Biz Buzz: Makati Diamond rising

The property unit of conglomerate San Miguel Corp. has been pretty quiet since its voluntary delisting from the Philippine Stock Exchange last year.

But before the year’s end, San Miguel Properties Inc. (SMPI) will join the tourism-oriented property business in the country.

SMPI is set to complete at the end of the year a 400-room serviced apartment project on Legazpi Street in Makati City. This is a 28-story structure announced in 2008 as a joint venture with the state-owned Government Service Insurance System, covering 1,766 square meters (but SMC has since bought out GSIS from the project).

The property will be called “Makati Diamond Residences” carrying the “Diamond” hotel brand in the personal portfolio of SMC president (and now single largest stockholder) Ramon S. Ang. Doris C. Dumlao

Real conflict of interest

Talk about a selective application of regulations.

With the Department of Public Works and Highways (DPWH) coming down hard on San Miguel Corp. for an alleged non-compliant bid for the Cavite-Laguna Expressway (Calax), one must ask: Why didn’t they apply the same rigorous standards with other bidders in previous projects?

DPWH disqualified SMC allegedly for submitting a deficient bid security, even though it has been clarified by the issuing bank that the bid security is valid and enforceable for a period as prescribed by the DPWH.

This move runs counter to the department’s recent lax rulings and accommodations to encourage more competition and to give the government the best price.

Note that during the bidding for Naia Expressway, a competing bidder submitted a non-compliant bid security that had a multiple-drawdown feature, when in fact, bidding rules clearly stated that it should have been a single drawdown. This apparent infirmity was accepted by the DPWH.

Another accommodation was granted by the DPWH to this conglomerate for the Calax project four days before the bid submission. Take note: four days before bid submission. Apparently, the day this conglomerate and its partner was formally awarded another project under the DOTC, both immediately became subject to conflict of interest restrictions under the Calax project (which stated that partners in previous projects were ineligible to bid separately for the deal).

However, in a bid bulletin issued just four days before the deadline, we hear that DPWH changed its original definition to cure the disqualification of this bidder.

In the case of the Daang Hari link road, meanwhile, DPWH also allowed a “viaduct or tunnel” design to accommodate the design of the Ayala group despite the written objection made by San Miguel way before the project was opened for bidding. Because of this new design accommodation, DPWH will incur an additional P500 million worth of expenses.

During the actual bid submission, Ayala submitted two constructions plan which SMC opposed during the bid opening. But unlike in Calax, DPWH did not request San Miguel to formalize its manifestation.

In the Naia Expressway project meanwhile, Metro Pacific Investment Corp. supposedly submitted a wrong bid bond. (The bid security must have a single drawdown feature, according to the rules, but MPIC gave a bond with a multiple drawdown feature.) But no mention was made of this supposed deficiency, that would have been grounds for disqualification.

Finally, on the Calax project, DPWH issued bid bulletin last April explicitly saying that the change of the project alignment was revised to grant the request of Ayala Land Inc. to have entry points from Laguna Technopark to the expressway. Does this qualify as giving one bidder undue advantage?

All of these make the officials at San Miguel wonder: Is DPWH out to get them? We’re wondering, too. Daxim L. Lucas

Of Aussies and Kiwis

Because agriculture is becoming an “in-thing” again, thanks to what many believe to be a structural upswing in global commodity prices, the First Pacific group led by Filipino businessman Manuel V. Pangilinan is scouting for more agribusiness opportunities in Australia in the aftermath of the Goodman Fielder investment deal.

The group is going heavy into agribusiness not just to ride on good investment prospects but to help ensure food security.

A source said MVP’s group recently had a good meeting with the New Zealand minister and the trade delegation. The group is said to be interested in getting into the dairy and livestock business in the market.

And aside from Goodman Fielder, MVP is now looking at wheat and sugar prospects in Australia. Doris C. Dumlao

Booming business

Tony Tan Caktiong, the billionaire founder of the Jollibee fastfood chain, has plenty of reasons to be jolly given the runaway success, at least in terms of share price, of his property venture with Mang Inasal founder Edgar “Injap” Sia II in DoubleDragon Properties Corp.

After all, the startup builder currently has a market value of about P17.4 billion, almost four times its initial public offering valuation upon listing last April 7. It peaked at P24.4 billion when its share price hit P10.96 apiece late last month.

The secret behind all this excitement is apparently not a big secret for Tan Caktiong, who partly credited the company’s expansion to the business style of Sia, DoubleDragon’s chair and CEO.

“It’s just the personality of [Sia], he just moves things so fast,” Tan Caktiong, the co-chair of DoubleDragon, said.

Indeed, a check with the stock exchange showed that DoubleDragon has revealed at least eight deals involving land acquisition for community malls, joint ventures and even the acquisition of a Visayas-based mass housing developer since it went public.

Tan Caktiong said that while he shares Sia’s aggressiveness, it was the latter that was more involved with DoubleDragon’s day-to-day operations.

“But if there is a major acquisition, he calls me up,” Tan Caktiong said.

It also helps that the company has enlisted the support of retail and banking billionaire Henry Sy for its flagship subsidiary building community malls. Sy’s SM Investments owns a 34-percent stake in CityMall Commecial Centers Inc.

DoubleDragon plans to build 100 CityMall “community malls” in six years to tap the Filipinos’ penchant for shopping in air-conditioned spaces.

And those who aren’t comfortable holding the company’s stock at these prices may opt instead for a possible bond issuance later this year.

Tan Caktiong said they may sell between P2 billion to P5 billion in bonds within the year to finance the company’s robust expansion pipeline. Miguel R. Camus

BIR shuts down Dillingers

Makati’s nightlife just got a little bit darker this week following the closure of one of the city’s top clubs due to tax evasion this week.

Hidden in the heart of the Ayala group’s Greenbelt 3 mall in Makati City, Dillingers 1903 Steak and Brew has gained popularity as one of Metro Manila’s classiest bars and clubs. Inside Dillingers, what appears to be a fire exit, is its “Prohibition Liquour Lounge,” which is used for parties.

However, Dillingers’—reportedly owned by “scions of well-known politicians”—forgot that in recent years, not paying your taxes has gone out of style.

The bar owned by Timeless Bar and Restaurant Concepts Inc. was padlocked by the Bureau of Internal Revenue last June 11. The BIR described the place as “an upscale watering hole frequented by popular personalities, as well as foreigners.” Dillingers was the first bar to be padlocked by the BIR in Greenbelt.

The BIR discovered during its surveillance and monitoring operations that the bar did not report its correct taxable sales receipts.

A 48-hour notice of the findings was furnished to Dillinger’s owners to make the necessary corrections, which it failed to do. A five-day value-added tax (VAT) compliance notice was issued thereafter and again, “the taxpayer failed to comply with the said VAT notice.”

“[The] said failure prompted the BIR to shut down the bar and restaurant,” the BIR said.

Ironically, depression-era outlaw John Dillinger, before being murdered, was charged with a host of crimes, but never tax evasion.  Paolo Montecillo

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