Philippine Amusement and Gaming Corporation (PAGCOR)

Part B: Poor Governance- Corporation: 50 points

4. Choose a Philippine Corporations with questionable, problematic governance and negative corporate
image. Write an overview the Corporate Background of your chosen corporations. How may the
corporation be described in terms of its?

PAGCOR CORPORATE PROFILE:

The Philippine Amusement and Gaming Corporation (PAGCOR) is a 100 percent government-
owned and controlled corporation under the Office of the President of the Republic of the Philippines.

The Corporation was created during the Martial Law years by virtue of a Presidential Decree
(PD1067-A) issued by then President Ferdinand Marcos in response to calls for the Philippine
Government to put a stop to the growing proliferation of illegal casino operations in various parts of the
country then. The law creating PAGCOR was later amended and consolidated under PD 1869 otherwise
known as the PAGCOR charter.

Under its Charter, PAGCOR was given a three-pronged mandate:

1. Regulate, operate, authorize and license games of chance, games of cards and games of
numbers, particularly casino gaming in the Philippines;
2. Generate revenues for the Philippine Government’s socio-civic and national development
programs; and
3. Help promote the Philippine tourism industry.

In June 2007, Republic Act No. 9487 was passed by the Philippine Congress, extending the corporate
life of the state-run gaming firm by 25 years, renewable for another 25 years, and prescribing the
following amendments to the PAGCOR Charter:

1. PAGCOR can enter into agreements, including joint venture, with any person, firm, association
or corporation.
2. Requirement to obtain consent of the local government authority that has territorial jurisdiction
over the area chosen as site for any of PAGCOR’s operations.
3. Exclusion of jai alai from PAGCOR operations; and
4. Delimitation of regulatory authority and power over gaming activities covered by other existing
franchises, regulatory bodies or special laws.

Aside from these, PAGCOR has also been tapped to provide funds for the implementation of vital
laws such as the Early Childhood Care and Development (ECCD) program which basically promotes pre-
school education and the Sports Incentives and Benefits Act which provides monetary rewards to
athletes who win in international sports competitions. As of October 31, 2014, PAGCOR has released a
total of P375 million to ECCD and P208.98 million to winning national athletes and coaches who made
the country proud in prestigious global athletic events. In compliance with RA 10066 or the National
Cultural Heritage Act of 2009 which provides for PAGCOR’s mandatory funding of P500 million (at P100
 million per year for five years), the state-owned gaming firm has allocated P183 million as of October 31,
2014.

Presently, PAGCOR is in coordination with the Department of Energy for the implementation of RA
9153 or the Renewable Energy Act of 2008, funding of which will be sourced from 1.5% of PAGCOR’s
annual net income. The remaining balance of PAGCOR’s income is remitted to the Social Fund to sustain
the priority projects of the Office of the President. Pursuant to RA 7656 or the Dividend Law, PAGCOR
remits at least 50% of its annual net earnings as cash, stock and/or property as dividends to the National
Government. Apart from its mandatory contributions to various agencies and entities, PAGCOR has also
been undertaking major Corporate Social Responsibility projects under the leadership of its present
management.

4.1. Political environment

PAGCOR aims to provide a safe and healthy working environment for all of its employees,
outside contractors, and visitors, as well as to follow all applicable local laws and regulations, as well as
best practice standards established by national and safety agencies. PAGCOR suspend services on
March 15, 2020 as the COVID-19 pandemic worsened. This included all land-based casinos, poker rooms,
sports betting shops, slot machine venues, and bingo clubs. On March 18, the online sector was told to
shut down. Since that time, the industry has suffered significant losses. In April, reports indicated that
PAGCOR was losing $118m in potential revenue each month. After most, if not all, industries were
affected by the pandemic, the Philippine government was able to look for alternative funding sources,
resulting in a significant drop in tax revenue. As a result, the government has a limited budget that is
urgently needed to support the population. The good thing is that the government may get into some
industries to generate funds through taxation. The same system that the government used to impose a
5% tax on POGO operators may be applied to online cock fighting or e-sabong.

PAGCOR, for its part, must immediately establish online gaming standards and enable or issue
online gaming licenses to the present pool of land-based gambling companies. During this time of
pandemic allowing operators to provide online gaming or casino operations would result in a win-win-
win situation for all industry stakeholders. Customers may play their favorite game in the privacy of their
own homes, without the fear of exposure of the Corona-virus. The casino operators will continue to get
money in order to survive and sustain their employees, while the government, through PAGCOR, would
receive a portion of the revenue in order to undertake government programs. In this scenario, the tax
generated by the online gaming platform benefited the firm by generating cash to support their
employees and certain establishments, as well as to aid individuals.

