President Rodrigo Duterte has agreed to probe the lease agreement of the UP Ayala Land Technohub upon the recommendation of Presidential Spokesman Salvador Panelo.
In a press briefing Thursday, Panelo said the Chief Executive has greenlighted the review of the 2006 deal which seeks to develop and convert the 37-hectare land of UP Diliman along Commonwealth Avenue into a commercial lot.
The issue stemmed from Panelo’s radio interview on Sunday, where he said he would recommend the contract’s review since Ayala Land is only paying P22-per square monthly rate to UP, citing figures from an article he “read on the internet.” Ayala Land later clarified that they were paying P171-per square monthly rate.
“I told the President about this, and his reaction was, ‘Then let’s see if the allegations of the article were true.’ So we will investigate. We will review so we will know if that’s true or not,” Panelo told reporters.
This came even if officials from UP and Ayala Land Inc. defended the lease agreement, saying it was not disadvantageous to both parties.
Panelo said he will request a copy of the contract from UP officials.
Under the deal, UP will receive a total of P10.23 billion during the 25-year lease—P4.23 billion payment and P6 billion in investments—according to Ayala Land.
Of the total lease payments, P1.1 billion was estimated to have come in from 2008 to 2018 while P3.13 billion would come from 2019 to 2033.
Ownership of the buildings, constructed at P6 billion, will also be turned over to UP at the end of the lease contract, the Ayala Land said.
The UP Ayala Technohub agreement is the newest contract under scrutiny of the administration, as Duterte previously ordered the review of the 1997 water concession deal and the LRT1 2015 concession agreement.
The President has earlier vowed to “correct” all government contracts with private firms before his term expires in 2022.
He specifically tasked the Office of the Solicitor General and the Department of Justice to check all existing contracts with the private sector.
The National Economic and Development Authority said the review of business contracts have caused fears from the business sector and some credit ratings agencies.
NEDA Undersecretary Rosemarie Edillon said that while “onerous” contracts have to be reviewed, the government must also look into the apprehensions of the private sector.
Panelo said local and foreign investors should not be worried on President Duterte’s order to “correct” all of state’s existing contracts with private firms, saying the government would respect the “sanctity” of these agreements unless contrary to law and public interest.
“There is nothing to worry on the part of the businessmen, whether foreign or locals, because the government will not be reckless to step into any contract that is not contrary to law,” Panelo said.
“Any pronouncement that says that the government will examine, evaluate or review onerous contracts is not something that businessmen should be afraid of because it is the duty of the government precisely to protect the interest of the Filipino people,” the Palace official added.