Sheriff serves garnishment notice to SM firms

Before letting go of the case,  court sheriff Antonio Bellones flew to Manila last Thursday to serve notices of garnishment to three  SM companies doing business with the Cebu city government.

The sheriff of Cebu Regional Trial Court Branch 9, delivered the notices to SM Prime Holding Inc., SM Development Corp. and SM Investments Corp. at their offices in the Mall of Asia Complex in Pasay City, Metro Manila.

SM is building a mall at the South Road Properties (SRP) of Cebu City.

The notices stem from a court order to  the Cebu city government for  payment to the heirs of Rev. Fr. Vicente Rallos over a 1963 lot expropriation.

Last Oct. 1 the amount due to the  Rallos family reached P133,469,962.55 , including interest.

“You are hereby notified that by virtue of the Writ of Execution dated Sept. 26, 2011, garnishent is hereby made upon all the goods, effects, interests, monies, stocks shares and all other personal prroperites … belong to the city,” said the notice of garnishment.

SM was advised to report to the court within five days whether the Cebu city government has sufficient funds or credits to satisfy its debt to the Rallos family.

The same notices of garnishment were sent to the Land Bank of the Philippines and Philippine Postal Bank  in Cebu City  and Development Bank of the Philippines and Philippine Veterans Bank along Osmeña Boulevard in Cebu City.

Last Thursday, Cebu City Mayor Michael Rama yesterday filed a complaint against  the sheriff  before the Office of the Ombudsman in the Visayas for immediately enforcing the court order.

Bellones, who is set to retire next month, was ordered by the court to “immediately desist and relinquish” his duty in executing the writ of execution in the case.  The order was issued Thursday, the same day the sheriff was in Manila to serve the notices of garnishment to SM.

The judge said Bellones should instead process his clearances before the sheriff retires on Oct. 18.

The mayor is trying to stop the garnishment of city funds and was advised by depository banks to get a court order lifting it.

For his part, Cebu City Vice Mayor Joy Augustus Young said receivables being challenged by the court should not be included as sources of funds for the city’s 2012 budget.

Young referred to the money which SM Prime Holdings is set to pay the city for the 30.4-hectare lot they bought at the SRP worth P2.7 billion.

The lot is payable in six years and SM already paid the city over P1 billion since the lot purchase was sealed last year.

SM pays the city about P110 million in installment quarterly for the purchased lot.

However, SM earlier warned the city that they may no longer be able to pay their installment for the last quarter of the year.

They intend to give the installment to the Bureau of Internal Revenue (BIR) after the city failed to resolve the BIR’s withholding tax claims for the sales of SRP lot. Cebu City was unable to secure tax exemption from BIR.

If SM stops payment,  the city stands to lose over P200 million in installment this year or over P400 million yearly until the BIR’s demand for taxes from SRP will be satisfied.

“All those money should be set aside.  It should not be included in the budget so the budget won’t be affected,” the vice mayor said.

In case the funds were not garnished, Young said the payments could be used for a supplemental budget.