administrative cost and other
priority social services programs of the National Government. The 25% share of the National
Government shall be reflected in the GAA as a Special Purpose Fund.

In order to ease the impact of the separation from government service, PAGCOR
officials and employees who will opt not to be absorbed by the new PAGCOM, will receive a
Severance Mitigation Package (SMP) based on the recommendation of the Governance
Commission for Government-Owned and -Controlled Corporations (GCG) and approval of
the President.

‘The SMP benefits shall be on top of whatever separation and retirement benefits those
officials and employees of the abolished PAGCOR may be entitled to under existing laws.


However, once the SMP is availed of, they shall not be eligible for employment in the
PAGCOM for the next five years from separation or retirement.

On the other hand, those officials and employees who will opt to stay with PAGCOM
and will be able to get a regular plantilla position shall enjoy a compensation package that is
exempted from the Salary Standardization Law and should approximate if not exceed what
they have been receiving from the abolished PAGCOR subject to the approval of the
President upon recommendation of the GCG.

This bill will ensure the effective operation of gaming corporations in order to provide

the government with more funds for the implementation of priorit s. Hence,

approval of this bill is eamnestly sought.

VILMA SANTOS-RECTO


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EIGHTEENTH CONGRESS OF THE. )

REPUBLIC OF THE PHILIPPINES )
First Regular Session )
HOUSE OF REPRESENTATIVES
HB. No, 4528

Introduced by Rep. Vilma Santos-Recto
6" District of Batangas

AN ACT
CREATING THE PHILIPPINE AMUSEMENT AND GAMING COMMISSION
(PAGCOM), AUTHORIZING THE APPROPRIATION OF FUNDS THEREFOR,
AND FOR OTHER PURPOSES

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

Chapter I
GENERAL PROVISIONS

Section 1. Short Title. - This Act shall be known as the “Philippine Amusement and
Gaming Commission (PAGCOM) Act”.

Sec. 2. Declaration of Policy. — It is hereby declared policy of the State to integrate a
centralized and efficient regulatory service in the Philippines in the conduct of operation for
all games of chance and other similar forms of amusement and recreation by providing for
the creation of a Commission, in such a manner as to promote transparency, efficiency and
business viability within its jurisdiction. In the pursuit of this policy, this Act shall have the
following objectives:

(@) To clearly delineate the operation of gaming activities, on one hand, and

regulation, on the other;

(b) To centralize and consolidate all forms of regulatory power, including licensing

and enforcement, of gaming activities in one governmental entity in order to

promote efficiency, transparency and good governance;

(©) To place the operation of gaming activities in the hands of the private sector by


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privatizing the current gaming operations of the Philippine Amusement and
Gaming Corporation (PAGCOR);

(d) To establish, regulate and issue a license to operate business activities of all games
of chance and such other similar forms of amusement and recreation, within the
territorial jurisdiction of the Philippines;

(©) To ensure that such businesses will generate sources of additional revenue for the
national government;

(f) To eradicate the evils, malpractices and incidence of corruption that are prevalent
in the conduct and operation of gaming clubs and casinos which operate in the
absence of governmental supervision;

(g) To expand and improve the tourism industry; and

(h) To introduce additional safeguards in the regulation and operation of gaming
activities.

SEC. 3. Definition of Terms. - For purposes of this Act, the terms:

(a) Commission shall refer to the Philippine Amusement and Gaming Commission
created under Section 4 of this Act.

(b) President shall refer to the President of the Republic of the Philippines.

(©) Philippine Amusement and Gaming Corporation (PAGCOR) shall refer to the
Philippine Amusement and Gaming Corporation created under Presidential
Decree No. 1869, as amended by Republic Act No. 9487.

(d) Privatization and Management Office (PMO) shall refer to the Privatization and
Management Office organized under Chapter 4 of Executive Order No. 323 (S.
2001).

Chapter I
PHILIPPINE AMUSEMENT AND GAMING COMMISSION
THE COMMISSION
Sec. 4. Creation. - There is hereby created and established an independent, quasi-
judicial regulatory body to be named the Philippine Amusement and Gaming Commission
(PAGCOM), hereinafter referred to as the Commission. For this purpose, the Commission
shall be attached to the Office of the President for supervision and control.

