P3.8-B car plate deal illegal – COA


THE Commission on Audit (COA) has found the P3.8-billion motor vehicle license plate procurement deal illegal and ordered officials of the Department of Transportation and Communications (DOTC) to settle the P477.9 million it initially paid the plate supplier.

In a 10-page Notice of Disallowance (ND) dated June 13, 2015, COA stated that the multibillion-peso transaction was considered unlawful because the contract, which was awarded to the joint venture of Knieriem BV Goes and Power Plates Development Concept Inc. (JKG-PPI), was not in accordance with procedures prescribed under Republic Act (RA) 9184 or the Government Procurement Reform Act.

The license plate supply contract is part of the Motor Vehicle License Plates Standardization Program (MVLPSP) of the Land Transportation Office (LTO).

In another blow to the deal, the Supreme Court (SC) on Thursday declared that the DOTC led by Secretary Emilio Abaya and the LTO committed irregularities in the procurement of the license plates that vehicle owners have described as sub-standard.

A 28-page decision of the SC 2nd Division dated April 22, 2015, penned by Associate Justice Jose Catral Mendoza, cited one major irregularity–the project did not have adequate funding.

Based on the findings of COA obtained by The Manila Times, the LTO failed to comply with the Auditing Code when it claimed that funds to cover the P3.8-billion contract had been duty allotted under the 2014 General Appropriations Act (GAA).

The LTO, in its Certificate As To Availability Of Funds dated February 18, 2014, claimed that the appropriation for the project was under the motor vehicle registration and driver’s licensing regulatory services in the 2014 GAA amounting to P4.4 billion.

But COA in its ND noted that the LTO cannot claim that the appropriation had been set aside by the 2014 GAA because the national budget for that year had not been approved when bidding and awarding of the project were done.

The bidding for the project was conducted on May 6 and 7, 2013, and a notice of award was issued on July 22, 2013.

COA further cited Section 46 of the Auditing Code, which states, “No contract involving the expenditure of public funds shall be entered into unless there is an appropriation therefor, the unexpended balance of which, free of other obligations, is sufficient to cover the proposed expenditure.”

It said the DOTC also failed to comply with Department of Budget and Management Circular 2004-12 that required it to secure a multi-year obligational authority (MYOA) from the DBM before it issued a notice of award to JKG-PPI for the five-year vehicle license plate supply contract.

The department, according to COA, also violated Section 4.7 of the Government Procurement Policy Board (GPPB) that also required it to secure first a Special Allotment Release Order (SARO) before issuing a notice of award.

“Though the GAA of 2014 resolved the MYOA issue when it indicated that amount allotted for the motor vehicle registration and driver’s licensing regulatory services to be P4,802,244,000 in 2014, still the issuance of the notice to award for the amount of P3,851,600,100 in 2013 was irregular and illegal,” COA stated.

It also found violations of the revised implementing rules and regulations (RIRR) of RA 9184, noting that the procurement process for the vehicles plates was delayed by 62 days from the time the invitation to bid was published to the issuance of notice to proceed.

COA further stated that JKG-PPI should have been disqualified from the start for its failure to submit documentary requirements–tax clearance, latest income and business tax returns, certificate of Philippine Government Electronic Procurement System (Philgeps) registration and other appropriate licenses and permits- to the Bids and Awards Committee within the prescribed period.

Under the law, bidders have three days, after receiving the notice that they have the lowest/highest calculated bid, to submit the documents.

It was found that JKP-PPI only managed to submit its certification from the Philgeps on April 9, 2014, or almost a year after the opening of bids.

The DOTC also violated the procurement reform law when it failed to enter into a contract with JKG-PPI within the period specified under the IRR of the law.

Section 37.2.2 of the IRR of the RA 9184 states that the procuring entity has 10 days, after receipt of a notice of award by the winning bidder to enter into a contract.

But based on the findings of COA, the notice of award was received by the bidder on August 8, 2013 but the license plate supply contract was only signed on February 21, 2014.

The LTO was delayed by 197 days and even after COA subtracted 179 days, the time incurred by the DOTC to resolve legal issues, the agency was still delayed by eight days.

Other violations found by COA included the DOTC’s non-compliance with Section 9 of Executive Order 109 and non-compliance with submission of bank guarantees under RA 9184.

Aside from Abaya, COA also named DOTC Undersecretary for Legal Affairs Jose Perpetuo Lotilla; Assistant Secretary for Legal Affairs Jaime Fortunato Caringal; Assistant Secretary Alfonso Tan Jr., LTO chief; Rene Limcauco; Julianito Bucayan Jr.; Ildefonso Patdu Jr.; Asuncion Manigas; Sheila Rondriguez; and JKG-PPI as among those liable.

Lotilla, as chairman of the BAC was the one who signed the resolutions that recommended the award and the approval of the contract and the certification that the contract is in accordance with all applicable laws and regulations and approved legal opinion on advance payment.

Meanwhile, Leo Romero, lawyer for bidder Marianing and Sons Development, said the LTO should immediately stop charging motorist an additional P450 for the new vehicle license plates because the COA already disallowed the MVLPSP.

He added that there is no basis for the LTO to still implement the plate standardization program because the COA in its notice of disallowance virtually directed officialsl of the DOTC to return to the government the advance payment of P477.9 million to the supplier.

In fact, Romero said, the LTO must reimburse vehicle owners who have already paid for new set of plates.


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  1. Jojo G. Castro on

    What do you expect from a government department with non-technical lawyers doing technical work? Total chaos, what else.

  2. Curbside Prophet on

    I think those plates are similar in quality if not the same as what some temporary plate makers in shopping malls sell. Manipis na klase. Ang makapal yung mukha ng mga taga-LTO na garapal ang ginawang anomalya.

  3. Johnny Ramos on

    The new plates is good and noble move by the started by Virgie Torres and being implemented by the current Assec Tan. It could have minimized the number colorum public utilities plying the street of Metro Manila plus the numbers of unregistered motorcycles travelling on the streets within the country. It was the COA that threw a monkey wrench on the transactions instead of helping a workable solutions to the problem. Even the issuance of new drivers licenses also suffered the same problem no solution. I can attest that Assec Tan is clean guy but his good intention will never implemented by corrupt LTO employees.

  4. This is a real case of “ghost” deliveries. I renewed my plates in January and had to pay for new plates. Here it is six months later and my plates have still not arrived! I want my money back.

  5. Bobski Natividad on

    It seems that the Pnoy administration will out phase the Macapagal Administration in terms of CORRUPTION.

  6. I Remember... on

    You want to cry when you read this…. How can the Philippines get better with those crooks?

    Yellow crooks.. by the way…