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Chan Robles Virtual Law Library
PRESIDENTIAL DECREE NO. 1869
PRESIDENTIAL DECREE NO. 1869 -
CONSOLIDATING AND AMENDING PRESIDENTIAL DECREE NOS. 1067-A, 1067-B,
1067-C, 1399 AND 1632, RELATIVE TO THE FRANCHISE AND POWERS OF THE
PHILIPPINE AMUSEMENT AND GAMING CORPORATION (PAGCOR)
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chanroblesvirtualawlibrary
WHEREAS,
Presidential Decree No. 1067-A, 1067-B, 1067-C, 1399 and 1632, relative
to the Franchise and Powers of the Philippine Amusement and Gaming
Corporation (PAGCOR), were enacted to enable the Government to regulate
and centralized thru an appropriate institution all games of chance
authorized by existing franchise or permitted by law; chanroblesvirtualawlibrary
WHEREAS, to facilitate the enforcement and application of the
above-mentioned Presidential Decrees, it is imperative to consolidate
them into one statute;chanroblesvirtualawlibrary
WHEREAS, since its creation in 1977, PAGCOR has demonstrated its
reliability as a source of income for the Government, particularly for
the funding of government infrastructure projects, such that, as of
December 1982, PAGCOR has generated gross revenue of P1.677 Billion,
contributing P956 Million as the 60% share of the Government plus P83
Million in the form of 5% franchise tax;chanroblesvirtualawlibrary
WHEREAS, PAGCOR's operation has enabled the Government to identify the
potential sources of additional revenue, provided games of chances are
strictly managed and made subject to close scrutiny, regulation,
supervision and control by the Government;chanroblesvirtualawlibrary
WHEREAS, to make it more dynamic and effective in its tasks, PAGCOR
should now be reorganized by (a) increasing the participation of the
private sector in the subscription of the authorized capital stock of
PAGCOR and by adjusting the share of the Government in the gross
earning to 50%; provided, that the annual income of the Government is
not less than P150 Million and, if it is less, then the share of the
Government shall be 60% of the gross earnings; (b) providing for a
settlement of the portion of the Government's share that was utilized
for the stabilization of casino operations, and (c) providing for
greater flexibility in operation by limiting governmental audit only to
the determination of the 5% franchise tax and the Government's share of
50% of the gross earnings; chanroblesvirtualawlibrary
WHEREAS, in order to make PAGCOR's regulatory powers more effective, it
is necessary that businesses primarily engaged in gambling operations
be affiliated with PAGCOR, and become subject to its regulatory powers
with respect to operation, capitalization and organizational structure;chanroblesvirtualawlibrary
WHEREAS, under Presidential Decree No. 1416, as amended, the President
of the Philippines is authorized to reorganized the administrative
structure of government offices:cralaw:red
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines,
by virtue of the powers vested in me by the Constitution and by
Presidential Decree No. 1416, as amended, do hereby decree;chanroblesvirtualawlibrary
TITLE I — GENERAL PROVISIONS
Section 1. Declaration of Policy. — It is hereby
declared to be the policy of the State to centralize and integrate all
games of chance not heretofore authorized by existing franchises or
permitted by law in order to attain the following objectives:cralaw:red
(a) To centralize and integrate the right and
authority to operate and conduct games of chance into one corporate
entity to be controlled, administered and supervised by the Government;chanroblesvirtualawlibrary
(b) To establish and operate clubs and casinos, for
amusement and recreation, including sports gaming pools (basketball,
football, lotteries, etc.) and such other forms of amusement and
recreation including games of chance, which may be allowed by law
within the territorial jurisdiction of the Philippines and which
will:(1) generate sources of additional revenue to fund infrastructure
and socio-civic projects, such as flood control programs,
beautification, sewerage and sewage projects, Tulungan ng Bayan
Centers, Nutritional Programs, Population Control and such other
essential public services; (2) create recreation and integrated
facilities which will expand and improve the country's existing tourist
