The Mall of Asia, considered as one of the region's largest shopping centers, is owned by SM Prime Holdings Inc., which also runs Save More, a grocery store chain. (Photo by Nonie Reyes)
[UPDATED 11 May 2011 after correcting figure in 5th paragraph.]
What would you do if the government wanted to give you your money back?
You’d grab it faster than a crooked general would feign amnesia at an anti-corruption hearing. [Which actually took place in this country. See: Amnesia grips witnesses]
After all, refunds don’t happen often enough, especially in the Philippines, a country where getting your money back is as rare and difficult as getting your money’s worth.
But six months ago, the Philippine government — through the Metropolitan Waterworks and Sewerage Systems (MWSS) — did just that.
Shown is a photocopy of a P33-million check representing the advance rent and security deposit, among others, of SM for the lease of MWSS' Katipunan Ave. property. Click to enlarge.
The MWSS reportedly returned P33 million (roughly $763,000) to SM Prime Holdings Inc., the Philippines’ largest mall developer which is owned by Henry Sy Sr., the country’s richest Filipino.
The agency reportedly sought to revoke a lease contract its officials entered into with SM Prime’s executives. [See: MWSS may cancel contract with SM, offers refund]
The contract, which would supposedly allow SM Prime to build Save More, a stand-alone grocery, on the MWSS’ Katipunan Ave. property was allegedly disadvantageous to the government, a source familiar with the matter said. [See: MWSS leases Katipunan property to SM Prime Holdings]
Under the lease agreement, SM reportedly agreed to pay the MWSS P100 per square meter or P1,200 annually for 25 years for a property that is reportedly worth P40,000 per square meter, a separate but unsigned document* claimed, citing current zonal values estimated by the Bureau of Internal Revenue (BIR).
“Selling prices [for properties in the area] range from P50,000 to P70,000 per square meter,” the same document said.
It added that rent should be twice than what was agreed upon, citing the property’s market value and interest rate projections.**
On the left is a photocopy of a receipt issued by the MWSS for a P33 million check it received from SM Prime Holdings Inc. On the right is a photocopy of a deposit slip indicating that the check was deposited to the account of the MWSS at the Philippine National Bank. Click to enlarge.
Moreover, rent payments of P100 a month exclude value added taxes, which, in turn, would be shouldered by the MWSS. As a result, the water agency would only get rent payments worth P88 monthly or P976 annually per square meter, an amount less than half of the estimated P2,400 it should supposedly receive.
The contract was entered into by Diosdado Allado, then MWSS administrator, and current SM Prime President Hans Sy Jr. on May 27, 2010, a month after the term of ex-President Gloria Macapagal-Arroyo ended.
In short, the lease contract covering an MWSS property along Katipunan Avenue may be considered a midnight deal.
Shown are signatures of ex-MWSS administrator Diosdado Allado and SM Prime Holdings Hans Sy Jr. on the contract's last page. Click to enlarge.
Shortly after the issue was reported in August last year at GMANews.TV, MWSS officials issued a check to SM Prime.
The check the MWSS issued was worth P33.248 million, equivalent to the amount of the check it received earlier from SM Prime Holdings Inc.
It was promply endorsed by official signatories around the time President Benigno Aquino III — in his first State of the Nation Address as Chief Executive — publicly excoriated MWSS officials and employees for receiving excessive bonuses for a year’s worth of work. [See: MWSS officials, staff received 25 bonuses]
The P33-million check was then reportedly hand-delivered to SM Prime’s offices at the Mall of Asia.
Except that no one supposedly wanted to receive it.
Question now is: what is the current status of the contract?
No one knows.
Text messages seeking clarification about the matter have already been sent to Allado, an SM Prime senior executive who handles media queries, and other government sources.
No reply from any of them has yet been received as of posting time.
Should we then kiss the checkout girls goodbye?***
*A source gave me the document, saying it came from someone who was also familiar with the matter but refused to be involved nor identified. Contents of the document, including financial estimates, have yet to be disputed.
**According to the document, rental rate per annum is equal to: Market value multiplied by interest rate prevailing, say of Treasury bills. “If we assume a fair market value of P60,000 per square meter and an interest rate of four percent per annum, the annual rental rate per square meter should be P2,400, not P1,200,” the document said.
***The line was borrowed from Steely Dan’s The Last Mall, one of the cuts from its 2003 album, Everything Must Go. [See: Steely Dan, Everything Must Go]
From The Before I Forget Dept. This blogger owns shares in SM Prime Holdings Inc., as of posting time.
From the Google is Your Friend Dept. A copy of a blueprint of MWSS’ Katipunan property can be found here while MY estimate of where property exactly is can be found here. WARNING: I get lost in Makati City.