DID DOTC Secretary Joseph EA Abaya lie to the President to clear the way for the release of the P1 billion out of the P4.2 billion held in escrow in favor of Stradcom in January this year? Or did Abaya merely act out of ignorance of the pending interpleader case in the Quezon City special Commercial Court?
The P1 billion in escrow account was released in January 2013 by Land Bank to Stradcom’s Quiambao group following instructions from Land Transportation Office Chief Virginia Torres. Her order to unfreeze the P1billion however was based on two separate memoranda from Secretary Jun Abaya and Undersecretary Perpetuo Lotilla instructing her to unlock the escrowed account.
In his text message to The Manila Times over the weekend, Abaya said, “When the funds were released DOTC was made aware of only one case, an intra-corporate dispute involving Sumbilla and Quiambao in a Pangasinan court which was dismissed by the court and was then pending appeal before the CA.”
“Furthermore, the case was an intra-corporate dispute with Stradcom on part of government. Case was clearly an internal dispute. Furthermore, there was no restraining order or injunction preventing payment. There was a need to release funds for the service provider is essential for the provision of public services. DOTC certainly did not want public service to suffer because of an intra-corporate dispute that had absolutely no bearing on government’s contractual obligation to pay.”
That was almost similar to the narrative Abaya wrote in his Nov. 21, 2012 memorandum to the President. He said, “While the escrow account was previously under litigation and a restraining order issued by the court, the case has since been dismissed. The case is now pending with the Court of Appeals but is not the subject of any restraining order. Therefore, no judicial intervention or notice is necessary for the release of these monies.”
It is hard to imagine how Abaya could have missed that the interpleader suit is still pending before the QC special commercial court. And it was the LTO (an attached agency of the DOTC) through Torres who filed the interpleader case in 2011 at the Quezon City Regional Trial Court to determine who the true directors and officials of Stradcom Corporation are.
Abaya, without paying attention to Torres’ QC action, must be referring to the case filed by Stradcom International Holdings, Inc. (SIHI) represented by one Rodolfo Millare before the Urdaneta Trial Court. Millare had sought to invalidate the stockholders meeting and subsequent election of the members of the board and officers of Stradcom Corporation on March 29, 2011.The Millare suit was neither about an intra-corporate dispute nor an interpleader suit.
The Millare suit was dismissed by the Urdaneta RTC on August 18, 2011 without trial as a “nuisance suit” and subsequently by the Court of Appeals and finally in a minute resolution by the Supreme Court on March 18, 2013. The SIHI suit is now the subject of a pending Motion for Reconsideration.
In 2011, LTO Chief and DOTC Assistant Secretary Virginia Torres filed an interpleader before the Quezon City Regional Trial Court to determine the rightful directors and officers of Stradcom. She was sustained by the QC RTC.
Quiambao immediately filed a Petition for Certiorari and Prohibition before the Supreme Court seeking to nullify the June 21, 2011 order of the QC RTC and the dismissal of the interpleader suit filed by Torres.
In its August 23, 2011 resolution, the Supreme Court upheld the filing of the interpleader suit while noting the “underlying corporate dispute” in Stradcom. The high court then ordered the re-raffling of the case to a special commercial court in Quezon City RTC for resolution of the pending intra-corporate dispute.
The Supreme Court dismissed Quiambao’s motion for reconsideration with finality on January 24, 2012.
Quiambao filed a second Motion to Dismiss the interpleader case citing that Stradcom’s intra-corporate dispute had already been resolved in his favor by the Urdaneta RTC. This was again denied by the Quezon City special commercial court in its Omnibus Order of July 19, 2012.
In denying Stradcom’s motion, the interpleader court affirmed the “underlying intra-corporate dispute” that should be resolved by the special commercial court. Additionally, the court again directed the LTO “to deposit with (the) court…the subject current amount of its contractual obligations to Stradcom as stated in the…Order dated June 21, 2011.”
The Quiambao group then filed a Motion for Partial Reconsideration, which was again trashed by the Quezon City interpleader court in its Omnibus Order on Feb. 20, 2013.
Contrary therefore to the assertion of Abaya in his November 21, 2012 memo to the President that “the case has since been dismissed,” the interpleader suit is still pending resolution before the Quezon City special commercial court and litigation is ongoing.
In the same communication to the President through Executive Secretary Paquito Ochoa, Jr., Abaya sought approval for the release of the P1 billion “to pay Stradcom’s obligations as follows:
a. P 317 million – Bureau of Internal Revenue (BIR);
b. P 183 million – working capital and other trade payables; and,
c. P 500 million – banks/creditors for overdue amounts with interest.
