CA reverses QC court’s grant to open Stradcom books

The Court of Appeals has reversed a Quezon City court's order granting a motion that would force Stradcom Corp., the government’s former information technology provider, to open its books for scrutiny.

In a 17-page decision penned by Associate Justice Francisco Acosta, the CA said the local court erred when it granted the plea filed by the group of Bonifacio Sumbilla to inspect Stradcom’s bank accounts, corporate books, and records.

“The Sumbilla Group has not proven its claimed interest over Stradcom. As such we cannot just give license to the said group to sail in such fishing expedition allowed by the Rules without giving us an iota of evidence that, indeed, they also have legitimate interests over Stradcom,” said appellate court said.

Sumbilla's group had wanted Stradcom under the group of Cezar Quiambao to reveal a listing of the banks, financial institutions, and persons with whom it transacted using the P1 billion payment it received from the Land Transportation Office (LTO).

The group also said the names and details of the bank accounts that were opened to hold the LTO payment and how they were spent should also be disclosed.
 
The P1 billion, which was released to Stradcom in January 2013, was in payment of the government's obligations for the services rendered by the IT firm.

The CA said it wondered why the Sumbilla group had to resort to filing a motion for production of documents when Section 74 of the Corporation Code explicitly gives any director, trustee, stockholder, or member of the corporation the right to inspect records of transactions and minutes of the meetings.

“This court is thus baffled by the fact that the Sumbilla Group is claiming interests and even control over the subject corporation and yet cannot present a precursor to prove such claims,” read the CA ruling.

The Quiambao and Sumbilla groups are fighting for control over Stradcom through an interpleader case filed by the government to settle the ownership row.

Stradcom, under a Build-Own-Operate agreement, used to be the firm tasked to provide IT services for the LTO at no cost to the government.

Despite setting aside the QC court’s grant of accounting, the CA still upheld the trial court’s decision to deny the petitioner's motion to produce documents, which the group insisted was necessary to prove its standing in an interpleader case on the ownership of Stradcom.

“It is important to note that the documents being asked by the Sumbilla group to be produced belong to and/or are in the custody of four separate corporations,” said the CA, adding these four firms are not parties in the case.

“We are one with the court a quo in holding that it is apparent that the Sumbilla group’s motion falls under the blanket inspection,” it said.

The CA added that inspection should only be limited to those documents designated with sufficient particularity in the motion, which would allow the adverse party to easily identify the documents it is required to produce. —KBK, GMA News