attractions; and (3) minimize, if not totally eradicate, the evils,
malpractices and corruptions that are normally prevalent in the conduct
and operation of gambling clubs and casinos without direct government
involvement. chanroblesvirtualawlibrary
TITLE II — CREATION OF PHILIPPINE AMUSEMENT AND GAMING CORPORATION
Section 2. Philippine Amusement and Gaming
Corporation (PAGCOR), Creation and Purpose. — To implement State policy
and pursue the objectives set forth in the preceding Section, there is
hereby created a body corporate to be known as the Philippine Amusement
and Gaming Corporation, hereinafter referred to as the "Corporation",
which shall have its principal office in Metropolitan Manila. The
Corporation may establish such offices, agencies, subsidiaries, or
branches in the Philippines as its operations would require and its
Board of Directors may determine
Section 3. Corporate Powers. — The Corporation shall
have the following powers and functions, among others: chanroblesvirtualawlibrary
a) to prescribe its By-Laws;chanroblesvirtualawlibrary
b) to adopt, alter and use a corporate seal;chanroblesvirtualawlibrary
c) to own real or personal property, and to sell,
alienate, mortgage, encumber or otherwise dispose of the same;chanroblesvirtualawlibrary
d) to make contracts, and to sue and be sued;chanroblesvirtualawlibrary
e) to employ such officers and personnel as may be
necessary or proper to carry on its business; chanroblesvirtualawlibrary
f) to acquire, lease or maintain, whether on land,
water orr, personal property and such other equipment and facilities as
may be necessary or proper to carry out its purposes;chanroblesvirtualawlibrary
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;chanroblesvirtualawlibrary
h) to enter into, make, perform, and carry out
contracts of every kind and for any lawful purpose pertaining to the
business of the Corporation, or in any manner incident thereto, as
principal, agent or otherwise, with any person, firm, association, or
corporation.
i) to borrow money from local or foreign sources as
may be necessary or proper for its operations;chanroblesvirtualawlibrary
j) 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; chanroblesvirtualawlibrary
k) to perform such other powers and functions as may
be provided by law; and
l) to do anything and everything necessary, proper,
desirable, convenient or suitable for the accomplishment of any of the
purpose 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.
Section 4. Authorized Capital Stock. — The
Corporation shall have an authorized capital stock divided into one
million voting and no par value shares, to be subscribed, paid for and
voted as follows:cralaw:red
a) 550,000 shares of stock to be subscribed to and
paid for by the Government of the Republic of the Philippines at an
original issue value of P200.00 per share; and
b) 450,000 shares remaining may be subscribed to by
persons or entities acceptable to the Board of Directors at issue value
to be determined by such Board of Directors. chanroblesvirtualawlibrary
The voting power pertaining to shares of stock subscribed to by the
Government of the Republic of the Philippines shall be vested in the
President of the Philippines or in such person or persons as he may
designate.
The voting power pertaining to shares of stock subscribed by private
persons or entities shall be vested in them.
Section 5. Government Investment. — The Government
advances to the Corporation authorized on May 29, 1978, having reached
the amount of P70,430,725.03, shall be converted into equity as part of
the investment of the Government to be applied to the subscription of
550,000 shares.
Section 6. Board of Directors. — The Corporation
shall be governed and its activities be directed, controlled and
managed by a Board of Directors, hereinafter referred to as the Board,
composed of five (5) members, three (3) of whom shall come from the
Government sector and shall be appointed by the President, while the
other two (2) shall be from the private sector, who own at least 1
share of stock in the Corporation and who shall be elected by the
stockholders of the corporation in the annual general meeting or in a
special meeting called for such purpose.
Each Director shall serve for a term of one (1) year and until his
successor shall have been duly appointed and qualified.