Abaya also detailed Stradcom’s payables. Thus:
1. Unpaid loans P236.50 million
2. Unpaid installments to investors/creditors -P436.25 million
3. Updating the sinking account with Metrobank – P 1,376.87 million
4. Business Tax – P 12.0 million
5. Tax Due – April 2012 – P 317.40 million
6. Trade payables – P 67.39 million
7.Retirement funds payables – P107.90 million
8. Working capital – P 330.0 million
9. Government share in connectivity fees – P 253.20 million
TOTAL (in millions) P 3139.52
The Secretary rationalized his recommendation for a partial unfreezing of the P4.2 billion when he wrote in the same memo, “While the escrow account was previously under litigation and a restraining order issued by the court, the case has since been dismissed. The case is now pending with the Court of Appeals but is not the subject of any restraining order. Therefore, no judicial intervention or notice is necessary for the release of the monies.”
He added a sweetener. The Secretary said, “From the escrow account, the monies will be directly released to the proper recipients thereof. Thus taxes due to the BIR, shall be directly released to the BIR. Amounts due to the trade suppliers and creditors shall likewise be released directly to them.”
Assuming Abaya truly believes that there is no more legal obstacle to the unlocking of the escrowed account with the Land Bank, why then did he not move for the release of the whole P4.2 billion? Why only P1 billion?
It is interesting to note that in his memorandum to Torres, Abaya made no mention at all of the case having been dismissed and that there is no more legal obstacle to the release of the P1billion to Stradcom. He simply wrote “In view of the approval of Executive Secretary Paquito N. Ochoa, Jr. to release the amount of One Billion Pesos (P 1B) from the escrow account under the Escrow Agreement among the Land Transportation Office (LTO), Land Bank of the Philippines (LBP) and Stradcom Corporation, you are hereby enjoined to immediately effect payment of the following obligations of Stradcom:
1. Three Hundred Seventeen Million Pesos (P317M) to the Bureau of Internal Revenue (BIR);
2. One Hundred Eighty Three Million Pesos (P183M) for working capital and other trade payables (in order for Stradcom to be able to continue its operations); and
3. Five Hundred Million Pesos (Ph500M) to banks/creditors of Stradcom for overdue accounts and interest payments.”
Perhaps Abaya knew that Torres would object to his claim that the “case has been dismissed” and “Therefore no judicial intervention or notice is necessary for the release of these monies” because the truth is, the interpleader suit is still pending before the QC special commercial court. That explains the omission of the “case having been dismissed.”
It is also interesting to note that in his memo to Torres, Abaya again omitted the words he used in his letter to the President to reinforce his justification to unlock the frozen account at Land Bank, “From the escrow account, the monies will be directly released to the proper recipients thereof.”
His memo to Torres was followed by another this time from DOTC Undersecretary Jose Perpetuo M. Lotilla who wrote, “Pursuant to the Memorandum from the Secretary, the Honorable Joseph Emilio Aguinaldo Abaya issued to you on 08 January 2013, please instruct the Escrow Agent under the Escrow Agreement dated December 06, 2011 (ITF 03-466) among Land Transportation Office, Land Bank of the Philippines – Trust Banking Group and Stradcom Corporation to debit the amount of ONE BILLION PESOS (P1,000,000,000.00) and credit it to Stradcom Account No. 0572-1038-03.”
See the pattern?
First Abaya writes the President asking to unfreeze P1 billion of the P4.2 billion because the “case has since been dismissed” and that “no judicial intervention or notice is necessary for the release of these funds.” Then he says that the P1 billion “will be directly released to the proper recipients.”
After the approval was secured by the Secretary, he then wrote Torres on January 8, 2013 ordering her to release the P1 billion to Stradcom for its various payables. No mention at all of paying the “proper recipients” directly as he had earlier wrote the President.
Then came Lotilla’s January 18, 2013 memo to the LTO chief, ordering her to release the P1 billion to Stradcom. Just like that. No more niceties. No more “paying Stradcom’s proper recipients.” Just pay Stradcom.
Surely, when he issued a memorandum to LTO chief Virginia Torres to release the P1 billion to Stradcom, he must have known that an interpleader suit is still under litigation before the Quezon City special commercial court and that it was Torres who filed the interpleader case to determine who between the two contending parties are the true directors and officials of Stradcom.
Abaya’s language in the LTO memo, could not have been interpreted any other way but to release the P1 billion directly to Stradcom Corporation and not to the corporation’s “proper recipients” as contained in his letter to the President.
Assuming that all my assumptions are wrong and Abaya were right, why then did he not do anything when the BIR raised an issue over the non-remittance of its P317 million in collectible taxes from Stradcom knowing fully well that that was one of the reasons why he had asked the President for approval of a partial release from the P4.2 billion held in escrow at Land Bank?
Again, assuming that I am wrong and Abaya were right, why then did he not run after Stradcom when it refused and continue to withhold the P1 billion to the “proper recipients?”
I understand that there is a move on the part of some people in government to have another P1.5 billion released from the remaining P3.2 billion still in escrow.
If Abaya’s intention was to remit the P1 billion directly to the “proper recipients” why, at the very least, did he not reprimand Lotilla and Torres who disobeyed him when the money was remitted instead to Stradcom?
Something smells. And it stinks.