The Philippines’ transport system relies heavily on the
road network which handles about 90 percent of the country’s passenger
movement and about 50 percent of freight movement. While the national roads
are extensive, and serve priority production areas and population centers,
roads that lead to many tourism destination and conflict-affected areas are
Of the approximately 202,000 kilometers (km) roads
nationwide, there were 30,224 kms, approximately 15%, classified as national
roads which are under the jurisdiction of the Department of Public Works and
Highways (DPWH). The rest are classified as provincial, city, municipal and
barangay roads which are under the jurisdiction of the concerned Local
Government Units (LGUs).
As identified in the 2004-2010 Medium-Term Philippine
Development Plan (MTPDP), one of the challenges faced by the Philippines’
transport sector is the need for improved monitoring and maintenance of
existing infrastructure, especially the roads. Addressing this challenge
will greatly improve the transportation backbone and the chance to achieve
the country’s development goals.
To supplement financing the enormous cost of
infrastructure projects, the government adopted a "users pay" culture where
the road users contribute certain amount to finance the maintenance costs of
the roads. This led to the crafting of Republic Act (RA) 8794, an Act
imposing a Motor Vehicle User’s Charge (MVUC) on owners of all types of
motor vehicles and for other purposes.
The MVUC was integrated into the usual annual vehicle
registration fees being collected by the Land Transportation Office (LTO)
from the road users. All MVUC collections are deposited under four (4)
special trust accounts established in the National Treasury which shall be
earmarked solely and used exclusively for road maintenance, installation of
adequate and efficient traffic lights and road safety devices, and air
pollution control. The three funds intended for road maintenance and
installation of traffic lights/road safety devices are managed by the DPWH,
while that for air pollution control is managed by the Department of
Transportation and Communications (DOTC).
As reflected in the records of the LTO, there were
registered vehicles of about 5.3 million in 2006, 5.5 million in 2007 and
5.8 million in 2008. Since the implementation of RA 8794 in CY 2001 up to
December 31, 2008, MVUC collections, as certified by LTO amounted to P55.856
billion of which P53.069 billion were certified to have been deposited. Of
the deposited amount, P46.708 billion were reported by the Road Board to
have been released to the implementing agencies.
The audit was conducted to determine whether MVUC funds were
properly accounted for and effectively utilized for projects and programs that
will contribute in improving the condition of national and provincial roads and
controlling air pollution from motor vehicles.
AUDIT SCOPE AND METHODOLOGY
The audit covered the review and evaluation of policies and
procedures on collection, allocation and utilization of MVUC funds as well as
the implementation of projects to be funded therefrom, by the Road Board, DPWH,
DOTC and LTO, and the utilization of funds transferred to the Philippine
National Police (PNP) and Metropolitan Manila Development Authority (MMDA). The
team considered the following audit criteria in its assessment:
- Adequacy of, and strict compliance with criteria for fund allocation
- Appropriate disposition of funds
- Effective program/project implementation
- Effective fund management
- Accurate accounting and timely remittance of collections
These criteria were tested on selected transactions during
CYs 2006-2008 of three (3) Central, five (5) Regional and eleven (11) District
Offices of DPWH, DOTC and LTO in Regions III, IV-A, VII, XIII and National
Capital Region (NCR), PNP-Headquarters and NCR-Police Office (NCR-PO), and MMDA.
To achieve the audit objective, the team performed the
following audit procedures, among others:
- Obtained and studied relevant laws, rules and
regulations including the roles and responsibilities of the implementing
- Analyzed MVUC collection and remittance reports of
selected collecting officers;
- Assessed policies and procedures on the allocation
and utilization of MVUC funds in relation to MVUC
accomplishment/monitoring/ financial reports;
- Obtained and reviewed selected transactions
pertaining to the utilization/disbursement of MVUC Fund; and
- Inspected/validated selected projects implemented by
DPWH, DOTC, LTO and their selected Regional/District Offices in Regions
III, IV-A, VII, XIII and NCR, PNP-HQ and MMDA.
