SEC can’t order NSC liquidation — Hottick

The Malaysian majority-shareholder of the cash-strapped National Steel Corp. has asked the Securities and Exchange Commission (SEC) to nullify its order for the liquidation of the company, saying the SEC has no authority to issue such an order.

Hottick Investment Ltd., which owns over 82 percent of the biggest steel firm in the Philippines, said the authority to dissolve and liquidate a corporation has always been exercised by the regional trial courts.

"Under the Corporation Code, the jurisdiction of the Securities and Exchange Commission to order involuntary dissolution is limited only to the grounds provided by existing laws, rules, and regulations," said lawyer Arturo de Castro, counsel for the Malaysian firm.

De Castro said the agency can only order the liquidation of any corporation if it has been proven, among other things, to be: inactive for at least five years, guilty of committing illegal acts or illegally organized.

He pointed out that under the Insolvency Law, SEC’s Oct. 3 order to liquidate the steel firm is "tantamount to involuntary proceedings," adding that the agency’s jurisdiction has been given to the court under the new Securities Regulation Code.

"The hearing panel has no jurisdiction to proceed to dissolution and liquidation after ordering the termination of the suspension of payments and rehabilitation proceedings because NSC is bankrupt," De Castro said.

De Castro maintained that SEC’s jurisdiction only involves "suspension of payments/rehabilitation cases filed as of June 30, 2000 until finally disposed of upon the termination of the proceedings under Section 21 of the Rules of Procedure on Corporate Recovery and Section 11 of the Insolvency Law."

"The hearing panel acted with grave abuse of discretion tantamount to lack and excess of jurisdiction and gross violation of the rights of the herein movant (Hottick) and other interested parties to the process of law," he added.

De Castro pointed out that SEC trampled on the rights of the steel firm’s creditors and its employees who, threatened with unemployment, have vehemently opposed the liquidation of the beleaguered steel firm.