Structural environment

The PAGCOR casino sector is already a capital-intensive venture for gambling operators. The
majority of the investment would often go toward physical infrastructures such as buildings, hotels,
gaming areas, restaurants, and amenities to satisfy its loyal customers. However, with the pandemic, it is
only reasonable for these operators to adjust and allocate a portion of their CAPEX expenditure to
construct infrastructure to enhance their online gaming capacity such as IT infrastructure, connectivity,
software and hardware, and security should all be included in the operators' capital cost. These should
take priority over the hard buildings that are now being built. In fact, this pandemic might be seen as a
chance for these operators to cash in on the online casino, as prior to the pandemic, these operators
were only permitted to conduct land-based casino operations. This pandemic provides an opportunity
for operators to diversify their income generating across numerous channels. Some PAGCOR services
are not focused on face-to-face interaction setup, but rather on online operations during a pandemic in
order to earn or generate revenue.

Economic environment

Many companies and economies are facing income losses as a result of the new corona virus
(COVID-19) epidemic, and the Philippine Amusement and Gaming Corporation (PAGCOR) is no
exception. According to our research, PAGCOR is losing P5 to 6 billion per month on average when the
expanded community quarantine is implemented in Metro Manila and other major cities around the
country. Some of PAGCOR's establishments and transactions are temporarily closed, causing the
economy to suffer as a result of the epidemic. Despite these losses, the country's gaming regulator and
operator have contributed a total of P20.5 billion to the national government to assist in addressing the
effects of COVID-19 in the country. Despite a significant reduction in earnings or revenue, PAGCOR does
not hesitate to respond to the needs of Filipinos, particularly front-liners who risk their lives in this
battle.

PAGCOR's efforts did not come to an end with the suspension ruling. It promptly paid P12 billion
in cash dividends to the National Treasury and sent P8.5 billion to the President's Socio-Civic Projects
Fund. Furthermore, PAGCOR recently acquired P65 million in food products, including rice purchased
from the National Food Authority, canned foods, and other basic needs for distribution to front-line
workers and communities in desperate need of assistance.

5. Identify the different Stakeholders involved. Describe how they affect/ or how they are affected.

5.1. Management-

The Management serves as the decision-making hub for PAGCOR's day-to-day operations. It
directs PAGCOR's actions by expressing the Board's goals into concrete words and adopting fundamental
methods to achieve those objectives. Management is accountable to the Board for implementing the
infrastructure for PAGCOR's success through the following mechanisms in its organization, as
determined by the Board: organizational structures that work effectively and efficiently in achieving
PAGCOR's goals; useful planning, control, and risk management systems that assess risks using an
integrated cross-functional approach; and information systems.

Every Director and Officer accepts the position fully aware that he assumes certain
responsibilities not only to PAGCOR, but also with its different constituencies or Stakeholders, who have
the right to expect that PAGCOR is being run in a prudent manner and with due regard to the interests
of all Stakeholders. Consequently, members of the Board and Officers shall deal fairly with PAGCOR's
employees, customers, suppliers and other Stakeholders. No member of the Board or Officer may take
unfair advantage of the PAGCOR’s employees, customers, suppliers and other Stakeholders through
manipulation, concealment, abuse of confidential or privileged information, misrepresentation of
material facts, or any other unfair-dealing practice. Ever since this pandemic began 13 months ago, they
have continued to receive full salaries and benefits, and our medical benefits, despite a drastic dive in
our income and in the face of the challenging operational environment.

5.2. Creditors- During the pandemic, creditors were impacted because some establishments and
agencies remained financially challenged due to limited gaming operations; however, this was not a
hindrance to them because there are ways to conduct transactions or negotiate because some services
operate in limited capacity on-site and the majority of them are through online platforms.

5.3. Shareholders-

PAGCOR's shareholders comprise the different companies in the gambling sector, as required by
its role as a gaming regulator. In this regard, PAGCOR is in charge of developing regulations, processes,
and guidelines that would regulate the gaming industry's activities.

5.4. Employees-

PAGCOR recognizes its employees as its best asset. PAGCOR shall develop and implement
human resource development programs aimed at continuing the personal and professional
improvement of its officers and employees.

The temporary closure of PAGCOR point to the business environment becoming too difficult as a
result of the virus. In the middle of the pandemic PAGCOR began laying off around More than thousands
of employees. The positions eliminated included employees that work in their affected establishment
like Casino, Hotel, other offshore iGaming, studio production staff, live dealers, and IT, and others. But
PAGCOR helped their employees to survive the situation even some establishments had retrenchments,
reduced their employees and others even had to cease operations but PAGCOR remains to be the hope
for all employees. Not only that, despite the big losses, the corporation continues to help frontline
workers, the poor and the government during the pandemic.

PAGCOR's volunteer staff aided in the repacking and distribution of items and services to those
in need during the epidemic. PAGCOR licensees have also made financial contributions to COVID-19
relief efforts. The four licensed casinos in Entertainment City contributed a total of P210 million, with
P150 million coming from Philippine Offshore Gaming Operations (POGOs) for PPEs, food, and other
needs.

