Amending Certain Sections Of Presidential Decree No. 1067-A DatedJanuary 1, 1977, Entitled "Creating The Philippine Amusements And Gaming Corporation, Defining Its Powers And Functions, Pro

Case Overview and Summary

Summary of Presidential Decree No. 1399

Board of Directors:
- The Philippine Amusements and Gaming Corporation (PAGCOR) shall be governed by a Board of Directors composed of 5 members. (Section 1)
- The members are: (1) Chairman of the National Development Corporation as Chairman, (2) Government Corporate Counsel, (3) Representative from the Office of the Executive Assistant of the Office of the President, and (4) Two members appointed by the President from the private sector. (Section 1)

Revenue Allocation:
- 60% of the aggregate gross earnings derived by the Franchise Holder (PAGCOR) shall be allocated to fund infrastructure and socio-civic projects. (Section 2)
- The 60% share can be appropriated and allocated to fund projects within Metro Manila, such as: (1) Flood Control, (2) Sewerage and Sewerage, (3) Nutritional Programs, (4) Population Control, (5) "Tulungan ng Bayan" Centers, and (6) Beautification. (Section 2)
- The 60% share can also be appropriated and allocated to fund infrastructure and/or socio-civic projects throughout the Philippines, as directed and authorized by the Office of the President. (Section 2)

Tax Exemptions:
- All importations of equipment, vehicles, boats, ships, barges, aircraft, gambling paraphernalia, and related facilities for the sole and exclusive use of the casinos shall be exempt from duties, taxes, fees, levies, or charges. (Section 3)
- Vessels and/or ferry boats imported for the sole and exclusive use of the casino or to service the casino operations shall be totally exempt from all taxes, duties, fees, levies, assessments, or charges, whether National or local. (Section 3)
- The Franchise Holder (PAGCOR) shall be exempt from all taxes, except a Franchise Tax of 5% of the gross revenue or earnings, which shall be paid quarterly to the National Government in lieu of all other taxes, levies, fees, or assessments. (Section 3)
- The tax exemption on earnings shall extend to corporations, associations, agencies, or individuals with contractual relationships with the Franchise Holder in connection with the casino operations, and those receiving compensation or remuneration from the Franchise Holder. (Section 3)
- Dividend income from the Franchise Holder shall be subject to a final flat income tax rate of 10%, unless the dividend is invested within 6 months in: (1) Casino operations or affiliate activities, (2) Government bonds/securities, (3) BOI-registered or export-oriented corporations, (4) Any productive enterprise, or (5) Payment of government or guaranteed indebtedness. (Section 3)

Foreign Exchange:
- The Franchise Holder shall have the right and authority to purchase, receive, exchange, and disburse foreign exchange solely and exclusively in connection with the casino operations, subject to certain conditions. (Section 3)
- A specific area in the casinos shall be designated for players and patrons utilizing foreign currencies. (Section 3)
- A designated commercial bank, agent of the Central Bank, shall handle and manage the use of foreign currencies in the casinos. (Section 3)
- Only persons with foreign passports or certificates of identity (for Hong Kong patrons) will be allowed to play in the foreign exchange gaming pit. (Section 3)
- Only foreign exchange currencies prescribed to form part of the Philippine International Reserve, Australian Dollar, Singapore Dollar, and Hong Kong Dollar shall be used in the foreign exchange gaming pit. (Section 3)
- The disbursements, administration, management, and recording of foreign exchange currencies in the casinos shall be carried out in accordance with existing foreign exchange regulations and reported to the Central Bank through the designated Agent Bank. (Section 3)

Location:
- The Franchise Holder shall conduct gambling activities or games of chance on land or water within the territorial jurisdiction of the Republic of the Philippines. (Section 4)
- When conducted on water, the Franchise Holder shall have the right to dock the floating casinos in any part of the Philippines where vessels/boats are authorized to dock under the Customs and Maritime Laws. (Section 4)