NSC’s realty taxes overstated

The Iligan City government has over-estimated the amount of real estate taxes owed by the National Steel Corp. (NSC), government sources said.

Based on their computations, NSC’s tax backlog should only amount to around P150 million, not P929 million as estimated by the Iligan city government.

The city government’s figure, the sources added, was over-inflated even though this includes interest and penalty charges.

As of February 2003, NSC’s real estate tax obligations have reportedly reached around P755 million, but sources explained that 70 percent of the taxes being claimed goes for the machinery.

Based on a Department of Finance ruling, however, taxes cannot be imposed anymore once the machinery stops operations.

The NSC shut down the operations of its plant and machinery in late 1999 after incurring massive losses and debts which led to a debt payment suspension and rehabilitation program overseen by the Securities and Exchange Commission (SEC).

The sources said in cases when there are discrepancies, the contending parties are allowed to conduct negotiations for a compromise settlement.

The City Council of Iligan last Aug. 3 passed an ordinance instructing the city treasurer to impose and collect real estate taxes amounting to almost P929 million on NSC.

According to the ordinance, failure by NSC to pay its real estate obligations would force the city government to auction off the NSC properties.

The Iligan City council had earlier rejected the request of NSC’s creditor banks to condone the unpaid real estate taxes, pointing out that this issue is delaying the closure of NSC’s sale to the India-based Ispat Group.

However, NSC liquidator Danilo Concepcion has assured that the Iligan City government has no legal right to auction off or sell any of NSC’s properties to pay off the steel firm’s real estate obligation to the city government.

Concepcion clarified that "only the NSC liquidator has the legal capacity to sell any assets or properties of NSC."

He said he had already asked the SEC for a stay order against the implementation of the city ordinance ordering the collection of the real estate taxes from NSC.

He added that "only after the National Government has sold the NSC assets or properties can the City of Iligan exercise its preferential right to get its share from the proceeds of the sale."

Concepcion also pointed out that Iligan’s lien only covers the "land, buildings and mills of NSC and does not extend to any other assets of the steel firm."

The cost of the real estate tax payments has not been included in the selling price and neither the creditor banks nor the Ispat Group want to shoulder the additional payments. However, the Iligan City council claims that it cannot condone NSC’s real estate taxes because at least three other firms located in Iligan would also insist on a condonation of their outstanding real estate taxes.

The Iligan City government estimates that if it condones the real estate taxes of NSC and is also forced to write off the obligations of the three other firms, the city would forego real estate tax revenues of a little over P1 billion.