Government lawyers asked the Supreme Court (SC) to resolve immediately the petition against the P3.19 billion contract signed in 2018 by the Land Transportation Office (LTO) with German firm Dermalog Joint Venture for the country’s Land Transportation Management System (LTMS).

In a motion filed by the Office of the Solicitor General (OSG) last Sept. 9, the SC was asked to issue a temporary restraining order (TRO) to stop immediately the enforcement of the contract.

Signed by Solicitor General Darlene Marie B. Berberabe, the SC was told that the LTMS of Dermalog “is a seriously flawed system that should not be used any longer.”

The OSG also told the SC that the LTMS of Dermalog “is unreliable, dangerous, and poses a greater threat to the interest of the State and to national security.”

Should a TRO be issued, the OSG asked the SC to order Dermalog to release and turnover the source code and database to the LTO.

It also pleaded the SC to stop the LTO from implementing the LTMS “to avoid serious damage to the government and the public, and to stop the LTO from further paying Dermalog.”

The OSG informed the SC that on Aug. 20, 2025, the House of Representatives’ Committee on Transportation inquired into the status of LTO’s LTMS with Dermalog.

It said the Congress suggested the filing of another motion for early resolution “inasmuch as it involves public interest.”

In March 2024, a petition was filed before the SC against the LTMS – a system that aims to integrate all LTO services – like issuance of driver’s license, registration of motor vehicles, and issuance of transport permits – into a single database and digital platform.

As conceived, the LTMS 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 petition told the SC that after years of waiting, the LTMS “remains incomplete and not fully utilized due to inherent defects in its design, illegal amendments to the contract, and flawed acceptance.”

The petitioners, Gerald Domingo and lawyer Jose Carlito M. Montenegro, asked the SC to issue a TRO or injunction that would stop the LTO from further paying Dermalog for maintenance fees, change orders, and other fees, and from further using LTMS.

“Unless enjoined by the SC, both the government and the public will be constrained to continue using the wholly substandard, inefficient, defective, ill-conceived and incomplete LTMS,” Domingo and Montenegro said in their petition.

They said: “Paying Dermalog, 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.”

At that time, Dermalog’s joint venture was composed of Dermalog Identification Systems gmBH, Holy Family Printing Corporation, Microgenesis Software Corporation, and Verzontal Builders, Inc.

The petitioners cited a finding of the Commission on Audit to the effect that the LTMS project was “flawed from inception and was put up for bidding despite lack of requirements and specifications to address the needs of LTO.”

They also cited findings of the Department of Communications and Information Technology (DICT) on deficiencies and enhancements needed to ensure a smooth flow and glitch-free use of end-users.

On May 29, 2025, the LTO sought the early resolution of the petition filed by Domingo and Montenegro.

In its motion, the LTO told the SC that the case is “imbued with public interest, and will drastically affect the registration, licensing and other functions of the agency.”

It also told the SC that it needed “to change current procedures and protocols that will entail requesting respondent Dermalog to implement specific change orders.”

“Should the Honorable Court, however, decide at a later date to declare the subject Dermalog Contract void, then necessarily, the change orders and ultimately the enhanced systems to better serve the public would have to stop on its tracks,” the LTO said.

Thus, it pointed out that “the LTO cannot proceed with the necessary changes with this possibility in the air as government funds to be used to effect these changes will just go to waste.”