Grandeur P. G.

Guerrero
Prof. Dr. Florencio N. Embalsado, Jr.
MPA 201 (Theory and Practice in Public Administration)
05 June 2021

Term Paper

The Philippine Charity Sweepstakes Office

I. Background of the Organization:

REPUBLIC ACT NO. 1169 or “AN ACT PROVIDING FOR CHARITY

SWEEPSTAKES, HORSE RACES, AND LOTTERIES” (As amended by Batas
Pambansa Blg. 42 and Presidential Decree No. 1157) mandates PCSO to be the
principal government agency for raising and providing funds for health
programs, medical assistance and services, and charities of national character.
It holds and conducts charity sweepstakes, races, and lotteries and engages in
health and welfare-related investments, projects, and activities to provide for
permanent and continuing sources of funds for its programs. It also
undertakes other activities to enhance and expand such fund-generating
operations as well as strengthen the agency’s fund-management capabilities.

The main products of PCSO are the sweepstakes and the lottery games.
The sweepstakes game has steadily been evolving through the years to be able
to conform with the changing times, to keep the game interesting to all
sweepstakes enthusiasts and to hopefully attract more clients, and to maintain
a variety of sweepstakes products readily available in the market. Various game
types have been introduced and other game innovations are constantly being
conceptualized, particularly the traditional scratch and match variety and the
Small Town Lottery (STL). PCSO holds five 6-pick number games, the Lotto
6/42; MegaLotto 6/45; SuperLotto 6/49; GrandLotto 6/55; and UltraLotto
6/58. The agency also conducts the 6-digit (6D); 4-digit (4D); Suertres Lotto;
and the EZ2 Lotto games. PCSO also offers KENO Lotto Express.

Since its inception in 1934, PCSO has lived up to the challenge of its
mandated mission and purpose and has remained unwavering in carrying out
its vision of uplifting the quality of life of the Filipino people. The agency has
well established itself as a model government institution with its unquestioned
dedication to serve the disadvantaged sectors of society. With these, PCSO has
developed a strong credence and incontestable acceptance from Filipinos who
have all come to believe and get comfort on the fact that PCSO will always be
there for them, as long as needs need to be satisfied and hopes and dreams
need to be given life and fulfilment.

Revenue Allocation

From the gross receipts generated from the sale of sweepstakes tickets,
whether for sweepstakes races, lotteries, or other similar activities, the printing
cost of such tickets is deducted to arrive at the net receipts. Pursuant to
Section 6, Republic Act No. 1169, as amended (PCSO Charter), the net receipts
shall be divided into 55% (Prize Fund), 30% (Charity Fund) and 15% (Operating
Fund): The Prize Fund is used for the payment of prizes, including those for
owners and jockeys of running horses and sellers of winning tickets. This is a
trust liability account. Unclaimed prizes or balances in Prize Fund reverts and
forms part of the Charity Fund after one (1) year. The Charity Fund is also a
trust and liability account and is used exclusively to finance and support
health programs, medical assistance and services and/or charities of national
character. Presently, any disbursements from the Charity Fund must not only
be authorized by the PCSO Board of Directors but must also be approved by
the Office of the President, regardless of the amount thereof. The Operating
Fund forms 15% of the revenue allocation, which is used to support the day-to-
day operating/maintenance and capital expenditures of the PCSO. If there is a
balance on the Operating Fund at the end of the fiscal year, it reverts and
forms part of the Charity Fund.

