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THE Court of Appeals has set aside the order of a lower court which
paved the way for the creation of a management committee (Mancom)
that would take over the management and operations of the
country’s largest manufacturer of steel products.
In a 16-page decision penned by Justice
Apolinario Bruselas Jr., the appellate court’s Special 10th
Division said “that the requirements of notice and hearing
prescribed in Section 4, Rule 9 of the Interim Rules of Procedure
Governing Intra-Corporate Controversies should be fully complied
with before a Mancom can be created, even if such an issue merely
crops up in the course of a corporate rehabilitation proceeding.”
The Mancom was an offshoot of the involuntary
corporate rehabilitation filed on September 2006 by Banco De Oro-Equitable
PCI Bank, Inc., one of the creditors of the Steel Corporation of the
Philippines.
It was Judge Ma. Cecilia Austria of the Regional
Trial Court of Batangas, Branch 2, who mandated the immediate
creation of the Mancom to take over the management and operations of
Steel Corp.
In setting aside Austria’s ruling, the
appellate court further stated that “this rule may not be taken
lightly for it is rooted in the Constitutional precept that ‘no
man may be deprived of life, liberty or property without due process
of law.’”
The appellate court expressed surprised on
Austria’s decision, saying that “we are amazed at how the
respondent judge was able to arrive at her finding that there was
danger of dissipation of [the firm’s] assets and other properties
of the petitioner, yet not imminent to warrant the creation of a
Mancom, in the absence of a full-blown hearing and considering that
the allegations in the urgent motion to appoint a Mancom were
disputed by the petitioner in its oppostion thereto.”
“Her acts of ordering the creation of a Mancom
without elementary due process are indicative of a grave abuse of
discretion and are characteristic of arbitrariness, whim and
caprice,” the appellate court added.
The decision thus permanently enjoined
respondent judge and Banco de Oro from further pursuing the
formation of a Mancom, and that the matter may be tackled only
pursuant to the requirements of due process.
The rehabilitation of Steel Corp. became
controversial after its officials accused Banco de Oro of conspiring
with Austria in taking over the firm’s ownership and management
under the guise of corporate rehabilitation.
The case has given rise to a congressional probe
initiated by Rep. Carlos Padilla of Nueva Vizcaya on the alleged
judicial abuse and manipulation by Austria of the Interim Rules on
Corporate Rehabilitation, and several criminal and administrative
complaints against the judge.
-- William B. Depasupil
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