Chevron lease of Batangas property ‘onerous’ —DOF

Chevron Philippines Inc. has been paying the government less than a peso per square meter a month for a state-owned property in Batangas that should fetch at least P17.90 per square meter monthly, the Department of Finance has said.

In a statement, the DOF said it uncovered onerous terms in the contract entered into by Chevron, formerly Caltex, and Batangas Land Co., Inc., a subsidiary of state-owned National Development Co. (NDC).

The DOF said the lease contract with BLCI allowed Chevron to pay a monthly rental fee of only 74 centavos per square meter on a 1.2-million-square-meter property in Batangas.

Citing NDC appraisal reports, the DOF said current fair market rental value in the area should be around P17.90 per square meter a month.

"Under the terms of its lease contract with the NDC subsidiary Batangas Land Co. Inc., Chevron has been paying a minuscule rental fee to the government for the 1.2 million-square-meter industrial park in San Pascual, Batangas that it uses as an oil import terminal," the DOF said.

Based on this computation, Chevron has been paying P10.66 million per year since 2010, compared with the P257.76 million per year based on current fair market rental rates.

The DOF said NDC documents showed that Chevron only paid P146.51 million in rentals from 1975 to 2019, equivalent to about P3 million per year.

With the property's current market value estimated at P4.9 billion to P5.3 billion, this translates into a rental yield of about 0.2% of the property's value.

"Based on current standards that the State imposes on similar contracts, to have a rental yield of less than 1% is surely grossly disadvantageous to the government and the Filipino people," Finance Secretary Carlos Dominguez III said.

Dominguez, who also sits as an NDC Board Member, described the lease deal as "another government contract with onerous provisions."

To recall, the Batangas property was acquired by Caltex under the 1946 Bell trade Act passed by the United States Congress, which granted "parity rights" that allowed American companies to own land in the Philippines.

Such parity rights were extended for 20 years until 1974, through the Laurel-Langley Agreement signed in 1955.

Chevron was then given preferential treatment in continuing to occupy and use various real properties such as Batangas industrial park.

However, Letter of Instruction (LOI) 276 issued by then-President Ferdinand Marcos required the lease-back of the properties occupied by Caltex for a maximum of 50 from 1975.

This also required minimum rates of 1.5% to 2.5% of the property's valuation in 1974. —NB, GMA News