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Arbitration court junks PGMC’s P7.6B damage claims against PCSO

PCSO General Manager Alexander F. Balutan

The International Chamber of Commerce-International Court of Arbitration (ICC-ICA) has junked the P7.6 billion damage claims of Philippine Gaming Management Corporation (PGMC) against the Philippine Charity Sweepstakes Office (PCSO).

“The Tribunal thus dismissed PGMC’s P7.6 billion claims for damages against PCSO. The agency was awarded reasonable costs and expenses amounting to P53.5 million. PGMC will also reimburse US$ 200,000 for our share of the advance costs,” said PCSO General Manager Alexander Balutan.

In a statement, the Makati City Regional Trial Court (Branch 143) issued an order dated May 25, confirming the arbitral award of the ICC-ICA.

The case—filed by PGMC in connection with the charity agency’s project to modernize its online lottery game such as Lotto, Digit Games, Keno, and Small Town Lottery (STL)—was won by the Office of the Government Corporate Counsel (OGCC) for the PCSO.

Since the start of lotto games more than 20 years ago, it was only in 2017 when PCSO opened for the first time the public bidding for the supply and delivery of its Nationwide Online Lottery System (NOLS), wherein 17 bidders properly secured bid documents.

However, Makati City Regional Trial Court Branch 143 Presiding Judge Maximo de Leon granted on August 3, 2017 a temporary restraining order (TRO) filed by PGMC against the bidding for the five-year lease of the NOLS with an approved budget for the contract (ABC) amounting to P10.906 billion.

In February this year, the ICC-ICA Arbitral Tribunal rendered a ruling favorable to PCSO declaring that PGMC does not have an exclusive contractual right to supply an online lottery system for Luzon.

The OGCC team who represented PCSO during the arbitration is composed of its lawyers Deputy Government Corporate Counsel Elpidio J. Vega, assistant government corporate counsel Efren Gonzales, government corporate attorneys Aniceto Calubaquib, Jr., Fiona De Leon, and Abegail Joan Orilla-Orara with Attorneys Anna Liza Inciong and Leah Christine Jimenez of the PCSO Legal Department.

Currently, PCSO has two existing lottery systems. For Luzon, it’s with PGMC, owned by Berjaya, a foreign company from Malaysia allegedly backed by a former president, and will end on August 21, 2018; while for Visayas-Mindanao, it is held by Pacific Online System Corp., and will expire on July 31, 2018.

“NOLS has a lower rate compared with the existing system. The system will be implemented nationwide, it will be accessible to the public. Meaning, kapag binili mo ‘yung ticket mo sa Visayas o Mindanao, pwede mo i-validate dito sa Luzon [if you buy your ticket from Visayas or Mindanao, you can validate it in Luzon],” explained Arnel Cases, assistant general manager for gaming sector.

Unlike in the existing two systems, when one buys ticket in the Visayas, he cannot validate the winning ticket in Luzon because it uses a different system. He has to go to PCSO main office where all validating machines are available to validate his ticket.

Casas said NOLS has only one system that can validate all tickets brought from all over the country. The new ticketing system also has added security features. One can easily check if it’s authentic or not to prevent players from counterfeiting or faking winning lotto tickets.

When that happens, players holding fake tickets will be referred to the National Bureau of Investigation (NBI) or authorities.

PCSO has a strict policy that winners can only claim jackpot prizes at the main office.

For consolation prizes of P10,000 and below, they can be claimed at any Lotto outlet, and for prizes amounting to P200,000 or P300,000, they can be claimed at the branch offices.

Based on OGCC’s records, the arbitration case at the ICC-ICA is one of the largest cases the OGCC won in the past decade.

While this is good news for PCSO, Casas said the agency has to start all over again with the preparation of terms of reference (TOR), technical specifications, and the bidding, which has already been started early last year.

Last year, 17 proponents already brought bidding documents, however, during the pre-bidding conference to clarify issues and concerns (e.g. terms of reference), another 30 bidders came, filling up the entire space at PCSO’s conservatory office.

After the pre-bidding conference, a clarificatory conference followed at the Legend Villas for a bigger venue, but it was stopped due to the injunction case filed by PGMC. Failure to stop the proceedings will amount to contempt of court on the part of PCSO.

“We’ve prepared for this since 2012 in anticipation of the expiration of contract of PGMC and Pacific Online this year. The bidding actually started early last year of 2017. Kung natapos yun ngayon dapat transition period na tayo sa bago kung natuloy. Kaya lang, they filed injunction case kaya na-delay. Nawala completely ang momentum. [Had we finished that, we would now be in the transition period. But they filed an injunction case so there was a delay. We completely lost momentum]. Now with this new development, we can now proceed with the bidding,” Casas said.

Bidding process usually takes six to eight months; while the transition period from old to new system usually takes another eight to 10 months.

Kapag nanalo ka, may one-year grace period kasi tayo to claim your jackpot prize. Kapag in-award na dito sa bagong company, na sa’yo pa ‘yung database nung winning ticket kaya mga one-year pa ‘yan nandyan, magsha-shadow, or for verification purposes. Pero ang selling, nasa bagong system na,” explained Casas.

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