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Thursday, March 28, 2024

Stradcom row: CA rules in favor of Quiambao group

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The Court of Appeals has overturned the order of the Quezon City Regional Trial Court of Quezon City mandating the accounting of the P1 billion payment made by the Land Transportation Office to its information-technology provider Stradcom Corporation.

In a 17-page decision, the CA’s Special Sixth Division through Associate Justice Francisco Acosta granted the petition filed by the group of Cezar Quiambao seeking to set aside the order issued by QC RTC, Branch 93, Presiding Judge Arthur Malabaguio giving the group of Bonifacio Sumbilla the right to inspect Stradcom’s bank accounts, corporate books and other records to account for the P1 billion released to Quiambao’s group.

The Quiambao and Sumbilla groups are fighting for control of Stradcom and are still locked in an interpleader case that was initiated by the government in order to settle Stradcom’s ownership issue.

Interpleader refers to a proceeding to enable a person to compel parties making the same claims against him to litigate the matter between themselves.

In its interpleader case, the government noted that the ownership issue over Stradcom has caused confusion among the officers and personnel of the LTO as they are “at a loss as to who it will recognize as the rightful representative of Stradcom Corporation.”

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In its decision, the appellate court stressed that the Sumbilla’s group has yet to prove it has right over Stradcom.

It said that such order for accounting of the P1-billion would entail the inspection of the corporation’s books and records including the list of all banks, financial institutions, prisons and entities that it transacted with regard the said amount.

According to the appellate court, such right to inspect corporate books and records is given only to a stockholder.

“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,” the appellate court ruled.

Instead, the CA sustained an order denying Sumbilla’s group motion for production of documents, which it claimed were necessary to prove its interest over Stradcom.

The CA noted that the documents being asked by the Sumbilla group to be produced belong to four separate corporations, which can be considered a “blanket inspection” which is not allowed under Rule 27 of the Rules of Court that permits “fishing” for evidence.

But the appellate court stressed that such allowable “fishing expedition” has boundaries and limitations.

“Indeed a motion for production and inspection of documents should not demand a roving inspection of promiscuous mass of documents. The inspection should be limited to those documents designated with sufficient particularity in the motion, such that the adverse party, can easily identify the documents it is required to produce,” the CA ruled.

It also noted that the documents being sought by Sumbilla’s group belong to other corporations, which are not party in the case.

“Verily, it is beyond the ambit of the trial court’s power or jurisdiction to cause the production of documents belonging to and/or in the custody of another person, albeit juridical, who are not party-litigants in the case,” the CA said.

Associate Justices Jose Reyes Jr. and Edwin Sorongon concurred with the ruling.

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