The Supreme Court (SC) has submitted for its resolution the petition which sought the nullification of the P3.19 billion contract of the Land Transportation Office (LTO) in 2018 with Dermalog Joint Venture, a German firm, for the Land Transportation Management System (LTMS).
The case stemmed from the petition filed by Gerald Domingo and Atty. Jose Carlito M. Montenegro who told the SC that the continuous existence of what they described as a flawed agreement may eventually lead to a threat to national security and even breach of informational privacy of the LTO data that include private information of the agency’s clients like them.
“Paying Dermalog JV, keeping LTO technologically captured, continually exposing unauthorized access to LTO’s data in foreign countries… undermine public welfare, threaten national security, and breach informational privacy of LTO data subjects, like herein petitioners who are taxpayers, drivers, motorists and motor vehicle owners,” they said in the petition.
The LTMS was envisioned to integrate all LTO services – like issuance of driver’s license and transport permits, and registration of motor vehicles – into a single database and digital platform.
It would be a web-based core system that would replace the old system of LTO, including the establishment and operation of an exclusive on-premises private cloud, network operations center, technical support, and helpdesk centers.
The SC acted on the petition by requiring the LTO and Dermalog to file their comments. The plea for a temporary restraining order (TRO) sought in the petition would be acted by the SC as soon as the comments were filed. Comments on the petition were not immediately available.
However, a check with the SC showed that no restraining order was issued and, instead, the petition has been submitted for resolution on its merits.
Dermalog Joint Venture is composed of Dermalog Identification Systems gmBH, Holy Family Printing Corporation, Microgenesis Software Corporation, and Verzontal Builders, Inc.
In their petition, Domingo and Montenegro told the SC that the LTMS “remains incomplete and not fully utilized due to inherent defects in its design, illegal amendments to the contract, and flawed acceptance.”
They said that less than a month after the signing of the contract, the LTO issued several orders which allowed 13 extensions to Dermalog’s deliverables from 2018 to 2021, prolonging the project delivery schedule by almost three years.
They pointed out that despite the delays, the LTO did not impose liquidated damages to Dermalog as required under the contract and Republic Act No. 9184, the Government Procurement Reform Act (GPRA), or pre-terminate the contract despite existing grounds to do so.
The SC was also asked to order the LTO to file appropriate administrative and criminal cases against the transport agency’s officials and employees involved in the anomalous implementation of the project.
The petitioners asked the SC to order LTO to blacklist Dermalog Joint Venture from participating in any bidding process involving government projects.
They also asked the SC to issue an order directing Dermalog to turnover to LTO the database containing all data owned by LTO, particularly data of motor vehicles and driver’s license.
At the same time, the petitioners asked the SC to order Dermalog to return the amount paid by the government for the “null and void” contract and to declare the company liable to pay damages amounting to not less than P319 million.
In October 2023, the LTO sought the full takeover of LTMS from Dermalog.
LTO Chief and Assistant Secretary Vigor D. Mendoza II had said the government’s takeover will not only expedite all the technical issues raised by the Commission on Audit (COA) and the Department of Information and Communications Technology (DICT).
Despite the payment of more than P3 billion, the LTMS has not been fully utilized due to issues raised by the Commission on Audit (COA) and the Department of Communications and Information Technology (DICT) like on deficiencies and enhancements needed to ensure a smooth flow and glitch-free use of end-users.
Of the 166 enhancements pointed out by the DICT, the German firm is seeking more than P600 million in payments for one-third of them.
This prompted Mendoza to issue a statement that the national government would save enough money if the LTO would take over the system instead of extending the contract for the maintenance and enhancements.
“Our IT experts are capable of operating and maintaining the system. In fact, they remain on the frontline in ironing out all that needs to be done in order for us to fully utilize the system,” Mendoza said.
He created a Technical Working Group to consolidate the system for easier and more convenient shift to digital services in the LTO.