Renewing for Another 25 Years the Franchise Granted to Metro Manila Turf Club, Inc. under Republic Act No. 7978

Case Overview and Summary

Summary of Republic Act No. 11505:

Renewal of Franchise
- Renews the franchise granted to Metro Manila Turf Club, Inc. under Republic Act No. 7978 and amended by Republic Act No. 8298 for another twenty-five (25) years from the effectivity of this Act. (Section 1)
- Authorizes the grantee to construct, operate and maintain one racetrack in the City of Kalookan, or anywhere within the provinces of Batangas, Cavite, Laguna, Rizal, and Quezon, establish branches for booking purposes, and hold or conduct horse races with betting. (Section 1)

Regulatory Authorities
- The Philippine Racing Commission (PHILRACOM) shall supervise and regulate the races conducted by the grantee, enforce laws and rules governing horse racing, frame and schedule races, oversee racetrack construction and safety, allocate prizes, and ensure security of racing. (Section 2)
- The Games and Amusements Board (GAB) shall continue to supervise and regulate betting in horse races. (Section 2)

Betting Operations
- The grantee or its authorized agents may offer, take or arrange bets for races conducted in or outside the Philippines, in person or electronically, anywhere in the Philippines, whether within or outside the racetrack, in on-track or off-track betting stations, a day in advance of and/or during scheduled races. (Section 3)
- No other entity or person other than the grantee or its authorized agents or licensees shall offer, take or arrange bets on any horse participating in races conducted by the grantee, or maintain or use a totalizator or other device for betting within or outside the grantee's premises. (Section 3)
- Violation of the above provision is punishable by a fine of not less than Twenty thousand pesos (P20,000.00) but not more than One hundred thousand pesos (P100,000.00), or by imprisonment of not more than six (6) months, or both, at the discretion of the court. (Section 4)

Use of Computerized and Mechanical Devices
- The grantee is authorized to provide and operate various mechanical, electrical, electronic or computerized devices, equipment and facilities for the effective conduct of its business, including but not limited to: photo patrol, automatic starter, electronic totalizator, photo finish devices, ticket sale machines, facilities for horse identification, drug testing facilities, weighing machines, sound systems, telecommunications and broadcast equipment, continuous and back-up power supply, and other instruments or devices to ensure clean and honest racing and betting. (Section 5)
- The grantee must provide and install the aforementioned equipment or facilities within three (3) years from the effectivity of this Act, or else the PHILRACOM shall suspend and prohibit the holding of races until such time as the equipment or facilities are provided and installed. (Section 5)
- The GAB shall assign auditors and inspectors to supervise and regulate the placing of bets, computation of dividends, and distribution of wager funds. (Section 5)

Distribution of Wager Funds and Breakage
- The total wager funds or gross receipts from the sale of betting tickets shall be apportioned as follows: 82% for dividends to winning ticket holders, 8.5% for the grantee's commission/fee, 8.5% for stakes or prizes and jockeys' bonuses, 0.5% for PHILRACOM (or GAB and Jockeys and Horse Trainers' Injury, Disability and Death Compensation Fund for pari-mutuel races), and 0.5% for drug testing facilities and rehabilitation of racing facilities. (Section 7)
- The breakage (fractions of less than Ten centavos (P0.10) eliminated from dividends) shall be set aside as follows: 50% for PHILRACOM for additional prizes and horse breeding activities, 25% for city/municipal hospitals where the racetrack is located, and 25% for rehabilitation of drug addicts. (Section 8)

Schedule of Races
- The grantee is authorized to hold horse races on at least two (2) days during the week as determined by the PHILRACOM, and on all Saturdays, Sundays and official holidays of the year, except on those official holidays where the law expressly provides that no horse races are to be held. (Section 9)
- The grantee may also conduct races on the eve of any public holiday to start not earlier than five-thirty in the afternoon, but not to exceed five (5) days a year. (Section 9)
- The grantee shall allocate racing days pursuant to the provisions of Republic Act No. 309, as amended. (Section 9)

