By Ben Rosario
Former officials of the Department of Transportation and Communications (DOTC) and the Land Transportation Office (LTO) caused the government to lose P1.562 billion in unrealized revenues from a proposed revenue-sharing agreement with an information technology provider from 2006 to 2018.
The Commission on Audit (COA) made this observation as it demanded an explanation from the current officials of the Department on Transportation (DOTr) why the agreement was turned down.
“Management failed to approve the proposed Amendment Agreement on the Revenue Sharing between the LTO-IT Provider and DOTC-LTO which relinquished the government’s opportunity to generate estimated additional income of P1.562 billion from 2006 to 2018,” COA said in its 2018 annual audit report for the DOTr.
The controversy started after the DOTC/LTO and Stradcom Corporation entered into a build-owner-operate agreement for the implementation of the 1998 LTO Information Technology Project.
In 2003, then LTO Asst. Secretary Roberto T. Lastimoso certified that the IT facilities of Stradcom conformed to the applicable acceptance test procedures and schedules.
After 10 years, the concession period expired with both parties agreeing to a phasing out of the project pending the lawful bidding, award, and design of a new LTO IT project. The concession period was extended on a month-to-month basis as indicated from letters by then DOTC.Undersecretary Jose Perpetua Lotilla.
“Further review of the LTO IT Project and the BOO Agreement disclosed that the DOTC/ITO failed to approve the proposed Supplemental Agreement on Revenue Sharing Scheme which relinquished the government’s opportunity to generate estimated additional income,” state auditors disclosed.
What was given up by the national government was an additional income of P1,453,303,639.52 from IT fee for miscellaneous motor vehicle registration transactions and miscellaneous license and permit transactions from 2005 up to the present, COA said.
COA noted that the Management Services Audit team had recommended that an amendment of the BOO be worked out to include revenue-sharing provision that would protect the government’s interest.
Auditors recalled that in the 2010 annual audit report of the LTO, the latest draft amendment to the LTO-IT BOO agreement was submitted and received by the Office of the Secretary of DOTC on August 5, 2010.
Then COA Chairperson Ma. Grace Pulido Tan wrote in 2011 a letter to then DOTC Secretary Manuel A. Roxas II, urging the department to revisit the July, 2010, proposed Supplemental Agreement with Stradcom.
In the letter, Pulido Tan pointed out that the interconnectivity fees and other IT fees collected by Stradcom were not part of the original BOO Agreement, and its 2001 Amendment Agreement, and that Stradcom has been generating additional revenue by using LTO data base and power without giving the agency a share in the revenues.
Responding to Pulido Tan, Lotilla, in his letter dated November 21, 2011, said the proposed Amendment Agreement had been referred to the Legal Service, which was advised to immediately conduct a review in order to comply with the COA audit recommendation.
“Upon inquiry, it was informed however that the proposed Amendment Agreement has not been approved by the concerned DOTC officials,” COA said.
“We wish to point out that due to the non-approval of the amendment agreement, the agency deprived the use of subject funds which could have significantly augmented the limited resources of the government,” the audit body stated.
“The 10-year concession period already ended, and the national government considerably was deprived from earning additional income because of the non-approval of the proposed amendment agreement,” the COA said.