DOTC to sue Stradcom to recover LTO's P2-B losses

(Updated 12:35 a.m., Oct. 11) Transportation and Communications Secretary Mar Roxas said the Department of Transportation and Communications (DOTC) will sue information technology (IT) service provider Stradcom Corp. for the recovery of P2 billion in losses allegedly incurred by the Land Transportation Office (LTO). During Monday's Senate finance committee hearing on the proposed 2012 DOTC budget, Roxas said their legal team is preparing the case against Stradcom, which was tasked under a build-own-operate agreement to provide IT services to the LTO at no cost to the government. LTO chief Virgina Torres claimed that the LTO lost around P2 billion in "interconnectivity fees" from 2007 to 2011, paid in favor of the service provider. Roxas said, “The department's position is that we will recoup all unauthorized exploitation of this database which is owned by the government. We will file the appropriate charges for (the) restitution of these amounts." Torres’ well-publicized conflict with Stradcom had her go on a two-month leave in the middle of the year after the Department of Justice (DOJ) recommended her dismissal last March for alleged gross negligence and complicity in the disruption of LTO operations for nearly six hours. But upon returning to work, she vowed not to resign from her post after President Benigno Aquino III himself took up the cudgels for her. “The DOTC is already making the final review of the contract with Secretary Mar," she said. Roxas said he cannot yet reveal other details about the case and its merits. “Without revealing in too open a session the legal strategy and legal tactics, we would be happy to reveal to your honor the legal position of the department in private or executive session," he told Senator Panfilo Lacson, who had posed questions about Stradcom during the hearing. Lacson said he understood the position of Roxas. Stradcom welcomes probe In a statement sent to reporters Monday, Stradcom spokesperson Margaux Salcedo said they were shocked to hear that the DOTC will sue them for unauthorized exploitation of the database. Still, Salcedo said they welcome any investigation of the case because it was the DOTC that asked Stradcom to provide interconnectivity services with other government agencies. “Stradcom cannot be accused of ‘unauthorized exploitation of the database’ when the authorization came from the DOTC and LTO themselves," she said. Salcedo said that Stradcom had even proposed an income-sharing scheme with the LTO wherein the government would get a revenue share of 20 percent. “Stradcom has never wanted to deprive the government of any income. In fact, as early as September 2010, Stradcom had already issued (the) proposal to the DOTC addressed to then-DOTC Sec. Ping de Jesus," she said. In the same statement, Stradcom president Cezar Quiambao added that Stradcom’s interconnectivity system had increased the incomes of agencies using it and the income of the national government through the taxes imposed. “In the issuance of fake insurance policies alone, Stradcom’s interconnectivity facility has ensured the authenticity of over P3 billion annually in insurance premiums for which government would have otherwise lost tax revenues due to unscrupulous practices of fake insurance agents. Stradcom also effectively has aided directly in protecting the public from fake insurance agents who leave innocent civilians hanging when they make their claims," he said. Aside from this, he said Stradcom assures the government P77.8M in annual VAT revenues from emission testing centers; P5.908 billion in taxes and insurance policy premiums from 2007 to 2010; P4.4 million annually in franchise payments to the LTFRB; and P60 million annually from the settlement of penalties for confiscated drivers' licenses. Last Aug. 9, Stradcom succeeded in convincing the Supreme Court en banc to review the Quezon City Regional Trial Court's order favoring Torres’ refusal to pay Stradcom some P1.2 billion in contractual obligations because of an ongoing intra-corporate dispute between factions led by Quiambao on one hand, and businessman Bonifacio Sumbilla on the other. The lower court said the P1.2 billion that LTO withheld from Stradcom should be held in escrow at the state-owned Land Bank of the Philippines until the intra-corporate war between the Quiambao and Sumbilla groups is resolved. — VVP/RSJ/MRT/VS, GMA News