IS businessman Rod Ngo, owner of Big Hotels, which were closed by the Mandaue City Government for entering into a contract with the previous administration without authority from the City Council caught in the “political crossfire” between the two political camps in the May elections?
I pose this question as the administration of Mayor Luigi Quisumbing is bent on going after the two establishments by recovering the lots and bring to court the former city officials responsible for the contract, which is viewed as disadvantageous to the interest of the City Government. The lease contract was signed during the administration of then mayor now Sixth District Rep. Jonas Cortes.
The two hotels sit on 1.4 hectares of prime government lot in Barangay Tipolo that has been leased out for P12 per square meter, or P170,000 a month, to Katumanan Hardware Inc. (KHI), a private supplier of wood and hardware materials since 2007. The lease was originally valid for 15 years, but in 2012, the company and the Mandaue City Government, then under Cortes’s mayorship, entered into an agreement to extend the lease for 25 years.
In 2013, KHI signed a contract with Cenore Corp. for the sublease of the property for commercial development. The KHI issued a deed of assignment to Cenore, which Cortes signed. Cenore built and operated the two hotels on the lot. The two hotels are managed by Travelbee Inc., also a sister company of Cenore. But the present administration claims that KHI’s deed of assignment to Cenore did not have a City Council authority, which makes it illegal. Cortes’s camp in the council ratified the deed of assignment during the council’s session last week.
Mayor Quisumbing filed charges for violation of anti-graft and grave misconduct against the seven councilors who voted for the ratification before the Office of the Ombudsman. The Commission on Audit also found the transaction to be irregular since the council did not have a record of the deed of assignment.
What is not known to the public is that Katumanan Hardware Inc. was originally put up by Ngo. He was the majority stockholder. Cenore, a sister company, is into the construction business. Ngo owned a chain of hotels in Cebu and other key cities in the country. He is also into low-cost housing projects. In big business conglomerates or holdings, it is very common for big corporations to create subsidiaries. The Ayalas, Sy and Gokongwies are doing it, depending on its diversified business interest.
The issue here is that Cenore’s contract did not have the authority from the City Council. The contention of Cortes’ legal counsels then was that there was no need for an authority from the City Council because the deed of assignment was given to a sister-company. In good faith, Ngo agreed to Cortes’ legal point of view, not expecting a legal repercussion arising from the agreement. His intention was only to put up a business and help propel the City’s economy. Besides, he had the assurance from the powers-that-be when he entered into the agreement.
There are contentions that not all contracts entered into by the local chief executive should have authority from the legislative body. Gov. Hilario Davide III has withdrawn his request for an authority from the Provincial Board when he insisted to proceed with the construction of the P1.3-billion Capitol Resource Center and signed the contract with the winning bidder, citing a Supreme Court jurisprudence on Quisumbing versus Garcia (GR No. 175527).
Only the court can declare if the contract entered by Cortes and Cenore is illegal sans authority from the City Council. Why the present administration is in a hurry to close the two hotels? Because they want to condition and paint in the minds of the Mandauehanons that the other party committed an anomalous transaction at the expense of legitimate businessmen like Ngo, who is very active in the Brotherhood of Christian Businessmen and Professionals (BCBP). He should be spared from political squabble.