Section 7. Powers, Functions and Duties of the Board
of Directors. — The Board shall have the following powers, functions
and duties;chanroblesvirtualawlibrary
a) To allocate and distribute, with the approval of
the Office of the President of the Philippines, the earnings of the
Corporation earmarked to finance infrastructure and socio-civic
projects; chanroblesvirtualawlibrary
b) To designate the commercial bank that shall act as
the depository bank of the Corporation and/or trustee of the funds of
the Corporation;chanroblesvirtualawlibrary
c) To prepare and approve at the beginning of each
calendar year the budget that may be necessary under any franchise
granted to it, to insure the smooth operation of the Corporation; and
to evaluate and approve budgets submitted to it by other corporations
or entities with which it might have any existing contractual
arrangement;chanroblesvirtualawlibrary
d) To submit to the Office of the President of the
Philippines before the end of February of each year a list of all the
infrastructure and/or socio-civic projects that might have been
financed from the Corporation's earnings, and to submit such periodic
or other reports as may be required of it from time to time; and
e) To perform such other powers, functions and duties
as may be directed and authorized by the President of the Philippines
or as may be necessary or proper for the accomplishment of its purposes
and objectives.
TITLE III — AFFILIATION PROVISIONS
Section 8. Registration. — All persons primarily
engaged in gambling, together with their allied business, with contract
or franchise from the Corporation, shall register and affiliate their
businesses with the Corporation. The Corporation shall issue the
corresponding certificates of affiliation upon compliance by the
registering entity with the promulgated rules and regulations thereon.
Section 9. Regulatory Power. — The Corporation shall
maintain a Registry of the affiliated entities, and shall exercise all
the powers, authority and the responsibilities vested in the Securities
and Exchange Commission over such affiliated entities mentioned under
the preceding section, including but not limited to amendments of
Articles of Incorporation and By-Laws, changes in corporate term,
structure, capitalization and other matters concerning the operation of
the affiliating entities, the provisions of the Corporation Code of the
Philippines to the contrary notwithstanding, except only with respect
to original incorporation. chanroblesvirtualawlibrary
TITLE IV — GRANT OF FRANCHISE
Section 10. Nature and term of franchise. — Subject
to the terms and conditions established in this Decree, the Corporation
is hereby granted for a period of twenty-five (25) years, renewable for
another twenty-five (25) years, the rights, privilege and authority to
operate and maintain gambling casinos, clubs, and other recreation or
amusement places, sports, gaming pools, i.e. basketball, football,
lotteries, etc. whether on land or sea, within the territorial
jurisdiction of the Republic of the Philippines.
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:cralaw:red
(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 in the aggregate exceed ten (10%) percent of the
gross income; chanroblesvirtualawlibrary
(2) 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;chanroblesvirtualawlibrary
(3) Acquire the right of way or access to or thru
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;chanroblesvirtualawlibrary
(4) Build or construct structures, buildings
castways, piers, decks, as well as any other form of landing and
boarding facilities for its floating casinos; and chanroblesvirtualawlibrary
(5) 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.
Section 12. Special Condition of Franchise. — After
deducting five (5%) percent as Franchise Tax, the Fifty (50%) percent
share of the Government in the aggregate gross earnings of the
Corporation from this Franchise shall be immediately set aside and
allocated to fund the following infrastructure and socio-civil projects
within the Metropolitan Manila Area:cralaw:red
(a) Flood Control
(b) Sewerage and Sewage
(c) Nutritional Control
(d) Population Control
(e) Tulungan ng Bayan Centers
(f) Beautification
(g) Kilusang Kabuhayan at Kaunlaran (KKK) projects;
provided, that should the aggregate gross earning be less than
P150,000,000.00, the amount to be allocated to fund the above-mentioned
project shall be equivalent to sixty (60%) percent of the aggregate
gross earning. chanroblesvirtualawlibrary
In addition to the priority infrastructure and socio-civic projects
with the Metropolitan Manila specifically enumerated above, the share
of the Government in the aggregate gross earnings derived by the
Corporate from this Franchise may also be appropriated and allocated to
fund and finance infrastructure and/or socio-civic projects throughout
the Philippines as may be directed and authorized by the Office of the
President of the Philippines.
