Philippine Supreme Court Resolutions > Year 2011 > August 2011 Resolutions > [G.R. No. 197311 : August 23, 2011] STRADCOM CORPORATION, REPRESENTED BY ITS PRESIDENT CEZAR T. QUIAMBAO, PETITIONER, VERSUS HON. EDGAR DALMACIO-SANTOS, AS PRESIDING JUDGE OF THE RTC-QUEZON CITY, BRANCH 222, REPUBLIC OF THE PHILIPPINES, THROUGH THE LAND TRANSPORTATION OFFICE REPRESENTED BY ASSISTANT SECRETARY VIRGINIA TORRES AND BONIFACIO C. SUMBILLA, REPRESENTING HIMSELF TO BE THE REPRESENTATIVE OF STRADCOM CORPORATION, RESPONDENTS. :

Please take notice that the Court en banc issued a Resolution dated August 23, 2011, which reads as follows:

G.R. No. 197311 � STRADCOM CORPORATION, represented by its President CEZAR T. QUIAMBAO, petitioner, versus HON. EDGAR DALMACIO-SANTOS, as Presiding Judge of the RTC-Quezon City, Branch 222, REPUBLIC OF THE PHILIPPINES, through the LAND TRANSPORTATION OFFICE represented by ASSISTANT SECRETARY VIRGINIA TORRES and BONIFACIO C. SUMBILLA, representing himself to be the representative of Stradcom Corporation, respondents.
   

RESOLUTION 

Before us is a petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure, as amended, seeking to annul the Order dated June 21, 201 1 of the Regional Trial Court (RTC)r Branch 222, of Quezon City in Civil Case No. Q-11-68723, entitled "Republic of the Philippines, through the Land Transportation Office, represented by Assistant Secretary Virginia Torres, versus STRADCOM Corporation and Bonifacio C Sumbilla. "

The facts follow:

On March 26, 1998, the Republic of the Philippines, through the Department of Transportation and Communication (DOTC) entered into the Land Transportation Office Information Technology Project (LTO-IT Project) Build-Own-Operate Agreement (BOO Agreement) with petitioner Stradcom Corporation, represented by its President Cezar T. Quiambao. Under the BOO Agreement, Stradcom shall construct, own, operate and maintain the IT facilities at no cost to the government, while the LTO continues to handle the processing of all transactions. In return, Stradcom shall be entitled to transaction fees from the end-users and/or beneficiaries of the IT-based services which the DOTC and the LTO shall be obligated to collect and pay to Stradcom. The parties together with the Land Bank of the Philippines (LBP) entered into an Escrow Agreement to facilitate the transmittal of payments to Stradcom. Per the Escrow Agreement, it is the LTO Chief's duty to issue a written order to LBP to release and pay Stradcom the said fees. Moreover, pursuant to the BOO Agreement, Stradcom constructed a building inside the LTO main compound in Quezon City, housing the IT facilities which Stradcom exclusively owns and operates. Included in the IT system are the following: (1) Motor Vehicle Registration System; (2) Driver's License System; (3) Law Enforcement and Traffic Adjudication System; (4) Revenue Collection System; and (5) Financial Administrative System. Stradcom averred that for the past years it never encountered any problem with the DOTC and the LTO.

However, since November of 2010 until the present date, the LTO under respondent Assistant Secretary Virginia Torres (Asec. Torres) has not approved any payment due to Stradcom, save on April 15, 2011 but only for the income tax due to it. Things allegedly got worse thereafter.

On December 2, 2010, at around 5:00 a.m., a large group of individuals led by respondent Bonifacio Sumbilla (Sumbilla group) arrived at the LTO Compound and attempted to enter Stradcom's office under a claim that they are the new corporate officers of Stradcom. They were prevented by Stradcom's security guards so the Sumbilla group allegedly retreated to Asec. Torres' office. Stradcom then sought police protection which was accorded by the Quezon City police. However, on December 8, 2010, without any notice to Stradcom, the police force was pulled out from the premises. Subsequently, on December 9, 2010, after the policemen disarmed the security guards of Stradcom, the Sumbilla group, together with armed security guards, entered the Stradcom office. Despite orders from the DOTC to drive the Sumbilla group away from the Stradcom office, Asec. Torres allegedly accompanied the said group inside. Moreover, Asec. Torres allegedly invited DOTC Secretary De Jesus to come to her office and talk to Assistant Solicitor General Renan Ramos (ASG Ramos) who, in turn, vouched to Sec. De Jesus that the Sumbilla group's title to Stradcom was in order. Notwithstanding, Sec. De Jesus ordered the eviction of the said group after a six-hour takeover.

