SM asks court to nullify award to Ayala

Wednesday, July 20, 2011

MALL operator SM Prime Holdings Inc. (SMPHI) on Monday filed a petition in Court of Appeals seeking nullity of the negotiated contract for sale and lease entered by the Negros Occidental Provincial Government with the Ayala Land Inc. (ALI).

The same petition seeks to nullify the resolution of the committee on Awards and Disposal of Real Properties, which declared a failure of bidding on certain properties of the province.

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In filing the petition, SMPHI asked the Appellate Court to issue a 60-day temporary restraining order on the Provincial Government's negotiation with ALI.

Vincent Patrick A. Bayhon, counsel for SMPHI, said his client believed that the committee has issued the assailed resolution in an "unjust, unfair and arbitrary manner with grave abuse of discretion amounting to lack or excess of jurisdiction", thus, requiring the court's immediate intervention.

The SMPHI received a copy of the awards committee resolution on July 8.

According to Rule 65, Section 4 of the Rules of Court, a petition for certiorari may be filed within 60 days from notice of adverse judgment, order or resolution.

Bayhon said SMPHI participated in the rebidding last July 7, 2011, believing that the public bidding would be fair and a genuine effort to obtain competitive bids and conducted in accordance with the law.

Both SMPHI and ALI were declared eligible in said bidding.

SMPHI claimed it gave a "clearly superior" offer compared to ALI's bid.

SMPHI's bid for the purchase of the Provincial Government lot was P18,888.00 per square meter (sq.m.) for the entire 35,587 sq.m., while ALI's bid of P23,626.00 per sq.m. was for a reduced area of 27,440.25 sq.m. or effectively only P17,719.50 per sq.m., since the rest would be retained as public roads.

SMPHI's bid for lease of the property was P65.00 per sq.m. while ALI only offered P50.00 per sq.m.

On July 8, SMPHI received a letter from Governor Alfredo Marañon Jr., inviting its representatives to attend a conference on July 11 with him and the awards committee to discuss the proposed sale or lease of the Provincial Government's properties.

Attached to the letter was the resolution declaring the July 7 public bidding a failure.

The resolution stated that the bids from SMPHI and ALI were both below the floor price or appraisal value of P19,500.00 per sq.m., which SMPHI said was belatedly disclosed.

It was stated in the resolution that the committee resolved to sell and/or lease the government properties through negotiated bidding.

SMPHI protested the "unreasonable rejection" of its bid. It said that in no certain terms, the SMPHI deserved to be declared the winning bidder.

Without abandoning or waiving any of its legal recourses, SMPHI was forced to attend the conference set by the committee on July 11, with the hope that the Provincial Government will take "a fair and reasonable way forward."

The governor again invited SMPHI to submit proposal for negotiation of sale and lease on July 15.

In said negotiated bidding, Ayala participated and proposed to buy the property for sale at P20,500.00 per sq.m. and lease the remaining properties at P73.00 per sq.m.

The Provincial Government awarded the sale and lease of the government-owned properties since no other entities joined the bidding. SMPHI did not submit a bid.

In its petition, SMPHI said despite the having no knowledge of the appraisal value of the properties up for bidding, it tendered a reasonable and acceptable bid, which turned out to be higher than Ayala's bid.

SMPHI said its bid was only a variance of P12.00 or only three percent off the floor price and it cannot be considered "unacceptable."

It said the committee committed grave abuse of discretion when it negotiated with the losing bidder, ALI. "It is highly anomalous for the committee to be negotiating with the losing bidder with the intent of awarding the contracts to that losing bidder," the petition read.

SMPHI said the committee cannot casually set aside a publicly held competitive bidding on the pretext of a "failure of bidding" in order to proceed with negotiations, which such unseemly haste.

It noted that the committee's actions are in complete disregard of Section 504 in relation to Section 505 of the Government Accounting and Auditing Manual.

It said governor has shown a pattern of unfairness towards SMPHI.

"Such bias was evident from the start. From his unjustifiable disregard of SMPHI’s unsolicited proposal, the unlawful declaration of failure of the July 7, 2011 bidding to the unreasonable rejection of SMPHI's winning bid and recently, the hasty, immediate and rushed acceptance of Ayala’s offer during the purported negotiation," the petition read.

SMPHI said Gov. Marañon undeniably favored Ayala, which amounts to the evasion of his duty to strictly observe the rules, regulations and guidelines of the bidding process.