Upon being told about the plan to convert the hotel's 50 guest rooms into 12 chapels and a columbarium with 3,000 vaults for funeral urns, victims of the blaze said they were disgusted.

'That's an insult to me, [and] especially to my companions who died,' said Albert Musngi, 30, who survived the pre-dawn blaze on August 18, 2001.

The fire hit front pages around the world, with heart-rending images of screaming victims trapped behind barred windows.

Civil and criminal law suits against hotel owners William Ong Genato and his wife Rebecca 'aren't even finished yet and they're going to make money by opening a funeral home', Mr Musngi said.

William Ong Genato said that 'because somewhat many died, we decided to convert' the five-storey hotel into Destiny Memorial Chapels. He insisted that the fire itself 'was not a big story'.

Plans to convert the building have received at least two council approvals.

On May 28, 2002, the 26-member city council issued the Genato Management Corporation a 'special use permit' exempting it from zoning laws by allowing it 'to operate a mortuary' in the building, which is in a no-mortuary zone. Part of the company's proposal was to reserve two chapels for the use of the poor, free of charge.

Then, on August 14, 2006, the council approved yet another resolution allowing the Genato firm to create a crematorium and columbarium in the hotel, against zoning regulations.

Quezon City mayor Feliciano Belmonte admitted that he knew of the approval to operate a mortuary in 2002, but said he was unaware that the council had also approved the crematorium and columbarium. None of the council's 26 members was available for comment, said their aides.

Upon being asked about the conversion, Pacifico Maghacot, chief of the city government's business permits section and the mayor's spokesman, said: 'I will never give a business permit for any activity in that building ... for as long as the cases are unresolved. I will stand by my word.'

A business permit represents the final stage of approval before a business can open. William Ong Genato and his architect, Edgar San Juan, said they already had a business permit.

'That's a lie,' said Mr Belmonte. The mayor said that he would do his best to make sure that Genato would comply strictly with all the permits before he could open for business, if ever.

Mr Maghacot's predecessor was sacked in the wake of the 2001 tragedy.

The Genatos are both the subject of an ongoing criminal case being heard by the Philippines' anti-corruption court.

A separate class-action civil suit has been lodged by victims but there has been no ruling.

Rebecca Genato offered to settle with relatives of the dead for 'up to 40,000 pesos (HK$6,260) subject to medical certificate and receipts', court documents showed.

Her husband, meanwhile, said that about 75 per cent of the claimants had settled out of court.

Mr Belmonte said the renovation work on the building was done quietly. 'They were renovating inside without anybody knowing,' he said.

A giant advertisement has now been painted on the building's exterior, telling potential clients 'we honour the departed and comfort the living'.

Some survivors who dropped by the hotel two months ago 'hardly recognised it', Mr Musngi said, because 'even the inside had been changed'.

The hand marks left by the frantic guests on the soot-covered walls have been covered by beige paint. The ornate window grills that Mr Belmonte blamed for most of the deaths are gone.

Ali Briones, 28, who was sharing the hotel's room 304 with Mr Musngi and five others when the fire broke out, said they had 'received not a cent for their trauma'.

Mr Briones and Mr Musngi were caught on camera weeping helplessly behind their barred windows while firemen doused them with water. Mr Briones recalled how his friend Joel Patio, 25, woke him at 4am by stepping on him as he lay sleeping on a mattress on the floor. Above the sound of the air conditioner and torrential rain, they heard cries of 'fire, fire'.

Patio, his wife Ailene, 26, and Wilma Tayag, 31, choked to death on smoke when they dashed from the room down the hallway, groping for fire exits which were unmarked and bolted.

Fire investigators later found that the hotel had failed to correct repeated violations of the fire code, including the installation of an automatic sprinkler system. Rebecca Genato said they could not afford sprinklers 'with business so bad'.

Mr Briones recalled that after the tragedy, newly installed President Gloria Macapagal-Arroyo and newly elected Mr Belmonte separately shook his hand and promised justice.

'The tragedy has been forgotten, and I ask myself why,' Mr Briones said.