5.5. Clients-

A successful and long-term company partnership requires honesty and integrity in contacts with
consumers. PAGCOR should operate a highly effective and efficient company that is focused on
achieving client or customer objectives, with the goal of delivering services that provide fair value,
consistent quality, reliability, and safety in exchange for the price paid. PAGCOR should establish policies
of continuous improvement, of both processes and personnel abilities, to guarantee that it continues to
offer value to its consumers by taking advantage of developments in all aspects of society. In order to
successfully and consistently deliver what PAGCOR is mandated to do, PAGCOR should have clear and
strong lines of communication that allow them to respond quickly and efficiently to customer and
market requirements, as well as public needs, and for customers to receive consistent service.
 In this time of pandemic, most clients are affected but they have a platform to still transact or
bet on PAGCOR services online, including Casino and eSabong, which is defined as online/remote or off-
site wagering/betting on live cockfighting matches, events, and/or activities streamed or broadcasted
live from cockpit arenas licensed or authorized by the Local Government Units having jurisdiction.

5.6. Specific government office

The Philippine Amusement and Gaming Corporation (PAGCOR is located CBP-1A, Metropolitan
Park, Roxas Blvd, Pasay, 1300 Metro Manila PAGCOR Main Corporate Office, address. However, during
this period of uncertainty, certain parts of the main office were temporarily closed due to the pandemic,
while some of their establishments continued to function and serve customers.

5.7. Public- In the midst of these difficult times, the Philippine Amusement and Gaming Corporation
(PAGCOR) continue to provide assistance to various local government units (LGUs) in Luzon that are in
desperate need of assistance due to the economic impact of the Corona Virus Disease-2019 (COVID-19)
pandemic. According to PAGCOR website, they contributed a total of P20.5 billion to the government's
efforts to prevent COVID-19 spread. Of this amount, P12 billion in cash dividends were paid to the
National Treasury, while P8.5 billion was transferred to the President's Socio-Civic Projects Fund.

6. Good governance matters

The principles and best practices of sound Corporate Governance are followed by PAGCOR's
Board of Directors, officers, executives, and employees, and serve as a guide in making decisions,
developing strategy, ensuring integrity, transparency, and efficiency in operations, and fulfilling
PAGCOR's role as a reliable government partner in nation-building. PAGCOR's commitment to the
highest levels of corporate governance is a driving factor behind its ongoing efforts to improve the
quality of its daily operations.

6.1. Present the main and specific problem. What are the business criticisms, challenges or issues?
e.g. Company A remained afloat during the pandemic by downsizing the company

In accordance with this directive, the Philippine gaming industry, such as Philippine Amusement
and Gaming Corporation (PAGCOR), ordered the temporary closure of all land-based casinos, E-Games,
bingo, poker, slot machine clubs, and sports betting facilities on March 15, 2020 and extended the
suspension order to POGO and its Service Providers until March 18, 2020. Following the government's
lockdown measures that temporarily suspended casino operations, the state-run Philippine Amusement
and Gaming Corp. (PAGCOR) experienced a net loss in the first six months of the year. With the COVID-
19 epidemic, it took a significant blow, possibly the hardest damaged industry, along with other leisure
and tourism-related companies such as hotels, airlines, and other tourist attractions. When the
Philippine government declared the Enhanced Community Quarantine (ECQ), all leisure activities and
companies were prohibited from functioning, with the exception of those engaged in critical necessities
such as hospitals, medication, food, and logistics. The PAGCOR industry suffered a drastic drop of its
total gaming revenue when compared year on year. This resulted and put a stop on the steady growth
year on year of the whole industry. The Philippine Amusement and Gaming Corporation (PAGCOR) the
Philippine government’s gambling regulating body is in an obscure situation as it can only regulate
gambling activities within the territorial jurisdiction of the Republic of the Philippines.
 The Philippine Amusement and Gaming Corporation (PAGCOR) have recently approved
resumption of gaming operation of all licensed operators but on a 30% operational capacity only. The
Philippine government needs fund for its pandemic initiatives and projects. PAGCOR, is one of the
government agencies badly affected, as the licensed gaming operators suffered drastically due to
stoppage or imposed limit on its operation. Pandemic put a stop on the year-on-year steady growth of
the gaming industry in the Philippines and it calls for a quick and effective measure in order for it to
survive. It is with PAGCOR and the whole gaming industry however, where the government can find its
needed additional fund source. It is in this industry as well, where we can find a win-win-win scenario for
all stakeholders, and it includes the gaming patrons and the public in general.

