THE Supreme Court (SC) has voided a 2009 deal between the government and Stradcom Corp. for radio frequency identification (RFID) tags on motor vehicles, ordering a refund of the additional P350 charge on car registrations.
Chief Justice Maria Lourdes Sereno wrote the 30-page decision dated January 31, declaring the deal illegal because of the lack of public bidding, partially granting the petition led by partylist group Bayan Muna.
The project involved an automatic identification technology in which digital data encoded in an RFID tag or “smart label” are captured by a reader using radio waves.
The high court ruled that the project was not a mere enhancement of the existing information technology (IT) contract for motor vehicle registrations awarded to Stradcom in 1997, but a “substantial amendment of the Build-Own-Operate (BOO) Agreement.”
Neither does it qualify as an “allowable contract variation” as it involved an additional P350 fee.
“In this case, it is patently admitted by DOTC/LTO (Department of Transportation and Communications and Land Transportation Office) that no public bidding was conducted on the RFID Project, which was presented by Stradcom as a proposal that would enhance the existing LTO IT Project,” the court said.
It said the deal did not fall under the exception to the rule on public bidding under Section 5-A of the Build-Operate-Transfer Law, which states that “direct negotiation shall be resorted to when there is only one complying bidder left.”
“The RFID MOA (memorandum of agreement) must, thus, be struck down by this Court for failure to comply with the rules on public bidding. There is no guarantee that the RFID fee that will be charged to the public is a fair and reasonable price, as it has not undergone public bidding. Likewise, there is no guarantee that the public will be receiving maximum benefits and quality services, especially from the additional hardware, such as the RFID tags and readers. These are to be procured by Stradcom from its two suppliers, which have not been identified and are not even parties to the RFID MOA,” the high tribunal said.
“On the other hand, Stradcom, which has been awarded the exclusive right to develop and operate the RFID system without having undergone competitive public bidding, stands to earn considerable amounts of revenue from the contract. In fact, in just three months, the period when the RFID Project was implemented prior to the issuance of the Status Quo Ante Order by this Court, the LTO had already generated P29,894,200 in RFID Fees. Clearly, the evils sought to be avoided by the requirement of competitive public bidding are evident in this case,” it added.
The high tribunal ordered a refund of the RFID fees collected during project implementation prior to the court’s issuance of a status quo ante order on Jan. 12, 2010.