In adherence to its main thrust of providing funds for health programs

and other charities, PCSO is engaged in various social welfare and development
programs. The main programs of the agency are as follows: endowment
fund/quality health care program, individual medical assistance program,
community outreach program, ambulance donation program, national calamity
and disaster program, and hospital renovation and improvement of health care
facilities. Also, the agency makes mandatory contributions to the Commission
on Higher Education (CHED), Comprehensive and Integrated Shelter and
Urban Development Financing Program (CISUDFP), Department of Foreign
Affairs (DFA), National Commission on Indigenous People (NCIP), Overseas
Workers Welfare Administration (OWWA), Philippine Centennial Commission
(PCC), Philippine Sports Commission (PSC), and the Quirino Memorial Medical
Center (QMMC) as well as regular quarterly and monthly contributions to
charitable institutions engaged in giving welfare services to the children and
youth who are either abandoned or exploited, the elderly, and the physically
and mentally handicapped, among others. Starting with just two beneficiaries –
the Philippine Tuberculosis Society and Hospicio de San Jose, PCSO now has a
long list of beneficiaries that include the Red Cross, Blood Bank, National
Mental Hospital, Boys’ Town in Marikina, Missionaries of Charity in Cebu,
Golden Acres, Tala Leprosarium, Commission on Family Life in Laoag City,
Bacolod Boys’ Home in Negros Occidental, Dominican Missionaries, Stela Maris
Nursery, Leprosarium in Zamboanga City, Daughter of Mary, Mother of the
Church in Naga City, nutrition centers, rural health clinics, government
hospitals and many others which total more than 8,000 beneficiaries. Since the
eruption of Mt. Pinatubo, PCSO has so far released PHP400 million as direct
assistance to the victims and to the various Pinatubo-related programs of the
Office of the President. In the Ormoc disaster, PCSO shelled out PHP48.5
million to the affected families apart from the financial assistance given to the
community. In the lloilo fire disaster, victims were provided financial assistance
amounting to PHP1.5 million. In the Ozone fire tragedy of March 1996, which
claimed the lives of over 150 people and injured close to 200 persons, most of
them were students, PCSO also came to the rescue by providing the families of
the victims with financial, funeral and medical assistance amounting to more
than PHP6 million. With the implementation of the Universal Health Care
(UHC) Law, PCSO shall transfer for the first two (2) years from the effectivity of
the Act at least fifty percent (50%) of the forty percent (40%) of the charity fund
per year, in accordance with Section 37(c) of the Act, to enable the PCSO to
conclude and liquidate its Individual Medical Assistance Program At-Source-
ang-Processing (IMAP-ASAP) obligations. Of the estimated PHP1.437 trillion
required for five years of initial funding of the UHC Law, PHP16.6 billion is
from PCSO, which is less than 1.2 percent of the total budget.

Organizational Chart
III. Analysis of the Problem:

