Mindanao cement firm not likely to resume operations

Unless the economic prospects are brighter, Mindanao Portland Cement Corp. (MPCC) is unlikely to resume its cement manufacturing operations in the near future.

The cement firm hinted it has no immediate plans to reopen its plant until there are clear signs of a sustained economic recovery in the country.

The Iligan based cement firm, disputing a number of stockholders' claim of mismanagement, said the slowdown in the economy which subsequently led to lesser construction activities, has forced it to temporarily stop its cement making activities.

Instead of a total shutout of its operations, MPCC said it continues to generate income by buying cement from various suppliers at lower costs than its manufacturing costs, and then distributing these to its customers.

"The temporary suspension of the operations of MPCC cement manufacturing operations was a business judgment by the management of MPCC. It was made according to the best judgment of the management of MPCC... in order to prevent MPCC from incurring losses," the company's legal counsels told the Securities and Exchange Commission (SEC) in its motion opposing its stockholders' request to the regulatory body to appoint a management committee or receiver to take over company operations.

The MPCC cited the business judgment rule which states that "whether the business of the corporation should be operated at a loss during depression, or closed down at a smaller loss, is a purely business and economic problem, to be determined by the directors of a corporation and not by the court."

They added that it is a well-known rule of law that questions of policy or of management are left solely to the honest decisions of officers and directors of a corporation, and so long as it acts in good faith, its orders are not reviewable by the courts.

MPCC has temporarily suspended the operations of the kiln in its plant for the purpose of minimizing the losses and improving the efficiency of the company. The kiln in MPCC's plant uses bunker oil and is operated below capacity. Thus, it produces cement at a high cost, contributing to major losses to MPCC.

The MPCC said there is no basis for the SEC to create a receiver and the requirements for the appointment of a receiver do not exist.

For one, there is no property or fund which is the subject of the action and which is in danger of being lost. Rather, the case is limited to the validity of the increase of capital stock.