Baring that the public was asked to pay in advance for services not yet delivered, the Commission on Audit (COA) said the Land Transportation Office (LTO) must refund more than P29.8 million in collected fees for its radio frequency identification (RFID) project.
State auditors said the LTO prematurely collected fees from car owners for a computerized vehicle identification system late last year.
The RFID project sought to make use of radio frequency waves to transmit the identity of an object or person through electronic tags or stickers that can be electronically read by a device.
The device, which has a unique ID number mounted on the windshield of a vehicle acts as the transmitter and relays information from the LTO Central Database to handheld readers to be carried by traffic enforcers.
The COA reported that the tagging of vehicles started in November 2009 but the Supreme Court stopped the project by issuing a status quo ante order on Jan. 12, 2010 after several party-list groups questioned the legality of the RFID and the advanced collection of fees.
State auditors bared that the LTO collected P29,894,200 million in fees as of January 2010 by requiring car owners to pay a one-time fee of P350 upon vehicle registration.
The payment was basically collected for the services of STRADCOM, the IT provider and project proponent, which invested funds to acquire the necessary hardware and software needed for RFID’s implementation.
The COA reported that the company invested in servers for production and backup facilities, RFID readers, software licenses, workstations for the LTO sites and the development of customized applications or systems among others adding that total project cost was P182.27 million.
“Although the RFID facilities were not yet completely installed and operating nationwide, fees totaling P29.89 million were already collected from the vehicle registrants. Such fees were, however, not refunded to the public despite the issuance of the status quo ante order by the Supreme Court on January 12, 2010,” state auditors stressed.
COA said RFID fees were collected by various LTO collecting officers in the regional and district offices and were deposited to the various escrow accounts.
“The LTO has not initiated the refund of the money collected to the vehicle registrants in the light of the issuance by the Supreme Court of the status quo ante order,” the audit report said.
COA said the collection of fees preceded the rendition of services which violates Section 88 of the Government Auditing Code of the Philippines, “which prohibits payment, whether partial or final, on any such contract except upon a certification by the head of the agency concerned to the effect that the services or supplies have been rendered or delivered in accordance with the terms of the contract and have been duly inspected and accepted.”
“The government or for this matter, the public, shall not be obliged to make an advance payment for services not yet rendered or for supplies not yet delivered under any contract therefore. Based on the above provision of the law, the public through the LTO cannot be made to pay for services not yet rendered by the LTO IT provider,” the audit report said.
“Though the implementation of the RFID project was suspended by virtue of the status quo order issued by the Supreme Court, the amount collected from vehicle registrants must be returned by LTO to the public pursuant to the doctrine of ‘solutio indebeti’ which operates within the principle that one should not enrich (one)self at the expense of the others.”
COA recommended the refund of the collected RFID fees through the adoption of an effective strategy that will facilitate the efficient distribution and return of the money to the public.
During an exit conference, the COA report said LTO officials proposed to refer the issue to the executive committee (Execom) for further deliberation.
The LTO explained that the agency had been preparing the guidelines for the refund based on the approval granted by the Department of Transportation and Communications secretary as recommended by the LTO assistant secretary dated July 20, 2010 but STRADCOM sought the stoppage of the same pending resolution by the Supreme Court of the case filed by former Bayan Muna party-list representative Satur Ocampo
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