G.R. No. 223865 - Silahis International Hotel, Inc. vs. Court of Appeals and Pacific Wide Holdings, Inc.

On December 23, 1999, Silahis International Hotel, Inc. (SIHI) and the Philippine Amusement and Gaming Corporation (PAGCOR) entered into a Contract of Lease for the second and third stories of the Grand Boulevard Hotel to facilitate casino operations for a period of four years.
Under the contract, PAGCOR was obliged to pay a restoration cost. Paragraph 4 of the contract provided that a deposit of TWO MILLION TWO HUNDRED FIFTY THOUSAND PESOS (P2,250,000.00) would serve as security for restoration costs. An independent appraiser was to be jointly selected by the lessor and lessee to determine a fair and reasonable restoration cost based on the premises’ original condition.
The contract’s stipulations clarified that the deposit was not an advance on rentals, would not earn interest, and was non-reimbursable; any excess or deficit following the appraiser’s determination would be adjusted between the parties.

The lease was renewed on June 15, 2004 for one year and continued on a month-to-month basis thereafter.
On April 1, 2006, SIHI notified PAGCOR via letter of its intent to terminate the lease effective July 2006 and reminded PAGCOR of its obligation to pay a restoration cost amounting to PHP115,200,000.00.
The parties failed to finalize the appointment of independent appraisers or agree on the determination process for the restoration cost as required by the contract.

SIHI filed a Complaint for Specific Performance on July 10, 2006 with the Regional Trial Court (RTC) seeking enforcement of PAGCOR’s contractual obligation.
After full trial proceedings, the RTC rendered a Decision on December 27, 2006 in favor of SIHI, clarifying that PAGCOR was obliged to pay the restoration cost as determined by a common independent appraiser.
The RTC’s dispositive order designated Asian Appraisal, Inc. as the independent appraiser and set strict time limits for the appraisal and subsequent compliance by the parties.

On appeal, the CA in its Decision dated May 3, 2012 modified the RTC ruling by deleting the appointment of the single independent appraiser.
The CA directed PAGCOR to select its own appraiser via a bidding process under Republic Act No. 9184 and instructed SIHI to select an appraiser in accordance with its internal rules.
The parties were given fixed periods to complete the appraisal work; the 2012 CA Decision became final and executory on May 25, 2012.
During the execution proceedings before the RTC, the parties agreed to fix the restoration cost at PHP102,114,040.00.

Pacific Wide Holdings, Inc. purchased the Grand Boulevard Hotel on November 7, 2007, acquiring the property through a tax delinquency sale; it obtained the final deed in September 2013 and the title in October 2013.
While execution proceedings were underway, Pacific Wide filed a Verified Motion (dated December 19, 2007) arguing that as the new owner, it was SIHI’s successor-in-interest and entitled to the restoration cost.
The RTC denied both the Verified Motion and Pacific Wide’s subsequent Motion for Reconsideration. On April 24, 2014, the RTC approved the parties’ agreement on the restoration cost and directed PAGCOR to remit the fixed amount.
A Writ of Execution was issued on February 25, 2014, but later set aside by the RTC on March 14, 2014, directing SIHI to file its monetary claim with the Commission on Audit (COA).

SIHI filed a Petition Ad Cautelam with the COA seeking payment of the agreed restoration cost amounting to PHP102,114,040.00.
Pacific Wide intervened in the COA proceedings by filing a Motion for Intervention and later a Petition for Certiorari before the CA, arguing that it was entitled to the restoration cost as the successor of SIHI.
The CA ruled that Pacific Wide was an indispensable party in the original RTC proceedings and annulled the 2006 RTC Decision (as modified by the 2012 CA Decision), remanding the case for re-impleading Pacific Wide.
Subsequently, the COA dismissed SIHI’s Petition Ad Cautelam, holding that its jurisdiction extends only to liquidated money claims and that, following the nullification of the RTC/CA decisions, SIHI’s claim had not yet crystallized into a final, executory (and therefore liquidated) judgment.

The First SIHI Petition (G.R. No. 223865), challenging the CA’s annulment of the RTC Decision and questioning Pacific Wide’s joinder as an indispensable party.
The Second SIHI Petition (G.R. No. 230631), attacking the COA’s dismissal of its Petition Ad Cautelam for failure to present a liquidated money claim.

SIHI argued that the 2006 RTC Decision had become binding and immutable, while Pacific Wide contended it had a right to the restoration cost by virtue of being SIHI’s successor-in-interest.
In later developments, Pacific Wide filed Notices to Withdraw its Comments/Oppositions in both petitions, along with a Waiver, Release and Quitclaim, thereby confirming it had no claim to the restoration cost.

Whether the Court of Appeals erred in nullifying the 2006 RTC Decision as modified by the 2012 CA Decision, particularly with respect to determining if Pacific Wide Holdings, Inc. was an indispensable party whose joinder was necessary for a final adjudication.

The contention focused on whether the transfer of interest (acquisition of the leased property by Pacific Wide) automatically made it an indispensable party despite its absence from the original contractual relationship.
SIHI maintained that Pacific Wide, although purchasing the property later, was not a party to the original Contract of Lease, and hence, its intervention should not affect the finality of the RTC Decision.

Whether the Commission on Audit committed grave abuse of discretion in denying SIHI’s Petition Ad Cautelam for payment of the restoration cost.

SIHI argued that because the 2012 CA Decision (and by extension the 2006 RTC Decision) had become final and executory, its money claim was now liquidated and should fall within the COA’s jurisdiction.
Conversely, PAGCOR and Pacific Wide contended that without a final, executory judgment, no liquidated claim existed, and SIHI was required to exhaust alternative remedies such as filing a motion for reconsideration.