DOJ, COA panels deem BuCor-TADECO deal illegal and unconstitutional

A six-man panel from the Department of Justice (DOJ) has found the land deal between the Bureau of Corrections (BuCor) and banana plantation Tagum Agricultural Development Company Inc. (TADECO) illegal.

TADECO is owned by the family of Davao Del Norte Rep. Antonio Floirendo Jr.

A preliminary report was issued on the matter as requested by House Speaker Pantaleon Alvarez, who believes that the deal should be declared null and void because it is supposedly full of infirmities.

In a letter dated April 27, Justice Undersecretary Raymund Mecate said the panel report was "without prejudice to the final review and approval of the Secretary of Justice.”

Mecate signed the report in his capacity as officer-in-charge of the DOJ as Aguirre was on official business in the United States when the report was forwarded to Alvarez.

Aguirre confirmed to GMA News Online that he has a copy of the report but has yet to decide how to treat the findings.

"I have to attend to urgent matters first," the Cabinet official said.

Since the land in question is an inalienable land of public domain, it cannot be subject to any joint venture agreement, such as the deal entered into by the BuCor and TADECO.

Not a joint venture

The transaction covers the lease of 5,308.36 hectares of the Davao Prison and Penal Farm (DPPF) in Panabo City for TADECO's banana plantation.

The agreement was signed in 1969. It was extended for 25 years in 1979, and again for another 25 years on May 21, 2003.

"The Public Land Act (Commonwealth Act 141) delimits the disposition of the DPPF reservation. It requires a presidential act to declare the land as alienable and disposable before any agreement over the same may be allowed," the panel said.
 
Even if a joint venture agreement (JVA) is allowed involving the property, the BuCor-TADECO deal could not be classified as a joint venture agreement, the DOJ panel said.
 
The agreement failed to comply with legal requirements to be valid. There is no community of interest in the business by both parties, according to the panel.

The agreement also has no categorical indication of a "true and realistic" sharing of the profits and losses and the BuCor’s participation in the operation and management of the banana plantation is "substantially minimal."

The panel noted that the JVA does not include a BuCor representative to the TADECO management team.

The BuCor-TADECO deal does not contain required provisions to ensure government control over the land, according to the report.

The present contract area of 5,308 hectares is more than five times the allowable area (1,000 hectares) of public agricultural land that can be leased to a private corporation under the 1973 and 1987 Constitutions, the panel noted.
 
The panel found that the present BuCor-TADECO agreement and earlier agreements since 1969 were never subjected to any public auction or bidding in violation of the Public Land Act.  

Grossly disadvantageous
 
The agreements, covering 1969 to 2029, is 10 years more than the maximum 50 years allowed under the law.

"Thus assuming that the DPPF Reservation lands were leased and disposed of to TADECO under the JVA in accordance with the 1,000-hectare constitutional limit and through public bidding as required by CA 141, the current JVA for beneficial use of the land by TADECO should expire in 2019, not 2029, without any more renewal option," the panel said.

It agreed with the contention developed by Alvarez that the agreement was "grossly disadvantageous" to the government, since it was based on the "low lease rates."
 
“Under the BuCor-TADECO JVA, the production and profit share of the BuCor in 2016 amounted to only P44,854,726.00, or a rate of P8,449.83 per hectare per year," the panel said. 

"Compared to the prevailing lease rates of P10, 000-P18,000 per hectare per year of Tanglaw and Cooperative leaseback rates located in the general area where the DPPF lands are located, the BuCor-TADECO JVA appears to be disadvantageous in terms of per hectare rate," it added.

The DOJ panel is headed by Chief State Counsel Ricardo Paras III.

Its members include Director Maria Charina Buena Dy-Po (vice chairman, technical staff), State Counsel Precious Pojas (legal staff), State Counsel Melvin Suarez (legal staff), State Counsel Noel Adriatico (technical staff), and Atty. Catherine Angela Maralit (technical staff).

The findings echoed the statement of Solicitor General Jose Calida who said the JVA violated the Constitution and the Public Land Act.

COA recommendation

A separate recommendation by the Commission on Audit (COA) asked BuCor to cancel the JVA or ask TADECO to amend the agreement so that it conforms with the constitutional provision that allows only 1,000 hectares of public agricultural land to be leased to a private corporation.

“What is obvious is the excessive holding of agricultural land by TADECO, which –under the May 21, 2003 JVA – consisted of 5,308.36 hectares. This being so, the JVA is unconstitutional,” according to the memorandum addressed to BuCor Director General Benjamin Delos Santos.

Dated April 25, the audit observation memorandum was prepared by team leader Josefina Gonzalez and supervising auditor Flordeliza Arez.

TADECO earlier defended the legality of the deal, saying it has "withstood the test of time and multiple reviews by secretaries of Justice and several congressional investigations over so many years."

The banana exporter said only the courts can declare that a contract is void. — VDS, GMA News