PAGCOR vs Colmenares

Last week Bayan Muna Rep. Neri Colmenares together with Archbishop Oscar Cruz, fellow Rep. Carlos Zarate, former Bayan Muna Rep. Teddy Casiño, BAYAN Secretary General Renato Reyes and COURAGE President Ferdinand Gaite, filed a letter of opposition to the reappointment of the whole Philippine Amusement and Gaming board led by

its chairman Christino Naguiat before the Governance Commission for Government-Owned or Controlled Corporation.

Colmenares said among the among their complaints was PAGCOR‘s non-payment of P5.14B tax.

Worse, he said, PAGCOR paid for the income tax of big time casinos like Travellers International Hotel Groups, Inc., MCE Leisure (Philippines) Corporation, Bloomberry Resorts and Hotels Inc. and Tiger Resort Leisure and Entertainment, Inc.

This is against its mandate “to help the poor and the needy,” he said.

Colmenares also questioned PAGCOR’s inability to explain where they spent their P110 million intelligence funds.

PAGCOR issued a statement on Colmenares saying that “under its incumbent management, PAGCOR has been a responsible corporate citizen.”
“It is only under the state-owned gaming firm’s present administration that PAGCOR has actually started remitting cash dividends to the National Treasury and began paying Corporate Income Tax and Fringe Benefits Tax to the Bureau of Internal Revenue, “the statement said.
On the issue of tax, PAGCOR said, “ It was only last February 17, 2014 when the Department of Finance (DOF) informed PAGCOR that it has to remit P5.88 billion in unpaid cash dividends since 2005. We immediately reconciled the figures and informed DOF that based on our own computation, PAGCOR only owes the National Treasury P5.14 billion and this amount pertains to the unremitted cash dividends of the previous PAGCOR administration. To date, we have already paid P2.44 billion or almost half of these arrears. We already informed the DOF that PAGCOR will settle the remaining arrears amounting to P2.71 billion by next year.
“Apart from the cash dividends which this administration started paying beginning 2011, we have also settled P856.98 million in back taxes (P657.18 million in Corporate Income Tax and P199.80 million in Fringe Benefits Taxes) incurred by the previous PAGCOR administration from 2004 to June 2010.
“It should also be noted that our administration accelerated the payment for loans made by the past PAGCOR management for the acquisition of various properties. These loans amounted to P1.65 billion as of June 30, 2010. We were able to settle this amount in less than a year after our new management assumed leadership of PAGCOR.
“It is also worth noting that due to the judicious management of funds of the incumbent PAGCOR administration, the state-owned gaming firm was able to give a P5 BILLION funding to the Department of Education (DepEd) for the construction of thousands of classrooms in public schools nationwide.
“In 2008 and 2009, the previous PAGCOR Board issued provisional gaming licenses to four proponents of Entertainment City. The licenses require the proponents to pay to PAGCOR license fees of 15% to 25% of gross gaming revenues. These license fees include 5% franchise tax payable to the BIR. The licenses state that these license fees are in lieu of all taxes.
“On April 17, 2013, the BIR issued Revenue Memorandum Circular No. 33-2013 clarifying that the proponents do not need to pay 5% franchise tax but are liable for income tax.
Following the contracts entered into by the previous PAGCOR Board for the license fees to be in lieu of all taxes, the license fees were adjusted by 10% to range from 5% to 15% instead of the original range of 15% to 25% so that the proponents can give the 10% adjustment directly to the BIR as income tax. The proponents will still pay a total of 15% to 25% of their gaming revenues to the government except that the 10% will be directly remitted to the BIR instead of passing through PAGCOR.
“If the proponents pay income taxes greater than 10% of gaming revenues, then the proponents will end up paying more than 15% to 25% of gross gaming revenues to the government. If the proponents pay income taxes lower than 10% of gaming revenues, they must still pay 15% to 25% of gross gaming revenues to the government. Thus, at the very least, this formula preserves the government’s financial benefits.”

As to its intelligence funds, PAGCOR said intelligence activities form an integral part of its gaming operations and gives assurance to its gaming clientele that the integrity of its gaming activities is maintained and protected. “

PAGCOR said “The liquidation of cash advances being made for intelligence operations have always been done by the special disbursing officers in accordance with COA Circular 2003-002 which only required the submission of certifications of fund utilization.

“Recently, however, the COA has requested the submission of additional documentary requirements beyond those required by COA Circular 2003-002. PAGCOR has already complied with these requirements. We are also awaiting the guidelines being prepared jointly by GCG, DBM and the COA to cover intelligence and confidential funds of government entities. The issuance of these guidelines will further ensure judicious use of government funds.”

Colmenares disputed PAGCOR’s statement that its payment of the income tax of rich casino owners still benefited the government and that it did not take away PAGCOR funds intended for social services. He revealed that the PAGCOR decision was a waste of public funds and asked Pres. Aquino to rescind the PAGCOR Board decision.