COA gives PAGCOR to remit P21.186-B

Published July 18, 2018, 3:30 PM

by AJ Siytangco

By Ben Rosario

The Commission on Audit has asked the Philippine Amusement and Gaming Corporation to remit to the Bureau of Treasury some P21.186 billion in unpaid shares of the national government from its earnings from gaming and other businesses in the past seven years.

PAGCOR quickly pointed out in response that the audit claim, together with another P1.631 billion in alleged deficient remittance to the Philippine Sports Commission in 2017, is the subject of a court petition the state-owned gaming firm filed before the Supreme Court.


PAGCOR warned COA that under the sub judice rule, the state audit agency must withdraw the Audit Observation Memorandum “in deference to the authority of the Supreme Court and its disposition on the matter.”

In its 2017 annual audit report for PAGCOR, COA ignored the warning as it reiterated its position that government share from the business operations of the gaming firm should be based on “gross income/earning”.

Audit examiners said that with the Office of the Government Corporate Counsel upholding its stand on the issue, PAGCOR has been underremitting government by turning over only the 50 percent share of gross income derived from its gaming operations.

“The 50 percent share of the NG remittance was based on PAGCOR’s income from gaming operations only which interpretation was deemed not in accord with the provisions of Section 12, PD No. 1869,” auditors noted.

The underremittance had caused government unrealized income of  P21.186 billion, computed from 2011 to 2017.

“The five percent share of the PSC as a result of the differing computation in the share of PSC which was likewise based on income from gaming operations only, remittances to PSC by PAGCOR for CY 2017 alone may result to a deficiency of P1.631 billion,” said COA.

Nevertheless, the audit agency said that in the case of the PSC underremittance, it understood PAGCOR’s position should the SC issue a ruling that will uphold COA’s stand.

The COA said that should PAGCOR find it impractical to settle its arrears with the PSC, it must seek the possible revision or repeal of the law “as well as the condonation of the liabilities to PSC.”

Auditors said they are aware that the “huge amount involved” in possible settlement “could result to the abrupt depletion of PAGCOR’s earnings.”

In the same audit report, PAGCOR was asked to take swift moves to collect some P481.92 million in uncollected receivables from Offshore Gaming Operators.

Further, PAGCOR was asked to explain why it failed to recover P18.051 million security deposit it paid as rent for a Mandaluyong City slot machine arcade that stopped operating in 2014.

The COA slammed PAGCOR’s claim that the security deposit had already been consumed, pointing out that documents submitted to the Office of the Auditor indicated that “there was nothing to prove” such assertion.

The audit body chided PaGCOR for leniency in the collection of gaming income from 21 Offshore Gaming Operators that has ballooned to P759.114 million as of December 31, 2017.

Of the amount, at least 63 percent or P481.928 million remained uncollected from one to ten months, with PAGCOR failing to do its duty of suspending the operations of erring licensees.

Reacting to the audit observation, PAGCOR said that “in some long outstanding accounts, the Legal Group” has already filed appropriate legal actions. It added that demand letters have already been issued for the settlement of arrearages.