THE Commission on Audit (COA) has recommended that the Department of Transportation (DOTr) take a second hard look at the provisions of its contract regarding revenue sharing with the concessionaire of the Parañaque Integrated Terminal Exchange (PITX).
In its Performance Audit Report on the PITX released on June 30, 2025, the COA warned of potential revenue losses for the government due to the 88 percent increase on the transport terminal project’s cost from P2.5 billion, as approved by the National Economic and Development Authority (NEDA), to P4.7 billion; the release of the P400 million Annual Grantor Payment (AGP) to operator MWM Terminals Inc. despite its earlier waiver; and the construction of commercial towers without the approval of the DOTr.
State auditors have questioned the P2.2 billion increase in the project cost, noting that there was no available document to show justification or a breakdown of the said amount to guide the audit team and the DOTr in verifying reasonability.
“The significant increase in the PITX Project cost from P2.5 billion to P4.7 billion, without proper documentation or approved variation orders, indicates a lack of transparency and adherence to established procedures outlined in the BOT (Build-Operate and Transfer) Law and its IRR (Implementing Rules and Regulations),” the COA said in the 138-page report.
The Concession Agreement (CA) was signed on April 24, 2015 between the DOTr and the MWM Terminals Inc., a consortium of Megawide Construction Corp and WM Property Management Inc.
Specifically, the DOTr contracted MWM Terminals, Inc. to construct the PITX Terminal on a turn-key basis. Upon completion, the facility’s title is transferred to the DOTr, while MWM Terminals, Inc. operates and maintains it for 35 years.
The legal foundation for PPP projects in the Philippines is the Republic Act No. 6957, as amended by RA No. 7718 also known as the Build-Operate-and-Transfer (BOT) Law.
The COA noted that the Notice to Proceed was issued to the concessionaire on October 17, 2016 with the completion date set on April 17, 2018. However, only 82.34 percent accomplishment was documented by April 28, 2018.
While still incomplete, a Provisional Acceptance Certificate was issued on November 8, 2018 even if several aspects, including the access roads and Lot 2 of the development of the staging area remained unfinished.
Even the PITX terminal building and its support infrastructure were only completed on October 24, 2019 – a year and a half behind schedule.
Auditors raised questions why the DOTr released P400 million as payment of the Annual Grantor Payment (AGP) to the concessionaire in November 2024 when the latter had previously agreed to waive the same from 2019 to 2023.
“The DOTr had previously reported that a former secretary negotiated with MWM Terminals, Inc. to waive the AGP, amounting to P3.5 billion over 35 years, in exchange for a two-percent share of the annual gross rental income from PITX Terminal commercial spaces. This agreement was approved by MWM Terminals, Inc.,” the audit team pointed out.
However, on May 23, 2023, the MWM terminals Inc. requested for the rescission of the waiver citing the pandemic that had “severely compromised their ability to generate commercial revenue,” adding that the lack of cash flow would lead to a deterioration of the PITX Terminal service quality.
According to the DOTr, it had issued a legal opinion on December 7, 2023 stating that the waiver of the AGP was void because of the absence of approval from the NEDA and the Public-Private Partnership Center (PPPC) since it amounted to a contract variation.
On October 23, 2023, during a meeting between the DOTr-Road Sector and the MWM Terminals, it was mentioned that the request to rescind the waiver had been submitted to the Office of the President through the Executive Secretary and was awaiting decision.
Noting the absence of presidential imprimatur and the failure of the concessionaire to complete other aspects of the terminal project, the audit team said the release of the P400 million AGP was questionable.
“This action, particularly the payment of AGP before the issuance of a Final Acceptance Certificate covering all project components, raises concerns about the DOTr’s adherence to contractual obligations and exposes the government to potential financial risks,” the COA said.
Auditors also noted that while key infrastructure components like the staging area for provincial buses and access roads for public utility vehicles into the terminal have been delayed by years, the MWM Terminals Inc “prioritized the construction of two additional office towers” even without securing approval from the DOTr.
“Inspection of the PITX Terminal building (Lot 1) revealed deviations from the approved Conceptual Layout. Notably, the structure includes two additional office towers that were not part of the original design,” the audit team said.
It also said that the concessionaire submitted a register of Commercial Agreements to the DOTr every six months but the latest roster dated June 6, 2023 contained only 57 operational tenants.
The team noted that another list dated November 6, 2023 showed 206 “currently operating and soon to be operating” businesses on the terminal.
Missing from the DOTr list were 40 ticketing booths, 23 office towers, 20 ancillary businesses, 30 ancillary kiosks, and 36 commercial inline.
“Overall, the absence of a robust monitoring system by the DOTr, coupled with insufficient oversight of the Concessionaire’s activities, has resulted in operational inefficiencies and potential revenue losses at the PITX Terminal,” the auditor said.
