Philippine economy

COA to LTO: Stop paying license plate supplier

Katerina Francisco

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COA to LTO: Stop paying license plate supplier
The Commission on Audit stops payments to the producers of the new vehicle license plates, but the Land Transportation Office says this won't affect the supply of the latest plates

MANILA, Philippines – The Commission on Audit (COA) has ordered the Land Transportation Office (LTO) to stop payments to the producers of new motor vehicle license plates, pending its investigation into the P3.8 billion ($85.02 million) deal

During a Senate blue ribbon subcommittee hearing on Monday, May 25, senators learned that COA issued a notice of suspension of payment in April, citing LTO’s failure to provide documents on the contract that it awarded to Power Plates Development Concepts Incorporated and J. Knieriem BV-Goes in 2013.

The Department of Transportation and Communications (DOTC) sought bidders for the P3.8 billion ($85.02 million) contract to produce new plate numbers for vehicles and motorcycles.

The auction took off from LTO’s Motor Vehicle Plate Standardization Program that required the winning bidder to supply and deliver approximately 5.23 million pieces of plates for motor vehicles and 9.97 million for motorcycles. The 5-year contract covers July 2013 to June 2018.

COA is studying the deal, following allegations that the DOTC’s bids and awards committee favored Dutch firm J. Knieriem BV-Goes despite its alleged financial incapacity and inexperience.

The company won the contract for the LTO’s License Plates Standardization Program, but the continued unavailability of new plates has infuriated motorists, especially after the LTO announced that it would strictly implement its “No registration, no travel” policy beginning April 1.

Payments suspended

During Monday’s hearing, LTO chief Alfonso Tan Jr said the agency already made initial payments amounting to P477 million ($10.66 million) to the suppliers.

But he added that the LTO has stopped processing payments since COA issued its notice of suspension of payment.

Leo Romero, counsel of bidder Marianing and Sons Development Corporation, asked COA if the LTO submitted a certificate of availability of funds for the P3.8 billion ($85.02 million) contract.

Romero said that under the procurement law, a certificate of complete appropriation for the project and a certificate of availability of funds are needed for a contract to be considered valid.

COA could not categorically say whether LTO submitted the document, but transportation undersecretary Jose Lotilla refused to answer, citing the sub judice rule since there is a pending case at the Supreme Court.

The LTO chief, however, downplayed fears that the suspension of payment order issued by the COA would worsen problems on the unavailability of new license plates. 

Tan said the supplier is still producing the plates.

“They’ve been paid initially, so [the suspension order affects] their subsequent billings,” he said.

He added the LTO is coordinating with the transportation department to provide COA with the documents needed for the audit. 

Monday’s Senate hearing was a continuation of last week’s investigation into the alleged irregularities of the bidding process.

Senate President Pro Tempore Ralph Recto earlier questioned why the LTO bid out the project at P3.8 billion ($85.02 million) when its appropriation was only P187 million ($4.18 million). –

$1 = P44.72

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