The Department of Justice has rendered an opinion that the Commission on Audit can review for audit purposes the gross gaming receipts (GGR) of Philippine Offshore Gaming Operators (POGOs) on the request of the Philippine Amusement and Gaming Corp. (PAGCOR),
In a legal opinion dated June 30, 2023, the DOJ said: “There appears to be basis and sound fiscal reasons for COA to audit the GRR 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 9184.”
RA 11590 is the law on the taxing of POGOs and amends a number of provisions of the National Internal Revenue Code of 1997 (NIRC), while RA 9184 is the Government Procurement Reform Act.
However, the DOJ opinion issued by Undersecretary Raul T. Vasquez informed COA Chairperson Gamaliel A. Cordoba that the opinion was issued for COA’s “information and guidance only.
Citing the DOJ’s 1988 opinion, Vasquez said: “This Department will not pass upon any opinion, ruling and/or actuations of officials/agencies, over which it has no revisory authority.”
“Being an independent constitutional body, this Department does not possess any reviewing authority over the rulings or official actuations of said agency (COA),” he stressed.
Nonetheless, the DOJ said that COA is “the watchdog of the financial operations of the government and is tasked with the examination, audit, and settlement of all accounts pertaining to the revenues and receipts of, and expenditures, or uses of funds and property, owned or held in trust by, or pertaining to, the government or any of its subdivisions, agencies, or instrumentalities including government-owned and controlled corporations with original charters.”
Vasquez also reminded there is a pending case before the Supreme Court (SC) concerning the issue and, because of this, “the matter is considered sub-judice, and as a judicial courtesy, this Department is constrained from rendering a legal opinion on the matter.”
In seeking a legal opinion, Cordova informed the DOJ that PAGCOR requested that COA examine the GRR of POGOs.
Cordova said that PAGCOR sought the help of COA after terminating last March 31 the consultant contract of third-party auditor Global ComRCI due to “default and violation of R.A. 9184 and its implementing rules and regulations.”
Citing RA 11590, the DOJ opined that PAGCOR “or any special economic zone authority or tourism zone authority or freeport authority shall engage the services of a third-party audit platform that would determine the gross gaming revenues or receipts of offshore gaming licensees.”
It said the law mandates that the third-party auditor should be “independent, reputable, internationally-known, and duly accredited as such by an accrediting or similar agency recognized by industry experts.”
It also said RA 11590 does not prevent “the Bureau of Internal Revenue and the Commission on Audit from undertaking a post-audit or independent verification of the gross gaming revenues determined by the third-party auditor.”
“We note that the conduct of the GGR of the POGO is necessary to ensure that the proper gaming tax on services rendered and regulatory fees are levied and collected, as provided under the above-quoted amended Section 125-A of the NIRC. Without this audit, POGOs would be able to defraud the government, i.e., PAGCOR and BIR, of its rightful share in the GGR, by declaring a lower amount,” it added.
