CEBU CITY, Philippines – The Cebu City Council has called on the Commission on Audit (COA) to conduct a thorough fraud audit of the city’s Digital Traffic System (DTS) project, which has already completed Phases 1 and 2. The council also urged Mayor Raymond Alvin Garcia to withhold payment for Phase 2 until the audit results are available.
The resolution was passed during the City Council’s regular session on Tuesday, following a privilege speech by Councilor Jocelyn Pesquera. In her speech, Pesquera raised concerns over alleged anomalies in the ongoing project, which has been under scrutiny since its inception under the previous administration.
Questions Over System’s Functionality and Contracts
Pesquera outlined her concerns regarding the system’s failure to meet expectations for an "intelligent transportation system." According to Pesquera, a fully functional DTS should include radar sensors capable of measuring vehicle speed and distance, as well as a control system that collects real-time traffic data to optimize signal timings. She argued that these components are missing from the current system, which was procured under the administration of former Mayor Tomas Osmeña.
She emphasized that a modern traffic system should have advanced features like cloud computing, real-time data analytics, and the ability to adjust traffic lights based on actual road conditions to reduce congestion. However, Pesquera said these capabilities were not incorporated in the system purchased from Triune Electronics Systems, Inc. and Cylix Tech, Inc., the contractors awarded the project via a Joint Venture Agreement (JVA) signed on September 1, 2020.
Pesquera also questioned the legality of the agreements, noting that the JVA and the award notice were signed by Atty. Floro Casas Jr., the city administrator at the time, even though former Mayor Edgardo Labella was still in office. Pesquera pointed out that there was no council resolution authorizing the agreements, which she said rendered the contracts invalid.
Alleged Financial Irregularities
Further raising red flags, Pesquera revealed that only 8% of the P232 million allocated for Phase 1 remains unpaid, while Phase 2, which was budgeted at P238 million, has yet to receive any disbursements. She warned that the Department of Engineering and Public Works (DEPW) was already processing a P120 million payment for Phase 2, despite unresolved concerns about the project’s quality and compliance.
Pesquera also shared findings from her own investigation into the cost of Phase 1, which included a comparison with a market survey. She claimed that the city could have saved up to P20 million if the project had been procured under more competitive terms. According to a report from the Metropolitan Manila Development Authority (MMDA), the actual cost per intersection should have been approximately P3 million, but the city paid P16 million per intersection.
Investigation into Legality and Potential Fraud
In response to Pesquera’s findings, the Cebu City Council has moved to suspend any further payments for the Digital Traffic System until the fraud audit and investigations into the legality of the contracts are completed. Councilor James Anthony Cuenco, chair of the Committee on Transportation, argued that the city must “stop what has already been found deficient” to prevent further waste of taxpayer money.
Pesquera also highlighted that earlier evaluations by MMDA experts indicated that the system installed by the contractors was not fully functional and failed to meet the terms outlined in the original contract. She mentioned that a letter from Cylix Tech in March 2023 requesting payment was met with a directive from then-Mayor Michael Rama to assess the system’s performance.
Verification of Signatures
The City Council also approved a resolution earlier this year requesting the National Bureau of Investigation (NBI) to verify the authenticity of Mayor Labella’s signature on the contracts, which appeared inconsistent with his signature on other documents.
Looking Ahead: Phase 3 and Budget Implications
Despite the ongoing investigation, the administration has already included Phase 3 of the Digital Traffic System in its proposed 2025 budget, a move that has drawn further scrutiny from council members.
As of now, the fate of the Digital Traffic System project hangs in the balance, with both financial and legal challenges potentially delaying its completion. The Cebu City Council’s call for an audit is expected to shed light on the full extent of the alleged irregularities in the project.