Presidential Decree No. 1869 is a Philippine gambling law that consolidates Presidential Decrees No. 1067-a, 1067-b, 1067-c, 1399, and 1632. PD 1869 is relevant to the franchise and powers of the Philippine Amusement and Gaming Corporation (PAGCOR). The decree was enacted by the government to regulate all games of chance through an appropriate institution either authorized by an existing franchise or permitted by law. This decree was signed by then President Ferdinand Marcos and took effect in 1983.
General Provisions Of Presidential Decree 1869
Among creation, this Philippine gambling law mandated the Philippine Amusement and Gaming Corporation (PAGCOR) with these general provisions.
- To centralize and integrate all games of chance.
- To centralize and integrate the right and authority to operate and conduct games of chance into a corporate entity that can be controlled, monitored and administered by the Philippine government.
- To establish and operate clubs and casinos for amusement and recreation.
- To generate sources of additional revenue to fund infrastructure and socio-civic projects.
- Create recreation and integrated facilities to promote tourism.
- Minimize or eradicate the operations of illegal gambling clubs and casinos.
The Creation Of PAGCOR
Section 2 is the creation and purpose of the Philippine Amusement and Gaming Corporation (PAGCOR). PAGCOR was created to implement state policies and pursue the objectives of the general provisions listed in PD 1869. It is stated that the newly formed government entity “PAGCOR” will have a corporate office in Metropolitan Manila and the Board of Directors can establish whatever subsidiaries, branches or offices it may need or determine useful.
PAGCOR’s Corporate Powers
Section 3 defines the corporate powers and functions of PAGCOR and outlines how the corporation should conduct business depending on the situation. This section holds a lot of corporate information but some of the more important factors are:
- Prescribe by-laws
- Use a corporate seal
- Own, sell, mortgage property
- Make contracts, sue or be sued
- Employ officers and personnel
- Acquire, lease, maintain land
- Import, buy, sell, trade merchandise
- Carry out contracts
- Borrow money from local or foreign sources
- Invest its funds
The stock for the PAGCOR is to be sold at a value determined by the Board of Directors. Based on a 1 million stock scale, 550,000 shares are to be paid for and controlled by the government of the Republic of the Philippines at an original issue value of P200.00 per share. The remaining 450,000 shares are to be sold at the discretion of the Board of Directors.
Board Of Directors
The corporation will be controlled by the Office of the President and the Board of Directors shall be comprised of 5 members. 3 members will come from the government sector and be appointed by the President, the other 2 members will come from the private sector and will be elected by stockholders. Each member will serve a term of 1 year and until his successor is duly appointed.
Powers And Functions Of The Board Of Directors
The duties, powers, and functions of the Board of Directors are addressed and laid out in Section 7 of PD 1869. Some of the important powers and functions are:
- Allocate and distribute the corporation’s earnings to fund socio-civic projects and infrastructure.
- Designate a commercial bank.
- Prepare a budget.
- Submit a list of all socio-civic and infrastructure funded projects.
- Perform functions authorized by the president to accomplish its purpose and objectives.
Grant Of Franchise
In Section 10 PAGCOR is granted 25 years the right and privilege to operate and maintain gambling casinos, sports, clubs, gaming pools on land and sea in the jurisdiction of the Republic of the Philippines. In addition, the PAGCOR corporation is granted to undertake the following:
- Enter into operating and managing contracts.
- Purchase foreign exchange.
- Acquire public waterways or harbors to use in connection with authorized casino operations.
- Build and construct structures.
- Set aside funds for Flood control, Sewerage, Nutritional control, Population control, Tulungan ng Bayan centers, and Beautification.
Exemptions And Other Conditions Of PD 1869
PD 1869 goes on to describe exemptions and other conditions for the franchise in sections 13 & 14. The franchise’s customs duties are exempt from taxes, fees or charges of any kind if it is gambling related. The franchises vessels or accessories for the use of casinos or for the use of operations and requirements of the casinos will also be exempt from any taxes or fees. Another exemption is that the franchise does not have to pay tax on income since it is a government company.
The franchise can also utilize foreign currencies in the casinos and purchase, receive, exchange and disburse those funds if they are in connection with the operations of the casino. Other exemptions in connection to foreign currencies include:
- A specific area for patrons using foreign currencies.
- Appoint a designated commercial bank agent to handle foreign currencies.
- Only people with foreign passports will be allowed to play in the foreign exchange pit.
Other Terms of Presidential Decree 1869
The other conditions section of PD 1869 has some useful information when it comes to gambling in the Philippines. It starts off by stating that casinos can run 24/7 and that tourist, foreigners, and residents with an annual income of over P50,000 can legally play at the casinos. Qualified players can bring 2 guests over the age of 21.
The next part of this decree describes the people who are not allowed to play. The list includes government officials, members of the armed forces, and anyone under 21 years of age.
Government Audit And Civil Service Law Exemption
The Commission of Audit or any government agency that the President designates or appoints shall be the auditor for the corporation. Auditor salaries and other expenses will be paid by the corporation. All positions in the corporation are exempt from civil service and shall only be governed by the management policies set forth by the Board of Directors. All personal members of PAGCOR shall be absorbed by the corporation under this decree. Employees separated from the corporation will be granted one-month gratuity for each year they were in service to the corporation in addition to all benefits for no more than 24 months.