That is the motivation why the Land Transportation Office (LTO) and the IC wants the new electronic system for issuance of COCs prior to vehicle registration implemented.
‘We have to implement it immediately!" exclaimed LTO chief Roberto Lastimoso. "The government is losing a lot of money with the continued delays."
In 1999, government should have collected an additional P300 million in taxes from illegal issuance of COCs and the subsequent vehicle registration.
To be implemented after several postponements, is the joint memorandum circular signed by the LTO and the IC establishing an electronic verification and authentication system for COCs prior to the issuance of the vehicle registration.
Other than the insurance companies which issue the COC, an information technology (IT) provider has been hired to establish a database for the COC and the vehicle registration. It was designed to stop the issuance of fake insurance coverage.
In 1999, the LTO registered 2.5-million vehicles but in the same year, only 900,000 COCs were issued. That means that 1.6 million vehicles in that period had illegal or fake insurance coverage.
Thus it deprived government of much-needed tax revenues while it left the vehicle owner unprotected in case of accident or mishap.
However, delays are still ahead as the system is far from fluid much less fully operational.
The issue of a central data base remains a touchy issue as two IT providers continue to jockey for the right to operate the database. The two or D:tech Management Inc. and SQL Inc.
D:tech Management was the first to get an accreditation from the LTO to serve as provider for 16 insurance companies. However, industry association Insurance Surety Association of the Philippines (ISAP) refused to recognize D:tech and undertook a public auction for another provider. It subsequently was won by SQL.
ISAP is the only recognized national assembly of all non-life insurance companies numbering 114.
Early this year, complaints started trickling in at the office of the IC about the inefficiency of D:tech. In mid-May, the ISAP declared it was putting its money with SQL.
But recently, Lastimoso said that he wanted the new system implemented immediately putting pressure on SQL, which was asking for roughly a month to get the system operational.
The insistence of the LTO forced insurers to rely on D:tech for the verification process just to start selling policies. "There are now 35 insurance companies that will use D:tech," the LTO chief revealed last week.
But that would only be a temporary arrangement, according to the IC. The ultimate arrangement it seems is that SQL would be the operator of the central data base and lead in verification of all transaction similar to the Philippine Central Depository Inc. in the case of the Philippine Stock Exchange (PSE).
"When SQL is operations, it will be the only provider to verify all transactions while D:tech will only authenticate COCs presented by vehicles owners seeking registration with the LTO," IC officials said.
The same source said that there would only be one provider as database operator while there could be several providers for COC authentication purposes. "Remember there are many LTO district offices which makes it practical to have several providers for authentication. But only one provider should serve as central data base operator."
IC Commissioner Eduardo T. Malinis said that the situation remains fluid and changes could still be undertaken as they implemented they new system. He added that Lastimoso and the IC want to be online with central data base realtime.
"The IC will watch the insurance side while the LTO will closely watch the registration side," Malinis explained. "Effectively, the system will get underway on July 1 with D:tech undertaking all authentication activities while SQL will verify all transaction and run the database. That covers on Metro Manila while the rest of the country is another matter."
The original implementation date was set for April 15 under the joint memorandum circular signed by the IC and the LTO last March 14. It was extended to April 22 upon the request of the industry and again moved to the middle on May.
The IT application provider based on the joint memorandum circular would implement a system of registration and verification of compulsory third party liability (CTPL) insurance COCs using IT solutions or software. Issuance of the CTPL should lead to the unhampered registration of vehicles with the LTO.
The joint effort was designed to stop the proliferation of fake COCs and the illegal registration of vehicles. The effort started as early as last year when transportation officials uncovered several cases of one COC covering several registered vehicles. That resulted in losses of millions of pesos in terms of government revenues while leaving the vehicle owner unprotected.