This pandemic made the gambling operators to adapt and innovate based on their respective
resources and according to regulatory guidelines. Some of the mandatory requirements for example are
the strict health declaration upon entry, temperature, and at times even on the spot swab test of guests
prior to entry. Some casinos too installed barriers to gaming tables which has multiple players playing at
the same time. This is on top of the reduction of seating capacity of establishment operation. It is
obvious however, that for this Win-Win-Win scenario to work, all the recommended courses of action
from all stakeholders must be implemented with immediate effect.

6.1.1. Provide at least two Alternative Corporate Response (ACR) and the advantages and
disadvantages for each ACR

Alternative Corporate Response (ACR)

Assistance from Covid-19

According to PAGCOR.PH (2021), they provided P65.33 million in relief packets (food and non-
food goods) to help alleviate the effect of the COVID-19 pandemic in the Philippines. PAGCOR, in
collaboration with its Entertainment City and Clark casino licensees, as well as the Philippine Offshore
Gaming Operators, provided aid to frontline workers and local government units in Luzon who are
suffering from the economic effects of the Corona Virus Disease-2019.

ADVANTAGES

In the instance of assistance on the COVID-12 response, the benefits of this are that PAGCOR
helps individuals who are down and require basic necessities to provide for their families and to survive
their everyday lives as a result of this epidemic. As a result of their dedication to helping people despite
the difficulties that the Corporation faces, the Corporation has received positive feedback from the
government and private sector.

DISADVANTAGES

We consider the downsides of this, such as the possibility of viral infection during the
transmission of the COVID-19 reaction to people, as well as not adhering to the government's social
distance policy.

Multiple Purposes Evacuation Centers

PAGCOR initially approved the construction of 32 MPECs at 31 locations. San Andres, Quezon;
Romblon, Zamboanga del Sur; Taguidin, Ilocos Sur; Tadian, Mountain Province; Legazpi City and Ligao in
Albay; Ocampo, Tigaon, San Jose, and Sagnay in Camarines Sur; and San Fernando and Floridablanca in
Pampanga and Tapaz, Capiz were among the first MPECs to receive P50 million in funding.

Advantages

PAGCOR should make a long-term investment in creating secure and adequate areas for
vulnerable individuals amid natural disasters. The design of the community evacuation center
incorporates Project International Humanitarian Standards, the DSWD Guidelines on Evacuation Centre
Coordination and Management, as well as the natural environment, climate, hazards, local cultural
practices, community demographics, and existing community capacity.

Disadvantages

The PAGCOR is an expensive investment that may have a significant influence on the
corporation's income. As a result, the firm may face a cash crisis.

Medical Assistance

According to PAGCOR.PH (2021), they provide financial assistance to state-run hospitals in order
to support the government's main health-related activities. The agency gave P123.6 million to Veterans
Memorial Medical Center (VMMC) in February 2021 to help fund a two-story halfway house or
dormitory for the relatives and watches of soldiers held in the facility. Apart from supporting state-run
hospitals, PAGCOR tries to help less fortunate individuals by giving cash assistance. In 2020, the agency
distributed P20.37 million in financial medical assistance to people and P30.45 million in financial grants
to Local Government Units, Non-Governmental Organizations, and other government agencies and
individual recipients.

Advantages

It will benefit both patients and the hospital if their services are supported in order to build a
convenient and high-quality facility. As a result of the outbreak, it will be easier and more useful to all
patients, employees, and hospital administration.

Disadvantages

Perhaps the cash that will fund the medical facility will not all pay to support the construction
and there will be corruption.

References:

Daniel I. Moran (2021). A Win-Win-Win Scenario in The Gaming Industry Amidst the Pandemic: Evidence

from The Philippines. irejournals.com. retrieved from

https://pagcor.ph/gob/pagcor-transparency/corporate-profile/

PAGCOR extends help to frontliners and communities despite losses (2020). PAGCOR extends help to

frontliners and communities despite losses. pagcor.ph. Retrieved from,

https://www.pagcor.ph/press-releases/pagcor-extends-help-to-frontliners-and-communities-

despite-losses.php

Sadonna Price (2020). 11 POGOs to Reopen, Five Close Permanently During COVID-19 Pandemic.

https://www.vegasslotsonline.com/news/2020/06/22/11-pogos-to-reopen-five-close-
permanently-during-covid-19-pandemic/

(Insider) (2021). Official Newsletter of the Philippine Amusement and Gaming Corporation. pagcor.ph

Retrieved from. https://www.pagcor.ph/insider/2021/jan-mar-2021.pdf

PHILIPPINE AMUSEMENT AND GAMING CORPORATION (PAGCOR) MANUAL ON CORPORATE

GOVERNANCE (2021). Philippine Amusement and gaming corporation. pagcor.ph Retrieved

https://pagcor.ph/transparency/docs/manual-on-corporate-governance.pdf

Our CSR Projects (2021). Our CSR Projects. pagcor.ph. Retrieved from,

https://pagcor.ph/social-responsibility.php