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Bacolod City, Philippines Tuesday, February 4, 2014
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Court junks SM case,
Ayala dev’t set - guv

The Regional Trial Court has denied the petition of SM Prime Holdings Inc. (SMPHI) to declare it the winning bidder of the 7.7-hectare property of the Negros Occidental provincial government in Bacolod City, Gov. Alfredo Marañon Jr. said yesterday.

The decision paves the way for AyalaLand Inc. (ALI) to finally begin its multi-billion peso development of the property adjacent to the provincial Capitol in Bacolod, the governor said.

Negros Occidental Branch 50 RTC Judge Estefanio Libutan Jr., in a 22-page decision dated January 23, denied the petition of SMPHI against Marañon and the members of the Committee on Awards and Disposal of Real Properties of Negros Occidental for lack of merit.

SMPHI asked the court to nullify the resolution of the Committee declaring the July 7, 2011 bidding of the 7.7-hectare property a failure, and to instead name it the winning bidder.

However, the court found no evidence to prove that the respondents gravely abused their discretion in an arbitrary and despotic manner in declaring the July 7, 2011 bidding a failure, Assistant Provincial Legal Officer Mary Ann Manayon-Lamis, counsel of the provincial government in the case, said.

In fact, the “respondents ought to be commended for protecting the interest of the province,” the judge said.

The Committee simply followed the law, and existing Commission on Audit circulars in the disposal of real properties owned by local government units, the judge noted.

Considering that the offers of SMPHI and ALI in the July 7, 2011 bidding were both below the appraised value of P19,500 per square meter as fixed by the Committee, it declared the bidding a failure.

SMPHI insisted that it should have been declared the winner as it offered a higher bid than ALI. It said that while its bid of P18,888 per square meter was below the floor price of P19,500, the difference of P612 is not excessive because it represents only 3 percent of the floor price.

It argued that, under COA Memoranda 91-712 and 88-659, if the difference is found not excessive, the sale may be allowed in audit.

There is no evidence that the Committee acted with grave abuse of discretion as the COA memoranda cited by SMPHI only apply to unserviceable properties like depreciated equipment and machineries, and not real properties, the judge ruled.

The difference of P612 between the floor price and the offer of SMPHI multiplied by the total area to be sold, which is 36,578 square meters, would amount to P22,391,244, which is too substantial to be completely ignored, the judge added.

The judge said it was good that the Committee declared the bidding a failure and proceeded to a negotiated sale, which SMPHI refused to participate in, because it made the provincial government richer by P1,000 per square meter.

Since ALI offered to buy the properties at P20,500 per square meter, which is P1,000 more than the floor price, it would amount to an additional income of P36,587,000 for the province, the judge said.

This is a lot of money that can be used to fund projects for the development of the province, he noted.

The court also noted that the SMPHI allegations that the conduct of the bidding should be declared null and void because of nondisclosure of the floor price before the bidding, and that the floor price was not yet approved by the COA before the bidding, had in fact been rejected by the COA in its Sept. 21, 2013 decision.

The COA had ruled that there is no law or rule that requires the disclosure of the floor price before the conduct of a bidding, it is a strategy to come up with a competitive and advantageous offer.

ALI offered to purchase 36,587 square meters at P20,500 per square meter, and lease P40,481 square meters at P73/sq. m. that was  evaluated and accepted by the Committee, and also approved by the COA in a Sept. 21, 2012 decision, the court said.

Marañon yesterday thanked SMPHI for not challenging further the COA decision, giving the provincial government a chance to see the development of its property.

In 2011, ALI said it planned to develop the Capitol property into an integrated mixed-use civic and commercial district that will combine the center of government with commercial and residential uses, making it the growth center of Metro Bacolod and Negros Occidental.

The RTC noted that the issues raised by SMPHI are similar to those contained in its letter to COA and its petition filed with the Court of Appeals that were both denied.

“Since this petition is grounded on similar arguments which have already been rejected by the CA and COA for lack of legal basis, this court sees no compelling reason to make a contrary ruling,” the judge said.

Had SMPHI been declared the winner in the July 7, 2011 bidding, the judge said it is possible that the sale would be disallowed by COA on the ground that the purchase price is below the floor price.

Marañon and the Committee members could have also faced possible lawsuits for violation of the Anti Graft and Corrupt Practices Act for having entered into a contract that is grossly disadvantageous to the province, Libutan added.*CPG



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