IF the stakes were not so high, the David and Goliath battle waged by the powerful Ayala Group against one of its smaller rivals would be laughable. But Ayala Land Inc (ALI) is sparing no effort to prevent up-and-coming property company Philippine Realty and Holdings Corp (Philrealty) from stealing the crown jewel of its showcase business district - the Makati Stock Exchange. The multi-million dollar tug-of-war over who hosts the bourse - to be renamed the Philippine Stock Exchange Inc (PSE) after its merger with the rival Manila Stock Exchange - has dominated newspaper headlines for months. For ALI to lose the exchange is widely seen as the first step in the demise of Makati. ''It would be a blow to its prestige,'' conceded ALI vice-president Mr Victor Manarang. The competition comes at a critical time for Makati and ALI, the district's major landowner. Makati was recovering from the 1989 coup attempt - during which rebels shot up office towers and hotels - when critics began to charge that unrestrained growth has clogged the district's streets with traffic jams and strained communications and electrical systems. Meanwhile, a surge of development has been going on in nearby Pasig City where Philrealty is building what is being called the new home of the PSE, Tektite Towers. Three major shopping malls and the new EDSA Shangri-La and Galleria Suites hotels have joined long-time tenants such as the Asian Development Bank, San Miguel and Hongkong Bank. ''Makati is supposed to be the business district of Manila but it's just getting too congested there,'' said Ms Peggy Angeles, director of sales and marketing for the EDSA Shangri-La Hotel. ''That's why people are coming to this area. If you give us a few months this area will be just as well-known as Makati.'' For ALI to lose the stock exchange to Pasig City could trigger a stampede of brokerage firms out of Makati. Recently, ALI offered to donate free space to the PSE in a new building it is hurriedly constructing on a prime lot in central Makati. Next month it will open free, temporary space for the PSE until the permanent building, costing about 200 million pesos, is ready. With the help of Saatchi and Saatchi, ALI has launched a sophisticated public relations offensive using large newspaper advertisements and weekly ''fact sheets'' faxed to local brokers and the media. ''Their war chest is huge. For every one dollar we spend, they spend ten,'' said Philrealty lawyer Mr Antonio Pastelero. Makati is the centrepiece of Ayala's property holdings in the Philippines. After developing plush residential districts in Makati, ALI put in enough office towers and roads to lure the most prestigious businesses from the City of Manila. Pasig is where Philrealty has its prime land holdings and to have the exchange headquartered there would be a significant boost. The Manila Stock Exchange is already there, but Philrealty can't claim to have won the battle until it gets the Makati Exchange, and eventually the merged body. ''If Philrealty gets it they will have a captive clientele. Most brokers want to be where the exchange is located. It lends some prestige to the area in the same way the Hongkong Stock Exchange lends prestige to Exchange Place,'' said a prominent Manila broker. ''That's why Ayala is taking this so seriously.'' Philrealty also has the support of Securities and Exchange Commission chief Ms Rosario Lopez who said she favours the Tektite building because it stands on ''neutral ground'' and is the closest to completion. It is unrealistic to expect a quick resolution. Neither side appears prepared to give in to the other after investing so much effort and money. The only certainty is this public battle of egos will produce further delays in the badly-needed reunification of the bourses.