The chaotic National ID system that at times issues paper printouts instead of plastic cards faces new delays after a Quezon City court issued a temporary restraining order (TRO) on the cancelation of the contract with the card supplier.

As of 19 September, 90.017 million Filipinos had registered for the P27.8-billion national ID project that would give the country its first universal identification system.

The Bangko Sentral ng Pilipinas (BSP) on Saturday, however, stood its ground as it reiterated that it was taking steps to replace AllCard Inc. (ACI) as an equipment supplier for the printing of national IDs despite receiving a “supposed” court order to revive the contract.

In a statement yesterday, the BSP said ACI sent it a copy of the order on 18 September.

The BSP said it had yet to receive an official order from the Regional Trial Court of Quezon City regarding the cancellation of its contract with ACI on 15 August due to the firm’s failure to promptly supply equipment, raw materials, and technical aid for the printing of the IDs.

“The BSP will act accordingly once the official order, if any, is received,” it said.

The Quezon City Regional Trial Court Branch 76 issued last 17 September a temporary restraining order (TRO) and preliminary injunction stopping the BSP from terminating its contract with ACI.

The court criticized the BSP for its “alarming lack of transparency” in the decision-making process.

The court’s order, issued on 9 September, noted that the BSP failed to substantiate its claims of delays and inadequate performance by ACI or give the company due process.

It added that ACI was not given a fair opportunity to respond.

“This lack of disclosure raises concerns about the fairness of the respondent’s actions and the adequacy of the information provided to justify the termination,” the court said.

Retaliation

After the BSP terminated its contract, ACI was prompted to seek arbitration in January 2024. The BSP’s public disclosure of the termination in August was viewed as retaliation for ACI’s arbitration request.

In the 9 September order, Judge Renato Pambid emphasized the substantial financial and reputational impact on ACI, underscoring the urgency of maintaining the current contractual terms.

The court ordered the BSP to suspend the termination process and refrain from imposing any penalties on ACI.

“Said delays in the delivery of the cards amounted to P129,646,464.29 in the form of liquidated damages. Given the substantial amount, the petitioner’s right to be fully informed of the basis of such damage and the opportunity to explain are imperative,” the court ruled.

Not just any bidder

The court emphasized that ACI was not just any bidder; it was the lowest bidder and thus had an unequivocal right to procedural and substantive due process.

“The clear and unmistakable nature of the petitioner’s right implies that any action taken to terminate the agreement without due consideration of this right would be in violation of the terms agreed upon by the parties,” the court added.

The court also criticized the BSP’s claim for liquidated damages, finding it insufficiently justified.

It highlighted the critical and sensitive nature of the case, emphasizing the need for expedited judicial review due to delays in arbitration proceedings.

Judicial intervention needed

“Consequently, the court finds that the Arbitral Tribunal’s current inability to act promptly further underscores the need for judicial intervention to ensure the timely resolution of the urgent matters presented,” the court said.

Under Republic Act 11055, the BSP is tasked with assisting the Philippine Statistics Authority (PSA), the lead agency for the ID project, in the customization and printing of the cards using equipment from a qualified supplier.

“Terminating the contract allows the PSA the freedom to explore other options to expedite the production and delivery of national ID cards. Attempts to revive the contract with a supplier that has already failed to deliver will only further delay PSA’s plans to address backlogs,” the BSP said.

The BSP maintained the cancellation of the contract with ACI was “justified” as the distribution of national IDs has been long delayed.

The PSA said that over 90 million Filipinos had registered for the cards but only 53 million cards had been distributed as of 2 August.

The government expects 116 million cards to be printed under the BSP contract with ACI.

The BSP said it complied with the rules on agency-to-agency procurement under Republic Act 9184.

“BSP properly conducted a public bidding process for a lease and supply contract, which ACI won and accepted. Other issues being raised distract from these basic facts. The contract cancellation was made to also protect the interests of the government, represented by the PSA.”

DAILY TRIBUNE reached out to the BSP regarding its search for a new supplier but had not received a response as of press time.

Senate steps in

Senator Aquilino “Koko” Pimentel III has filed a resolution to investigate the card backlog, stressing the need for the government to come up with a new plan to provide physical national IDs.

“The Philippine Identification System was designed to simplify and expedite the delivery of public services, but these delays undermine its purpose. The root causes of the delays must be uncovered to prevent further disruptions,” Pimentel said in a statement.