SPECIALREPORT

Govt urged to settle dispute before giving money to Stradcom

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First of two parts
AFTER years of dispute, the Department of Transportation (DOTr) has signed a one-year phase-out agreement with Stradcom Corp., the information technology (IT) provider of the Land Transportation Office (LTO) since 1998.

The agreement, signed on December 9, was laid down to allow the LTO to switch to a new IT service provider covering the hardware, software and data requirements of the agency, and to give Stradcom time to turn over source codes and databases to the government.

In the agreement, DOTr Secretary Arthur Tugade made sure Stradcom would do its part in ensuring the smooth migration of data and computer operations to the next IT provider of the LTO.

The DOTr expects the switch to a new IT provider to take one to two years because of the tedious process of data migration.


The Cabinet department agreed to settle the P8-billion debt of the government to Stradcom, which committed to observe Commission on Audit payment rules.

Bidding processes and conditions will be set within a one-year period. The DOTr agreed to allow Stradcom to join the bidding for a new IT service provider.

Rival factions

But one shareholder claiming control over Stradcom said the DOTr should first settle an ownership dispute in the company before it allows the disbursement of funds to Stradcom.

“They should settle that immediately. The interpleader case should move forward, or at least finish the process within the year in time for the phasing-out program,” businessman Bonifacio Sumbilla told The Manila Times in a telephone interview.

Sumbilla’s group also wants Tugade to uphold the earlier suspension of payment for Stradcom’s services until the ownership row is settled.

To recall, rival factions led by Sumbilla and Cezar Quiambao made separate demands for payment from the LTO of some P1.2 billion, which is deposited with a court.

“We learned that LTO, during the time of Secretary [Joseph Emilio] Abaya, made some payments to Stradcom. We don’t know how much remains, that’s why we want an accounting of the funds, and how it was used by the Quiambao group,” Sumbilla said.

He added that the LTO was paying IT fees to Stradcom of about P100 million per month on licenses and vehicle registration, and another P70 million monthly in relation to emission testing services.

The interpleader case was filed by the government, through the LTO, in 2011 to determine which faction should represent Stradcom.

The government said LTO officers and employees were “at a loss” as to who should be recognized as the rightful representative of Stradcom.

In an 18-page decision released in August 2015, the 8th Division of the Court of Appeals (CA) dismissed the petition filed by Sumbilla seeking to stop the implementation of the Transport department’s Special Order No. 2011-181 ordering a new bidding for LTO IT services.

The CA found merit in the Quiambao group’s claim that the Executive branch, specifically the Office of the President, the Department of Transportation, the LTO and even then assistant secretary Virginia Torres, had recognized Quiambao and members of the board and officers of Stradcom as the ones in control and who are operating the firm.

Thus, it said, “it is quite clear from these developments that the basis for the interpleader case, the confusion as to which between the two opposing groups the LTO should deal with, no longer exists.”

“There is no more justiciable controversy,” the CA pointed out.

Proper ‘remedy’

Sumbilla, however, said the CA order ignored the Supreme Court’s February 2012 ruling on the interpleader, ordering the Quezon City Regional Trial Court (RTC) to finally determine which of the rival claimants have the right to money or property held by the LTO.

“The LTO’s interpleader suit is properly filed with the Quezon City RTC to settle Stradcom’s ownership issue. However, the case is not moving, which puts the government at a disadvantageous position,” Sumbilla said.

“What we want now is for the interpleader case to move forward,” he said, adding that the Supreme Court had found the interpleader case to be the proper course of action.

The court en banc had also affirmed an August 2011 decision and denied the motion for reconsideration filed by Quiambao to be recognized as the controlling owner of Stradcom.

“… As the Republic, being the payor, it is in a quandary as to which group should be recognized as having legal control over Stradcom and therefore, entitled to payment. It was but appropriate and judicious for the Republic to avail [itself]of the interpleader as a remedy under the rules,” the high tribunal ruled.

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