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GSIS sues IBM, seeks P100M in damages

IBM sues agency for libel

By Alexander Villafania, Ronnel Domingo
INQUIRER.net, Philippine Daily Inquirer
First Posted 17:05:00 06/03/2009

Filed Under: Litigation & Regulations, Government, Technology (general)

MANILA, Philippines?(UPDATE 2) The Government Service Insurance System filed on Wednesday a P100-million damage suit against IBM Philippines and its parent firm, as well as contractor Questronix Corp. for ?supplying defective database software? that led the pension fund?s computer system crashing.

Estrella C. Elamparo, GSIS chief legal counsel, said in an 18-page complaint filed before the Pasay City Regional Trial Court that the pension fund was suing for tort and breach of contract ?to hold the defendants liable for the damage caused by the defective software [they supplied] to the GSIS.?

Elamparo said GSIS suffered damages of at least P5 billion given the man-hours lost and the amount of resources spent for data recovery activities as well as unrealized income from investments.

However, she said the agency was suing for less ?considering the enormous amount of filing fees that a claim in [such] amount would entail.?

The GSIS incurred a backlog in the processing of claims and loans following the crash of its database system on April 2 and May 11.

In earlier interview, Elamporo said the agency would file a case unless IBM delivers a purported ?special build? that should solve the GSIS?s problems with its database infrastructure.

Questronix has informed the GSIS that as a final solution to the problem, ?IBM Laboratory in Toronto, Canada, would provide fix, the complaint said. ?Essentially, this means that the DB2 software would be modified to avoid another database crash in the future,? it added.

Questronix is the lead systems integrator for GSIS? database that brought together and made into a whole a mix of sub-systems that were bought from vendors like German firm SAP AG and included software developed and licensed by IBM.

?To date, the IBM Laboratory has yet to provide such a fix that will permanently solve the database crashes,? the complaint said.

In a separate statement obtained by INQUIRER.net, IBM Philippines said it was filing a libel suit against the GSIS, and is also seeking damages of P200 million.

?The GSIS has engaged in a series of unwarranted public attacks on IBM related to the performance of the GSIS Integrated Loans, Membership, Acquired Assets and Accounts Management System (ILMAAAMS). We cannot stand by and allow our company's reputation to be tarnished by blatantly inaccurate and misleading accusations,? the computer giant said in its statement.

?We have initiated legal action to vigorously defend our reputation. This is an action that we do not take lightly. IBM has been in operations in the Philippines for more than 70 years, and has over 7,000 employees. During this time, we have built our business by upholding the highest level of corporate ethics and integrity. Anything less would betray the trust that clients, citizens and governments place in us every day.

Our preference is to work constructively with our clients and our business partners to address any and all issues they may have, in a spirit of mutual cooperation and partnership. Unfortunately, the deliberately libelous actions by the GSIS leave IBM with no other course of action,? IBM Philippine said.

GSIS has alleged that IBM failed to deliver the special build that should solve the constant crashes of its ILMAAAMS, which uses IBM?s DB2 version 9.1 database software.

The ILMAAMS crashed on March 30 and since then has constantly suffered from more crashes.

Elamparo in a previous interview alleged that GSIS relied on ILMAAAMS to handle over 200,000 transactions per day and the system crashes were causing massive delays.

Meanwhile, the case also alleged that Questronix failed to inform the GSIS of the defects or limitations of the DB2 software.

GSIS also alleged that Questronix failed to keep the system in working condition.

?To make things worse, Questronix even has the temerity to publicly blame the plaintiff [GSIS] for the disaster that befell upon it despite defendant?s own admission that the database crash is being caused by the flawed DB2 software which it installed,? the GSIS argued in its case.

Questronix won the bidding for the P80 million ILMAAAMS project in 2006.

Questronix would be the main contractor entering into a joint venture with Team Synergia Inc. and Tera Systems Inc. to implement the project.

Lawyer JJ Disini, whose law office Disini & Disini represents Questronix, said in an interview he was fairly certain that his client was not in breach of any contract.

?This matter about the supposed provision of a defective software is a bit of a stretch,? Disini said. ?The DB2 is being used around the world and GSIS is the only one to report such problems, it is peculiar to [the pension fund].?

Questronix had written letters to the GSIS informing the latter that the crash would not have happened had GSIS properly managed the system by complying with best practices in database management.

The contractor told GSIS that the damage suffered by GSIS members arising from the system?s failure could have been avoided altogether had GSIS made provisions for a disaster recovery site, which is standard practice for mission-critical systems.

Disini said that, in fact, GSIS supplied itself with DB2 because the agency specified that particular software in its terms of reference.

Copyright 2015 INQUIRER.net, Philippine Daily Inquirer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.




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