DOJ grants COA permission to audit POGO receipts, sparking curiosity

The Department of Justice was given authority to audit the Philippine Offshore Gaming Operators’ (POGOs) receipts. This is to combat concerns about tax evasion, and other illegal activities in the POGO industry. Due to the increase in POGOs, it’s important that operators adhere to tax laws and contribute their fair share to our economy. Allowing the DOJ the audit of POGO receipts will enhance the government’s control over the industry. It will allow them to detect any irregularities, and take appropriate action against noncompliant operators. This initiative is a demonstration of the government’s commitment to regulate the POGO sector, and maintain transparency in its operation.

The audit by the DOJ of POGO receipts is a move towards ensuring accountability within the industry and preventing illegal activities. POGOs faced criticism for their alleged involvements in illicit activities such as money-laundering and human trafficking in the recent past. Allowing the DOJ access to their financial records makes it easier to identify suspicious transactions and discrepancies which may indicate illegal activity. This measure protects not only the interests of government, but also the reputation of the Philippines in the online gaming industry. The DOJ’s comprehensive audit is a powerful deterrent for potential wrongdoers in the POGO industry, and reinforces the commitment of the government to maintain a clean, transparent and honest online gaming environment.

The Department of Justice has ruled that the Commission on Audit is authorized to review, at the request of Philippine Amusement and Gaming Corp. PAGCOR, the gross gaming revenue (GGR), of Philippine Offshore Gaming Operators.

In an opinion dated 30 June 2023, the DOJ stated: “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, the Taxing of POGOs Act, amends a few provisions of the National Internal Revenue Code of 1997. RA 9184 is Government Procurement Reform Act.

The COA chairperson Gamaliel C. Cordoba was informed by the DOJ’s opinion, which was written by the Undersecretary Raul V. Vasquez. This opinion had been issued “for information and guidance” only.

Vasquez quoted the DOJ’s 1988 report. “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.

The DOJ has said that COAs are not acceptable. “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 reminded that there is an pending case in the Supreme Court (SC), which concerns the issue. “the matter is considered sub-judice, and as a judicial courtesy, this Department is constrained from rendering a legal opinion on the matter.”

Cordova, in seeking a legal advice, informed the DOJ of PAGCOR’s request that COA review the GRR for POGOs.

Cordova told Cordova that PAGCOR asked COA for help after terminating the contract of Global ComRCI as a third party auditor on March 31 last year due to its inability to pay. “default and violation of R.A. 9184 and its implementing rules and regulations.”

Citing RA 11590 the DOJ opined 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.”

According to the law, the third-party auditor should be appointed. “independent, reputable, internationally-known, and duly accredited as such by an accrediting or similar agency recognized by industry experts.”

The RA 11590 also stated that it does not prohibit “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.