The Truth Behind the Liquidation Order for Steel Corporation of the Philippines

An estimated 300 employees of Steel Corporation of the Philippines (SCP) are afraid of losing their jobs following the order of Batangas Regional Trial Court Branch-3 to submit the company for “liquidation proceedings.”

These employees are now furious because they believe that the rehab court’s order was a clear violation of the existing Labor Code of the Philippines, thus, they are now starting to get the attention of those who were involved in the issue to resolve the case, once and for all.

Employees of SCP insisted that the rehab court went against the ruling of the Court of Appeals, as well as, of the Supreme Court, where there are still pending appeals on the said courts. Over 50 SCP employees recently rallied towards the Batangas City Hall of Justice and expressed their worries of losing their jobs, especially that the Christmas season is fast approaching, just because of the alleged lack of knowledge of RTC Branch-3 Judge Ruben Galvez with regards to the true state of the company.

“Magkano ang perang involved Judge?!” (How much money is involved Judge?!) , this is what the angry mob tried to voice out in front of Batangas City Hall while the case was still being discussed of whether to proceed on the liquidation process or not.

SCP’s lawyers had already submitted a “Motion to Intervene with Motion to Suspend Execution of the Order of Liquidation.” Atty. Herman Nicdao argued that if the liquidation order will push through, more than 300 employees will no longer receive their salary, therefore, it is important that Atty. Galvez resolve this issue even just for the benefit of SCP employees’ families.

In addition, Atty. Nicdao questioned BDO’s statement that “if the liquidation proceedings were carried out, they (BDO) will take care of the financial aspect of the affected workers”. Nicdao asked what will the assurance that BDO can give, particularly on the continuous employment of the workers but not talking about the separation pay of the workers. He reiterated that if the liquidation proceedings will be realized, the Court will violate the rule of law wherein an employee should be given a 30-day prior notice before he can be terminated from his work. Because it was already mentioned that SCP is still fully operational, each affected employee is entitled to this right.

However, Nicdao said that until now, the SCP employees were still not yet informed of the main reason/s why the SCP was issued to stop its operations. On the other hand, while this issue is still under the process of argument, lawyers of BDO haven’t issued a final decision yet on whether to hire the affected workers should the liquidation process be materialized.

Atty. Ferdinand Topacio, one of the lawyers of SCP, said that it’s a basic knowledge based on the corporation code that once a company will undergo liquidation proceedings, it requires a concrete “baseline” of why the company has loaned that certain amount of money from the creditors. Since, the baseline has not been accurately established, according to Topacio, “there are several entities whose interests also have to be considered by the court… There are the labor force, the unsecured creditors, and the stockholders.”

Furthermore, Topacio explained that BDO is not the only creditor involved here, in fact, other creditors agreed to defer the liquidation proceedings so that loans to individual creditors will be determined in the first place. According to him, “since the properties are in custodialegis anyway, election of a liquidator is not yet necessary.”

It was earlier reported that the issue started when SCP loaned for about P1.3-B to different creditors and one of these creditors is the Banco De Oro (BDO), which is owned by business tycoon Henry Sy of SM (Shoemart). Later, when SCP was having difficulty of paying the loan, SCP claimed that BDO took advantage of the situation and filed a petition in court for the SCP to undergo corporate rehabilitation, which later end up into liquidation proceedings. The petition filed by BDO was favored by Judge Galvez. When this happens, SCP knows that the company will be controlled by BDO without much effort.

The court-appointed receiver, Atty. Norma Singson De Leon, issued a report stating that SCP is no longer operational and instead was “maintained” and “padlocked. This report gave Judge Galvez a “go signal” to issue a liquidation order.

This report was strongly denied by SCP Employees Union President Rodrigo Rodriguez as he insisted that the company still 100% “fully-operational” and that the operations never stopped. He added that De Leon was maybe referring to the cessation of the operation of one of the SCP’s line, which seldom happens. He added that even though one of the line operations was stopped, employees continued to work because those who were assigned on the closed section of SCP were transferred to other departments.

Because of this issue, SCP requested for the inhibition of Atty. De Leon in the next hearing regarding the issue.