Section 13. Exemptions. —chanroblesvirtualawlibrary
(1) Customs duties, taxes and other imposts on
importations. — All importations of equipment, vehicles, automobiles,
boats, ships, barges,rcraft and such other gambling paraphernalia,
including accessories or related facilities, for the sole and exclusive
use of the casinos, the proper and efficient management and
administration thereof, and such other clubs, recreation or amusement
places to be established under and by virtue of this Franchise shall be
exempt from the payment of all kinds of customs duties, taxes and other
imposts, including all kinds of fees, levies, or charges of any kind or
nature, whether National or Local. chanroblesvirtualawlibrary
Vessels and/or accessory ferry boats imported or to be imported by any
corporation having existing contractual arrangements with the
Corporation, for the sole and exclusive use of the casino or to be used
to service the operations and requirements of the casino, shall
likewise be totally exempt from the payment of all customs duties,
taxes and other imposts, including all kinds of fees, levies,
assessments or charges of any kind or nature, whether National or Local.
(2) Income and other taxes. — (a) Franchise Holder:
No tax of any kind or form, income or otherwise, as well as fees,
charges or levies of whatever nature, whether National or Local, shall
be assessed and collected under this Franchise from the Corporation;
nor shall any form of tax or charge attach in any way to the earnings
of the Corporation, except a Franchise Tax of five (5%) percent of the
gross revenue or earnings derived by the Corporation from its operation
under this Franchise. Such tax shall be due and payable quarterly to
the National Government and shall be in lieu of all kinds of taxes,
levies, fees or assessments of any kind, nature or description, levied,
established or collected by any municipal, provincial, or national
government authority.
(b) Others: The exemptions herein granted for
earnings derived from the operations conducted under the franchise
specifically from the payment of any tax, income or otherwise, as well
as any form of charges, fees or levies, shall inure to the benefit of
and extend to corporation(s), association(s), agency(ies), or
individual(s) with whom the Corporation or operator has any contractual
relationship in connection with the operations of the casino(s)
authorized to be conducted under this Franchise and to those receiving
compensation or other remuneration from the Corporation or operator as
a result of essential facilities furnished and/or technical services
rendered to the Corporation or operator.
The fee or remuneration of foreign entertainers contracted by the
Corporation or operator in pursuance of this provision shall be free of
any tax.
(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:cralaw:red
(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);chanroblesvirtualawlibrary
(b) Government bonds, securities, treasury notes, or
debentures; or
(c) BOI — registered or export-oriented
corporation(s).
(4) Utilization of Foreign Currencies. — The
Corporation shall have the right and authority, solely and exclusively
in connection with the operations of the casino(s), to purchase,
receive, exchange and disburse foreign exchange, subject to the
following terms and conditions: chanroblesvirtualawlibrary
(a) A specific area in the casino(s) or gaming pit
shall be put up solely exclusively for players and patrons utilizing
foreign currencies;chanroblesvirtualawlibrary
(b) The Corporation shall appoint and designate a
duly accredited commercial bank agent of the Central Bank, to handle,
administrative and manage the use of foreign currencies in the
casino(s);chanroblesvirtualawlibrary
(c) The Corporation shall provide an office at
casino(s) exclusively for the employees of the designated bank, agent
of the Central Bank, where the Corporation shall maintain a dollar
account which will be utilized exclusively for the above purpose and
the casino dollar treasury employees;chanroblesvirtualawlibrary
(d) Only persons with foreign passports or
certificates of identity (for Hong Kong patron only) duly issued by the
government or country of their residence will be allowed to play in the
foreign exchange gaming pit;chanroblesvirtualawlibrary
(e) Only foreign exchange prescribe to form part of
the Philippine International Reserve and the following foreign exchange
currencies: Australian Dollar, Singapore Dollar, Hong Kong Dollar,
shall be used in this gaming pit;chanroblesvirtualawlibrary
(f) The disbursement, administration, management and
recording of foreign exchange currencies used in the casino(s) shall be
carried out in accordance with existing foreign exchange regulations;
and periodical reports of the transactions in such foreign exchange
currencies by the Corporation shall be duly recorded and reported to
the Central Bank thru the designated Agent Bank; and
(g) The Corporation shall issue the necessary rules
and regulations for the guidance and information of players qualified
to participate in the foreign exchange gaming pit, in order to make
certain that the terms and conditions as above set forth are strictly
complied with.
