Development of a policy framework for the Philippine Charity Sweepstakes Office / Eric M. Villamar.

Thesis (Ph.D.) -- Pamantasan ng Lungsod ng Maynila, 2011.

A dissertation presented to the faculty of the Graduate School of Management in partial fulfillment of the requirements for the degree Doctor of Business Administration.

This study entitled ?The development of Policy Framework for the Philippine Charity Sweepstakes Office? examined the significant contribution of PCSO on the economy of the country with an attempt to develop a policy framework that can be utilized to enhance its performance. It specifically sought answers to the following questions: 1. What is the status of the PCSO indicators with regard to the following: 1.1 Revenues, 1.2 Expenses, 1.3 Investment, 1.4 Cost of Labor, 1.5 Community Projects, 1.6 Prizes Paid, 1.7 Taxes Paid, 1.8 Business Establishments? 2. What is the trend and growth rate of the following economic indicators for the last ten years in terms of: 2.1 Gross Domestic Product, 2.2 Personal Consumption Expenditures, 2.3 Government Investments, and 2.4 Government Spending? 3. Is there a significant relationship between the performance indicators of the PCSO and the economic indicators in problem 2? 4. How can a policy be developed to enhance the performance of the PCSO? 5. What are the constraints and limitations of the PCSO that affect its performance? The null hypothesis was tested and rejected in this study: 1. There is no significant relationship between the performance indicators of the PCSO and the following selected economic variables: 1.1 Gross Domestic Product, 1.2 Personal Consumption Expenditures, 1.3 Government Investment, and 1.4 Government Spending. The historical method of research was used to find solution to the stated problem. The historical design made use of critical investigations of the past ten (10) years, from 1999-2008, and audited annual reports of PCSO. This study also used the quantitative method through mathematical computation of different formulated business models. Quantitative models were separated into three basic types: time series and causal models, system models, and sophisticated models incorporating elements of each. The descriptive method in acquiring the desired information was also used through Focus Group Discussion. Guide questionnaires were also utilized and resulted in fruitful discussion among the sixteen (16) participants from various departments of PCSO. Two separate sessions were conducted. The following findings and conclusions were derived from the analysis and interpretation of data; The status of the different PCSO, performance indicators were presented by trend and growth rate. It was discussed in the order enumerated in the problem. An unstable growth rate of PCSO?s Revenue indicators were observed during the ten years period. PCSO?s revenue declined during the Estrada?s administration. In 2005, President Arroyo tasked the PCSO to introduce the Small Town Lottery (STL) as a substitute to ?jueteng? in the National and Local levels. This contributed to the PCSO?s revenue increase and it reached a growth rate of 29.06%. In 2006, online game, Keno, contributed additional sales revenues, and reached its maximum of P20 billion in 2008. PCSO?s expenses showed positive growth rate every year for the past ten years. A significant investments were placed on a short term maturity investment at the Landbank of the Philippines and Philippine National Bank, respectively. However, from 2003 to 2008 a negative growth rate was experienced by the PCSO in terms of investments. The cost of labor had positive growth rate every year and employees concerned seemed contented. The top community projects sustained by PCSO were Medical Assistance & Service Program, Health & Welfare Program; PCSO Charity Clinic; 5% Share of LGU; Commission on Higher Education; Aids to National Calamities; TB Control Program; Funeral and Burial Assistance; and the Sports and Development Program. Price Fund expenses exhibited the highest indicator of PCSO?s total expenses. Prizes paid by the PCSO declined in 2000 at the rate of 6.73% and the lowest growth rate for the past ten-year period. Unstable growth rate was observed in the PCSO?s taxes paid to the government. The highest taxes paid were observed during the year 2006 with a growth rate of 116.16% due to payment of documentary stamps. PCSO?s business establishments experienced an unstable growth rate too. The lowest was observed in 2000 at the rate of -43.62%. That was the time when the Estrada?s administration was ousted. A slight increase was observed after the transition in 2001 with the growth rate of 5.75%. A huge amount of growth rate was experienced in the year 2003 at the rate of 133.96%. As observed, the actual values of economic indicators exhibited a continuous increase but as for growth rate, they were unstable. These were attributable to the change in the government administration, effect of the global financial crisis and calamities experienced in the country. The null hypothesis was rejected that there is no correlation between the