By Ben Rosario
Over P460 million in lease payments have been denied the government in just the past two years of a total 25-year rental period by the Floirendo-family owned Tagum Development Corporation of a 5,308-hectare agricultural land owned by the Bureau of Corrections.
The Commission on Audit made this revelation as it aired serious doubts about the constitutionality of the controversial Joint Venture Agreement (JVA) that TADECO and BuCor signed in 2003.
The COA aired its audit observations on the deal in the 2017 annual audit report for Bucor that was released Friday.
State auditors also assailed Tadeco, an agricultural corporation owned by Davao del Norte Rep. Antonio Floirendo Jr., for alleged under remittance of Bucor’s profit sharing income by P5,826,567.01 in 2015 and 2016.
Last year, the COA called on the Department of Justice to void the JVA for being grossly disadvantageous to government. It also recommend the filing of appropriate criminal and administrative charges against BuCor officials involved in the deal.
The audit agency reiterated its view that the JVA violated Section 3, Article XII of the 1987 Constitution that limits such deal to 1,000 hectares of government property.
“The annual guaranteed income, including the profit share as consideration for the use of the reserved land of the Bucor, is grossly disadvantageous to the government considering the prevailing rental rate of P50,0000.00 per hectare in the locality or a revenue loss for the government of P460,181,652.00,” the recently-released audit report stated.
Under the assailed Tadeco-Bucor deal that was signed on May 21,2003, the BuCor will allow Tadeco to use and develop 5,308.36 hectares of its 28.8 hectares reserved land at the Davao Prison and Penal Farm in exchange for a P26,541,809 guaranteed income for government prison bureau.
Effectively, each hectare leased by Tadeco gave government at least P6,655.01 annual income, especially from 2015 to 2016.
Following an ocular inspection and other studies, state auditors, assisted by the COA Regional Technical Services in Region XI, submitted a Technical Evaluation report that showed that developed banana plantation in the area can be rented from P40,000 to P50,000 annually per hectare while undeveloped land may be leased from P15,000 to P25,000 yearly for each hectare.
With the report as basis, the COA said BuCor could have earned a total P530,836,000.00 had it followed the prevailing lease rate per hectare of land in the area in 2016 and 2017.
Deducting the guaranteed annual income paid by TADECO of P70,654,348, the Bucor should have collected an additional income of P460,181,652 from the deal.
“Indeed, the JVA entered into by BuCor with TADECO is grossly disadvantageous to the government. Hence, the same has to be revisited with the view to increase the guaranteed rates in the time that the same JVA is not yet declared unconstituitional by proper authority,” the COA stated.
However, the BuCor management maintained .that aside from having the authority to enter into contract for the use of the reserved area, it also acted in good faith since the burau is under direct supervision of the Department of Justice whose head approved the deal, being the “alter ego of the President.”
“The JVA is beneficial to the government because it serves the primordial purpose and mandate of the Bureau of Corrections in the rehabilitation of inmates,” agency officials stressed.
The management also reminded the COA that the JVA was signed in 2003 and the “rates jointly agreed therein were the most competitive rate prevailing at the time.”
Meanwhile, audit examiners accused TADECO of not giving Bucor its full income from the profit sharing scheme provided under the JVA.
“The total volume of bananas exported to various coutries by TADECO differ from the actual volume of bananas reported in the monthly production oreport submitted to Bucor, thus, resulted in the under-remittance of the profit share of TADECO totaling P5k,826,567.01,” COA said.
Citing Tadeco’s website, the COA noted that the firm boasted of an average of 5,000 boxes of annual yield per hectare of bananas, thus a production of “no less than 30,000,000 boxes/year.”
Computing the profit share of Bucor, audit experts said that Bucor earned a total P19,040,566.19 in 2015 and 2016.
With Tadeco being given the right to plant banans over a 5,308.35 hac of leased properties, Bucor should have received at least “a profit share of P12,433,566.62.
The COA warned that it will charge in audit the difference of P5,826,567.01 unless the management can justify the reasons for the “apparent noted under remittances of profit share.