Section 14. Other Conditions. —chanroblesvirtualawlibrary
(1) Place. — The Corporation shall conduct the
gambling activities or games of chance on land or water within the
territorial jurisdiction of the Republic of the Philippines. When
conducted on water, the Corporation shall have the right to dock the
floating casino(s) in any part of the Philippines where vessels/boats
are authorized to dock under the Customs and Maritime Laws.
(2) Time. — Gambling activities may be held and
conducted at anytime of the day or night; provided, however, that in
the places where curfew hours are observe, all players and personnel of
the gambling casinos shall remain within the premises of the casinos.
(3) Persons allowed to play. —chanroblesvirtualawlibrary
(a) Tourist and/or foreigners who are not residents
of the Philippines;chanroblesvirtualawlibrary
(b) Residents with a gross income for the previous
year of at least P50,000.00, which fact shall be certified to by the
Bureau of Internal Revenue; and
(c) The number of guests of the above-mentioned
qualified persons shall be limited to two (2) only; provided, that the
said guests are at least 21 years of age;chanroblesvirtualawlibrary
(4) Persons not allowed to play. —chanroblesvirtualawlibrary
(a) Government officials connected directly with the
operation of the Government or any of its agencies;chanroblesvirtualawlibrary
(b) Members of the Armed Forces of the Philippines,
including the Army, Navy,r Force or Constabulary; and
(c) Persons under 21 years of age or students of any
school, college or university in the Philippines.
From these are excepted the personnel employed by the casinos, special
guests, or those who at the discretion of the Management may be allowed
to stay in the premises. chanroblesvirtualawlibrary
(5) Operation of related services. — The Corporation
is authorized to operate such necessary and related services, shows and
entertainment. Any income that may be realized from these related
services shall not be included as part of the income of the Corporation
for the purpose of applying the franchise tax, but the same shall be
considered as a separate income of the Corporation and shall be subject
to income tax.
TITLE V — GOVERNMENT AUDIT
Section 15. Auditor. — The Commission of Audit or 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
earnings pertaining to the Government as its share.
TITLE VI — EXEMPTION FROM CIVIL SERVICE LAW
Section 16. Exemption. — All position in the
Corporation, whether technical, administrative, professional, or
managerial are exempt from the provisions of the Civil Service Law,
rules and regulations, and shall be governed only by the personnel
management policies set by the Board of Directors. All employees of the
casinos and related services shall be classified as "Confidential"
appointee.
TITLE VII — TRANSITORY PROVISIONS
Section 17. Transitory Provisions. — The properties,
monies, assets, rights, choses in action, obligations, liabilities,
records and contracts of the Philippine Amusement and Gaming
Corporation (PAGCOR) under Presidential Decree Nos. 1067-A, 1067-B,
1067-C, 1399 and 1632 shall continue to be vested in and assumed by the
Corporation, pursuant to this Decree.
Likewise, all personnel of PAGCOR under the above-mentioned Decree
shall be absorbed by the Corporation under this Decree and shall remain
in their respective positions without demotion in rank or reduction in
salary: provided, that employees who shall be separated from the
Corporation shall be given at least one month gratuity for every full
year of service, a fraction of over six months being considered a full
year, but in no case more than twenty-four months salary, in addition
to all benefits to which they may be entitled under existing laws,
rules and regulations.
TITLE VIII — REPEALING, SEPARABILITY AND EFFECTIVITY CLAUSES
Section 18. Repealing Clause. — All laws, decrees,
executive, orders, administrative orders, rules or regulations,
inconsistent herewith are hereby repealed, amended or modified
accordingly. chanroblesvirtualawlibrary
Section 19. Separability Clause. — The provisions of
this Decree are hereby declared to be separable, and in the event any
one or more of such provisions are held unconstitutional, the validity
of the other provisions shall not be affected.
Section 20. Effectivity. — This Decree shall take
effect immediately.
Done in the City of Manila,
this 11th day of July, in the year of Our Lord, nineteen hundred and
eighty-three.
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