RTC issues TRO vs SteelCorp, three other government agencies

The Makati Regional Trial Court Branch 32 has issued a temporary restraining order (TRO) against Steel Corp of the Philippines (SteelCorp), the Department of Trade and Industry, the Board of Investments and the Bureau of Customs preventing them from implementing Executive Order 237 which allows the importation of hot rolled steel at zero duty.

The TRO was requested by the Filipino Galvanizers Institute (FGI), Puyat Steel Corp, Sonic Steel Industries, Inc. and Tower Steel Corp who are all questioning the classification of hot rolled steel as a raw material as defined in Republic Act 7103 and whose tariff was subsequently reduced to zero under Executive Order 237.

R.A. 7103 is also known as the Iron and Steel Industry Act. It allows a review of tariff rates on imported raw materials not indigenously sourced or are not available in sufficient amounts or at the required grade or quality such as iron ore, coking coal, scrap and manganese ore.

FGI, Puyat Steel, Sonic Steel and Tower Steel all argue that the intent of RA 7103 was to encourage the private sector to invest in the building of blast furnaces which is the missing link in an integrated industrial Philippine steel industry.

Furthermore, they argued, RA 7103 defines hot rolled steel as a finished product.

President Estrada, who issued EO 237, the petitioners argued, "exceeded his authority."

They insist that what was subject to incentives was the importation of raw materials such as iron ore, coke, limestone, fluorspar, dolomite and silica.

Salvio Perez, president of FGI said that the issuance of the TRO would temporarily place their group on an even playing field with SteelCorp.

EO 237 had given SteelCorp an undue advantage over FGI members because SteelCorp could import hot rolled steel at zero duty and manufacture cold rolled steel, while the rest of the galvanizers have to pay a three percent duty on cold rolled coil.

The Galvanizers are now hoping that the Court will also grant them a Writ of Preliminary Injunction.

FGI’s law firm–Roque & Butuyan Law Offices– had previously written BOI managing head Elmer C. Hernandez questioning, on behalf of their client, the FGI, the validity of the Certificate of Eligibility of SteelCorp for incentives that grant zero tariff on their hot rolled coils (HRC) importations.

According to the FGI, the grant of zero duty for the importation of HRC contravenes the Iron and Steel Industry Act which mandates the grant of tariff incentives only to raw materials and not to processed metals like HRC.

The Galvanizers’ Group argues that even if the COE is valid, it must still be canceled because of SteelCorp’s failure to comply with the conditions for eligibility for incentives.