LTO seeks to blacklist Dermalog over alleged contract violations

The Land Transportation Office (LTO) is preparing to blacklist German technology firm Dermalog Identification Systems GmbH over alleged contractual violations involving the P3.19-billion Land Transportation Management System (LTMS).

During a House committee on transportation hearing, lawmakers also raised concerns over the possible exposure of data belonging to around 10 million motorists.

LTO executive director Martin Ontog said the agency is pursuing the blacklisting of Dermalog after the company allegedly failed to deliver a fully functional LTMS before the contract expired.

“The LTO is already preparing blacklisting proceedings against Dermalog and under RA 9184 and its RA 12009 implementing rules,” Ontog said.

“That process moves forward alongside Dermalog's own arbitration notice, its RTC case, and its pending ombudsman complaints,” he added.

According to Ontog, the LTMS remains incomplete more than 900 days after its intended completion despite 13 contract extensions.

He said the system still cannot process transactions for public utility vehicles (PUVs) or automatically collect penalties linked to new vehicle registrations.

According to him, the Commission on Audit (COA) has repeatedly flagged deficiencies in the LTMS over the past four years.

Ontog said Dermalog's maintenance contract expired on May 13, leaving the system without patching, active monitoring, and incident response, exposing it to potential outages and cybersecurity risks.

"Because Dermalog continues to withhold source code, encryption keys, and full administrative and database access, including the transfer of LTO's complete database of vehicle registrations and driver's licenses, the LTO is effectively blind in operating, maintaining, and most critically securing the LTMS. We cannot secure a system we do not control," Ontog said.

Data at risk

Several lawmakers warned that the continued control of the LTMS source code by a foreign company could pose national security and data privacy risks.

Las Piñas Representative Mark Anthony Santos expressed concern that the personal information of approximately 10 million motorists could be compromised, citing text messages he recently received regarding alleged traffic violations.

Meanwhile, Aklan Representative Jesus Marquez questioned the integrity of the LTMS database after discovering that his birth date had been altered in the system.

Ontog assured Marquez that the LTO could update his personal information during the renewal of his driver's license but acknowledged that the agency may have to rebuild its motorists' database from scratch if Dermalog never relinquishes control of the source code.

The Office of the Solicitor General (OSG) said it has asked the Supreme Court to compel Dermalog to turn over the LTMS source code to the LTO and to expedite the resolution of a petition seeking to nullify the LTMS contract.

GMA News Online reached out to Dermalog for comment and will publish it once available.—AOL, GMA News