DOJ recommends scrapping joint venture between Floirendo firm, Bucor

May 9, 2017 - 11:54 AM
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The Tadeco banana plantation (image from http://www.anflocor.com)

MANILA, Philippines — In what could be a major setback for President Rodrigo Duterte’s main campaign backer, the Department of Justice has recommended the revocation of the joint venture agreement between the Bureau of Corrections and Tagum Agricultural Development Co., calling the deal unconstitutional.

Tadeco, the country’s biggest banana exporting company, is owned by the family of Davao del Norte Representative Antonio Floirendo Jr., who gave P75 million to Duterte’s campaign, making him the top donor.

At a congressional hearing, Justice Secretary Vitaliano Aguirre II also recommended that the 5,308 hectares of land owned by the Davao Prison and Penal Farm in Panabo City, Davao del Norte, where Tadeco maintains its vast banana plantation, be reclassified as alienable and disposable to allow Bucor to enter into an agreement with other parties through public bidding.

“We believe that if ever there’s an entity who has the right to question the contract, it would be the Bucor because it’s one of the contracting parties to the said agreement,” Aguirre said.

The joint hearing of the committees on good government and on justice was conducted in response to House Resolution No. 867 filed by Speaker Pantaleon Alvarez, who called the Tadeco-Bucor agreement “grossly disadvantageous” to the government.

Floirendo, Alvarez’s erstwhile bosom buddy, did not attend the hearing, but said that the allegations against Tadeco were “baseless and misplaced.”

“I deemed it more prudent to recuse myself from participating in the investigation to keep any perception of personal interference or influence on the House panel,” he said in a letter read at the hearing.

Alvarez has also filed a complaint against Floirendo before the Office of the Ombudsman over the deal.

The two Davao congressmen, known to be among Duterte’s staunchest allies, are now locked in a bitter dispute that some accounts trace to a spat between their partners.

Bucor and Tadeco first entered into a joint venture agreement on July 1, 1969 that allowed the company to lease some 3,000 hectares of land for its banana plantation. In 1979, they signed a consolidated joint venture agreement under which Tadeco leased 5,212.46 hectares of land from Bucor for an extended period of 25 years.

In 2003, the consolidated joint venture agreement was renewed and, based on the contract, Bucor wuld receive a guaranteed annual production share of P26.54 million, which would automatically be increased by 10 percent every five years.

But Alvarez claimed the government was “prejudiced” by as much as P106.16 million per year if prevailing industry practice were to be applied.

Meanwhile, Albay Representative Edcel Lagman said that 27 years ago, the House agrarian committee, which he chaired during the 8th Congress, had recommended that the land covered by the joint ventue between Tadeco and the Davao Penal Colony joint venture be placed under coverage of the Comprehensive Agrarian Reform Law.

In the June 20, 1990 recommendation, the committee said: “In fine, areas covered by the DAPECOL-TADECO Joint Venture Agreement, being commercial farms, must forthwith be covered under CARL for distribution to qualified agrarian reform beneficiaries as determined by DAR, without prejudice to TADECO entering into leasehold agreement with the beneficiaries.”