‘Pagcor can enter into lease agreements’

The Philippine Amusement and Gaming Corp. (Pagcor) claimed to have found allies in two senators after both agreed that the regulatory body can enter into lease agreements with slot machine arcades contrary to the charge of Sen. Jinggoy Estrada.

In a statement yesterday, Pagcor said both Sen. Juan Ponce Enrile and Sen. Richard Gordon "basically agreed" that Pagcor can forge lease contracts, citing stipulations in the law that created Pagcor in 1983.

Enrile and Gordon also observed that allowing gambling operations "has served the country quite well" based on earnings generated for the cash-strapped government.

Pagcor, a government-owned and controlled corporation, noted that during Enrile’s interpellation of Estrada’s privilege speech on Monday, the senator noted Section 8 of Presidential Decree 1869 "authorized the registration of persons primarily engaged in gambling," further explaining that the decree "envisioned that other entities may engage in the business of gambling provided they are authorized and registered with Pagcor."

Enrile asked Estrada if PD 1869 contained prohibitions on Pagcor becoming a stockholder of corporations, to which Estrada replied there are none.

Enrile, an opposition lawmaker like Estrada, also said that corporations authorized under Section of PD 1869 could independently operate casinos as long as these are Pagcor-approved.

"Or they may join Pagcor either as partners, advisers, managers or service providers," read the Pagcor statement, attributing it to Enrile’s interpellation.

Estrada had accused Pagcor of violating its charter by allowing private firms to operate slot machine arcades nationwide.

Quoting reports from slot machine arcade operators, Estrada said almost P2 billion in revenues for the government had instead gone to the private partners. He said Pagcor had opened 12 slot machine arcades with private partners and investors, with five more set to open.

Giving a hypothetical situation, Enrile said that if a proponent would put up all the capital, set up the entire enterprise and comply with all the requirements, he asked Estrada whether sharing could be arranged by a contract between the proponent and Pagcor, acting as the operator of gambling casinos and not as the regulator.

Estrada agreed this was cited in Section 11, Paragraph 1 of PD 1869.

Gordon, for his part, cited his dealings with Pagcor when he was tourism secretary in coming to the gaming body’s defense.

The pro-administration senator told Estrada during the interpellation that Pagcor operates from a budget of zero as it remits all of its earnings to the government.

"In fact, Pagcor has no retained earnings that can be used for expansion, investment and promotion," Gordon reportedly said.

He also commented that there is no need for Pagcor to borrow money to buy slot machines, especially since these "easily become obsolete."

According to Pagcor, Gordon also said it is better to lease machines, especially with a 60-percent profit share.

Estrada had charged that Pagcor, by circumventing the provisions of its charter, or PD 1869, "changed the contracts by secretly doing away with the agreements with its partners and replacing them with lease contracts for slot machines."

Gordon stressed that unless the Pagcor charter is amended to allow it to keep part of its earnings for operations, it would not be competitive.

In comparison with other Asian countries, the Philippine government gets a high 62 percent of Pagcor’s earnings, Gordon observed.

"On the other hand, the Chinese government retains 39 percent from the earnings of Macau casinos, the Malaysian government keeps 25 percent from its gaming business, and the Cambodian government retains a mere four percent," Gordon pointed out, according to the Pagcor statements.

Pagcor said only the Supreme Court can now resolve the question of legality of Pagcor’s franchise and operations.

"PD 1869 answers all the questions on franchise and license so these issues can be resolved by the courts and the SC because it is a question of law," said a Pagcor official, who asked not to be named.

Pagcor spokesman Edward King said the House of Representatives had already resolved these issues when it approved the extension of Pagcor’s franchise.

King, however, refused to comment on the case filed by former senator Francisco Tatad before a Quezon City regional trial court, seeking to declare Pagcor’s continued operations as illegal.

"I would like to think that the issue has been settled because Congress has approved our franchise," he stressed.

According to Tatad, the legal claim contained in House Bill 3409 that Pagcor’s 25-year franchise — which expired on Dec. 31, 2001 — is still valid until 2008 should be struck down.

He claimed the bill violates the Pagcor law it seeks to amend.

But the Pagcor source argued that all five presidential decrees involving Pagcor’s creation were consolidated and amended by PD 1869 in 1983 that made the corporation legal until 2008. — With Pia Lee-Brago