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Ayala drops Negros project

Posted on September 14, 2012 06:24:32 PM [ BusinessWorld Online ]
By Nanette L. Guadalquiver, Correspondent

BACOLOD CITY -- Property giant Ayala Land, Inc. (ALI) has dropped plans for a P6-billion development project over the failure of the Negros Occidental provincial government to deliver on the proposed site.

Gov. Alfredo G. Marañon, Jr. announced in a press conference on Friday ALI’s decision to withdraw from the planned Capitol Civic Project, which is the subject of a legal dispute with SM Prime Holdings, Inc.

ALI’s withdrawal was a big loss for the province and “sends a very bad signal to other investors,” he said.

“This is a very sad day for Negros and Bacolod City. The Ayala Land wrote me a letter yesterday [Thursday] withdrawing their project at the Capitol.

Negros lost a golden opportunity of a 6-billion investment and thousands of job opportunities,” the governor said.

Mr. Marañon furnished reporters a copy of the September 13 letter sent to him by Emilio J. Tumbocon, ALI senior vice-president and group head for Visayas-Mindanao and Superblock Projects.

In his letter, Mr. Tumbocon said the company is unable to pursue the project due to delays and legal disputes that continue to threaten its implementation.

“In light of this, and considering that the provincial government was unable to fulfill its obligation to deliver the property to us under the terms of the agreement, we are open to discussing with you mutual disengagement from the project,” he told the governor.

The provincial government awarded the 7.7-hectare property for more than 3.5 billion to ALI in July last year. The deed of conditional sale for the 3.6-hectare property and contract of lease for the 4.05-hectare property were submitted by the provincial government to the Commission on Audit (CoA) also in July last year.

Both contracts were signed by the province and ALI and subsequently ratified by the provincial board in April this year as required by the CoA. The commission, however, has not approved the deal.

SM Prime, which has insisted that it won the bidding, has filed cases before the Court of Appeals and the Regional Trial Court in Bacolod against the governor and members of the provincial bid and awards committee. These are still pending in court.

ALI’s decision to drop the project came even after the firm informed the governor early this year that it has started drafting plans and engineering studies.

Mr. Tumbocon, however, said ALI remains committed to investing in Negros Occidental. The group has an ongoing mixed-used development in the 200-hectare North Point in neighboring Talisay City.

Mr. Marañon said that since ALI will no longer pursue its project, he will create a special committee to study and plan the use of the 7.7-hectare property.

Mary Ann Manayon-Lamis, assistant provincial legal officer, earlier said the provincial government can proceed to lease the 4.05-hectare property for 2.75 billion in the next 50 years as the transaction does not require an approval from the CoA.

CoA Circular 92-386 and the Local Government Code of 1991 cover only the review of a contract that pertains to sale or disposal of properties, she noted.

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