Tax Provisions
- The grantee, its successors or assignees shall continue to be subject to all specific taxes, duties and fees imposed on the Metro Manila Turf Club, Inc. under Republic Act No. 7978, as amended by Republic Act No. 8298, and with respect to other taxes, charges and fees not so specified therein, under Republic Act No. 8424 (Tax Reform Act of 1997), as amended, and other applicable laws. (Section 10)

Warranty in Favor of the National and Local Governments
- The grantee shall hold the national, provincial, city, and municipal governments of the Philippines free from all claims, liabilities, demands, or actions arising out of accidents causing injury to persons or damage to properties, during the construction or operation of the racetrack of the grantee. (Section 11)

Sale, Lease, Transfer, Grant of Usufruct, or Assignment of Franchise
- The grantee shall not sell, lease, transfer, grant the usufruct of, nor assign this franchise or the rights and privileges acquired thereunder to any person, firm, company, corporation, or other commercial or legal entity, nor merge with any other corporation or entity, nor the controlling interest of the grantee be transferred, simultaneously or contemporaneously, to any person, firm, company, corporation, or entity without the prior approval of the Congress of the Philippines. (Section 12)
- Congress shall be informed of any sale, lease, transfer, grant of usufruct, or assignment of franchise or the rights and privileges acquired thereunder, or of the merger or transfer of the controlling interest of the grantee, within sixty (60) days after the completion of the said transaction. (Section 12)
- Failure to report to Congress such change of ownership shall render the franchise ipso facto revoked. (Section 12)
- Any person or entity to which this franchise is sold, transferred, or assigned shall be subject to the same conditions, terms, restrictions, and limitations of this Act. (Section 12)

Reportorial Requirement
- The grantee shall submit an annual report to the Congress of the Philippines, through the Committee on Legislative Franchises of the House of Representatives and the Committee on Public Services of the Senate, on its compliance with the terms and conditions of the franchise and on its operations on or before April 30 of every year during the term of its franchise. (Section 13)
- The annual report shall include an update on the roll-out, development, operation and/or expansion of business; audited financial statements; latest General Information Sheet officially submitted to the Securities and Exchange Commission, if applicable; and certification of the PHILRACOM and the GAB on the status of its permits and operations. (Section 13)
- The reportorial compliance certificate issued by Congress shall be required before any application for permit or certificate is accepted by the PHILRACOM and the GAB. (Section 13)

Fine for Non-Compliance
- Failure of the grantee to submit the requisite annual report to Congress shall be penalized by a fine of Five hundred pesos (P500.00) per working day of noncompliance, to be collected by the PHILRACOM from the delinquent franchise grantee and remitted to the Bureau of the Treasury. (Section 14)

Equality Clause
- Any advantage, favor, privilege, exemption, or immunity granted under existing franchises, or which may hereafter be granted for horse racing, upon prior review and approval of Congress, shall become part of this franchise and shall be accorded immediately and unconditionally to the herein grantee, except for provisions concerning territorial coverage, the term, or the type of service authorized by the franchise. (Section 15)

Repealability and Nonexclusivity Clause
- This franchise shall be subject to amendment, alteration, or repeal by the Congress of the Philippines when the public interest so requires and shall not be interpreted as an exclusive grant of the privileges herein provided for. (Section 16)

Separability Clause
- If any of the sections or provisions of this Act is held invalid, all other provisions not affected thereby shall remain valid. (Section 17)

Repealing Clause
- All laws, decrees, orders, resolutions, instructions, rules and regulations, and other issuances or parts thereof which are inconsistent with the provisions of this Act are hereby repealed, amended, or modified accordingly. (Section 18)

Effectivity
- This Act shall take effect fifteen (15) days after its publication in the Official Gazette or in a newspaper of general circulation. (Section 19)