Court of Appeals: Manila court can try Smokey Mountain case

MANILA, Philippines - The Court of Appeals (CA) has upheld the jurisdiction of a Manila regional trial court in settling a dispute involving the Smokey Mountain Development and Rehabilitation Project (SMDRP).

In a 10-page decision penned by Associate Justice Noel Tijam, the former special 15th division of the appellate court affirmed the Manila RTC ruling that the latter has jurisdiction over a civil suit filed by project developer R-II Builders seeking to enjoin the Home Guaranty Corp. (HGC) from selling some of the properties in the project’s so-called Smokey Mountain Asset Pool (SMAP) even before obligations to creditors have been paid.

“For the failure of HGC to demonstrate any grave abuse of discretion on the part of the respondent RTC, even at this stage, we stand by our affirmation of the trial court’s orders dated March 3, 2009 and Sept. 29, 2009. Indeed, there is no valid cause to further restrain the continuance of the proceedings in Civil Case No. 05-113407 before the respondent RTC,” the CA said.

Associate Justices Ramon Bato Jr. and Antonio Villamor concurred with the ruling.

The decision is expected to hasten the resolution of the long-delayed disposal of SMDRP’s assets for the payment of obligations on the project.

The case stemmed when the HGC, which controls the asset pool, sold a portion of the Smokey Mountain reclamation site to La Paz Milling despite an earlier court injunction preventing it from disposing the property being part of SMAP.

The SMAP was created by the National Housing Authority and R-II Builders in 1993 to make the SMDRP more attractive to investors and answer obligations that will be incurred during the duration of the project.

R-II Builders said it is entitled to the residual value of the SMAP after all the creditors of the project have all been paid. The sale of the property prompted R-II Builders to file a civil case before the Manila court.

Subsequently, the lower court stopped the sale to La Paz Milling as it agreed to the position of R-II Builders that the sale will dissipate the SMAP and affect its residual value.

The lower court also ordered the appointment of a court receiver that will dispose of the SMAP to settle all obligations.

The HGC sought the dismissal of the case, saying it is an ordinary civil case and not within the ambit of a commercial court. But the CA ruled that while the case was “erroneously raffled” to a commercial court, it still did not deprive the RTC of jurisdiction over the case.

“The raffle of cases is an internal matter of the court that is beyond the ambit of lawyers and litigants. The fact that R-II Builders correctly filed the case with a regional trial court suffices for purposes of jurisdiction,” the CA held.