CA stops release of P3.2 B to LTO contractor

MANILA, Philippines - The Court of Appeals (CA) stopped the Land Bank of the Philippines from releasing P3.2 billion in escrow funds to Land Transportation Office (LTO) contractor Stradcom Corp. after one of the parties fighting for control of the firm filed a petition.

The CA issued the resolution yesterday despite a Supreme Court ruling last June favoring the group of businessman Cezar Quiambao over that of Bonifacio Sumbilla, who filed a petition seeking to stop the release of the funds.

In an eight-page resolution, the CA’s Sixth Division issued a 60-day temporary restraining order (TRO) enjoining the LTO, Land Bank and Quiambao from implementing a ruling of the Quezon City Regional Trial Court (RTC) Branch 90 last August that allowed the release of the funds to Stradcom.

The CA held that allowing the release of the escrow funds would result in “grave injustice and injury” to the petitioner.

“It must be stressed that these funds are due to Stradcom for services it rendered to the LTO for which it must be paid. Thus, inaction on our part to protect the remaining escrowed amount, by allowing the assailed portion of respondent judge’s omnibus order to be relied on by any person or entity to access and use the escrowed funds during the pendency of this case unjustly endangers Stradcom’s opportunity to be paid,” read the CA ruling penned by Associate Justice Marlene Gonzales-Sison.

The CA also noted that despite the order for the LTO to deposit the escrowed money to the court, a huge portion of the amount released “did not redound to the benefit of Stradcom.”

Resolving claims

The CA explained that a TRO is necessary to preserve the status quo and to comply with the resolutions of the SC directing the two warring groups to interplead first before resolving other issues.

“The basic issue in the interpleader before the RTC is to determine who between the groups of Quiambao and Sumbilla rightfully represents Stradcom. However, the status quo will be dissolved prematurely if we were to stand by passively now and allow any party the opportunity to invoke the assailed portion of the RTC’s order and thus gain access to and cause the release of the escrowed funds to Stradcom,” the CA said.

The appellate court also directed Sumbilla to post a P5-million bond to answer for whatever damages Stradcom, as represented by Quiambao, may suffer if it finally decide that the petitioner is not entitled for the relief.

Associate Justices Hakim Abdulwahid and Edwin Sorongon concurred in this ruling.

In his petition, Sumbilla argued that the RTC abandoned its judicial duty to implement the final and executory resolutions of the SC, which affirmed the July 21, 2011 order issued by QC RTC Branch 222 directing the LTO to deposit the funds in escrow to the court.

In his petition, Sumbilla claimed that the Department of Transportation and Communication through Secretary Joseph Emilio Abaya, allegedly acting on the approval of Executive Secretary Paquito Ochoa, convinced LTO chief Virginia Torres to have the Land Bank release P1 billion of the escrowed funds to pay for Stradcom’s liabilities to the Bureau of Internal Revenues amounting to P317 million and other obligations.

Sumbilla said the Land Bank, acting on Torres’ request, released the amount, leaving P3.2 billion still in escrow.