‘See. 5. Powers and Functions. - The Commission shall have the following powers and

functions:

(a) To provide comprehensive policy guidance for the promotion and development of

the Commission, as provided in this Act;


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(b) To ensure that the Commission performs its functions in a proper, efficient and
effective manner;

(©) To determine the organizational structure and staffing pattern of the Commission
in accordance with the provisions of this Act, subject to existing Department of
Budget and Management (DBM) and Civil Service Commission (CSC) rules and
regulations: Provided, That the PAGCOM compensation plan including a
performance incentive scheme for officials and employees shall be exempted ftom
the Salary Standardization Law but subject to the recommendation of the
Department of Budget and Management and approval of the President of the
Philippines;

(@) To decide on all matters relating to licenses, certificates, and permits for the
operation of gaming activities and prescribe the appropriate terms and conditions
thereof;

(©) To establish and maintain linkages with intemational gaming commissions,
associations or organizations of other countries, and international non-
governmental organizations whose main objective is regulation and supervision of
games of chance and other similar recreation and amusement activities;

(® To coordinate and cooperate with other goverment agencies and entities
concemed with any aspect involving the provisions of this Act;

(g) To prescribe rules of practice and procedures for its proceedings :

(h) To issue provisional remedies and interlocutory orders, including preliminary
injunction, whether prohibitory or mandatory, in all cases in which it has
jurisdiction, and in which cases the pertinent provisions of the Rules of Court shall
apply;

(i). To punish for contempt in accordance with the pertinent provisions of the Rules
of Court;

() To issue subpoena duces tecum and ad testificandum and summon witnesses to
appear in any proceedings of the Commission;

(k) To administer oaths and affirmations in the transaction and performance of their
official duties;

() To conduct investigations and hearings of complaints for violation of gaming

laws and of the Commission’s rules and regulations, orders, decisions and/or

rulings and to impose fines and/or penalties for such violations;


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(m)To determine, prescribe, approve and periodically review and adjust the manner
and method of payment of fees, costs, and penalties to be paid to or collected by
the Commission;

(n) To formulate policies, directives, programs and projects, as well as the rules and
regulations and guidelines to implement the provisions of this Act; and

(0) To exercise such other acts as are incidental to or are appropriate and necessary in
connection with the creation of the Commission.

Sec. 6. Composition, Qualification and Tenure. ~ The Commission shall be headed
by a Commissioner as Chairperson and four (4) Deputy Commissioners as members, all of
whom shall be appointed by the President for a term of three (3) years and may be
reappointed for another term unless removed for cause, They must be citizens of the
Phi
years of actual and distinguished experience in their respective fields.

The President, upon recommendation of the Commission, shall appoint an Executive

pines, of good moral character, holder of a college degree and with at least five (5)

Director. The appointee must be a citizen of the Philippines and of good moral character,
holder of a college degree and with at least three (3) years of actual and distinguished
experience in their respective fields. The Executive Director shall have the following powers
and functions:
(a) Advise and assist the Commission in the formulation and implementation of
the objectives, policies, plans and programs of the Commission;

(b) Direct and supervise officials and employees of the Commissi

(©) Prepare an annual report on the activities of the Commission at the close of
cach fiscal year and to submit a copy thereof to the President and Congress;
(d) Keep and maintain official records and reports of the proceedings of the
Commission;
(e) Oversee all the operational activities of the Commission;
(8) Coordinate the programs and projects of the Commission and be responsible
for its economical, efficient and effective administration;
(g) Administer oaths in connection with all matters relating to the business of
the Commission; and
(h) Perform such other duties as may be assigned by the Commissioner.
Any appointment to fill the vacancy in the foregoing provision arising from death,
removal, retirement or resignation shall be made only for the unexpired term.
Sec. 7. Meetings and Quorum. — In all cases, the Commission shall convene and act


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as a collegial body in all matters referred to in Section 5 of this Act. The Commission shall
meet at least once a month, or as determined by the Commission. The presence of at least
three (3) members shall constitute a quorum.

See. 8. Decision and Appeal. — In all cases or proceedings before the Commission,
the decision of the majority shall prevail. Decisions of the Commission shall become final
and executory fifteen (15) days from receipt thereof. Only one (1) motion for reconsideration
shall be filed with the Commission.

The decision, order or resolution of the Commission shall be appealable to the
Offfice of the President within thirty (30) days from receipt. The decision of the Office of the
President shall be final and executory unless stayed by an order of the Court of Appeals.

