SEC orders Iligan City not to sell NSC assets

The Securities and Exchange Commission (SEC) has issued an order preventing the Iligan City government from selling any asset of National Steel Corp. (NSC) to pay off the steel firm’s real estate obligations and instead directed the city council to file its claims directly with NSC’s liquidator.

The order was in response to NSC liquidator Danilo Concepcion’s request for SEC to issue a stay order against the implementation of the city ordinance ordering the collection of P929 million in real estate taxes from NSC by directly proceeding against the steel firm’s assets.

In its order, the SEC said since NSC is now under liquidation, "no claimant of the petitioner, including the government, may pursue the remedy for collection or enforce any lien, independent of or outside the liquidation proceedings before this Commission."

Citing Section 6-10 of its Rules on Corporate Recovery, the SEC said every disposition of any property for the purpose of liquidating it shall be with prior approval of the Commission.

The SEC pointed out that only the liquidator may dispose NSC’s properties and apply the proceeds thereof for payment of all claims in accordance with the approved liquidation plan.

"Moreover, the assets of petitioner are deemed under custodia legis in the hands of the liquidator and is exempt from any order of garnishment, levy, attachment or execution. The proper and orderly procedure is for the City Government to file its claims with the liquidator so that these can be properly settled in accordance with the approved liquidation plan," the SEC said in its order.

At the same time, the SEC has directed the Bureau of Internal Revenues to lift the warrant of garnishment it had issued against the assets of NSC to pay for P3.98 million in tax liabilities to the government.

Concepcion said "only after the National Government has sold NSC’s assets or properties can the City of Iligan exercise its preferential right to get its share from the proceeds of the sale."

He also pointed out that Iligan 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.