THREE business establishments in Mandaue City have been ordered closed by the local government for their failure to secure business permits and for building on land under a deed of assignment said to be infirm.
These are Big Hotel and Big Hotel Suites, both three-star, and Linear Coffee Shop located within the premises of Big Hotel.
A team from the Mandaue City legal office carried out the closure orders on Big Hotel, Big Hotel Suites and Linear Coffee Shop on Wednesday morning, Feb. 27. The closure orders were posted on the entrance to the lobby, but business at the two hotels continued throughout the day.
A meeting between Big Hotel lawyer Diolito Alvarez and lawyer Elaine Bathan, chief of staff of Mayor Luigi Quisumbing, is scheduled today.
The two hotels sit on 1.4 hectares of prime government land in Barangay Tipolo that has been leased out for P12/square meter or P170,000/month to Katumanan Hardware Inc. (KHI), a private supplier of wood and hardware materials in Cebu, since 2007.
The lease was originally valid for 15 years but in 2012, KHI and the Mandaue City Government, then under the mayorship of Jonas Cortes, entered into an agreement to extend the lease for 25 years.
In 2013, KHI signed a contract with Cenore Corp., which runs Big Hotel and Big Hotel Suites, subletting the property for commercial development.
KHI issued a deed of assignment, which Cortes signed, to Cenore.
Bathan said the deed KHI assigned to Cenore did not have the authority of the Mandaue City Council.
In 2018, City Hall cancelled the lease of contract with KHI because of this. This is the reason the three establishments were not able to renew their business permits.
Despite the absence of business permits, the three establishments have been paying business taxes.
As a procedure, contracts between public and private entities are ratified by the legislative council.
Cortes was mayor of Mandaue City from 2007 to 2016. After one term as congressman of the sixth district, he is seeking a fresh mayoral term with the incumbent mayor, Luigi Quisumbing, as opponent come May 13.
Bathan said that based on the current appraisal by the Mandaue City Assessor, the land where the hotels are has a lease value of P1,500 to P2,000 per square meter.
Bathan said City Hall did not rescind the contract with KHI finding it irregular in the first place. It instead asked Cenore to enter into a direct contract with the Mandaue City Government and lease the property at its true value.
But Cenore ignored the call and instead wrote the majority bloc of the City Council asking to ratify its contract with KHI.
Bathan said the Mandaue City Government was at the losing end of the transaction.
“Dako kaayo nga alkansi ang siyudad,” she said.
Even the Commission on Audit (COA) had come out with a report on the irregular transaction between KHI and Cenore Corp. And as a recommendation, COA asked the Mandaue City Government to amend the contract and have it ratified by the City Council, Bathan said.
The closure of the hotels “was an act of the City to put a stop to what is an irregular, and perceived to be anomalous transaction that was entered into pursuant to a deed of assignment,” Bathan said.
She said Mayor Quisumbing only wants what is due the City.
Speaking for Cortes, lawyer James Calipayan said the City Council approval of the deed of assignment to Cenore was not required.
Calipayan said that after Cortes had opened Mantawi Drive to KHI for commercial development, KHI came to Cortes after a year and said that it did not have the expertise to develop the property.
“So we told them that it (was) in (their) contract of lease (that they can) assign this to an affiliate or subsidiary. In which case, if it is subsidiary more or less we are dealing with the same board of directors, nga kauban ra sa Katumanan Hardware,” Cortes’s chief of staff said.
So KHI turned to Cenore and assigned a contract of lease, and pursuant to that assignment, “there was no need to get the authority” of the City Council “because the act of assigning was a mere implementation of a provision of the contract that has been approved and ratified” by the Council, Calipayan said.
Big Hotel continued to transact business on Wednesday afternoon even if the closure order notice was served, said its lawyer Alvarez.
Alvarez in a text message to Superbalita Cebu said, “The owners of Big Hotel are businessmen, not politicians. It is sad that businesses are often victimized by dirty, heartless and evil hands of politicians.” (MPS from a report of FMD of SuperBalita Cebu)