PCSO, e-lotto operator execs face raps due to 14% commission issue

PCSO, e-lotto operator execs face raps due to 14% commission issue

/ 06:54 PM June 10, 2024

MANILA, Philippines — Complaints have been filed against officials of the Philippine Charity Sweepstakes Office (PCSO) and its e-lotto service provider, Pacific Online Systems Corporation (POSC), for allegedly setting aside a 14 percent commission for the said private company.

In the graft and plunder complaints filed on Monday before the Office of the Ombudsman, the group Filipinos for Peace, Justice, and Progress Movement (FPJPM) claims that POSC originally offered a service for the e-lotto management without cost to the government.

However, the group claimed that eventually, the memorandum of agreement (MOA) between the two entities featured a 14 percent commission to the POSC.


“In a nutshell, this complaint revolves around the simple and glaring fact that said MOA entitles POSC to fourteen percent (14%) commissions, even though the proposal of POSC was for zero commissions and/or no cost to the government,” FPJPM said in the complaint.


“The pertinent portions of POSC’s Letter of Intent dated 29 June 2023, state that: ‘Our Corporation, PACIFIC ONLINE SYSTEMS CORPORATION, would like to signify our interest and intention to offer PCSO our system and services. With this, we are submitting our proposal at no cost nor risk to PCSO,’” the group added.

FPJPM stated that PCSO also required that for the Web-based Application Betting Platform (WABP), the incorporated systems would be shouldered by POSC.  This, the group said, changed when the MOA was signed.

“On PCSO’s part, their Technical Guidelines of the WABP required POSC to provide, at no cost to PCSO, a call logger management system for the Help Desk operations, including data recording media, telephone systems, headsets, accessories, and that all costs related to the subscription to private cloud services shall be shouldered POSC,” FPJPM said.

“However, when the MOA was executed between PCSO and POSC on 30 August 2023, the MOA, in no uncertain terms, entitled POSC to receive an unconscionable and outrageous payment of fourteen percent (14%) commission based on the generated daily sales, paid on a weekly basis,” it added.

Such a scheme would be disadvantageous to the government, according to FPJPM.

“It is clear that said contracts or transactions are grossly and manifestly disadvantageous to the Government. We reiterate that POSC’s E-Lotto proposal was for zero commissions, at no cost, to PCSO, whereby POSC assumed all the cost and ALL the risk,” the group said.


In a separate statement, PCSO General Manager Melquiades Robles, who was named as a respondent in the complaint, said it was unfortunate that FPJPM filed a complaint without understanding that the MOA is not a final contract.

According to Robles, these issues brought up by the FPJPM have been overtaken by events since the Office of the Government Corporate Counsel (OGCC) had already given them a favorable review.

“It is unfortunate that the FPJM filed a complaint without understanding the MOA PCSO entered with a service provider. Our agreement is not final until we get a favorable decision from OGCC,” Robles said.

“All issues cited are now overtaken by events as the OGCC has already given PCSO a favorable review on the contract we entered into. This is [a] gross misrepresentation of facts which we suspect was made by the former chairman who surprisingly was not included in the complaint,” he added.

Previously, PCSO was scolded by lawmakers as it supposedly did not seek the OGCC’s nod before implementing the MOA with POSC. Last January 22, PCSO was questioned why it entered into a deal with POSC — and implemented it — without the nod of the Office of the Government Corporate Counsel (OGCC).

READ: Lawmaker hits, questions PCSO’s online lotto deal

Surigao del Norte 2nd District Rep. Robert Ace Barbers said that the MOA “clearly falls within the purview of 2023 Revised Guidelines and Procedures for Entering into Joint Venture Agreements between Government and Private Entities” — which means OGCC has a say in the issue.

READ: Senators scold PCSO for not asking Marcos’ nod in e-lotto implementation

But aside from the commission given to POSC, FPJPM also noted in the complaint that increasing the jackpot prizes only exposes PCSO to great risks where wealthy bettors can take advantage of the system by investing money to create different combinations and eventually win the jackpot.

“Furthermore, augmenting the minimum jackpot prizes for five games to a total of P1.7 billion exposed the Government to tremendous fiscal risk and uncertainties, it being unpredictable if the Government would be able to recover the P1.7 billion used to augment the jackpot prizes,” FPJPM said.

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“Before the augmentation, it would have been hundreds of times more likely to get hit by lightning than to win the lottery – after the augmentation, a wealthy bettor or coordinated group could purchase all the combinations and still double their money in Super Lotto 6/49,” it added.


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