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Genuino charged over P258-M coffee overprice


01:49 AM July 18th, 2012

By: Leila B. Salaverria, July 18th, 2012 01:49 AM


Three former officials of the state-run Philippine Amusement and Gaming Corp. (Pagcor) and its coffee supplier may be having sleepless nights these days.

A year after President Benigno Aquino dropped his bombshell on the agency’s P258-million bill for coffee, Pagcor filed a plunder and graft complaint against its former chairman Efraim Genuino.

Also named in the complaint filed in the Office of the Ombudsman Tuesday were Rafael Francisco and Rene Figueroa, former Pagcor president and senior vice president, respectively, and Carlota Cristi Manalo-Tan, the owner of Promolabels Inc., the  former Pagcor coffee supplier.

Manalo-Tan is the wife of Johnny Tan, a “known ally” of Genuino and the second nominee of the Bida party-list group  identified with the former Pagcor chief.

In the complaint filed by present directors Jose Tanjuatco and Enriquito Nuguid, Pagcor alleged that Genuino and his officials entered into concession agreements with Promolabels from 2001 to 2010, and in the process, enriched themselves by purchasing overpriced Figaro coffee products.

The beverage was provided free to customers of state-run casinos.

Pagcor said that from 2005 to 2008, five Casino Filipino branches paid Promolabels P258 million for coffee products.

74-percent overprice

The products were overpriced by 9 percent to 74 percent, contrary to the agreement that the prices of Promolabels’ products would be similar to mall prices.

“For the year 2005 to 2008 alone, Pagcor could have saved at least P78 million if only the prices of Promolabels’ Figaro coffee products were the same as those of other Figaro franchisees,” Pagcor said in its complaint.

Pagcor said Genuino, Francisco and Figueroa had been repeatedly informed about the losses that Casino Filipino branches were incurring because of the Promolabels transactions, but they did not do anything about it.

“They refused or otherwise failed to act to stem or prevent further losses,” the complaint said.


Speaking through his lawyer Ramon Esguerra, Genuino belied the claim of the current Pagcor management that casino players had been given free coffee.

“This is another case of persecution in so far as the allies of former President (Gloria Macapagal-Arroyo) are concerned,” Esguerra quoted the former Pagcor chairman as saying.

Esguerra surmised that the case was filed in time for President Benigno Aquino’s State of the Nation Address (Sona) on July 23.

“Remember that they tried to build this case as early as last year and yet, they are filing it only now,” the lawyer said. “They are just reviving this issue.”

Total of P1 billion

Mr.  Aquino disclosed in his Sona last year that Pagcor had spent P1 billion for coffee during the Arroyo administration. He joked that former officials of the gaming firm might not have been able to sleep because of the copious amounts of the stimulant they must have drunk.

Pagcor legal chief Jay Santiago told reporters that the Promolabels contracts were part of the P1 billion spent for coffee by the previous Pagcor administration, and that the latter had hired other concessionaires in the past years.

But the current Pagcor administration decided to file the complaint over the Promolabels contract first to make an example of it, Santiago said.

He said that if Pagcor had waited until the review and documentation of the entire P1-billion coffee expenses were completed, it would be unable to file the complaint until several years from now.

But he added that the review of the other coffee deals was still ongoing, and Pagcor would file cases in the future, if necessary.

Santiago said the complaint for the coffee deals was filed only yesterday, a year after the President disclosed the expenses, because the agency’s auditors had to pore over a decade’s worth of documents.

“What’s important is that we have filed it and we have completed the filing,” he said.


Santiago added that it was just a coincidence that the complaint was filed a few days before Mr. Aquino’s next Sona.

Pagcor said the board led by Genuino approved the proposal of Figaro Coffee Co. to set up kiosks in Casino Filipino branches on May 16, 2001. The prices of its beverages should be the same as those of similar beverages sold in malls.

Pagcor then gave Promolabels, a Figaro franchisee, concession agreements in seven Casino Filipino branches. Carlota Tan signed the concession agreements for Promolabels.

No bidding, SEC registration

Pagcor said Promolabels’ seven contracts had given it a virtual monopoly of the coffee served in Casino Filipino branches.

But it found that the contracts were awarded without the required public bidding. Promolabels’ three-and five-year contracts were extended and renewed without any public bidding as well, it added.

Pagcor also learned that Promolabels was not registered with the Securities and Exchange Commission, contrary to what was stated in its Pagcor contract.

COA findings

Pagcor said that as early as 2006, the Commission on Audit (COA) had raised concerns about the validity and implementation of the concession agreements with Promolabels and pointed out that a public bidding should have been conducted as required by the procurement law.

The audit reports also found disparities between the prices of Promolabels’ Figaro products and those of other Figaro franchisees, including an overprice of up to 74 percent.

The audit reports said that Pagcor could have saved a lot of money had Promolabels prices been similar to those of other Figaro shops outside Casino Filipino.

Despite these reports, Pagcor said its former officials did not demand that Promolabels lower its prices. They even went out of their way to justify Promolabels’ higher prices, it added.

The explanations were issued just a few days after the audit reports, indicating that the former officials did not even bother to conduct a thorough review of Promolabel’s reasons, it further said.

Yearly increases

Pagcor said Figueroa even allowed Promolabels to increase its prices a year later.

By doing all this, the former Pagcor officials “caused undue injury to the government and gave Manalo-Tan unwarranted benefits, advantages and preferences,” Pagcor said.

In a statement, Carlota Tan welcomed the filing of the case against her, saying “this will provide us the chance and opportunities to present all the facts and necessary evidence that the court will require from us.”

“Although this will be the first time that a mere concessionaire is being charged with plunder, we firmly believe that in the end, the current judicial system will allow us to prove our innocence,” she said.

Pagcor, meanwhile, is now spending less for coffee, according to Santiago.

The prices of the coffee that it now serves for free to casino customers range from P9.36 to P14.99 per cup. With a report from Marlon Ramos

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