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SC set to decide on nullification of P3-B contract for LTO digitalization

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The Supreme Court has submitted for resolution the petition seeking to nullify the P3.19-billion contract of the Land Transportation Office (LTO) in 2018 with German firm Dermalog Joint Venture for the Land Transportation Management System (LTMS).

The case arose from the petition filed by Gerald Domingo and lawyer Jose Carlito M. Montenegro, who described the contract as a flawed agreement that “[undermines] public welfare, [threatens] national security, and [breaches] informational privacy of LTO data subjects.”

The LTMS was envisioned to integrate all LTO services, such as driver’s license and transport permit issuance and motor vehicle registration, 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 upon by the High Court as soon as the comments are filed.

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.

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 added 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.

Furthermore, Domingo and Montenegro 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 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.

According to the petitioners, the SC should also order LTO to blacklist Dermalog from participating in any bidding process involving government projects.

The petitioners also asked the High Court to order Dermalog to turn over to LTO the database containing all the agency’s data and return the amount paid by the government for the “null and void” contract, declaring the company liable to pay damages amounting to not less than P319 million.


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