Pagunsan, who finished joint third place in the recent Brunei Open, came away with four birdies, two on each nines of the par-71 layout, and came out from nowhere and into the top of the leaderboard ahead of veteran players on the Asian Tour and from the elite US PGA Tour.
The 28-year-old Pagunsan was the only player in the elite field who fashioned out a bogey-free round under humid condition, an outstanding effort for the slightly built Filipino who made the wise decision of leaving his driver in his hotel room in an effort to stay clear of the shin-high rough.
He produced an outstanding par save on the last hole, blasting out a 30-yard bunker shot to eight feet and draining the putt for a 33-34 ard.
"I only missed two fairways, on the first and last hole. Im surprised to be in front as there are so many top players in the field. But my confidence has been up as Ive been playing well and I had a top-10 at the Brunei Open two weeks ago," said Pagunsan.
"I left my driver in the hotel room and used my 3-wood on most of the holes. The course is so difficult and Ive got more confidence with my 3-wood and Ill probably stick with this plan," added Pagunsan, who won P1 million in The Country Club Invitational back home early in the year.
Scott, the world No. 6 who shares stellar billing with Els in this event considered as Asias richest, shot a one-under 70, mixing five birdies with four bogeys to share ninth place with eight others, including Filipino bets Gerald Rosales and 2004 Vietnam Masters winner Angelo Que.
Els, who dropped to No. 7 in the world ranking coming off an injury, matched par 71 but the three-time Major winner, along with Scott and the six other world-ranked players, is expected to make his move today in a bid to put himself within striking distance of the leaders.
Former US Open champion Michael Campbell of New Zealand, teeing off from the back nine, gunned down an eagle on the third hole only to drop two strokes on the next. He also had three birdies and four bogeys for a 72.
Strange, who won this years Philippine Open, overcame two bogeys on the opening nine to compile six birdies for that 67 to seize the solo lead until Pagunsan came in with his own version of a four-under card.
Indias Jyoti Randhawa finished the first round in solo third place with 68, followed a stroke behind by five players, including Japans Shingo Katayama, Angel Cabrera of Argentina, Australians Scott Barr and Nick OHern and South African amateur Christopher Joseph.
Els, looking for his first win of the year, followed a promising birdie on the first hole with a double bogey on the second and a bogey on the third. He picked up three more birdies against another bogey on his way to a share of 18th place.
Scotts title defense looked shaky when he matched two birdies with two bogeys on the front nine, before staging a recovery of sorts with three birdies against two bogeys on the way back.
Englands Lee Westwood shot three bogeys and a double bogey to sit six strokes off the lead at two-over 73, while Ryder Cup teammate Paul McGinley of Ireland is five-over 76 and in danger of missing the cut.
But while Pagunsan, Que and Rosales went off a fiery start, fancied Frankie Minoza groped for form and stumbled with a two-over 73 to fall in a tie for 47th while Cookie LaO and Tony Lascuna had 76 and 81, respectively, to fall below the projected cut-off line.
Pagunsan, fighting off opening round jitters, sent his 5-wood tee shot into the rough on the first hole but fired an 8-iron to three feet for a birdie to get him going.
A two-putt birdie on the par 5 fourth saw him turn in two under before he knocked in putts of 12 feet on 11 and 13 for his superb start.
"Its nice to be leading among the stars and Ill take it one shot at a time. It was really good to save par at the last. I hit one of the best shots of the day from out of the bunker," said Pagunsan.