GSIS, IBM sue each other over 'defective' software


Posted at Jun 03 2009 08:22 PM | Updated as of Jun 04 2009 09:37 AM

MANILA - The ongoing dispute between the Government Service Insurance System (GSIS) and IBM Philippines over an alleged defective software has reached the courts, with the two slapping charges against each other.

GSIS is suing IBM and its partner, Questronix Corp., for tort and breach of contract after allegedly providing the state pension fund with a defective software that paralyzed its operations. GSIS is seeking P100 million in damages.

In a 19-page complaint filed before the Pasay Regional Trial Court, GSIS chief legal counsel Estrella Elamparo said the damages suffered by GSIS were estimated at P5 billion, given the man-hours lost and the amount of resources spent for data recovery activities when its Integrated Loans, Membership, Acquired Assets and Accounts Management System (ILMAAAMS) crashed.

"Given the stoppage of certain transactions, GSIS likewise failed to realize substantial income from its investments," Elamparo stated in the complaint.

She noted GSIS was constrained to claim actual and compensatory damages of at least P80 million.

IBM, on the other hand, is filing a libel suit against GSIS for employing "a series of unwarranted public attacks." The company wants P200 million in damages.

"We cannot stand by and allow our company's reputation to be tarnished by blatantly inaccurate and misleading accusations (made by GSIS)," IBM said in a statement.

"We have initiated legal action to vigorously defend our reputation. Our preference is to work constructively with our clients and our business partners to address any and all issues they may have, in a spirit of mutual cooperation and partnership. Unfortunately, the deliberately libellous actions by the GSIS leave IBM with no other course of action," it added.

The clash between the two stemmed from the repeated collapse of GSIS' ILMAAMS, which uses IBM's DB2 database software.

GSIS said multi-million daily transactions were dependent on this system, whose intermittent crashes have been "catastrophic."

But IBM earlier made it clear it has no contractual obligation to GSIS because it is merely an original equipment manufacturer (OEM) to systems integrator Questronix, which leads the whole ILMAAMS project with GSIS.

As an OEM, IBM said it provided the DB2 software to Questronix, which customized it before distributing to customers.

IBM also said that it played no role in the supply, installation and support of GSIS' system.

Instead, the IT firm blamed the pension fund for failing "to follow industry norms and best practices in the handling of its data."

"IBM DB2 has thousands of clients globally, and to date, GSIS is the only organization to report these types of issues," it said.