PHILIPPINES Trends and Developments Contributed by: Ignatius Michael Ingles, The Law Firm of Ingles Laurel Calderon
Meanwhile, the PCSO claimed its contributions to the PSC should only be sourced from sweep - stake draws and not from other PCSO lottery games. The PCSO claimed that its lottery games did not fall within the definition of “lottery draws” under Section 26 of the Philippine Sports Com - mission Act. It argued that its lottery operations were not contemplated under Section 26 for the simple reason that the PCSO was not in exist - ence at the time Section 26 was enacted. In any case, the PCSO claimed that it showed good faith and steadfast compliance because it had been remitting what it could despite the decline of its sweepstakes sales. Judgment The Supreme Court sided with Coach Guiao and dispensed with the arguments of both the PAG - COR and the PCSO. Sitting en banc, the Supreme Court found that the PAGCOR’s obligation was to remit all 5% of its gross income to the PSC, as the law made no qualifications or deductions as to the amount, contrary to the PAGCOR’s arguments. The Supreme Court stated that Section 2 “does not state that the computation of the 5% is arrived at after deducting the franchise tax” . In finding that the remittances must be based on gross income without deductions, the Supreme Court also looked at other laws that likewise require the PAGCOR to distribute its gross income. For example, it looked at a law which required the PAGCOR to distribute its income to the National Power Corporation. In that law, the Supreme Court found that any subsidy should only be remitted after certain deductions. The lack of a similar instruction in its remittances to the PSC was proof to the Supreme Court that the PAGCOR should, in fact, remit all 5% of its gross income, without any deductions.
In finding against the PCSO, the Supreme Court went into the definition of “lottery” . The term “lottery” in this jurisdiction is defined as extend - ing to “all schemes for the distribution of prizes by chance, such as policy playing, gift exhibi - tions, prize, concerts, raffles at fairs, and vari - ous forms of gambling” . A lottery is said to have three essential elements: consideration, prize and chance. These three elements applied to the PCSO’s “lotto draws” as “the payment of the prize of the lotto ticket is the consideration for the chance to win the prize offered in the lotto draw” . The Supreme Court reminded the PCSO that its lotto games and any other future games that fall within the definition of “lottery” will be subject to contributions to the PSC for the NSDF. The PAGCOR was ordered to account and remit all 5% of its gross income per year from 1993 up to the present. The PCSO was ordered to account and remit the 30% representing the charity fund of the pro - ceeds of six sweepstakes or lottery draws per year (including lotto draws) from 2006 onwards to the PSC. The Supreme Court also had a strong reminder for the PSC, noting that it should have been the PSC that filed the petition, not Coach Guiao, stating: “It seems that the Philippine Sports Commission has turned a blind eye to its own mandate and has instead allowed the Philippine Amusement and Gaming Corporation and the Philippine Char - ity Sweepstakes Office to remit however which way they desire, despite the wordings in the law. Consequently, this Court will not sit idly by as
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