The audit was conducted from November 24, 2008 to November
12, 2009 in compliance with COA MS/TS Office Order No. 2008-018 dated November
The audit concluded that MVUC funds were not properly
accounted for and effectively utilized. The total MVUC collections and deposits
could not be accurately established due to errors in recording, among others,
which resulted in unreconciled differences between the LTO and BTr records of
P1.288 billion as of December 31, 2008. Substantial amount of MVUC funds
released to agencies covered in the audit were also used for other purposes and
in implementing a number of projects without due regard to economy and
The use of funds for other purposes is evident in the
utilization by the implementing agencies of about P297.538 million for
administrative and miscellaneous expenses contrary to the provisions of RA 8794
requiring funds to be used exclusively for road maintenance and safety projects,
and air pollution control programs.
On the other hand, the implementation of a number of
projects/programs without due regard to economy, efficiency and effectiveness is
evident in the following:
Around 78 road maintenance and safety projects, out
of the 376 projects inspected by the team, were deficient by P88.507
million while 13 other road safety projects costing P167.16 million were
not properly maintained.
A number of equipment installed and structures
constructed amounting to P69.494 million were not being used while
another project costing P3.729 million were not being used for the
Twenty-seven (27) units of traffic surveillance and
software devices costing P8.204 million could no longer be located while
1,319 other units consisting of surveillance cameras and streetlights
costing P139.552 million were no longer functional.
About P1.605 billion, equivalent to 38% of the total
releases for routine maintenance activities in five (5) Regions, were
used in the Job Creation Program of the Government. In view of
significant releases and number of workers hired to maintain the
roadside, in some cases, each worker is covering a relatively less area
than required. This is in addition to the regular street sweepers being
hired by the local government units.
Costs of 128 projects were unnecessarily increased by
P21.597 million due to inclusion of special items which were subjected
to indirect costs, application of higher rate for bituminous tack coat,
costly thermoplastic materials which lasts longer than the asphalt
pavement where these were applied, and installation of raised pavement
studs in excess of the requirements prescribed under existing
regulations and/or in places without need for the same.
Funds amounting to P19.556
million were also used for improving private property temporarily used
for a government event.
Road signs were installed with spacing varying from
as frequent as 0.8 to as far as 10.4 meters due to the absence of
standards on spacing. Under existing general standard, the use of
regulatory and warning signs shall be restricted to the minimum
consistent with the particular requirements, as sign tend to lose their
effectiveness if used unnecessarily or too frequently.
Unit costs of bollards installed along Commonwealth
Avenue and EDSA by the MMDA almost at the same time varies from P488.86
to P8,053.46 per unit. Apparently, MMDA has yet to establish the
reasonable cost of this item.
The management of the funds and programs may not also be
considered effective on account of the following:
Recurring problems remained unaddressed, such as:
Loss of newly installed road
signs and safety devices amounting to P2.920 million due to the
failure of implementing agencies to properly turnover these
projects to the LGUs.
Eventual upgrading or
replacement by one implementing agency of projects amounting to
P279.170 million constructed by the same or another implementing
agency due to lack of coordination among implementing agencies
and/or inadequate planning.
cameras/guardrails amounting to P2.219 million by one
implementing agency in places with existing cameras/parapet
walls installed/constructed by another agency.
The normal budgetary process
was not observed in the release of MVUC funds. In several instances,
cash allocations were released without covering allotment and/or in
excess of allotments resulting in continuous cycle of incurring
overdraft in obligations. While excessive releases were observed,
allocations of Regional/District Offices were not fully sub-allotted by
the DPWH Central Office.
There were no substantial
accomplishments reported as of December 31, 2008 out of the funds
released to DOTC amounting to P1.056 billion for air pollution control
program. Funds were even being released to Regional Offices without
Regional Work Plans.
Around P4.502 billion of the
fund was used for 435 projects that were not included in the HDM4 and
TARAS, and not recommended by the DPWH. On the other hand, 804 other
identified priority projects are yet to be funded. Releases for routine
maintenance and Funds 152 and 153 were not also in accordance with the
approved Work Plan and Road Safety Programs which further resulted in
inequitable distribution of funds.
