CA allows Pasay court to try GSIS case vs IBM

Business Mirror

Posted at 11/02/2010

MANILA, Philippines - The Court of Appeals (CA) has upheld its earlier decision giving the Regional Trial Court in Pasay City the go-signal to proceed with the trial of the P100-million damage suit filed by the Government Service Insurance System (GSIS) against its former computer database provider, IBM-Philippines Inc.

In a two-page resolution written by Associate Justice Estela Perlas-Bernabe, the CA’s Third Division denied IBM’s motion for reconsideration of its July 16, 2010 ruling which denied the latter’s petition to dismiss the damage suit filed by GSIS against it and its partner Questronix Corp. over the alleged “defective” database management software, called DB2.

GSIS said its database crashed several times in a span of two months in 2009 and paralyzed about 90-percent of the state-pension fund’s operations owing to IBM’s “defective software.”

The problem mainly affected the GSIS’ processing loans and claims as well as the updating of members’ records.

In denying IBM’s motion, the appellate court stressed that its petition raises factual issues which it has no authority to scrutinize since its power is limited to the issue of jurisdiction and essentially, in determining whether or not GSIS had acted without or in excess of its jurisdiction or with grave abuse of discretion.

“Having such limited power, therefore, the court is without authority to address the issue of whether the complaint a quo should be dismissed outright on the grounds cited by petitioner,” the CA ruled.

In its motion for reconsideration, IBM has sought the dismissal of the complaint filed by the GSIS instead of remanding the same to the trial court for purposes of preliminary hearing.

IBM insisted that the trial court has no jurisdiction to hear the complaint.

The GSIS pushed through with the filing of the complaint after IBM and Questronix failed to fulfil their promise to fix the problem by modifying the DB2 software to avoid another crash.

However, the GSIS said the problem remained unresolved up to the time of the filing of the complaint.

In its complaint, the state-pension fund accused IBM of negligence for failing to exercise a certain standard of care in the production of the software.

It stressed that the computer company should have conducted adequate tests on the software to “ensure that potential bugs or limitations are promptly ascertained.”

IBM earlier threatened to seek P200-million in damages from GSIS for maligning the company’s reputation through “a series of unwarranted public attacks” against the company.