On December 12, 2010, Asec. Torres sought an opinion from the Office of the Solicitor General (OSG), which in its reply dated December 22, 2010 opined that there is an intra-corporate dispute within Stradcom. On the other hand, Stradcom claims that the "intra-corporate dispute" was merely concocted by Asec. Torres and ASG Ramos so that LTO would have an excuse in refusing payment even for obligations due to it prior to the takeover incident.

Thus, in a letter dated January 18, 2011, Stradcom as represented by its President Cezar T. Quiambao (Quiambao) demanded from LTO the payment of the outstanding receivable amounting to P662,345,610.47. Instead of acceding to Stradcom's demand, the LTO, through the OSG, filed a Complaint for Interpleader with the RTC of Quezon City (Interpleader case). The said complaint did not dispute the outstanding obligation due to Stradcom nor did it deny that Stradcom is the rightful payee. The complaint, however, alleged that there is an intra-corporate dispute within Stradcom and that its legitimate representatives should first be determined. Meanwhile, the LTO prayed that it be allowed to manage, supervise, operate and maintain the IT facilities. Initially, the case was raffled off to the RTC, Branch 95, Quezon City. On March 1, 2011, Stradcom filed a Motion to Dismiss, claiming that the Interpleader case was merely simulated by Asec. Torres, ASG Ramos and the Sumbilla group in order to unjustly evade payment. Sensing bias, Stradcom filed a motion to re-raffle and a motion for inhibition which were granted. Thus, on May 12, 2011, the Interpleader case was re-raffled off to the sala of respondent Judge Edgar Dalmacio-Santos (Judge Santos) of RTC, Branch 222, Quezon City. Subsequently, Stradcom filed its Supplemental Motion to Dismiss, showing to the RTC that Asec. Torres already recognized Quiambao as the true representative of Stradcom in her letter dated April 4, 2011.

In its Order dated June 21, 2011, RTC Judge Santos denied Stradcom's motion to dismiss and directed the LTO to deposit to the RTC the subject current amount of LTO's contractual obligations to Stradcom. The dispositive portion of the assailed order reads: 

WHEREFORE, to recapitulate, the ruling of this Court on the Motion to Dismiss, are as follows: 

1. On the ground that the LTO has neither the capacity to sue nor authority to sue on behalf of the Republic of the Philippines is hereby DENIED. When Undersecretary Virginia Torres, representing the Land Transportation Office filed this instant special action for interpleader, she is exercising her proprietary functions incidental to its primarily governmental functions. Any counterclaim that maybe asserted by defendants by claiming that the state waived its immunity, need a full blown trial considering that official acts of the Government, including those performed by governmental agencies are clothed with the presumption of regularity in the performance of official duty;
    
2. On the ground that the complaint fails to state a cause of action for failure to attach or allege its actionable document in the pleading is hereby DENIED for lack of merit. This Court finds that the BOO Agreement is not the actionable documents in this Interpleader case;
    
3. On the ground that venue is improperly laid is hereby DENIED. This case is not an intra-corporate case;
    
4. On the grounds of litis pendentia and forum shopping, the same are hereby DENIED considering that the cause of action in Civil Case No. Q-11-68518 is entirely different and distinct in this case and the plaintiff did not conceal the existence of Civil Case No. Q-11-68518:
    
5. On the ground that the claim or demand set in the pleading has been abandoned or otherwise extinguished is hereby DENIED as the alleged letter dated April 5, 2011 is not a conclusive proof of payment;
    
6. On the ground that the present action is not proper for interpleader inasmuch as the plaintiff has claimed interest in this case is hereby DENIED considering that the manifestation of the plaintiff to deposit the subject matter and to abandon its injunctive relief prove otherwise. 

Likewise, in view of the "Urgent Manifestation and Motion" filed on February 18, 2011, manifesting [of] its withdrawal of the prayer for the issuance of a temporary restraining order and writ of preliminary injunction, this Court hereby orders the plaintiff TO AMEND its complaint by striking out the allegations for the issuance of a temporary restraining order and writ of preliminary injunction and reliefs as prayed under No. 1 and 2, within ten (10) days from receipt of this Order. 

Further, as provided for under Section 2, Rule 62 of the 1997 Rules of Civil Procedure and pursuant to the ruling of the Supreme Court in the case of Eternal Gardens Memorial Park Corp. vs. CA, G.R. No. 124554, December 9, 1997, citing the derivative case G.R. No. 73794, September 19, 1988, and in the interest of justice, the plaintiff is hereby ordered TO DEPOSIT to the Court the subject current amount of its contractual obligations to the STRADCOM Corporation simultaneously with the filing of the Amended Complaint. 

Furthermore, the defendant(s) STRADCOM Corporation as represented by Cezar T. Quiambao and defendant STRADCOM Corporation as represented by Bonifacio C. Sumbilla are hereby ordered TO INTERPLEAD with each other and TO FILE their respective Answers within fifteen (15) days from receipt of the Amended Complaint serving a copy thereof upon each other. 