The existence of these deficiencies may have been partly due
to the absence of sound monitoring activities, inadequate criteria on the
allocation of funds for air pollution control projects and in the installation
of road safety devices, and failure to observe criteria on road maintenance and
The team forwarded the draft report to the implementing
agencies covered in the audit on November 12, 2009 for comments and
justifications. Their detailed comments and justifications were incorporated in
the report, where appropriate. Generally, the implementing agencies acknowledged
that there are some issues that needs to be addressed and committed to take
corrective actions, to adhere to existing laws and regulations, and to comply
with the team’s recommendations.
Their explanations on some issues follow:
The Equivalent Maintenance in Kilometers (EMK), HDM4
and TARAS are not the only criteria used by the Road Board in the
allocation of Special Road Support and Special Road Safety funds. The
Road Board also considered vehicle registration and traffic situation.
The DOTC, under Department Order No. 2008-03, created
a Program Management Office (PMO) which is tasked, among others, to
formulate and recommend criteria in prioritizing projects to be funded
from the SVPCF.
The savings from MVUC funds were used for
administrative and miscellaneous expenses due to insufficient MOOE
released by the DBM to cover operating expenses of the implementing
agencies and inter-related agency functions.
A number of MVIS equipment distributed to LTO
Regional Offices remained unutilized/uninstalled due to unforeseen
problems encountered in the acquisition of MVIS site and
interconnectivity with LTO-IT. On the other hand, some unaccounted
safety devices may have been stolen, and could no longer be accounted
due to subsequent and/or on-going projects.
The Road Board has a limited number of personnel and
priority is given in monitoring of projects implemented by DPWH.
While it may be true that factors other than EMK, HDM4 and
TARAS may be considered in fund allocation, these factors should be properly
identified and prescribed through a Road Board Resolution. There were likewise
no documents provided to the team, that vehicle registration and traffic
situation were considered in the allocation. As discussed in the report, there
were no Annual Work Plan for preventive maintenance projects for CYs 2007-2008
and releases were merely based on individual projects approved by the Road
Board. It is also informed that one of the requirements in the release of Funds
151 and 152 is for projects to be funded therefrom to have passed the HDM4
evaluation process and TARAS recommendations.
The team further stressed that:
MVUC funds were created for specific purposes and not
meant to augment the regular appropriations of the implementing
agencies. Any unspent balance shall, unless the Board otherwise agrees,
be cancelled and remain in the relevant special trust account in
accordance with RA 8794. Moreover, the implementing agencies
requirements in the performance of their regular functions are
considered in the preparation of their regular budgets. The use of funds
for other purposes is considered in violation of RA 8794 and its IRR.
The procurement of equipment and construction of
projects that are not being used and/or used for other purposes is
likewise not justified. The lost and/or dismantled safety devices is an
indication of lack of coordination and inadequate planning.
The team recognized that the Road Board’s personnel
may have been limited. However, it should have, at least, required the
DOTC to submit Regional Work Plan before allocating funds to the
Regional Offices, and targeted and actual accomplishment to assess their
The team, though, appreciates the commitments of the Road
Board and the implementing agencies to take corrective actions and comply with
the team’s recommendations.
To correct the deficiencies noted, the team recommended
measures under Part IV of the report. In general, the team recommended the
following, among others:
For the Road Board to refrain from using funds for
projects not considered priority, to require the DOTC to facilitate the
formulation of criteria in the allocation of SVPCF, and to assess and
evaluate the suitability of projects to be implemented in a specific
location. The Road Board should also closely monitor the utilization of
funds and implementation of projects to ensure that these funds are not
being used to augment administrative and support operations of the
For the implementing agencies to refrain from using
funds for other purposes, to ensure compliance of projects with
prescribed standards, designs, and specifications, to implement only
projects that are extremely necessary and can be put to effective use,
and to coordinate with concerned LGUs to safeguard installed road safety
devices. The DPWH should also establish standard spacing in between road
signs to ensure the effectiveness of road signs and avoid wastage of
For the LTO to ensure that collecting officers
deposit their collections intact within the prescribed period as
required under the Department of Finance (DOF) Department Order No.
52-96 and to reconcile its records of remittances with the Bureau of
Treasury (BTr) in accordance with Treasury Order No. 5-2003.