Senators say BSP shortchanged in Alphaland deal

MANILA, Philippines–The Boy Scouts of the Philippines (BSP) under Vice President Jejomar Binay’s watch has been left holding an empty bag since agreeing to develop its one-hectare prime property in Makati with Alphaland Corp. seven years ago, according to several senators.

Senators tangled with BSP and Alphaland executives as they pointed out several disadvantages on the BSP’s part in the June 2008 joint venture agreement (JVA) to develop the property into the Alphaland Makati Place project.

For instance, the BSP was paid P7.6 million by Alphaland for the rent of the third floor of the project’s podium for 2014 only in January this year after the Senate blue ribbon subcommittee began looking into it, the lawmakers said.

“So, they paid you after the revelation of Mr. [Ernesto] Mercado about this issue in December,” Sen. Antonio Trillanes IV told BSP senior vice president Wendel Avisado. “This can be an afterthought.”

Under the JVA, developer Alphaland would acquire rights, title and interest in 85 percent and landowner BSP, 15 percent of the gross floor area.

The BSP’s share covers five floors of basement parking, a podium with six floors and three residential towers built on top of the podium, according to Alphaland.

‘Really shortchanged’

Avisado admitted that the organization had not collected one cent from the project on Ayala Avenue Extension and Malugay Street for the 2.2 million Boy Scouts nationwide.

He asserted that the BSP could only collect income once the project was completed. Without any financial advisor on board, he said, the BSP merely relied on then Makati Vice Mayor Ernesto Mercado, a senior BSP executive, to negotiate a good deal.

“Didn’t you notice that you were really, really, really, really shortchanged here?” Sen. Alan Peter Cayetano told Avisado.

During the hearing, Cayetano pointed out that Alphaland issued the P7.6-million check on Jan. 23, a day after the subcommittee heard Mercado’s testimony on the matter.

“After eight years, Sir, you only gained P7 million,” he told Avisado, “Mr. [Mario] Oreta already gained P600 million.”

By P600 million, Cayetano was referring to Oreta’s earnings in terms of shares from the BSP-Alphaland deal. Oreta said he had not earned any income since he had not sold shares, agreeing it was a “paper profit.”

“You’ve gained only P7 million and you’re sitting here, and saying that’s OK for the 2.2 million Boy Scouts,” he told Avisado.

Avisado said the BSP could earn income only when the third floor of the podium was completed. Cayetano pressed on and asked if the BSP had earned a single cent from the JVA. Avisado responded: “Our share is based on the gross floor area; there’s no cash involved.”

“None,” Avisado eventually admitted when asked if BSP received a cent from the project before it was paid the P7.6-million check.

Avisado admitted that both the BSP and Alphaland would have to agree on the “method of the selection of share” under the deal.

Hearing this, Sen. Sergio Osmeña III remarked this was a “weakness in the arrangement.” He said that normally, the JVA would identify which units would go to the landowner and developer.