CA stops recovery of foreclosed hotel property

MANILA -- The Court of Appeals (CA) has stopped a Manila court from implementing a series of orders allowing the owners of the Grand Boulevard Hotel to redeem for just over P6-million the foreclosed hotel property forfeited in favor of the Manila City Government, one of its creditors.

In a decision penned by Associate Justice Normandie Pizarro, the CA's Second Division granted the petition filed by Rafaelito Garayblas, secretary to the office of the mayor of Manila, seeking to annul the December 18, 2009, order of Judge William Simon Peralta of the Manila Regional Trial Court branch 50, which found the tender proffered by Silahis International Hotel Inc. (SIHI) to be proper.

The Appellate Court likewise nullified the RTC's issuance on September 3, 2010, of a writ of execution pending appeal, and the order dated November 15, 2010, denying petitioner City Government’s motion for reconsideration.

The CA said that in granting SIHI's motion for execution pending an appeal, the RTC not only acted with grave abuse of discretion, but worse, it acted without jurisdiction in taking cognizance of SIHI's motion, since the appeal was filed only on July 9, 2010, or 30 days from receipt of notice denying petitioner's motion for reconsideration.

Under Section 9, Rule 41 of the Revised Rules of Court, a party's motion for execution pending appeal must be filed within 15 days from notice of decision.

"Based on the above, it is abundantly clear that a court's jurisdiction to take cognizance of a motion for execution pending appeal is subject to the conditions that it still has jurisdiction over the case and still has possession over the records. This is not the situation at bench," the CA ruled.

The Appellate Court further said SIHI's motion did not contain any good reason to justify the execution of the RTC's December 2009 judgment since it was heavily anchored only on the theory that the appeal lodged by the City Government is dilatory.

"In allowing execution pending appeal on such theory, respondent RTC was not mindful of the SC's admonition that 'it is not within the competence of the trial court… to rule that appeal is patently dilatory, and rely on the same as its basis for finding good reason to grant the motion. Only the appellate court can appreciate the dilatory intent of an appeal'" the CA held.

Associate Justices Remedios Salazar-Fernando and Manuel Barrios concurred with the ruling.

Court records showed that on January 14, 2008, the Treasurer's Office of the City of Manila issued warrants of levy over seven parcels of land upon which the hotel stood, and over the hotel itself, in view of the owners' failure to pay real property and business taxes. The levied parcels of land and improvements made were covered by TCT-113016 to 113022.

Sixteen days later, and pursuant to the levy, the lands and the hotel were publicly auctioned and were sold in its entirety by the city's Committee on Public Auction to the highest bidder, R2 Builders Inc., in the amount of P254.3-million.

R2 Builders, however, failed to pay the purchase price for the properties despite notice, thus, these were forfeited in favor of the city of Manila.

On January 9, 2009, respondent SIHI tendered two checks with the aggregate face value of P6,119,566.19 to the City Treasurer's Office as redemption price for the property, covered by TCT 139628, allegedly just a portion of the auctioned properties.

The city treasurer, however, refused to accept SIHI's checks on the grounds that the redemption should be for all of the auctioned properties, that is, the lands and the hotel itself, since these were auctioned off and sold as one whole property; that assuming redemption of levied property is an option under tax laws, the period to redeem has already expired; and that TCT 139628 is not one of the properties auctioned and sold as no part of the hotel is covered by such certificate of title.

On March 31, 2009, SIHI filed a complaint at the Manila RTC to compel the Manila government to accept its payment and to issue a tax clearance in its favor, to declare the company as having fully satisfied its tax obligations, and release to it the subject property.

On December 18, 2009, the RTC issued the first of its assailed rulings, which were then appealed by the city government. On July 9, 2010, SIHI filed a motion for execution, which the trial court subsequently granted on September 3, 2010.

The unfavorable judgments of the RTC prompted Manila City Hall to seek remedy at the CA. (JCV/Sunnex)