Supreme Court: PCSO free to bid out online lottery

MANILA, Philippines – The Supreme Court has ruled that the Philippine Charity Sweepstakes Office (PCSO) can bid out its nationwide online lottery operations, contrary to the long-standing claim of a private gaming company that it has exclusive contractual rights over the government project.

In a decision of the SC's 3rd Division promulgated on August 30, the High Court said,  “The Philippine Charity Sweepstakes Office may proceed with the bidding process for the Nationwide On-line Lottery System for Luzon.”

The case stems from a contractual dispute between PCSO and private company Philippine Gaming and Management Corporation (PGMC), which had been leasing online gaming equipment to the PCSO since 1999.

In 2011, the Senate blue ribbon committee called out the contract for being disadvantageous to the government because the PCSO was supposedly renting equipment for $148 million when it could just buy the same for $25 million.

Despite the Senate recommendation to renegotiate the fee, PGMC refused to budge, triggering a string of litigation from the trial court, to the Court of Appeals, up to the International Court of Arbitration.

In 2013 or two years before the contract was to end in 2015, the PCSO and PGMC entered into an interim settlement to discuss the issue through arbitration, and to withdraw all cases in the meantime.

Both parties also agreed to extend the contract to August 21, 2018.

But when the PCSO withdrew all its appeals, PGMC went to the International Court of Arbitration to question the legality of the interim settlement.

Around 2016, when the cases reached the Court of Appeals, the PCSO  began preparing for the bidding of the lottery operations because the contract was ending in 2018.

PGMC secured an injunction from the Makati Regional Trial Court stopping the bidding process.

In March 2018, the International Court of Arbitration rendered a final award favoring the PCSO and ordering the PGMC to shoulder the P52-million government cost of arbitration.

In the SCdecision penned by Associate Justice Marvic Leonen, the Court said "the Regional Trial Court committed grave abuse of discretion in granting respondent Philippine Gaming and Management Corporation's application for injunctive relief."

"To emphasize, respondent Philippine Gaming and Management Corporation's exclusive rights, if any, extend only until August 21, 2018. After the expiration of the Supplemental and Status Quo Agreement, it can no longer claim any alleged right to exclusively provide on-line lottery equipment in Luzon,” said the decision.

The decision had concurrences from Chief Justice Teresita Leonardo De Castro, Associate Justices Lucas Bersamin, Andres Reyes Jr, and Alexander Gesmundo. – 

Lian Buan

Lian Buan covers justice and corruption for Rappler. She is interested in decisions, pleadings, audits, contracts, and other documents that establish a trail. If you have leads, email or tweet @lianbuan.