Having actually looked at the research of mathematics learning (I have a Master's Degree in Elementary Education, and have taken grad courses specific to teaching mathematics at an elementary level), I have to chime in and say that most of what's posted in this thread is wrong. It's easy to say "meh, they're no big deal," but math facts specifically have a huge impact on a child's ability to do well in math early on, and thus have a solid base to build on. Much more so than anything spacial, etc.
Math facts are like a 10 out of 10 in importance. The reason is working memory.
Like how the average person can only hold 7ish numbers, thus why phone numbers are 7 digits.
If you're trying to solve a problem (say, a word problem) and you have to pause mid-problem to calculate 3x7, you'll likely get lost in the problem and screw it up. If you just have that memorized, and need no working memory for it, you can keep the problem in your head, and have a much better chance at solving it.
Multi-step problems just become so much harder without math facts being memorized, because you chew up your working memory with trying to calculate the basic facts, and can't keep the steps in order, and are much likelier to make mistakes.
Further, while a fact like 5+7 is easy enough to calculate by hand (though sometimes kids still screw it up), try something like 9x7. Sure, you can add 7+7+7+7+7+7+7+7+7. Try being eight years old, and doing that without screwing it up. It's just much more efficient to memorize them, and much less likely to end with you making a mistake.
It sucks the school didn't tell you about it. And I don't necessarily think it should be a REQUIREMENT to get into the advanced class.
On the other hand, your child should, with some drilling, be able to get them memorized in plenty of time. 9 weeks left is no problem. Sure, as of right now, they can only do one test/week, so to do 12 seems impossible, but that's not the only solution.
Rather than approach it as a "fight" with the school, talk with them about how you can work together to show he knows those facts by the end of the year. Maybe he can do two tests a week. Maybe he can be verbally quizzed at the end on a mix of all of the multiplication facts. Approach it as a partnership, and I think you'll see much more success. Arguing about the usefulness of math facts will likely make the (teacher/admin/whomever) more stubborn. Acknowledging why they're important, and asking how he can show mastery by year's end will get you much further, IMO.
The problem is not with the math facts, it's with the school's rigid rules around the test taking/"proving" knowledge of them, and the requirement of them for a particular class. Approaching them looking for a solution to that, rather than looking to tear down math facts, is the way to go.
Good luck! :)