The Land Transportation Office (LTO) has petitioned the Supreme Court (SC) to expedite the resolution of the case involving its P3.19-billion contract with the German firm Dermalog Joint Venture for the Land Transportation Management System (LTMS).

The LTMS was envisioned as a web-based core system designed to integrate all LTO services — such as the issuance of driver’s licenses, motor vehicle registration, and transport permits — into a unified digital platform and database. The contract between LTO and Dermalog was signed on 28 May 2018.

The plea for early resolution was contained in a motion filed on 29 May by the LTO, which is among the respondents in the case filed by Gerald Domingo and lawyer Jose Carlito M. Montenegro.

The petitioners alleged that the agreement was flawed and could potentially compromise national security and violate informational privacy, particularly involving personal data of LTO clients, including themselves. Alvin Murcia

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

The agency also emphasized that it is in the process of “streamlining and overhauling its current systems in the registration of vehicles, licensing of drivers, and in enforcing transport laws,” and that these reforms require it to “request 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 in their tracks,” the LTO said.

It added 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.”

“LTO needs clear guidance, by way of court ruling, in order to determine how best to proceed with the changes needed to best serve the public,” the agency further stated.

The LTO also noted that former transportation secretary Jaime J. Bautista had “approved the imposition of liquidated damages against the Dermalog Joint Venture due to delays in the delivery of essential system components pursuant to the agreed implementation schedule.”

However, it said it could not proceed with enforcing the liquidated damages because “the grounds in support of the liquidated damages are intertwined with the issues raised in the case,” and that the Supreme Court’s decision “will affect the claim for damages.”

“Hence, the early resolution of this case will provide guidance on how to proceed with the government’s claim,” the LTO said.

In April 2024, instead of acting on the petitioners’ plea for a temporary restraining order (TRO), the SC, after requiring both the LTO and Dermalog to respond to the petition, declared the case submitted for resolution.

The petitioners told the SC: “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.”

The Dermalog Joint Venture is composed of Dermalog Identification Systems GmbH, Holy Family Printing Corporation, Microgenesis Software Corporation, and Verzontal Builders, Inc.

Domingo and Montenegro claimed 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 pointed out that less than a month after the contract signing, the LTO issued several orders that granted 13 extensions to Dermalog’s deliverables from 2018 to 2021, extending the project timeline by nearly three years.

Earlier reports revealed that despite the payment of over P3 billion, the LTMS has not been fully operational due to issues flagged by the Commission on Audit (COA) and the Department of Information and Communications Technology (DICT), including system deficiencies and the need for further enhancements to ensure smooth and glitch-free use for end-users.