by MALOU MANGAHAS and PATRICIA M. DE LEON

GLORIA MACAPAGAL Arroyo will go down in Philippine history as the president who made gambling the third biggest source of government revenues, after taxes and customs duties.

	PAGCOR logo

Under her watch over the last seven years, the Philippine Amusement and Gaming Corp. (Pagcor) has grown into a humongous money — and power — machine. Until now the monopolistic state gambling agency, Pagcor's gross revenues of P13 billion in 2001 more than doubled to P26.83 billion in 2007, or an average annual growth of 18 percent.

This falls behind only the tax collections of P712.09 billion by the Bureau of Internal Revenue (BIR), and the Bureau of Customs' (BOC) collections of P210.5 billion in 2007.

On parallel track, the President's Social Fund (PSF) that serves as Arroyo’s fat political purse has recorded a steeper climb. Funded from Malacañang's shares in Pagcor's revenues, the PSF increased nearly 50 percent from P1.03 billion in 2006 to P1.42 billion in 2007.

That may increase some more should Pagcor’s latest venture, the $20-billion Tourism City that will rise on reclaimed land along Manila Bay, succeed. Pagcor's “terms of reference” for the project boasts that Tourism City “could triple the annual income generation of Pagcor from $500 million to $1.5 billion, thus dramatically increasing the income of the National Government to whom all Pagcor revenues accrue.” (see sidebar)

	PREVIOUSLY PART 1 uncovers the mysterious and muddled ownership interests behind Bloombury, and gaps in Pagcor's decision to enroll it as an investor in “Tourism City.”

In a recent interview with the PCIJ, Pagcor Senior Vice President Rene C. Figueroa qualified that “the government will have more money, not Pagcor,” on account of Tourism City.

WHO SPENDS AND HOW?
But the Palace and Pagcor may have some serious explaining to do regarding the latter’s ever-increasing billions. The questions they need to answer include where Pagcor's money goes, who spends it and how, and why the Commission on Audit (COA) and the BIR say Pagcor is not paying taxes correctly and fully.

Pagcor President Rafael ‘Butch’ Francisco, who also spoke with PCIJ last week, did say that of the agency's gross earnings, 65 percent represents the government's shares, franchise tax, and the PSF. This portion, he said, is automatically deducted from what Pagcor earns.

The 35 percent balance of Pagcor's gross revenues goes to operating expenses, as well as into a so-called “community services fund” and allocations for various "confidential, intelligence, extraordinary and miscellaneous expenses," and "subsidies and donations," he added.

If the PSF runs dry, or a calamity or disaster strikes, Francisco said, Pagcor draws additional amounts from its “community service fund.”

But he admitted that for most of these funds, liquidation reports are not submitted to explain how Malacañang and the other agencies spend the amounts. Sometimes, he said, President Arroyo makes requests for donations, even before Pagcor could raise the money for these.

“Actually, minsan the Office of the President, (says) paki-donate naman dito. Ibig sabihin, hindi pa kumpleto 'yung ano (collections) namin, naka-earmark na (Actually, sometimes the Office of the President says, please donate for this thing. That means even though we haven’t completed our collection, the money’s already earmarked),” Francisco said. “Kung minsan, nakikita namin kung saan napupunta, 'yung iba hindi na namin nakikita na (Sometimes we see where it’s going, but the others we don’t).”

Pagcor has 12, 000 employees but in 2007, the agency reported operating expenses of P11.03 billion, up from P10.73 billion in 2006. Month on month, Pagcor's operations bill amounts to P919 million on average, or about P30 million daily.

Unfortunately, the law is largely silent about how Pagcor, Malacañang, and other state agencies must account for how they spend Pagcor's money. But laws do specify where Pagcor’s billions should go: to the national government through dividends and taxes, other state agencies, and yes, the PSF.

Half of Pagcor’s gross earnings, in fact, are to go to the national government. It must also pay five percent of gross earnings as franchise tax.

Other laws mandate Pagcor to set aside portions of its net earnings to the Philippine Sports Commission, host cities, and other government funds, including the Early Childhood Care and Development Fund, Gasoline Station Training and Loan Fund, Barangay Micro Business Enterprises, National Endowment Fund for Children's Television, and other "mandated contributions."