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SAYING
that it failed to observe due process and fair play, the
Court of Appeals (CA) has permanently barred the
Regional Trial Court (RTC) in Batangas from constituting
a Management Committee (Mancom) that will supposedly
supervise the takeover and operations of Steel Corp. of
the Philippines (SCP).
In a
16–page decision penned by Associate Justice Apolinario
Bruselas Jr., the CA overturned a ruling by Ma. Cecilia
I. Austria of the Regional Trial Court in Batangas-Branch
2, mandating the putting up of a Mancom for SCP.
The
Mancom was an offshoot of the involuntary corporate
rehabilitation filed last September 2006 by SCP’s
creditors led by Equitable PCI Bank (EPCIB).
The
appellate court stressed that “the requirements of
notice and hearing prescribed in Section 4, Rule 9 of
the Interim Rules of Procedure Governing Intra-Corporate
Controversies (IRPGICC) 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.
“Wherefore, in the light of the for going, the instant
petition is granted, the assailed acts of the respondent
judge are vacated and set aside for having been carried
out in excess of jurisdiction. By this decision, the
respondents are permanently enjoined from further
pursuing the formation of a Mancom in violation of the
IRPGICC and that the matter may be pursued only pursuant
to the requirements of due process as herein set forth,”
the CA held.
The CA
said Judge
Austria’s
action is “indicative of a grave abuse of discretion and
are characteristic of arbitrariness, whim and caprice.”
The
appellate court did not give credence to Judge Austria’s
position that a full-blown hearing is not required
before a Mancom can be created under Presidential Decree
902-A, or the Securities and Exchange Reorganization
Act.
EPCIB,
on the other hand, maintained that the petitioner was
not denied due process, and was given ample opportunity
to be heard.
The bank
added that no grave abuse of authority can be ascribed
to Judge Austria when she refused to allow SCP to
examine material witnesses since, under Section 1 Rule 3
of the Interim Rules of Procedure on Corporate
Rehabilitation, the court may decide on matters on the
basis of affidavits and other documentary evidence and
may conduct clarificatory hearings whenever necessary,
in line with the summary and nonadversarial nature of a
rehabilitation proceeding.
The CA,
however, stressed that Section 4, Rule 9 should 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.”
“We are
amazed at how the respondent judge was able to arrive at
her finding that there was danger of dissipation of
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 opposition
thereto,” the CA added.
On March
22, the CA issued a temporary restraining order to stop
the Batangas RTC from implementing its order allowing
SCP creditors to acquire ownership and management
control of the latter.
In a
three-page resolution, the CA’s Special 10th Division
stopped Austria, the EPCIB and court-appointed receiver
lawyer Santiago Gabionza, from constituting a management
committee that will supervise the operations of Steel
Corp.
In its
petition before the CA, the SCP assailed the
rehabilitation plan approved by Austria as it allows its
bank creditors, including Equitable PCI Bank, to acquire
ownership of the company through a mandatory
debt-to-equity conversion and create a management
committee to replace its board of directors. |
