The Senate Blue Ribbon Committee has compelled the representatives of Dermalog Identification Systems, the Land Transportation Office’s foreign information technology contractor, to attend the next public hearing to answer the lingering issues hounding the Land Transportation Management System (LTMS), including delays and alleged undue payments.
During a hearing presided over by Blue Ribbon Committee chairman Sen. Francis Tolentino on June 8, several senators were appalled by the absence of Dermalog officials, who were said to be in Germany, according to the company’s legal counsel.
Public Services Committee chairman Sen. Grace Poe and Sen. JV Ejercito said they could not gather sufficient information on the issues regarding LTO’s IT platform.
Poe added that the hearing could have given Dermalog a chance to clear its reputation amid earlier media reports that aside from the LTMS, some of its projects in Indonesia, Angola, and Haiti also faced irregularities.
The hearing stemmed from two separate resolutions filed by Senate Minority Leader Aquilino “Koko” Pimentel and Sen. Imee Marcos in August 2022 and December 2022, respectively.
Pimentel, in his Senate Resolution No. 147, which was based on a Commission on Audit (COA) report, questioned LTO’s alleged undue payment to Dermalog and its joint venture with Holy Family Printing Corp., Microgenesis, and Verzontal Builders, Inc., despite the foreign IT firm’s delays in fully submitting the deliverables of the P3.14 billion Road IT Infrastructure project that was awarded in May 2018.
Pimentel revealed that despite having more than 70 unresolved issues involving the core applications of the LTMS, the LTO has accepted the submission of Dermalog and provided payments to them.
In addition, a COA representative revealed to the Committee that the LTO started paying maintenance fees to the foreign IT company in 2019, even before the project was fully completed and turned over.
For his part, Ejercito questioned LTO for being overly “generous” by amending the payment scheme at least 12 times in favor of Dermalog.
He alleged that the LTO accepted the submission of its foreign IT contractor despite failing to reach at least 41 percent completion.
The Department of Transportation (DOTr) reported that the government has since paid P2.31 billion to Dermalog. It added that these payments were required in the contract based on certain milestones.
Meanwhile, Verzontal Builders, Inc., one of the local JVA partners of Dermalog, revealed that it has a pending petition with the Court of Appeals (CA).
The firm sought the court to uphold the warrants of arrest released by a Quezon City Regional Trial Court Branch 224 against four Dermalog officials in line with an estafa case filed against them in September 2021.
Verzontal alleged that they did not receive the full payment from Dermalog despite the completion of their responsibilities under the JVA.
The hearing also tackled Marcos’s Senate Resolution No. 348, which states that the LTO violated Republic Act 9184 or the Government Procurement Reform Act when the P8.2 billion automation project for LTO’s internal and external functions was divided into two components (Component A and B) without the approval of the National Economic Development Authority – Investment Coordination Committee (NEDA-ICC).
The COA Information Technical Audit Office is currently conducting an audit of the LTMS contract to determine if the issues they raised in the 2021 audit report have already been resolved. The report is expected to be completed within the month.
Meanwhile, Tolentino warned Dermalog’s legal counsel that he will be cited for contempt if he fails to bring his clients to the next hearing.
Aside from the principal officers of Dermalog, the Blue Ribbon Committee also subpoenaed the representatives of Holy Family Printing Corp., Microgenesis, and former LTO key personnel to attend the next hearing, which has yet to be scheduled.