For alleged faulty contract: Mandaue firms ordered closed

CEBU, Philippines — The Mandaue City government has issued a closure order against three establishments in the city for alleged contract violations and for operating without business permit or registration.

The closure order signed by Mayor Luigi Quisumbing dated February 26, 2019 was served to Travelbee Management Corporation for Big Hotel for an alleged anomalous contract.

Another order was served to Travelbee Management Corporation for Big Hotel Suites and Linear Coffee Shop for operating without business permits, for failing to pay business taxes and fees for calendar year 2019, and for employing a person who has not paid occupational tax prior to employment.

While the closure order was served yesterday, Big Hotel will reportedly operate normally pending talks between its owners and the city government, said its lawyer Deolito Alvarez.

"The closure order notice was served. The hotel, however, is in normal operation and closure was not implemented after I talked to Atty. Elaine Bathan. We have set a meeting tomorrow  (today) to discuss issues pertinent to the dispute. 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," Alvarez said yesterday.

The hotel is owned by Cenore Corporation and managed by Travel Bee.

"Cenore is the owner of the hotel. Travel Bee is the management operator of the hotel. The closure order is directed against the management operator of the hotel. The closure order is only the management operation of Travel Bee of Big Hotel. It's totally a different matter if it is the hotel itself which is ordered closed," Alvarez said further.

But Bathan said that pending result of negotiations with the city government, the hotel must respect the closure order.

During the time of Mayor Jonas Cortes, the city leased its property to Katumanan Hardware, Inc., which subleased the same to Cenore Corporation through a Deed of Assignment.

However, the Commission on Audit found out later that Deed of Assignment did not have the authority of the City Council. 

Bathan said the closure order was issued to put a stop on “irregularities” of the alleged anomalous transaction, particularly the Deed of Assignment.

“Unfortunately, despite the fact that we have sent them a notice to comply on the show cause order, giving and granting them the opportunity to come to the city, to negotiate with us to the terms and conditions, what they actually did was to derail the proceedings and violate the executive functions and the authority of the city mayor and insisted to the Council to ratify (the contact) and even asking the council to do a patently illegal act of ratification,” Bathan said during a press conference yesterday.

The city gave Cenore 30 days to justify and prove why the hotel shouldn’t be closed.

“However, prior to the end of the given period, last February 19, Cenore Corporation, through President Roderick Ngo, sent a letter to the Mandaue City Council thereby requesting to set aside Resolution No. 14-394-2018 and to issue another resolution confirming, affirming, and ratifying the validity and authority of the Deed of Assignment entered into between Katumanan Hardware and Cenore Corporation, and to consider the Contract of Lease as having been validly assigned already to Cenore Corporation,” the order reads.

The city said, however, that the same “is a clear manifestation of bad faith on its part in order to evade the possible penalty for the non-compliance of the show cause order.”

Bathan said existing rule require a written authority from the City Council before the mayor can enter into a contract of lease or into any transaction.

“In this case, there is no record from the Council that authorizes them and that they gave that written consent to the mayor at that time to allow the Deed of Assignment,” she said.

Mandaue Vice Mayor Carlo Fortuna also said that Cenore reportedly approached sitting councilors allied with Cortes to ask that the Deed of Assignment be ratified.

Fortuna said the original contract between the city and Katumanan was for 15 years, from 2007 to 2022, but this was extended to 25 years during renegotiation in 2012 while Cortes was mayor.

While the Council consented the renegotiated contract, it did not authorize the Deed of Assignment.

Bathan also pointed out that the worth of area leased out should be based on prevailing fair market value.

“Under the lease contract, it only said P12 per square meter… P12 is not the prevailing fair market value of that area given the developments. (Supposedly, it can) go as high as P1,500 to P2,000 per square meter at least in that area,” she said.

Bathan said the city government is losing much from the previous contract or transaction.

“All we wanted was to make sure that the assets in the city is well protected and we are able to maximize the resources of the city and to, of course, correct what is a wrong doing, and what is irregular and to rectify certain irregularities arising from that contract,” she said.

Aside from the hotel and suite, the city also ordered a coffee shop at the hotel closed for operating without a business permit or registration, for failing to pay business taxes and fees for 2019, and for hiring an individual who has not paid his occupational tax prior to employment.

The city government also offered assistance to some employees whose offices are affected by the closure of the hotel.

The city said the employees can seek help from the city’s Public Employment Service Office (PESO). —  JMO (FREEMAN)