THE Supreme Court (SC) has ordered the Iligan City government to stop its control and ownership over National Steel Corp.’s plant assets and land.
In an 18-page decision on July 20 and made public on Oct. 21, the SC Third Division said Iligan City went against a Makati regional trial court (RTC) ruling when it took over the firm’s plant assets.
“Considering all the circumstances, the court holds the levy and the tax delinquency sale of the subject plant assets as invalid having been conducted in defiance of the RTC Makati decision which ordered the respondents to clear the petitioner (National Steel) of its real property tax liabilities,” according to the ruling penned by Associate Justice Henri Jean Paul B. Inting.
Plant assets are long-term fixed assets that are used to generate sales for a corporation.
The Makati trial court in 2011 ruled that the sale of the firm’s assets was void since the local government unit did not clear the firm’s tax liabilities after it complied with the tax amnesty agreement.
The Court of Appeals had ruled that the Makati court did not have jurisdiction over the case. The appellate court then modified its ruling and upheld the finality of the trial court’s decision to void the sale of the plant assets.
In 2016, the city government still included National Steel in the list of delinquent real property taxpayers and proceeded to levy its plant assets.
The assets were forfeited in favor of the city government since there were no other bidders for them, which led to National Steel filing its complaints to the Makati court.
National Steel went bankrupt in 2000, prompting the Securities and Exchange Commission to order the firm’s liquidation.
In 2004, the city government provided tax relief to delinquent real property taxpayers, which included National Steel.
National Steel also entered into a tax amnesty agreement with Iligan City on Oct. 13, 2004, where the firm agreed to pay its real property tax liabilities amounting to P177.53 million in eight annual installments of P22.19 million from 2004 until 2012, with 2005 being a grace period.
The firm then sold its plant assets to Global Steelworks International, Inc. through an asset purchase agreement. The deal involved National Steel agreeing to pay and settle its tax liabilities over the plant assets up to Oct.14, 2004. Global Steel agreed to assume the taxes over the plant assets on Oct. 15, 2004.
The city government issued receipts acknowledging payments made by the firm on Dec. 18, 2008, and acknowledged its full compliance with the schedule of payments on Feb. 23, 2009.
The High Court noted that it will not award the plant assets to National Steel since the firm has an existing agreement with Global Steel.
“In as much as the right of the city government of Iligan to possess and own the plant assets proceeded from a void tax delinquency sale, it is commanded to desist from further possessing and exercising acts of ownership over the plant assets,” it said. — John Victor D. Ordoñez