In 1987, the PCSO launched the Small Town Lottery (STL) and Instant
Sweepstakes. The STL is intended to compete with ‘jueteng’ (a popular but
illegal numbers game). Yet STL was criticized as a major source of corruption
in local government units and was suspended in 1990. In 2005, President
Gloria Macapagal-Arroyo tasked the PCSO to help in the campaign to stamp
out ‘jueteng’ and to institutionalize charity at the national and local levels by
reviving an alternative – the Small Town Lottery or STL. On July 26, 2019, in a
live speech on national television, President Rodrigo Duterte declared all of
PCSO gaming activities as "illegal" due to widespread corruption allegations
and ordered the Philippine National Police and the Armed Forces of the
Philippines as well to shut down all PCSO outlets across the country. The
President's move came as a surprise to everyone. Yet this was the result of the
many confidential reports and documentary evidences being furnished to the
President by the fiery and controversial whistleblower in our lifetime, Sandra
Cam (my boss) who was appointed by PRRD to PCSO on December 6, 2017 to
become one of the members of the Board of Directors and serve as the
President’s eyes and ears inside the graft-ridden agency. Since PRRD assumed
power in 2016, then private citizen Sandra Cam has already been furnishing
reports on the corruption inside the Philippine Charity Sweepstakes Office.
Immediately after being appointed, the new PCSO Director Sandra Cam made
headlines by calling-out on the lavish Christmas Party of 2017 that was held in
Shangri-La Hotel in Mandaluyong City under the auspices of then PCSO
General Manager Retired Marines General Alexander Balutan. Later, Dir. Cam
was vindicated by the statements made by some senators and congressmen
after a Senate and House inquiry respectively on the matter and finally, by a
report made by the Commission on Audit (COA) in 2018. On March 8, 2019,
PCSO General Manager Balutan was fired by PRRD yet the former was
insisting he resigned. In 2019, Dir. Cam before being able to make another
controversial call-out on the corruption in their beleaguered agency, was asked
by PRRD for proof on the corruption inside PCSO when they met in Tokyo,
Japan in May 2019 during the President’s official visit thereat. Dir. Cam then
was instructed to hand over aforesaid documents to Senator Christopher
“Bong” Go, who himself turned them over to the Presidential Anti-Corruption
Commission (PACC) Commissioner Greco Belgica who is in charge of the
corruption investigation. Dir. Cam was ready to bare more details about the
corruption inside the PCSO in a Senate or House inquiry as she possesses
voluminous documents, which could prove that some officials connived with
some retired military generals who were and are part of accredited STL
corporations, and were involved in massive corruption in PCSO by using their
STL franchises as a front for illegal gambling operations in many parts of the
country, thereby under-declaring their proceeds to the PCSO. Such inquiry has
not materialized to date. Even the result of the investigation conducted by the
PACC yielded nothing yet. Nevertheless, Lotto operations was resumed on July
31, 2019 and STL operations on August 22, 2019. The question now is could
the Duterte administration with less than a year left still be able to solve the
problems hounding the PCSO? The latest COA report flagged PCSO for waiving
PHP1.43 billion in claims from STL, and also found shortfalls for 2018 and
2017 amounting to PHP7.3 billion and PHP7.6 billion, respectively from
presumptive monthly target sales.

IV. Reform Strategies/Recommendations:

Some quarters are giving their unsolicited advices in order to once and
for all cut the sources of graft and corruption within PCSO, hence easing the
burden of indigent Filipinos who rely much on any forms of assistance that the
PCSO can provide to them. Among them are the following, to wit:
 1. Through an act of Congress, PCSO can be transformed into something
similar to the Philippine Amusement and Games Corporation (PAGCOR),
with it granting licenses to private companies to operate the Lotto and
Keno draws, and a more centralized STL system;
2. Another idea is merging PCSO and PAGCOR into a single agency that
would still be under State control. The Lotto, Keno, and other PCSO
gaming operations will be handled by the new agency very much in the
same way as how gaming licenses are being granted to private
companies, while the health, social service and charitable activities of the
PCSO can be handled more directly by concerned government entities
such as the Department of Health (DOH) and the Department of Social
Welfare and Development (DSWD). The income generated from gaming
activities will go straight to line agencies of the government through the
Presidential Social Fund of the Office of the President or through the
creation of DOH or DSWD specific funds; and
3. Finally, the suggestion of a senator to privatize the gaming operations of
the PCSO, further stating that the Department of Finance (DOF) can
craft the terms to allow a winning bidder to acquire and run these
gaming outlets so that there will be no improper reporting of proceeds
and under-remittances of daily earnings by rogue ones due to manual
collections done by their ‘cabos’ and ‘cobradores’ as this hampers the
social services being given to the needy.

V. References:

https://www.pcso.gov.ph/

https://www.rappler.com/nation/duterte-suspends-pcso-gaming-operations-
july-26-2019
https://www.rappler.com/nation/sandra-cam-appointed-member-pcso-board-
directors

https://www.gmanetwork.com/news/news/nation/704514/duterte-anti-
corruption-unit-asks-sandra-cam-to-submit-evidence-of-pcso-
anomalies/story/

https://www.philstar.com/headlines/2017/12/22/1770877/sandra-cam-
seeks-probe-pcsos-grandiose-party-5-star-hotel

https://cnnphilippines.com/news/2018/07/13/COA-PCSO-charity-fund.html

https://www.rappler.com/nation/duterte-fires-pcso-general-manager-
alexander-balutan