THE Department of Justice (DOJ) has thumbed up the audit of the gross gaming receipts (GRRs) of Philippine Offshore Gaming Operators (POGOs) by the Commission on Audit (COA), while the Philippine Amusement and Gaming Corp. (Pagcor) is still looking for an independent third-party auditor.
While it is clear under Section 125-A of the National Internal Revenue Code (NIRC) that the conduct of an audit on the GGR of POGOs should be done by a third-party platform, the DOJ noted that the same section also provides that COA may conduct a post audit independent verification of the GGR determined by the third-party auditor.
“Taking into consideration the foregoing circumstances and to ensure that the aim and objective of the law is met, there appears to be legal basis and sound fiscal reasons for COA to audit the GGR of the POGO, while Pagcor is still in the process of procuring the services of a qualified third-party audit platform in accordance with the provisions of RA [Republic Act] 11590 and RA 9164,” the DOJ said through Undersecretary Raul T. Vasquez, officer-in-charge.
“Without this audit, POGOs would be able to defraud the government, i.e., Pagcor and BIR [Bureau of Internal Revenue], of its rightful share in the GGR, by declaring a lower amount,” the DOJ said.
THE DOJ made known its position on the issue in response to the letter by COA Chairman Gamaliel A. Cordoba seeking guidance and/or confirmation of the agency’s power to audit the GGRs of POGOs.
In his letter, Cordoba noted that Section 8 of RA 11590 (An Act Taxing Philippine Gaming Operations) requires Pagcor to engage the services of an “independent, reputable, internationally-known and duly-accredited third-party auditor” that would determine the gross gaming revenues or receipts of POGOs.
But, on March 31, 2023, the Pagcor terminated the consultancy contract with Global ComRCI, due to the latter’s default and violation of RA 9184 (Government Procurement Reform Act) and its implementing rules and regulations. The gaming regulator, thus, requested for COA to conduct the audit of the POGO GGRs.
A document by the 19th Congress read that it was on October 26, 2017, when the Pagcor issued a notice of award to Global ComRCI, a consortium between Global Myoho Renge Copy Inc, Highweb Trade Ltd. and Comfac Corp. for a total annual contract price of roughly P552.215 million “payable per year for ten years.”
Last March 9, the Pagcor issued a press statement saying the regulator has “issued a Notice to Terminate the Consultancy Contract with Global ComRCI, the third-party auditor for licensed offshore gaming operations.”
THE COA maintained that it can audit the GGRs of POGOs as this is within its constitutional mandate and in accordance with the relevant provisions of Presidential Decree 1445, otherwise known as the Government Auditing Code of the Philippines, and that it also possesses the qualifications required by RA 11590.
However, the DOJ declined to give a legal opinion on the issue noting that COA has already adopted a definite stance on the matter.
“Being an independent constitutional body, this Department does not possess any reviewing authority over the rulings or official actuations of said agency,” the DOJ said.
However, the DOJ acknowledged that the audit of the GGR of the POGO is necessary to ensure that the proper gaming tax on services rendered and regulatory fees are imposed and collected.
In view of the importance of issue raised, the DOJ said it is necessary for the agency to express its views and comments on the issue.