CHAPTER III
LICENSING REGULATIONS
Sec. 9. Registration and Licensing of Gaming Operators. ~ The Commission shall
register and issue license, authority, privilege or permit to gaming operators, subject to such

rules, guidelines, procedures and other issuances as the Commission may promulgate:

Provided, That licenses shall be issued to gaming operators only in municipalities and
cities with tourist arrivals of one hundred thousand (100,000) or more foreign tourists
annually as certified by the Department of Tourism (DOT) unless the gaming facility will
be located in a new entertainment resort facility and the DOT certifies as to the potential
tourist arrivals equivalent to or more than the required number: Provided, further, That the
PAGCOM shall require gaming operators to collect an entrance fee of not less than One
‘Thousand Pesos (P1,000) for local players.

The Commission shall also ensure that the granting and revocation of licenses,
authority, privilege or permits are carried out fairly, transparently, and without
discrimination,

Sec. 10. Special Condition on License-Holders. — After deducting the five percent
(5%) gross revenue tax, the Commission shall collect twenty-five percent (25%) of the
aggregate gross earings of License-Holders, which shall be remitted to the National
Treasury: Provided, That the equivalent amount shall be included in the General

Appropriations Act (GAA) as a Special Purpose Fund and shall be earmarked for the

Government Units (LGUs) hosting the gaming facilities; the Department of Social Welfare
and Development (DSWD) intended for the establishment and operation of rehabilitation
centers; and other priority social services programs of the National Government: Provided,

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further, That a Trust Fund is hereby created in the DSWD for the operation of rehabilitation
centers for all forms of addiction including compulsive gambling, drug dependency and
alcoholism.
CHAPTER IV
ABOLITION OF PAGCOR

Sec. 11. Abolition of the Philippine Amusement and Gaming Corporation
(PAGCOR). ~ The PAGCOR, created under Presidential Decree No. 1869, as amended by
Republic Act No. 9847, is hereby abolished.

All powers, duties and rights vested by law and exercised by PAGCOR in the
performance of its regulatory powers, is hereby transferred to the Commission.

lll assets, real and personal properties, except those that may be privatized under
Chapter V of this Act, including funds and revenues owned by or vested in the different
offices of PAGCOR are transferred to the Commission,

All contracts, records and documents relating to the powers and functions of the
abolished agency, its offices and branches are likewise transferred to the Commission.

CHAPTER V
PRIVATIZATION OF THE PHILIPPINE AMUSEMENT AND GAMING
CORPORATION (PAGCOR)

Sec. 12. Privatization of PAGCOR’s Operations. — All assets pertaining to the
operations of gaming activities of PAGCOR shall be privatized and disposed of in
accordance with this Act, and, as soon as practicable, the Commission on Audit (COA), in
coordination with PAGCOR, the Commission and the Privatization and Management Office
(PMO) shall conduct a complete accounting and inventory of such assets to determine and
ascertain their nature, description, amount and value, as well as other rights and obligations
pertaining thereto, if any.

Nothing herein shall be construed as preventing the PMO from causing the appraisal by a
third party of any of the assets prior to or in the course of preparing the privatization or
disposition plans for the said assets.

Sec. 13. Additional Mandate of the PMO. ~ In addition to its powers, duties and
functions under Executive Order No, 323 (s. 2001), as amended, the PMO shall, for and in
behalf of the National Government, take possession of, conserve, provisionally manage, and
dispose of the assets which have been identified for privatization and disposition by the

Commission.


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In the discharge of its mandate under Executive Order No. 323 (s. 2001) and this
Section, the PMO is hereby empowered to implement a specific marketing and disposition
program for privatization and disposition; to execute and deliver, on behalf of the National
Government, deeds of sale, contracts, trust instruments, and other legally operative
documents as may be necessary or appropriate to convey title to, take possession of, and
conserve, such assets; to engage external expertise as may be necessary in the fulfillment of
its tasks under this Act; to adopt internal rules and regulations in relation to the marketing and
disposition of the assets; and to submit periodic reports to the Commission on the status of
the disposition program.

Any and all sales and other modes of privatization or disposition or any form of
divestment or transmission of rights over these assets shall not be considered final unless
approved or ratified by the Commission.

Sec. 14. Powers of the PMO. — The PMO is hereby accorded discretionary powers
with regard to the preparation of the privatization plans and policies of the assets transferred
to it. The PMO is empowered to enter into sales through public bidding, negotiated sale,
lease, or any form of divestment or transmission of rights over the assets: Provided, That
operations of these assets or a partnership with the private sector in the management or
operation thereof prior to actual sale or disposition shall remain with the Commission.

