The Mandaue City Government has served a notice of closure to BIG Hotel and BIG Hotel Suites over alleged violation of the Contract of Lease signed between City Hall and lessee Katumanan Hardware, Incorporated.
BIG Hotel, a budget business hotel at the Mandaue North Reclamation Area, is the latest business venture to become a casualty of politics. The establishment stands on a city government property covered by a lease contract signed in 2007 by then mayor Jonas C. Cortes, now Cebu 6th District Representative who is challenging the reelection bid of incumbent Mayor Gabriel Luis "Luigi" R. Quisumbing.
Katumanan Hardware is owned by businessman Roderick Ngo, whose wife Marivic established the Travelbee chain of small budget inns and pension houses.
Travelbee Management Corporation, which runs BIG Hotel and BIG Hotel and Suites, is currently led by CEO Ken Derrick S. Ngo, who was awarded by the Cebu Chamber of Commerce and Industry (CCCI) as Young Entrepreneur of the Year 2017.
A team from the Mandaue City Legal Office posted a copy of the closure order mid-morning Wednesday, February 27, 2019. Also ordered closed was the Linear Coffee Shop inside the hotel.
Quisumbing posted on social media on Wednesday afternoon an excerpt from the Commission on Audit (COA) report which recommended that the city government “take immediate legal action on the violation of the Contract of Lease on the assignment of rights by Katumanan Hardware to Cenore Corporation without prior written approval of the Sanggunian Panlungsod.”
Lawyer Mae Elaine T. Bathan, Quisumbing’s chief of staff, said she met with BIG Hotel counsel Deolito Alvarez, saying the Office of the Mayor is “open to discuss ways to rectify anomalous and irregular transactions through lawful channels and legal means”.
Cortes defended the lease contract with Katumanan Hardware in his own social media post.
Cortes said the Mandaue City Council ratified in 2012 the revised lease contract with Katumanan Hardware, which allowed the latter to sub-lease the 1.4-hectare property covered by the contract to an affiliate or subsidiary provided there was written approval from the city government.
Cortes said there was no need for him to secure council approval when he approved Katumanan’s move to sub-lease the lot to affiliate Cenore Corporation.
Cortes also denied allegations that he received P25 million from the transaction, saying this amount was actually exchanged between Katumanan and Cenore.
According to Cortes, the Mandaue City Government entered into a lease contract with Katumanan Hardware in 2007 for the use of the 1.4-hectare property behind Parkmall.
For the next five years, Katumanan used a warehouse on the property to store lumber and other construction materials.
In 2012, Cortes said the city government drafted a masterplan for the area, envisioning the Mantawi International Drive to be developed into an entertainment and commercial hub.
The masterplan, which was part of the city government's Performance Government System, was drafted in consultation with the business sector.
Cortes said the city government extended the lease contracts covering several government properties in the reclamation area on the condition that the lessees, including Katumanan, would invest and develop the properties for commercial use.
Other lessees are Seaboard Realty, Ong Kin King Development Corporation, Cebu Oversea Hardware, Inc., and Katumanan.
Each lease contract was revised to reflect the changes in the terms and conditions. In the case of Katumanan, Cortes said the revised contract allowed Katumanan to assign its lease rights to an affiliate or subsidiary.
Based on this revised contract, Katumanan assigned its lease rights over the property to affiliate Cenore Corporation, which is engaged in the real estate business. Cortes approved the transaction by signing the Memorandum of Agreement. (Ventures Cebu)