performance indicators of PCSO and the selected economic variables. Statistical test revealed that there were significant relationships between the PCSO performance indicators and the selected Economic Indicator. Model-1 on page 78, GDP vs. REV, EXP and INVT, revealed that for every P1M decrease in PCSO?s revenue, GDP decreases by P1.9M. The value 1.52 shows that for every P1M increase in the GDP by P165M. In model-2 PCE vs. COL and PRIPD was interpreted as highly significant as discussed in page no. 80. Model-3 GINVT vs. INVT, COMPROJ, TAXPD and BUSEST was interpreted as significant and discussed on page no. 84. Model-4 GSPED vs. COMPROJ, TAXPD and BUSEST was interpreted as significant as discussed on page no. 87. PCSO Model-1 on page no. 88 showed the effect of revenue and investment on Expenses. Revenues were the most important indicator of PCSO?s expenses. It was statistically significant at 5% level of significance. PCSO Model-2 on page no. 89 was about the effect of operating fund, price fund, and charity fund to PCSO?s total revenue. Three indicators affected the total revenue. It was statistically significant at 5% level of significance. Given the three indicators, charity fund exhibited the most indicator that contributed to the total PCSO?s revenues. PCSO Model-3 on page 92 was all about the effect of different games on the total revenues. It shows that all the number games were interpreted as highly significant. Keno being introduced only in 2006 was the least significant. PCSO Model-4 on page 94 presented the effect of selected community projects to the total projects. It is interpreted to have statistical significance. Based on the focus group interviews conducted last January 20, 2011, the responses clearly showed the constraints and its limitations. On the revenues, all were accounted for and audited with the exception of those collections reported by the STL operations are not under PCSO supervisions and control, thus no regular audit was conducted to attest the veracity of the financial records submitted. Revenues from Keno games were keeping up, but very slow despite the 100% increase in sales. This could be attributed to the computer access and skills of the gaming public. With regard to PCSO expenses, participant could not of any negative issues or limitations on PCSO expenses. Most of PCSO participants were not aware of their company investments. Some replied that PCSO had time deposits placed at the Philippine National Bank and Landbank of the Philippines, regardless, of interest rates being offered in the market. Under the cost of labor, extra bonuses at anniversary and an easy access to medical services and assistance were the most precious advantages they could avail of. The normal change of power in the government brought changes in the various projects of PCSO. Delays and difficulties in the project implementation were experienced. There were some unclaimed prizes and delays in reverting back to charity fund after a year. No record of tax cases was filed and pending in court, only few adjustments on imposition of taxes on was employees? fringe benefits in excess of P30,000. As of to date, there are 69 legal cases pending in different courts. They are mostly civil and criminal cases against erring sweepstakes and lotto agents. This resulted in the strict implementation of the requirement to get PCSO franchise.

Based on the findings of the study the following conclusions were formulated: 1. PCSO?s performance indicators used in the study indicated an unstable growth rate for the past ten-year period. The transition of government significantly affected the growth rate of the PCSO?s financial indicators. However, a slight increase in the growth rate was observed after the transition period. The PCSO performance indicators were affected by the various limitations and constraints as gathered in the focus group interview. 2. Economic indicators exhibited a contentious increase. The increase or decrease in the growth rate of the economic indicators has something to do with the transition of the government, the development plan of the government and the natural calamities that the economy experienced during the past ten years. 3. The null hypothesis was rejected. There was a significant correlation between the performance indicators of PCSO and economic variables. 4. The significant effects shown by the four (4) PCSO Models presented can enhance further the PCSO performance. 5. Based on the results of the focus group interview as guided questionnaires, the following limitation and constraints were gathered: a. Revenues were fairly presented, except those from STL operations that were not examined. b. Expenses were properly recognized, examined and presented, thus, no comments, nor suggestions of significant values were gathered. c. Investments were perceived by all as strictly confidential and taken care of by the top management. It was also perceived as not PCSO?s top priority. d. Community projects need to consider some mandatory contributions to be served and recorded. e. Prizes paid were kept secret for security reasons