Lawyer, PUJ operator urge SC to nullify LTO-Dermalog contract

A petition was recently filed in the Supreme Court (SC) asking to scrap the joint venture agreement between the Land Transportation Office (LTO) and Dermalog. Dermalog is the German company that supplied the LTO with its new IT system, the Land Transportation Management System (LTMS).

The petition, which was received by the SC on December 2023, claimed that the IT deal was “flawed at inception,” and that the implementation of the agreement was a threat to national security. The petitioners are Atty. Carlito Montenegro and jeepney operator Gerald Domingo.

Deliverables not met

The petition also alleges that Dermalog’s supposed deliverables were not met on their due date in 2018. The LTO, says the petition, granted the IT supplier 13 extensions “without stating the specific meritorious grounds.”

And despite Dermalog being unable to deliver on what was on the contract, the LTO has not taken any action against the IT supplier and did not impose any liquidated damages for each month the deliverables are delayed.

The petition also alleges that the law mandates the LTO to pre-terminate the contract in such events.

Montenegro and Domingo, in their petition, claimed that the LTO issued a Certificate of Project Completion and Acceptance of the project in December 2021, even if the project was not yet 100% delivered at the time.

PHP 300 billion in damages

The SC petition also included a Temporary Restraining Order (TRO) vs the LTO to stop the agency from paying Dermalog “maintenance fees, change orders and any other billables and receivables.”

Because of these alleged fulfillment failures of Dermalog, the petitioners have asked the SC to hold Dermalog liable for PHP 300 billion in damages to the government. “The execution and implementation of the contract were clearly designed to defraud the Filipino people,” says one of the lines in the petition.

LTO not terminating any contract

LTO chief, Atty. Vigor Mendoza II, denied on Friday, March 15, that the agency will terminate the contract on the current operation of the Land Transportation Management System, or LTMS.

Mendoza said the LTO is more focused on solving all the challenges in the agency in order to deliver fast and convenient services to its clients across the country.

“Our hands are full in terms of further improving our services and in delivering what needs to be delivered to our kababayan. All of these are our priority right now,” said Mendoza.