GOVERNMENT auditors are “doubtful” whether the Boy Scouts of the Philippines (BSP) is getting its correct share of the lease income from its 15 percent stake in a high-end office space property in Makati City.
This is because the BSP remains clueless as to exactly what part of the Tower3 – Alphaland Makati Place, Inc. (AMPI) it can call its own despite having signed a supplemental Joint Venture Agreement with Alphaland Corp. five years ago that provided for determination of ownership.
“The specific area representing the share of the BSP in Tower 3–Alphaland Makati Place Inc. with a total amount of P208.011 million could not be ascertained… contrary to the requirement of Item 6 of SJVA dated September 8, 2015. The correctness of the agency’s share from the lease income of the same property was doubtful due to the unresolved income sharing scheme,” the Commission on Audit said in its 2019 report.
Tower 3 has a total floor area of 25,124 square meters which means the BSP’s share should measure around 3,768 square meters.
The commission stressed that the BSP is required by law to “ensure a fair and reasonable sharing scheme on both property and lease income” as well as the timely remittance of the revenues.
In its comment to the audit findings, the BSP claimed the reason for the delay in the finalization of the signed agreement on ownership was primary attributable to its desire to ensure that the government will not be at a disadvantage.
The audit team said the BSP has made assurances that it is “continuously exerting efforts to negotiate for more advantageous terms and conditions” with Alphaland “to maximize potential revenue…while maintaining a good business relationship” with its joint venture partner.
In 2018, the BSP through its National Executive Board (NEB) tried to take ownership of floors 24 to 27 of Tower 3 with a combined floor area of 3,800 square meters but AMPI pointed out that it would be difficult to assign individual floors since the process would require securing separate certificates of title from the Housing Land Use and Regulatory Board.
State auditors noted that Tower 3 began operations in December 2017 by leasing out commercial spaces to various businesses even if the question of space sharing with BSP has not been resolved.
The BSP management was reminded of its duty to safeguard government interests under the transaction when the COA issued Audit Observation Memorandum No. 2019-0004 on April 25, 2019 prompting the agency to seek the opinion of the Office of the Government Corporate Counsel (OGCC).
“The required SJVA/written agreement was not yet finalized and approved by both parties …which was a clear display of disregard of item 6 of the (2015) SJVA,” the audit team said.
Records showed the BSP received a remittance from AMPI of its shares amounting to P32.717 million after deducting expanded withholding taxes on August 29, 2019 covering lease for the period December 1, 2017 to December 31, 2018.