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Results of the Assessment of the Utilization and Impacts of Motor Vehicle User’s Charge (MVUC) in the Philippines

The Congressional Policy and Budget Research Department (CPBRD) of the House of Representatives (HRep), in partnership with the Philippine Institute for Development Studies (PIDS), conducted a forum on the Results of the Assessment of the Utilization and Impacts of Motor Vehicle User’s Charge (MVUC) in the Philippines last December 8, 2016 at the Office of the Speaker Social Hall, House of Representatives.

In her Opening Remarks, Dr. Sheila Siar (PIDS Director for Research Information) emphasized the importance of the MVUC in raising revenues and providing funds for infrastructure. Taxes and charges such as toll fees and the MVUC are anchored on the “users pay principle” wherein users of public facilities should bear the cost for its maintenance. She also underscored the importance of evidence-based policies and programs towards effective policy implementation.

Dr. Ma. Sheilah G. Napalang presented the results of the study on the MVUC, which is being imposed by virtue of Republic Act 8794. Napalang cited an earlier study of the World Bank, Better Road Philippines (2000) that highlighted the country’s poor infrastructure and lack of road maintenance fund, and eventually prompted the creation of the MVUC.  As provided by law, MVUC is earmarked for four special funds: 1) Special Road Support Fund (SRSF - 80%) for road maintenance and improvement of drainage; 2) Special Local Road Fund (SLRF - 5%) for maintenance of local roads, traffic management and road safety devices; 3) Special Road Safety Fund (SRSaF - 7.5%) for installation of traffic lights and safety devices; and 4) Special Vehicle Pollution Control Fund (SVPCF - 7.5%) for air pollution control. Except for SVPCF which is managed by the DOTr, the rest are administered by the DPWH.

The study involved a process evaluation of the four Special Funds, and case studies that illustrate some of the issues identified. The case studies conducted are as follows:

·          SVPCF: Motor Vehicle Inspection System-NCR North

·         SRSaF: Installation of Road Safety Devices along Daang Maharlika, Atimonan, Quezon

·         SLRF: Baguio City

·         SRSF: Case Study 1, Upgrading of Shoulder, Marcos Highway, CAR

·         SRSF: Case Study 2, National Road Lighting Program in Roxas Blvd.


Findings and Recommendations:

·         On utilization/fund balance.

MVUC has a current fund balance amounting to PhP7.5 Billion. Among the special funds, the highly utilized are the SRSF (96.8%) and SRSaF (91.9%). Low utilization for SLRF (73.5%) and SVPCF (71.1%).

·      On the collection and deposit of monies.

There is discrepancy between the Land Transportation Office (LTO) certification of deposits and the Bureau of Treasury (BTr) statement of collections. Dr. Napalang explained that the discrepancy is primarily due to the following reasons: (1) collections in 2001 were deposited in the General Fund since Special Fund Accounts were only created in 2002, and (2) manual recording of deposited collections which can be prone to human error. To reduce human errors and address discrepancies, the study recommended for automation of the recording of deposited collections and to revise recording procedure to account for advance deposits.

·     On project identification and prioritization.

Projects under SRSF and SRSaF are not generated by DPWH Road Program Office (RPO) using the HDM-4 (Highway Development Model) and TARAS (Traffic Accident Recording and Analysis System) on road safety projects, inconsistent with the provisions of the MVUC Act‘s IRR. The study also noted the absence of a definitive operating procedure for the identification and prioritization of projects under the SVPCF (DOTr) and the absence of a comprehensive and validated database on local road conditions for SLRF (DPWH/DILG). The study recommended that for the special accounts under the DPWH, infrastructure programming and project proposals must originate from the DPWH in coordination with the RPO and District Engineering Office/Regional Office. Process should also be in conformity with the law’s IRR. For DOTr projects, it is recommended that the guidelines for project implementation be finalized and that a multi-year funding scheme be developed to ensure sustainability of programs and maintenance of facilities.

·     Lack of Monitoring and Evaluation.

Due to lack of technical personnel, it was observed that project monitoring of the agency covers only the physical outputs rather than the impact of the projects (e.g. minimized road-related accidents, enhanced road security, or enhanced traffic flow). The study recommended to strengthen the information system and communication channels with LGUs, to establish a monitoring and impact evaluation system, strengthen the auditing system by the Road Board Secretariat, and/or explore third party audit set-up, and to improve the transparency of the evaluation process.

·     On the implementation and regulatory function of the Road Board

The study recommended not to abolish the Road Board but rather improve transparency, strengthen its oversight capacity and re-orient Secretariat as a fund manager and not an implementing agency. The study also recommended to continue earmarking the MVUC since it provides funds for road maintenance and safety.


