The Land Transportation Office (LTO) is continuing to operate the Stradcom-developed LTO-IT System alongside the government-owned Land Transportation Management System (LTMS), despite a May 29 directive from the Office of the Ombudsman ordering the agency to immediately stop using the older platform.
The LTO’s position emerged anew this week as the agency stepped up its dispute with German technology firm Dermalog Identification Systems GmbH, the developer of the LTMS, including plans to initiate blacklisting proceedings against the company.
LTO executive director Martin Ontog told lawmakers that the agency would continue the parallel operation of the LTMS and the Stradcom system while awaiting a Supreme Court ruling involving the LTMS contract, according to ABS-CBN News.
The position is directly at odds with the Ombudsman’s May 29 directive, which ordered the “cessation of use of Stradcom’s LTO-IT System” and required LTO transactions to be processed exclusively through the LTMS.
The Ombudsman also gave the LTO five days to submit a compliance report confirming that it had stopped using the Stradcom platform and warned that non-compliance could result in administrative proceedings, including preventive suspension.
The directive cited the absence of a subsisting contract covering the Stradcom system as well as procurement, audit, and public-interest concerns that computer IT fees collected from motorists and payable to Stradcom reached more than P602.9 million in 2025.
The LTO subsequently told the Ombudsman that immediately migrating entirely to the LTMS was “untenable” because of technical and legal issues, including the pending Supreme Court case.
This week, the dispute shifted back to Dermalog after LTO officials told a House hearing that the LTMS remained incomplete and that the German company had yet to turn over critical system components.
Ontog said the LTO was preparing blacklisting proceedings against Dermalog for alleged contractual violations.
Dermalog, however, rejected the LTO’s claims in a statement issued Aug. 5, saying the agency already possesses and controls the LTMS database.
“Contrary to recent public statements, the LTMS database has at all times formed an integral part of the system delivered to the Land Transportation Office,” Dermalog said.
“LTO has long been in possession of, and exercises operational control over, the database. Any suggestion that Dermalog has withheld the database is therefore incorrect.”
The company also denied refusing to surrender the source code, saying its turnover is governed by the terms of the contract.
“Dermalog has never refused to transfer the LTMS source code,” the company said. “The timing and conditions for source code turnover are expressly governed by the parties’ contract.”
Dermalog said the LTMS was formally accepted by the LTO in 2021 as compliant with the project’s terms of reference. It also disputed claims that deficiencies currently cited by the agency were part of its original contractual obligations, saying several functions were later requested as additional requirements.
The German firm likewise pushed back against cybersecurity concerns raised during the House hearing.
Dermalog said its technical access to the production environment had been terminated by the LTO, leaving the company unable to maintain the system or install updates and security patches.
“Cybersecurity is not a one-time achievement but an ongoing process. The protection of critical national digital infrastructure depends on continuous maintenance and timely security updates in response to an evolving threat landscape,” Dermalog said.
According to Dermalog, the LTMS currently handles about 120,000 government revenue collection transactions a day and has more than 47 million registered portal users. Its database contains more than 32 million driver’s license records and about 24 million registered motor vehicles.
The company said it filed a petition for a temporary restraining order and injunction on May 11 over the LTO’s intended termination actions. It said the proceedings remain pending.
Dermalog also cautioned against the LTO’s proposed blacklisting while the contractual dispute remains before the courts.
“In light of the ongoing judicial process, Dermalog believes that public statements concerning sanctions or blacklisting should be viewed in the context of matters that have not yet been finally determined by the courts,” the company said.
