Commission on Audit confirms road fund misuse

MANILA, Philippines - Commission on Audit (COA) investigators have found a “breach in the budget process” regarding the use of funds under the motor vehicle user’s charge (MVUC) that resulted in “irregular” expenditures not covered by the supposed allotment.

The latest COA report also mentioned other problems in the process, including the misuse of funds, too much cash allocations and excessive and unauthorized allowances given to government employees.

These observations were made by state auditors in the 2007 report on the Road Board, which administers the MVUC funds collected from registration fees of motor vehicles. The audit agency has yet to issue its report on the use of the funds in 2008.

“(There was a) breach in the budget process in the authorization of expenditures from the MVUC Special Funds resulting in the irregular incurrence of obligations and disbursements without covering allotments,” state auditors said in the report.

COA auditors found that notices of cash allocations were received by the Department of Public Works and Highways (DPWH) for “carriageway and maintenance activities” from the Department of Budget and Management (DBM) even without special allotment release orders (SAROs).

This resulted in “irregular incurrence of obligations and disbursements” by the DPWH and other government agencies even before the receipt of allotments, something that is not in accordance with the budget process.

COA auditors recommended to the Road Board to “make strong representation with the DBM to ensure strict compliance with the government process.”

State auditors also noted that expenditures and obligations for different projects exceeded the allotment received, resulting in overdraft totaling P1.806 billion in violation of the 1987 Administrative Code of the Philippines.

“Verification of allotments and obligations for the year 2007 under Fund 151 revealed that expenditures incurred in the implementation of various roadside and carriageway maintenance projects in the total amount of P1,654,119,452.93 were obligated in excess of the allotments received for the period January to May 2007 by the different District Engineering Offices,” they said.

The auditors recommended that the implementing agencies of the fund should limit the incurrence of expenditures and obligations within the allotment that they received.

The COA report also noted “improper utilization of cash allocations” worth P4.395 million that were supposed to be under Fund 151 to cover “requirements for labor, equipment and materials” under the Motor Vehicle User’s Charge Act.

Verification conducted by the COA showed that the amount was used for payment of an “external creditor,” among others, by offices in Samar.

The COA recommended the strict following of rules and regulations on the use of the cash allocations.

State auditors also mentioned “excessive cash allocations” worth P50.073 million that caused funds to be unutilized.

“Interview with officials concerned revealed that the amount allocated to the cities of Naga and Masbate was not released because the road sections specified in the SAROs were not included in the approved inventory of city roads, while the provinces of Catanduanes and Camarines Norte did not submit to the DPWH the proposed memorandum of agreement and the program of work,” they said.

“In Region VIII, the cash allocations received were not utilized due to the absence of sub-allotment advice; poor monitoring of cash releases, excessive NTA (notices of transfer allocation), and the non-implementation of the projects, resulting in the reversion of the unutilized cash allocations to the National Treasury, thus depriving the government of maximum use of resources.”

Investigators said the Road Board “did not observe sound cash management” and that there was “poor monitoring of cash.”

The COA report also noted “excessive and unauthorized allowances” worth P1.244 million and P2.562 million, respectively.

“Excessive Collective Negotiation Agreement amounting to P1,244,000 and unauthorized payment of CNA, COLA and cultural and athletic allowance amounting to P1.979,166.67, P269,999 and P313,3000, respectively, were granted to officers and employees without legal basis,” the report stated.

Palace orders probe

Malacañang said yesterday it would look into allegations that P50 billion in road users’ tax were misused even as officials of the Road Board maintained the funds are all properly accounted for.

Deputy Presidential Spokesperson Lorelei Fajardo issued the statement as some lawmakers sought an investigation into the reported misuse of the P50 billion in funds from MVUC for road maintenance, road safety and pollution control.

“We are open to that (congressional inquiry) if they (lawmakers) think it would help in the implementation of the road users’ tax,” Fajardo told a news briefing.

 “But we will continue to further look into this and inquire about this (alleged misuse),” she said.

She said any irregularity found to be committed by any official in connection with the MVUC would be subject to investigation by either the Office of the Ombudsman or the Department of Justice.

The Road Board, which is under the Office of the President, sent a written explanation yesterday to the Palace on the collection and disbursement of the MVUC from 2001 to last year.

According to Road Board Executive Director Danilo Valero, the board does not handle any of the funds of the MVUC. The collection is made by the Land Transportation Office, which remits the funds to the Bureau of Treasury.

Since its inception in 2001, the Road Board has collected some P51.4 billion, Valero said.

He said out of the total collections, the board has allocated and caused the release of P46.3 billion for various projects including road repair and maintenance covering at least 30,223,643 kilometers of roads in 16 regions.

The bulk or 80 percent of the funds is allocated for the repair and maintenance of national roads while the rest is for installation of road safety devices, including traffic lights and road signs, he said.

He also denied allegations by lawmakers that Nueva Ecija received a total of P2 billion. He said the province got only P370 million since 2007.

The same can be said of Eastern Samar, which received only P1 million worth of road safety projects and not P350 million, Valero said.

Fajardo said some lawmakers might not be aware that many of the projects are implemented in Metro Manila, which has the most number of vehicles.

Lawyer Allan Guevarra, chief of staff of the Road Board, said that this was not the first time that legislators raised questions on the manner the MVUC, otherwise known as the Road User’s Tax (RUT), was being spent.

Valero and Gueverra only assumed positions on the board last July 2008. Valero took over the position from Dodie Puno, who is the brother of Interior and Local Government Secretary Ronaldo Puno. Valero once served as assistant secretary at the DILG.

Budgets allocated for projects are remitted to government banks by the Bureau of Treasury, and it is only at this time that money is released to the implementing agencies, the DPWH and the Department of Transportation and Communication (DOTC).

Gueverra said that there is a proper explanation to all the reported complaints of some congressmen on the spending of RUT in their respective areas. - With Evelyn Macairan, Paolo Romero