Don’t drive private car owners up the wall

Published in Daily Tribune on February 13, 2021
by: Atty. Jesus Clint Aranas

For the record, government figures in 2020 show that there were over slightly over one million registered private motor vehicles nationwide.

A separate Philippine Statistics Authority study in 2018 determined that around 40 to 45 percent of these vehicles were owned by middle income wage earners, who are among the major drivers (pardon the pun) of our national economy.

How the recent moves of the Department of Transportation (DoTr) and the Land Transportation Office (LTO) will affect this productive sector of our society raises concerns.

Foremost is the decision of both government agencies to compel car owners to have their cars tested by private motor vehicle inspection centers (PMVIC) before renewing the registration of their vehicles.

The relinquishment of this inherent LTO function to private business has spawned widespread criticism.

Among these critics are Senate Pro Tempore Ralph Recto and Senator Grace Poe, the chair of the Senate Public Services Committees, who urged stopping the operations of PMVIC until further study and public consultation are done on the issue.

We echo the compassion and common sense of our good senators whose sentiments confirm that the decision is ill-advised in these harsh pandemic times.

Spending an added P1,800 on testing for motor vehicles weighing 4,500 kilograms or less — and more for heavier ones — plus another P900 for the retest if they fail the first time leaves a huge dent in the pocket, less cash for basic needs of families.

On the other hand, registered motorcycles and tricycles, now numbering seven million and commonly used by lower middle-income groups, are charged an inspection fee of P600 and another P300 should the first test fail.

The plan of the DoTr and LTO to set up 138 PMVIC all over the country should be subject to further public and government scrutiny.

The situation could give rise to opportunities for graft and corruption as well as favoritism considering the huge sums of money likely to be generated from these testing fees.

What are the safeguards against unscrupulous people within and outside the LTO, who might exploit the accreditation and sanction of MPVIC for illegal gain? Given the penchant of some Filipinos for short cuts, what steps can government authorities take to deter these private testing centers from issuing fake certifications for something extra added to the advertised costs?
It is so easy to imagine fixers and their cohorts within the agency drooling at the prospect of making a fast buck given the chances afforded by this car inspection process.

Then, there is the matter of the lack of transparency in the selection of PMVIC, a worrying thought given that Senate President Pro Tempore Ralph Recto estimates the Motor Vehicle Inspection System to generate P8 billion annually for private inspection firms, an amount which brings into perspective how its implementation would cast an additional heavy burden to the motoring public.

The absence of transparency in the selection process of PMVIC raises concerns on monopoly, anti-competition and price-fixing already voiced by no less than members of the Philippine Senate to the public, who have called for the suspension of operations of PMVIC.

While Memorandum Circular 2018-2158 of the LTO prescribing the Guidelines for the Authorization of PMVIC appears to address these concerns by limiting each operator to three PMVIC, how can the public be sure that this will prevent a monopoly?

Further, the circular frustrates fair competition by fixing the price of each inspection.

The Philippine Competition Commission describes a competitive market as one with multiple buyers and multiple sellers, driving market prices lower and offering consumers more choices.

Fixing the price of inspection prevents competition between the PMVIC and is potentially violative of Philippine competition laws.

A competitive market cannot exist if the price is fixed.

Senator Recto opined that although the intention behind the implementation is laudable, it is far from lovable.

We add that the practicality of its immediate implementation was not carefully considered as it appears divorced from the actual concerns and priorities of ordinary Filipinos.

Some quarters have proposed that as an alternative, existing and reputable car maintenance and repair shops be given this task of vehicle testing under LTO rules and guidelines for reasonable fees, of course.

Then there are those who suggest that the LTO reassume the role of testing privately-owned cars, taking a portion from the motor vehicles user’s charge (MVUC), commonly known as the road user’s tax, to acquire or modernize its present equipment.

Media reports that the LTO had collected a total of P159.1 billion in taxes from the year MVUC was implemented under Republic Act No. 8784 in 2001 until 2017.

This figure can only increase after congressmen passed House Bill 6136 in March 2020 that would hike the MVUC by around 90 percent over a three-year span, starting in 2021.

The Senate counterpart of the proposed law remains pending, however.

Whatever the means the LTO will adopt, what is important is that the affected sectors are consulted before such a decision is made.

Although we are wont to state the obvious, what the motoring public, particularly our middle-income breadwinners, do not need right now are further financial burdens.

Wisdom and charity should be the order of the day, instead of driving our struggling private car owners up the wall.

With over 20 years of experience in the field of taxation, Jesus Clint O.

Aranas is known in the tax community as a competent and incorruptible practitioner.

Aranas was appointed Deputy Commissioner of the Bureau of Internal Revenue to lead its legal arm in 2016.

In 2017, he was appointed as the president and general manager of the Government Service Insurance System.

He is the founder and managing partner of Aranas Cruz Araneta Parker & Faustino Law Offices.