February 23, 2009 (InfoPowa News) — Quezon City in the Philippines claims that gambling group Philippines Amusement and Gaming Corporation (PAGCOR) owes hundreds of millions of pesos in unpaid franchise taxes. City executive Dr. Victor Endriga cited Section 13 (2) of Presidential Decree 1869, or the Pagcor Charter, imposing a 3-percent franchise tax on the firm and its partners for the operation of online casinos in making the claim this week.
He told the Manila Standard Today newspaper that PAGCOR, alongside PhilWeb Corp., the first listed Internet gaming company, have remained unaudited for their gross sales since they started online gambling in the city, and that café operators have misstated their revenues.
"One operator had declared a P3-million net income against its actual income of P93 million. On the other hand, Pagcor thought PD 1869 as amended by PD 1993 and Executive Order 260 have exempted it to pay franchise taxes," he told Standard Today.
Endriga said Section 13 (2) stipulated that “municipal, provincial or national government” were not permitted to impose taxes on any Pagcor gambling operation and other activities within its jurisdiction, but this did not apply to cities.
“Ours is a city, and not a municipality, a province, or a national government, therefore Quezon City can collect taxes from Pagcor and PhilWeb, and their agents. The law is easily interpreted,” Endriga said.
“I would write Pagcor chief executive officer Efraim Genuino and Philweb officials to open their books of account.”
Endriga said 15 tax examiners would be mobilized for the extensive audit.
“Hopefully, we could finish this in just less than a month,” he said. “We will go after Pagcor’s bingo operations, too, as well as the [Manila Jockey Club Inc.] the off-track betting stations.”
According to Endriga, Third District Councilor Jimmy Borres has conferred with the League of Cities of the Philippines about the issue, noting that 21 percent of the total gross sales goes to the Internet café operators, while Pagcor and PhilWeb share the 72 percent of the gross sales.
He said the Local Government Code mandates a 3-percent franchise tax on the 100-percent gross sales of Pagcor’s operations.
“Two Pagcor lawyers and PhilWeb representatives appeared at Friday’s public hearing," Endriga revealed. "They, too, were shocked about Pagcor Charter’s Section 13 (2). I was also taken aback. Pagcor [did us a favour] giving Councilors Ariel Inton, Borres, Jesus Suntay and me a copy of their Charter.”

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