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House panel exposes irregularities in Dermalog joint venture

MANILA, Philippines — The House Committee on Transportation, chaired by Antipolo City 2nd District Rep. Romeo Acop, has accused Dermalog, the foreign IT provider for the Land Transportation Office (LTO), of deceiving the government and its joint venture (JV) partners in the P3.14 billion Land Transportation Management System (LTMS) project.

During a committee hearing on Monday, local construction firm Verzontal Builders Inc. revealed that Dermalog had not fully paid them for the electrical, mechanical, and civil works they completed, including a data center at the LTO’s main compound in Quezon City.

“You’ve been dealing with this government, but it seems you are deceiving it, as well as your partners,” Acop said.

Verzontal Director Jose Natividad said that Dermalog still owes them about P165 million. 

Despite attempts at settlement, they were only offered P1 million. 

Natividad also claimed Verzontal was illegally removed from the JV, and former LTO officials were biased towards Dermalog.

“We were unilaterally and illegally removed from the JV because we were not paid, and we discovered some fraudulent acts by Dermalog,” Natividad said.

Verzontal’s legal counsel, lawyer Ricardo Gao Pronove III, reported sending complaints to the DOTr and the LTO. 

Despite attempts at meetings, they were accused of bullying Dermalog. Dermalog later excluded Verzontal from the JV.

“We represent 25 percent. Not only did they fail to pay us, but they also removed us from the profit sharing,” Pronove said.

Verzontal is considering legal action against former LTO officials and JV members, including Dermalog, Microgenesis, and Holy Family Printing Corp. They await a Quezon City Court decision on a petition to terminate the LTO's contract with Dermalog.

Dermalog’s legal counsel, lawyer Anthony Peralta, denied the allegations, stating that Dermalog had paid over P219 million to Verzontal and that Verzontal left the JV in April 2019.

In June 2022, the Quezon City Regional Trial Court ordered the arrest of four Dermalog executives for qualified theft based on a case filed by Verzontal. However, the Department of Justice overturned the decision in July 2022.

The transportation committee has