Pagcor padlocks casino at Subic Freeport

SUBIC BAY FREEPORT — Tension disrupted the otherwise quiet atmosphere at the Subic Freeport last Friday when the state-owned Philippine Amusement and Gaming Corp. (Pagcor) padlocked the casino of Legend International Resorts Ltd. Co. for non-payment of arrears amounting to P365 million.

Pagcor officials also served a writ of attachments issued by the Manila regional trial court, freezing Legend’s accounts of some P198 million with the Olongapo City branches of Metrobank and United Coconut Planters Bank.

Legend has been operating a hotel and a casino here since 1993, but has claimed that its casino has been operating at a net loss.

Pagcor chief legal counsel Carlos Bautista Jr. told The STAR that the casino’s closure was based on the April 5 resolution of the Pagcor board revoking the "provisionary" permit of Legenda Hotel and Casino for failing to settle its obligations to the government.

Despite repeated demands, Bautista said Legenda "has ignored our notices to settle its liability."

"Ironically, these debts have been incurred since the start of the casino operations in 1993," he said.

Bautista said Pagcor reminded Legenda through a formal notice last May 10 that it has been three years since its provisional authority was granted "but no amicable resolution of monetary obligation has been achieved."

In its April 5 resolution, the Pagcor board approved the closure of the Legend Casino after the company failed to pay the minimum guaranteed amount of P5 million per month based on the amended contract and financial restructuring scheme agreed upon on Sept. 12, 2000.

"Because of this failure by Legenda, Pagcor is now duty-bound to revoke (its) provisional authority for refusal to pay the guaranteed minimum amount provided under the 2000 amendment of Legend’s license," lawyer Arnold Salvosa, Pagcor legal officer, told The STAR.

Salvosa said the Pagcor board also cited Legenda’s violation of the state-run company’s cease-and-desist order against the holding of the First Legenda Cup Cockfight Derby.

Last Friday, court sheriffs served a summons and preliminary attachment to Legenda Casino chief executive officer Khoo Boo Boon on the strength of an order issued by RTC Branch 22 Judge Marino de la Cruz Jr. of the National Capital Judicial Region.

Khoo, however, refused to sign and accept the order and invoked his right to legal counsel.

"The Pagcor lawyers would be facing charges of contempt for their refusal to honor the stay order issued by Olongapo City RTC Judge Eliodoro Ubiadas on Nov. 9, 2004, which remains in contention before the Court of Appeals," Khoo said.

Khoo said Ubiadas has ordered a stay in the enforcement of all claims, whether financial or otherwise.

However, Bautista argued that Ubiadas’ 180-day "stay order" has lapsed and has become a "worthless piece of paper."

Khoo also questioned Pagcor’s authority to padlock the casino without any closure order from the court.

Bautista, however, said this is no longer necessary since the law authorizes Pagcor to both issue and revoke licenses for casino operations.

A frantic Khoo removed the notice of closure posted at the casino’s main entrance and instructed casino personnel to scrape off all Pagcor seals glued onto gambling tables and slot machines.

After almost a five-hour standoff, a commotion ensued as Legenda executives and employees blocked the main entrance to prevent the Pagcor lawyers from padlocking the casino.

Pagcor officials were forced to seek the help of the Subic Bay Metropolitan Authority’s law enforcement department to eventually close the casino.

SBMA officials led by deputy administrator for business Ramon Agregado also assisted in enforcing the closure order.

Agregado told The STAR that the SBMA wanted to ensure that the closure notice was orderly served since it recognized Pagcor’s full authority to stop the casino operations of Legenda.

According to SBMA sources, Legenda also owes SBMA about P800 million in rentals, utilities and shares.

Fidel Fuentes, branch manager of Casino Filipino in Olongapo, said the 2000 amendment to the authority granted Legenda was a valid measure which Pagcor and SBMA adopted to protect the government’s interest.

"As early as 1999, Legenda has failed to remit to Pagcor and the SBMA shares from its casino operations," Fuentes said.

"Legenda has reasoned out that its casino (was operating) at a net loss, but upon investigation by Pagcor’s special audit team, it was discovered that Legenda was charging expenses in its non-casino operations to its casino operation, thus causing an artificial net loss," he added.