Why not compromise on controversial hotel sale?

Here IS the latest on the controversy over the sale of the long-abandoned McAdore Hotel in Dagupan City:

The buyer of the hotel, Amb. ALC Holdings and Management, wants a change of venue for the trial of a pending petition seeking to nullify the sale of the hotel last January because it believes it won’t get a fair shake from the courts in Dagupan.

The apprehension of the winning bidder in the public auction of the hotel about not getting justice in Dagupan is well-founded. In most local communities outside Metro Manila, politicians hold sway not only over local government units but also over local courts. Already, it is becoming clear that the judge handling the case wants to please the political bosses rather than dispense true justice. A new venue, therefore, is ALC Holdings’ best resort.

For those who tuned in late, here is a backgrounder on the case: The seven-story McAdore Hotel was built 20 years ago in the middle of Dagupan’s bustling business district as the “Pride of Dagupan City.” However, the bank foreclosed on the loan for the construction of the hotel when the borrowers defaulted on their payments. The Dagupan City government bought it for P50 million, planning to convert it into the new city hall to replace the old one which was crumbling. But the city government was unable to do that for lack of funds. So the city council decided to sell the property and authorized then Mayor Benjamin S. Lim to initiate the sale of the property.

A public bidding was held and ALC Holdings submitted the highest bid. It paid the city government P119 million, plus other expenses for the transfer of the property.

In the May 13, 2013 elections, a new mayor was elected. Mayor Belen Fernandez now wants the sale nullified and has filed a petition in the Dagupan Regional Trial Court. She says the property was underpriced and was worth double the price paid for it by the buyer. Her suit also claims that due process was not followed in the sale.

Exactly a week after Fernandez emerged as the winner of the May 13 elections, Judge Mervin Jovito Samadan declared null and void a resolution that authorized former Mayor Lim to initiate the sale of the property. The buyer said it is obvious that the judge is intent on coming out with a ruling that would please Mayor Fernandez.

The new owners (titles to the property have already been issued to them) claim: “It is totally baffling how Mayor Belen Fernandez, the main political foe of ex-Mayor Lim during the elections, could question the sale of McAdore Hotel. In her capacity as city council presiding officer, she signed and was party to the second resolution that reinforced the authority of Lim to sell the property.

“So how can she question the legality of a city council resolution that she had been party to?”

ALC Holdings said the sale of the property during the Lim administration complied with all requirements of the law. It was done by virtue of two council resolutions authorizing Lim to initiate and complete such sale. The Commission on Audit set the floor price for the sale of the property, a regular public bidding was held and had never been questioned, the property was formally awarded to the winner without objections from other parties, and all incidental expenses for the transfer of the property have been fully paid by its new owners.

In fact, there is no actual case against the sale of McAdore Hotel. The pending petition is to annul the council resolution authorizing Lim to sell the property.

In an interview with Mayor Fernandez, she said she wants to convert the hotel into Dagupan’s new city hall, the reason it was sold by the government bank to the city at such a cheap price in the first place. Even at P119 million, the amount paid by the buyers, it is still very cheap, she said. The present city hall is very old and unsafe, she said, and it is embarrassing for outsiders to see it in that condition.

Does she have the funds to remodel it? I asked. Lim was unable to remodel it because of lack of funds.

I can find the money, she answered.

However, she added that she is still willing to sell the property—“if the price is right” and if the correct procedures are followed. Based on the value of adjoining properties, the hotel is worth twice what ALC Holdings paid for it, she said.

In that case, as a compromise, why not create a three-man committee that would evaluate the true market value of the property? It should be composed of the city assessor, a real estate broker (not from Dagupan so he would not be under the influence of the city government), and a representative of COA. If ALC Holdings finds the new price acceptable, then the property should go to it. If not, then there should be a new public bidding that would follow all the correct legal procedures and in which ALC Holdings should be allowed to  participate.

But that also raises the following questions: ALC Holdings has already been issued the title to McAdore Hotel, making it the legal owners. Can the title still be taken away from it without the correct court procedure?

The argument of the city government is that “if the resolution authorizing the sale of the property is void, then the sale itself is void.” Is that a justifiable reason to nullify a perfected sale?

A long-drawn out court case can take many years, considering the slowness of our courts, so the building will deteriorate further and decrease in value while the case drags on. A compromise would avoid all that—and the hassles and expenses for legal services.