Hotel firm ordered to vacate Nayong Pilipino complex

MANILA, Philippines - The Supreme Court has ordered the owners and operators of Philippine Village Hotel Inc. (PVHI), formerly Sulo sa Nayon Inc., to vacate the Nayong Pilipino complex in Pasay City and pay its unpaid lease obligations amounting to P100 million. In a 12-page decision, the SC’s First Division denied the PVHI's petition seeking a reversal of the October 14, 2005 ruling of the Court of Appeals holding the hotel’s owners liable for rental arrears in the amount of P26.18 million incurred as of July 31, 2001. PVHI argued that since they have made substantial improvements on the leased premises, they should have the right to retain possession of the property until they are reimbursed by Nayong Pilipino Foundation (NPF), the owner of the property. But the high court held that introduction of any improvement on a leased property does not give its lessee the right to retain possession of the property. The SC said PVHI’s argument cannot be given merit as this would allow the lessee to easily “improve" the lessor out of its property. It further said that the lessee may remove the improvements should the lessor refuse to reimburse. “We affirm the ruling of the CA that introduction of valuable improvements on the leased premises does not give the petitioners the right of retention and reimbursement which rightfully belongs to a builder in good faith," the SC said. The Court held that PVHI erred when it anchored its right over the said property under Articles 448 and 546 of the Civil Code, which states that “the owner of the land on which anything has been built, sown or planted in good faith, shall have the right to appropriate as his own works, sowing, or planting, after payment of the indemnity…or to oblige the one who built or planted to pay the price of the land, and the one who sowed, the proper rent." Based on court records, NPF, a government-owned and controlled corporation that owns the park complex near the domestic and international airport terminals in Pasay City, leased to Sulo sa Nayon, Inc in June 1975 a portion of the complex measuring 36,289 square meters for the construction of the Philippine Village Hotel. Under the lease contract, petitioner agreed to lease the land for 21 years or until May 1996 and renew it for a period of 25 years. On March 7, 1995, PVHI renewed the contract for another 25 years or until 2021 where PVHI would pay a monthly rental on a per square meter basis at the rate of P20 per sqm subject to a 20% increase at the end of every three-year period. At the time, the lease was renewed PVHI was paying a monthly rental of P725,780 to respondent NPF. However, since January 2001, petitioners started to default on their monthly rental of P725,780 prompting respondent to send petitioners a demand letter on March 26, 2001 to pay their arrears and vacate the premises. The failure of PVHI to heed their demands prompted NPF to start a litigation process. The CA, in its assailed ruling, reversed the findings of the Pasay regional trial court that declared petitioners as builders in good faith and affirmed their right to indemnity. - GMANews.TV