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QC court upholds LTO chief’s decision to withhold Stradcom payments

MANILA, Philippines—The Quezon City Regional Trial Court (RTC) has ruled in favor of Land Transportation Office (LTO) chief Virginia Torres, upholding her decision to withhold money from information technology (IT) firm Stradcom Corp. in light of the dispute over the company’s real ownership.

A statement released by the LTO on Tuesday said RTC Branch 222 Judge Edgar Dalmacio Santos, in an order dated June 21, 2011, directed current Stradcom chair Cezar Quiambao and rival Bonifacio Sumbilla to litigate their several claims between themselves and in the meantime, the court would take possession of the P1.2 billion in cash owed to Stradcom for safekeeping.

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The money, which is being fought over by the two claimant groups, is presently in escrow with Land Bank of the Philippines.

“The defendants’ Stradcom Corpo., as represented by Cezar T. Quiambao, and defendant Stradcom Corp., as represented by Bonifacio Sumbilla, are hereby ordered to interplead with each other and to file their respective answers within 15 days from receipt of the Amended Complaint serving a copy thereof upon each other,” Santos said.

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On February 10, 2011, the Office of the Solicitor General (OSG) filed an interpleader complaint with the court on behalf of LTO after the two groups claimed ownership of Stradcom.

This was after Torres sought the legal advice of government lawyers after she was threatened with lawsuits by one of the warring factions for her continued refusal to pay their dues.

Torres’ refusal to make payments was in defiance of an order by outgoing Department of Transportation and Communications (DoTC) Secretary Jose de Jesus. He wanted the payments made to ensure that Stradcom would not shut down its operations—throwing the LTO back to manual operations.

The dispute, and the subsequent disagreements between Malacañang and the DoTC on how to handle it, has been linked to the resignation of De Jesus, which takes effect on Thursday. The Department of Justice also previously recommended disciplinary action against Torres, which the President has ignored, leading his critics to say that the President has been unduly protective of the LTO chief tagged as his shooting buddy.

The intra-corporate dispute reached its peak in December 2010 when the Sumbilla group attempted a takeover of Stradcom’s offices. The incident, which disrupted LTO operations nationwide, prompted the DoTC and the LTO to take over control of the IT systems and protect the database.

The Quiambao faction, on January 20, demanded more than P662 million from LTO as payment for its rendered services. The Sumbilla group, on the other hand, sent a similar letter on January 27.

Torres, upon the advice of the OSG, took the position that no such payment should be made until the resolution of Stradcom’s ownership. This paved the way for the filing of the interpleader complaint, which Torres had won.

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Judge Santos ruled that indeed the owners of the IT firm should settle among themselves first before seeking any payment from the LTO.

The RTC judge also denied all six arguments raised by Stradcom in its motion to dismiss the complaint for interpleader. The court upheld the “presumption of regularity in the performance of official duty” by the LTO chief.

It was also ruled that Torres and her office had no interest in the amount in question considering her manifestation to “deposit the subject matter to the court and abandon its injunctive relief.”

The court also denied the allegations that the LTO had no authority to sue on behalf of the Republic of the Philippines; that the interpleader complaint failed to state a cause of action; that the court was a wrong venue; that LTO was liable for forum shopping; and that Torres had recognized Quiambao as the owner of the IT firm.

“Assistant Secretary Torres did not categorically recognize Quiambao as the President and CEO in clear convincing terms but merely as a title in a letter. If indeed she recognized him, she should have already ordered the withdrawal of the instant case or a joint motion to dismiss should have been filed by all parties,” Santos said.

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TAGS: Conflicts, DoTC, information technology, Judiciary (system of justice), land transportation, LTO, news, Stradcom, Virginia Torres
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