PCSO voids P42-B deal with Australian firm

The Philippines Charity Sweepstakes Office (PCSO) has declared null and void the 50-year contract worth P42 billion, which its previous administration had entered into with an Australian firm for the supply of thermal paper used for lotto stubs.

In a resolution approved on April 15, the PCSO Board of Directors declared the joint venture agreement between the agency and TMA Group of Companies null and void “for patent violation of applicable laws, rules and regulations.”

“Wherefore, the board resolved, to revoke Resolution No. 2171, Series of 2009, dated 24 November 2009, approving the JVA between PCSO and TMA,” part of the Board’s resolution reads.

Lawyer Ma. Aleta Tolentino, one of the PCSO directors, said the contract was illegal because “it was simply a supply contract in the guise of a joint venture agreement.”

But she clarified that when the Board of Directors of the PCSO’s previous administration submitted the deal for approval in 2009, then PCSO chair Serge Valencia, had questioned it.

“He (Valencia) didn’t want it,” Tolentino said of Valencia.

Under the contract, the Australian firm is set to invest P4.4 billion for the project, while the value of the paper contract which the PCSO would pay for 50 years would be P42 billion.

“That’s iniquitous and grossly disadvantageous to the government,” she said.

According to Tolentino , the agreement stipulates the establishment of a thermal coating plant primarily for export sales of thermal papers.

The thermal coating plant was also supposed to provide the PCSO with thermal paper and other consumables for its gambling activities, including future games.

“The mere fact that you are tying down PCSO for 50 years for the supply of papers exclusively from this particular group is indeed questionable,” she said.

“First of all, it’s not within the PCSO purpose and mandate to engage in the manufacturing or producing and exporting paper. Our mandate is to operate sweepstakes and lotto activities for charity,” Tolentino said. “Second, it violated the Procurement Act of the Philippines, which requires bidding for suppliers.”

“Let’s say it’s a good deal… but you don’t tie the office for half a century,” she added.

She also cited the recent opinion of the Office of the Government Corporate Counsel (OGCC), which also declared the agreement void and inexistent because “it is undertaken to circumvent Republic Act 9184 in the procurement of supplies and evade COA (Commission on Audit) audit.”

The OGCC added that the deal was not only grossly disadvantageous to government but also unfair to other paper suppliers and results in monopoly.

Tolentino said the PCSO’s contract with its existing paper supplier, Mark Sensing Corp, a TMA subsidiary, ends this year and getting the next supplier will have to go through the regular bidding process.

She added that the agency’s decision to declare the contract null and void had prompted TMA to file a case against the PCSO.

“They want us to honor the contract, but they cannot force us; it’s illegal,” she stressed.

As early as 2009, former Senate President Jovito Salonga representing Bantay Katarungan, a group of lawyers monitoring Philippine courts and quasi-judicial bodies, has been questioning the propriety of the deal.