Sec. 15. Commission to Determine Transfer Value. - The Commission is hereby
vested with full and complete powers and prerogatives to determine the indicative sale or
transfer valuations of the assets identified for privatization or disposition by the PMO, which
valuations shall be based on COA’s audit report or listing as adverted to or those made by a
reputable third-party appraisal firm: Provided, That any valuations approved by the
Commission shall not be deemed a condonation, waiver, or extinguishment of any obligation
by any third party to such assets.

Sec. 16. Reimbursement and Retention. — \n order to fulfill its additional mandate
under this section, the PMO shall be reimbursed for reasonable expenses incurred in the
management and disposition of these assets, subject to pertinent laws, rules and regulations.

Sec. 17. Remittance of Proceeds of Privatization. — All proceeds or receipts from the
privatization, sale or disposition of the assets, except portions thereof for operational
expenses of the Commission, or such amount approved by the Commission to be refunded to
the PMO under the preceding section, shall be remitted to the Bureau of Treasury (BTr).

Sec. 18. Reporting Requirements. — The Commission shall, on a semi-annual basis,
submit to the President and to Congress a report on the status of disposition of the assets,


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which shall include, among others, a description of the individual assets privatized and
disposed of, their purchasers, the consideration received, and the terms of payment as agreed
upon.
CHAPTER VI
SEPARATION AND RETIREMENT BENEFITS:

Sec. 19. Separation and Retirement Benefits. — Officials and employees of the
PAGCOR who choose to separate from government service or who shall choose to retire, if
eligible, shall be given a Severance Mitigation Package (SMP) in addition to other separation
and retirement benefits to which they may be entitled under existing laws and regulations,
and based on the recommendations of the Governance Commission on Government-Owned
and -Controlled Corporations (GCG) created under R.A. 10019 and approval of the President.

Provided, that no affected employee who opt to retire or separate from service shall
receive less than an aggregate amount of Two Hundred Thousand Pesos (Php 200,000.00)
as his retirement or separation benefit: Provided, further, That those who availed of the
benefits under the foregoing provisions shall not qualify for re-employment to the
Commission within five (5) years from the date of retirement or separation from service.

CHAPTER VII
FINAL PROVISIONS

Sec. 20. Funding. - The budgetary requirements for the operation of the Commission
shall be charged against the income of the PAGCOM.

The cost of retirement and separation benefits of officers and employees of the
abolished PAGCOR shall be charged to the funds of the Corporation before its privatization.

Sec. 21. Auditor. ~ The COA may appoint a representative who shall be the Auditor
of the Commission and such personnel as may be necessary to assist said representative in the
performance of his duties.

Sec. 22. Interim Period. ~ All incumbent officials and personnel of PAGCOR whose
positions are vital for the purposes for which this Act was created, shall continue to discharge
the functions of their positions until the Commission has been organized.

Sec. 23. Saving Clause. — Unless otherwise provided in this Act, rights and
privileges vested or acquired under the provisions of Presidential Decree 1869, as amended
by Republic Act No. 9487, its nature and term of franchise, prior to the effectivity of this
‘Act shall remain in full force and effect.

Sec. 24. Implementing Rules and Regulations. ~ Within ninety (90) days from the
date of effectivity of this Act, the Commission, the PMO, the Goverment Service Insurance

8


System (GSIS), the Social Security System (SSS), and the DBM, shall formulate the rules
and regulations for the proper implementation of this Act.

Sec. 25. Separability Clause. ~ If any part or provision of this Act shall be declared
unconstitutional, the other parts or provisions hereof which are not affected thereby, shall
continue to be in full force and effect.

Sec. 26. Repealing Clause. —

(a) Presidential Decree No. 1869, otherwise known as the PAGCOR Charter, as

amended by Republic Act No. 9487 is hereby repealed;

(b) All laws, executive issuances, orders and rules and regulations contrary to or
inconsistent with the provisions of this Act or any part thereof are hereby
repealed, amended and/or modified accordingly.

Notwithstanding the foregoing, nothing in this Act shall diminish the powers and
functions of agencies, relative to the operation and regulation of gaming activities, provided
under Republic Act Nos. 7922, 9490, 1169, as amended, and Presidential Decree Nos. 420
and 810.

Sec. 27. Effectivity. — This Act shall take effect fifteen (15) days after its complete
in the Official Gazette or in two (2) newspapers of general circulation.

publi
Approved,