SO ORDERED.

Aggrieved, petitioner filed the instant petition for certiorari. Petitioner argues that Judge Santos committed grave abuse of discretion when he:

1. Directed the LTO to deposit to the RTC the subject current amount of LTO's contractual obligations to Stradcom, which has the effect of enjoining the operations of the LTO IT project in violation of R.A. No. 8975 which prohibits lower courts from issuing TROs and Injunctions against national government projects;
    
2. With manifest bias and partiality, motu proprio ordered the LTO to amend its own complaint and to remove all allegations and grounds for the issuance of injunctive relief, which defects could have been constituted as grounds for the dismissal of the Interpleader case; and
    
3. Arbitrarily disregarded various grounds that would have warranted the dismissal of the Interpleader case such as the LTO's lack of capacity and authority to sue; failure to attach the BOO Agreement to the complaint as an actionable document; improperly laid venue; the LTO's subsequent recognition of Quiambao's authority; and LTO's liability for forum shopping. 

Aware of the doctrine of the hierarchy of courts, Stradcom justifies its direct resort before this Court on account of special and compelling reasons of public interest. Stradcom claims that if it would be forced to shut down due to lack of funds, serious problems would arise, affecting not only Stradcom and the government but the general public as well.

Petitioner alleges that it has not been paid by the LTO since December of 2010 and the continuation of respondents' actions would work injustice and grave and irreparable injury on its part, the government and the general public. Thus, Stradcom submits that the status quo ante in this case, prevailing prior to December 2, 2010 when the Sumbilla group tried to takeover Stradcom, where all the parties respected the BOO Agreement and the Escrow Agreement, should be restored. Furthermore, Stradcom prays that a TRO be issued enjoining (i) Judge Santos from implementing its assailed Order and from conducting further proceedings in the Interpleader case; and (ii) the Republic through the LTO from complying with the RTC Order. Stradcom also prays that the LTO be directed to comply with the procedure outlined in the Escrow Agreement.

In its Opposition Ad Cautelam, respondent Republic through the OSG counters that Stradcom failed to file a motion for reconsideration of the RTC Order which is the plain, speedy and adequate remedy available in the ordinary course of law, rendering the present recourse legally unavailing; that Stradcom did not follow the Hierarchy of Courts as its petition for certiorari  should have been filed before the Court of Appeals; that Stradcom failed to justify its direct resort before this Court; and that this Court is not a trier of facts. The OSG submits that factual issues are involved in this case which are the proper subjects of the Interpleader case before the RTC. The OSG manifests that the Republic is in a quandary as to which group should be recognized as having legal control over Stradcom. The OSG insists that an intra-corporate dispute still exists in Stradcom. The question as to who between the Quiambao group and the Sumbilla group is the true representative of Stradcom, must first be resolved. The OSG opines that what Stradcom really seeks is payment; hence, Stardcom is asking not for a TRO but a preliminary mandatory injunction.

In its Verified Opposition with Motion to Dismiss, the Sumbilla group asserts that Quiambao's authority to represent Stradcom is in controversy. Hence, he has no personality or legal standing to file this petition or ask for a TRO. Quiambao's prayer for a TRO is actually a disguised prayer for the issuance of a preliminary mandatory injunction and that he failed to show that he will suffer grave and irreparable injury if no injunction is issued.

On July 12, 2011, the OSG likewise filed an Opposition ad Cautelam while petitioner filed a Reply with Opposition to respondent Sumbilla's Verified Opposition with Motion to Dismiss and a Reply to the OSG?s Opposition ad Cautelam. On August 16, 2011, the OSG filed a Rejoinder to petitioner's Reply.

The Court has carefully studied the parties' submissions and find that it is clear that what the Republic through the OSG filed before the RTC is an Interpleader case. However, it is likewise clear that both the Quiambao group and the Sumbilla group lay claim as valid representatives of Stradcom. Necessarily, there is a need to resolve the underlying intra-corporate dispute between the two claimants. As the branch of the RTC to which the case was raffled off is not a designated special commercial court, this Court deems it more appropriate that the interpleader case be raffled off to any of the designated special commercial courts in Quezon City RTC for resolution of the underlying intra-corporate dispute.

WHEREFORE, Judge Edgar Dalmacio Santos, Presiding Judge of the Regional Trial Court of Quezon City, Branch 222, is hereby DIRECTED to forward with dispatch the entire records of Civil Case No. Q-11-68723 to the Office of the Executive Judge of the Regional Trial Court of Quezon City for a re-raffle to a designated Special Commercial Court therein."

Sereno, J., on leave.

Very truly yours,

(Sgd.) ENRIQUETA E. VIDAL
  Clerk of Court