The government earned a total of P142.72 million in 2016, representing a 45 percent share under its joint venture agreement with the Tagum Agricultural Development Co. Inc. without spending a single centavo, Tadeco president and CEO Alex Valoria told lawmakers at a congressional hearing on Tuesday.
At the resumption of congressional hearing on the alleged anomalous BuCor-Tadeco agreement, Valoria told the House committee on good government and public accountability that the Bureau of Corrections was guaranteed a production share, which is a fixed amount under the agreement, as well as a portion of the profits from the bananas exported by the company.
“Both of these guaranteed earnings are reviewed and increased by 10 percent every five years,” Valoria said, noting that several local government units and organizations in Davao del Norte where Tadeco is based have also cited the benefits that the economy and the people of Mindanao receive from the JVA.
On top of these benefits, Valoria said Tadeco also provides BuCor for the farm training program and stipend support of the inmates inside the Davao Prison and Penal Farm, as part of the rehabilitation aspect of the JVA.
“We have likewise made our position also clear. We are on solid constitutional grounds. Through the years, the JVA was proven to be undoubtedly advantageous to the government and BuCor,” Valoria said.
For 2016 alone, Valoria said Tadeco paid BuCor a guaranteed production share of P35.36 million, and a profit share of P9.53 million. For the farm training program for inmates, Tadeco spent P5.5 million, and another P92.35 million for stipend support.
Thus, for 2016, Tadeco paid BuCor a total of P142,719,662, Valoria said, adding that the government’s gain from the JVA does not yet include the taxes and fees paid by Tadeco, which amounted to P438 million in 2016 alone.
But Speaker Pantaleon Alvarez, who initiated the inquiry into the BuCor-Tadeco deal after figuring in a personal quarrel with Rep. Antonio Floirendo Jr., disputed Tadeco’s stand on the JVA. He said the
agreement was disadvantageous to the government.
When Alvarez asked how much of BuCor’s earnings from the JVA represented Tadeco’s gross income of about P1 billion in 2016, Valoria said “14.2 percent.” Alvarez then asked Valoria if “hypothetically” an entity would agree to such a profit-sharing scheme of getting “only 14.2 percent.” Valoria then responded: “Hypothetically, Mr. Speaker, I would jump at it because I won’t have any risks. There is no single centavo involved.”
Valoria later clarified that the P1 billion hypothetical estimate referred to the gross income of the company’s export business, and does not yet include the operational expenses and other costs incurred by the firm.
“If the basis for BuCor’s percentage of the earnings were pegged on the net income, then BuCor’s share of P142.7 million would actually account for 45 percent of the P316 million net income attributable to the BuCor land covered by the JVA,” he said.
Under the JVA, BuCor will merely provide the land and manpower, while Tadeco will provide the capital in developing a portion of the DPPF as a banana plantation primarily to help rehabilitate inmates inside the penal colony. Tadeco will assume all the business risks under the agreement.
For his part, Justice Secretary Vitaliano Aguirre seemed to be at a loss when the discussion centered on the “primary goal” of the JVA between BuCor and Tadeco, when he said at the hearing that “I did not know about the rehabilitation” aspect of the agreement.
“I was not informed that this contract constitute some parts of rehabilitation of the inmates,” Aguirre said.
Alvarez has insisted that the BuCor-Tadeco deal violated the Constitution. But Tadeco refuted Alvarez’s claim, saying that under both the 1935 and 1973 Constitutions, the government is not barred from entering into such arrangements with respect to the development of natural resources. It also invoked that under the present 1987 Constitution, specifically Section 2, Article 12, the government can enter into JVAs involving “inalienable land of the public domain.”
But Alvarez insisted that the agreement was unconstitutional, and even threatened plunder charges against officials of the company, without any provocation from any of the resource persons or lawmakers present at the hearing.