Reactions/Open Forum:

Discussants from key transport and infrastructure authorities were invited to the forum. The panel of reactor consists of Dir. Virgilio C. Castillo of the DPWH - Roads Management Cluster 1, Usec. Anneli R. Lontoc of the DOTr - Road Transport and Infrastructure, and Engr. Bryan Kheth B. Tacadena of the Road Board Secretariat - Planning, Monitoring and Evaluation Division.

Dir. Castillo shared that the implementation of the MVUC fund in the DPWH is being used to partly fund their road upgrading projects under JICA. He mentioned that the projects which they identify through the HDM-4 get as much as 20% of its funding from the MUVC. Dr. Castillo emphasized the importance of impact evaluation especially in assessing the sustainability and effectiveness of the projects.

Meanwhile, Usec. Lontoc agreed to the automation of the recording systems to reduce human error and address deposit and collection discrepancy. She explained that the low utilization of SVPCF is primarily due to the absence of the guideline for project identification and prioritization. According to Usec. Lontoc, there is a National Environmentally Sustainable Transport (NEST) Strategy (with DOTr as lead agency) which shall be used to reform the transport sector and address GHG emission and air pollution. The SVPCF will be tapped to finance the implementation of programs under the NEST.

Rep. Arnolfo A. Teves, Jr. (3rd District, Negros Oriental) raised his concern over the unutilized fund balance from the MVUC. Rep. Teves even tasked the Road Board to look into the illegal use of public roads as personal parking space, property extension, and market place of private individuals as the cause of traffic and road congestion. He suggested that if the Road Board cannot fully utilize the MVUC fund balance, amounting for about P7.5 billion, it may be divided equally among the congressional districts particularly for road maintenance and safety purposes.

Atty. Roentgen Bronce, Executive Director of the Budget and Tax Research Bureau, raised concern over the expansion of the functions of the Road Board Secretariat and the arrangement between DPWH and DILG to co-manage the SLRF. Dr. Napalang explained that the Road Board should focus on its role as regulator of the MVUC, and strengthen its oversight and monitoring functions. She also clarified that DILG does not co-manage the SLRF since LGUs download the funds (SLRF) directly from DPWH. The DILG monitors the status of the local projects, funded out of SLRF, and ensures that LGUs met the qualifications like the Seal of Good Local Governance.

Ms. Lina Mortega, Director (Economic Cluster I) of the Committee Affairs Department (CAD) encouraged the Road Board to actively participate during the congressional hearings conducted by the House of Representatives in order to engage with the legislators and various stakeholders. Dir. Mortega mentioned that there are bills already filed this 17th Congress pushing for the abolition of the Road Board.

Meanwhile, Dir. Pamela Diaz-Manalo of BTRB also raised concern over the underutilization of the SLRF and inquired of possible reasons and constraints faced by the DPWH. According to DPWH, the low utilization rate of the fund can be attributed to the difficulty in identifying projects using the prescribed formula. The formula requires a validated database on local road conditions and number of motor vehicles per municipality/city, which most LGUs do not have. Another possible factor is the technical capacity of the LGUs to undertake road projects.

Dr. Romulo E.M. Miral Jr., Director-General, CPBRD ended the forum by highlighting the importance of the MVUC, which is the third largest revenue source of the government which helps ensure funding for road maintenance and safety. He also reiterated the significance of evidence-based studies in aiding Congress in its policymaking and oversight functions.


Results of the Assessment of the Utilization and Impacts of the Motor

Vehicle User's Charge (MVUC) in the Philippines

Speaker's Social Hall
House of Representatives, Batasan Hills, Quezon City
08 December 2016, Thursday
1:00-4:00 PM
 P R O G R A M M E

1:00-1:30       Registration

1:30-1:40       National Anthem/Invocation

1:40-1:50      Opening Remarks
                        DR. GILBERTO M. LLANTO
                        President, Philippine Institute for Development Studies (PIDS)
1:50-2:00       Introduction of Resource Speakers
                     ATTY. ROENTGEN F. BRONCE
                     Executive Director, Budget and Tax Research Bureau, CPBRD
2:00-2:40      Main Presentation:
                                       Vehicle User's Charge (MVUC) in the Philippines"
                        DR. MA. SHEILAH G. NAPALANG
                        Philippine Institute for Development Studies (PIDS)
2:40-2:50     Dir. VIRGILIO C. CASTILLO, Roads Mgt. Cluster 1, DPWH
2:50-3:00   USEC. ANNELI R. LONTOC, Road  Trasport and Infra, DOTr
3:00-3:10   ENGR. BRYAN KHETH B. TACADENA, Planning, Monitoring and
                   Evaluation Division, Road Board
3:10-3:50    Open Forum
 3:50-4:00    Closing Remarks
                   ROMULO E.M. MIRAL, JR., Ph.D.
                   Director-General, CPBRD
Moderator   MS. PAMELA D. MANALO
                   Director II, Budget and Tax Research Bureau, CPBRD

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