While browsing the web awhile ago, I stumbled to this news that Steel Corporation of the Philippines, the country's only remaining fully integrated steel plant, was forcibly brought to corporate rehabilitation in 2006 by Banco de Oro upon orders by the court. So, this is now the reason why the Philippine steel industry is now practically dead and much of the country's steel supply are now smuggled and unrated Chinese steel.
I think this is bad for our country, especially now that there are lots of China-made steel proliferating in the market. Though these are low cost, the quality is sub-par and will just means higher spending in the long run.
Steel Corp is a 100% Filipino–owned corporation engaged in the manufacture and production of cold-rolled coils (CRC) and high quality steel sheets. It owns the most modern and biggest integrated flat steel mill in the country today, built in 1998 and located in Balayan, Batangas.
The action for a corporate rehabilitation against SCP came despite the pendency of several appeals at the Court of Appeals and the Supreme Court. For some strange reasons, the rehab court has all of a sudden, issued an order on 19 September 2012 converting the rehabilitation proceedings into one of liquidation based on the outdated, erroneous, and speculative report of the rehab receiver.
This action of the rehab court being presided over by Judge Ruben Galvez of the Batangas Regional Trial Court's Fourth Judicial Region, Branch 3 was in utter disregard of judicial courtesy and of SCP's ’s fundamental right to due process.
The country's last remaining fully integrated steel plant and it's only defense against the invasion of cheap but substandard Chinese steel products is now in danger of a complete meltdown because of an overzealous judge who is on a mad rush to see it dissolved instead of being rescued from its financial woes.
The local steel industry is already in pain because while the Philippines is so rich with high grade iron ores and other minerals needed the production of steel, many local steel plants have shut down especially during the onslaught of the Asian Financial Crisis in 1997.
In its 30-page complaint made through SCP legal counsel and Vice-President for Legal, Nonnatus Chua, the SCP accused Galvez of of gross ignorance of the law an procedure and/or knowingly rendering an unjust judgment and gross incompetence; blatant disregard and disrespect of the jurisdictions of the Court of Appeals and the Supreme Court; gross ignorance of the law and procedure and of tolerating and aiding the enforcement of an unlawful order.
Despite initial successes of its operation, churning out high-quality and locally prouduced steel products and providing employment for thousands of Filipinos, SCP failed to evade the Asian financial firestorm resulted in foreign exchange losses of some PhP1.3 billion.
Faced with financial woes, SCP sought negotiations for debt restructuring plan with its creditors, among them, Banco De Oro Unibank, (“BDO”), formerly Equitable PCI Bank, Inc, which is owned by Shoemart's Henry Sy.
However, BDO seems to be more interested in taking over the SCP rather than helping the steel company to survive its financial problems and allow its rehabilitation. On 11 September 2006 BDO suddenly filed with the Batangas City Regional Trial Court a creditor-initiated petition to place SCP under corporate rehabilitation which, according to SCP was actually a scheme by the bank in its bid to take full possession of the company at a bargain. In its complaint seeking disciplinary actions against Valdez, the SCP claimed that the judge simply went along with BDO's scheme that despite the pendency of several appeals at the Court of Appeals and the Supreme Court, the judge has all of a sudden, issued an order on 19 September 2012 converting the rehabilitation proceedings into one of liquidation based on the outdated, erroneous, and speculative report of the court-appointed rehab receiver identified as Atty. Norma Singson-De Leon .
It claimed that it was De Leon who rendered a Receiver’s Report III dated 11 June 2012, received by the RTC on 19 June 2012, recommending the termination of the instant rehabilitation proceedings and, worse, by her own unilateral judgment, the application of Republic Act No. 10142, otherwise known as the Financial Rehabilitation and Insolvency Act (FRIA) of 2010, thus, recommending the conversion of the case to liquidation proceedings pursuant to said law.
“ In ordering the liquidation of Steel Corp based merely upon the Rehabilitation Receiver’s recommendation, Respondent Galvez hastily and erroneously applied the F.R.I.A. without even the slightest regard to its apparent inapplicability,” the complaints said.
“In relying solely on said recommendation, Respondent Judge Galvez failed to discharge the duty to ascertain the pertinent facts of the case,”it added.
The SCP also decried Galvez who “blatantly disregarded all the appealed cases arising from the rehabilitation case and disregarded and disrespected the respective jurisdictions of the court of appeals and the supreme court.”
“Respondent Judge Galvez, in perfunctorily issuing the liquidation order, pre-empted the Court of Appeals and the Supreme Court, thereby unjustly forfeiting and rendering useless the outcome of the aforementioned appeals and petitions involving no less than the issues of termination and applicability of Art. 1634 of the Civil Code, and other issues bearing on the feasibility of the rehabilitation of Steel Corp,” the complaint noted.
It said that as a rule, "judicial courtesy" should have been sustained by Galvez as here, “there is a strong probability that the issues before the higher court would be rendered moot and moribund, as they were, in fact rendered moot and moribund, as a result of the continuation of the proceedings in the RTC, particularly by the issuance of the liquidation order.”
“Judge Galvez has, thus, likewise violated the Canons of Judicial Ethics when he effectively deprived Steel Corp of the opportunity to the full benefit of the right of review,” it stressed as the complaint noted Galvez's “gross ignorance of the law and procedure,” thereby depriving SCP due process. For failing to conduct a hearing or scrupulous investigation of De Leon's report.
The complaint noted that while Galvez claims that his task is to determine if the rehabilitation of SCP is no longer feasible, he took no effort to afford the company a day in court.
“No evidentiary hearing was called by him prior to the issuance of the liquidation order. He swallowed completely, absolutely and considered as gospel truth the comments, observations, findings and conclusions of the rehabilitation receiver in her Receiver’s Report III,” the complaint noted.
SCP also charged Valdez of tolerating and aiding in the unlawful enforcement of the liquidation order as it claimed that prior to the notice of the issuance of the liquidation order, “on 01 October 2012, at around 5:00 o’clock in the afternoon, beyond office hours and when the Steel Corp office in Balayan, Batangas was already closed, Sheriff Nilo Villalobos, introducing himself as the sheriff of RTC Branch III, with Sheriff Eufemio Alea, apparently taking orders and submitting themselves under the control and supervision of lawyers later on identified as BDO lawyers Stephen Quiambao and Mikee Villa, and a horde of private security personnel, forcibly gained entry at the Balayan, Batangas Plant of Steel Corp.”
“ The Sheriffs of RTC Branch III, in conspiracy with or under the control and supervision of BDO lawyers (who incidentally were tolerated by Sheriffs in all their illegal acts) and abetted by private guards and goons, completely closed down the plant in Balayan, Batangas. Intimidating and threatening the safety of the personnel and employees of Steel Corp, they padlocked and chained the front gate. Employing intimidation and threats, they took over the Steel Corp Balayan plant and controlled the same with their own gang of security guards. They blocked its ingress and egress and disallowed any deliveries within the plant,” the complaint said.
“As a matter of fact, there were Steel Corp employees trapped inside the plant who were illegally detained by the said Sheriffs and their cohorts for a number of hours before finally deciding to release them,” it added.
photo from romania-insider.com