Vol. XXII, No. 199 [ BusinessWorld Online ]
Wednesday, May 12, 2009 | MANILA, PHILIPPINES
DAVAO CITY — The Court of Appeals has upheld an earlier decision of a Regional Trial Court (RTC) granting the go-signal for Pamintuan Enterprises (Pamenter) to implement a rehabilitation plan for this city’s Apo View hotel.
In a resolution dated April 13, a division of the appellate court denied the motion for reconsideration filed by creditor Banco Filipino Mortgage and Savings Bank on the case.
The resolution was signed by Associate Justice Michael P. Elbinas, with associate justices Romulo V. Borja, Rodrigo F. Lim Jr., Mario V. Lopez, and Jane Aurora C. Lantion concurring. Officials of both Pamenter and Banco Filipino declined to comment.
On June 23, 2003, Pamenter filed a petition for rehabilitation which it claimed would best serve the interests of creditors, stockholders, and employees. To do this, Pamenter asked the court to temporarily suspend payments to creditors.
Nearly 24 hours later, major creditor Banco Filipino filed an "urgent opposition" to the stay order, claiming the rehabilitation plan was only meant to "frustrate" the bank’s right to foreclose.
The court issued the stay order on June 25, 2003 which, among others, appointed a rehabilitation receiver, suspended the foreclosure, and set the initial hearing of the proceedings.
The order started a chain of mudslinging and counter-filings that continued for four years. In his decision dated August 6, 2007, former RTC Branch 10 Judge Jaime Quitain ruled in favor of Pamenter, noting that the hotel’s assets of P537.7 million at the time of valuation in 2003 exceeded liabilities valued at P414.6 million.
The courts also took into consideration the hotel’s standing as a landmark in Davao City, as well as the more than 1,000 employees relying on the hotel for livelihood.
The 50-year-old hotel has 158 rooms and occupies about a hectare of prime land. The Asian currency crisis in 1997 overwhelmed the hotel’s finances as past due accounts amounting to P211 million matured. Pamenter’s attempts to obtain new loans, attract investments and infuse more capital proved futile.
Under the approved rehabilitation plan, the hotel management is obliged to pay its creditors over a 15-year period at interest rates of 6% in the first five years, 7% for five years thereafter, and 8% for the last five years.
The plan called for a three-year moratorium as regards loans from banks. The rehabilitation plan also compels the owners to prioritize debts to the Pag-IBIG or Home Mutual Development Plan, the Philippine Health Insurance Corp., the Social Security System, the Bureau of Internal Revenue, and the Davao City Treasurer’s Office, while also mandating a shorter period of payment for debts less than P100,000. — Joel B. Escovilla