Only PRRD can nullify Tadeco deal: DOJ

Department of Justice Secretary Vitaliano Aguirre told a joint hearing of the House of Representatives on Tuesday it is only President Duterte who can cancel the joint venture agreement (JVA) between the Bureau of Prisons and the Davao-based Tagum Agricultural Development Company.

“The DOJ can only recommend that the deal be rescinded,” Aguirre explained. “It is not within our powers to nullify the JVA.”

He admitted that Speaker Pantaleon Alvarez had asked the DOJ to declare the JVA between Tadeco and Bucor as illegal but that he could not accede to the request because it was not within his powers to issue such a declaration.

Aguirre made this admission even as Tadeco president and CEO Alex Valoria made it clear that not only is the JVA valid and legal, adding it is also highly beneficial to the government and to some 30,000 direct and indirect workers in the banana industry and other related sectors.

Tadeco president and CEO Alex Valoria stressed these key points as he explained before lawmakers the constitutionality and legality of the BuCor-Tadeco JVA during the joint hearing Tuesday of the House of Representatives’ Committee on Good Government and Public Accountability and the Committee on Justice on the issue.

Valoria also submitted TADECO’s position paper to the two committees to answer point by point the erroneous allegations made against the company.
At the hearing conducted by the two committees, Aguirre said it is only the President who can declare the JVA between BuCor and TADECO as cancelled. The DOJ can only recommend that the deal be rescinded.

“Actually in the letter which we received from Speaker Alvarez they are asking us to declare more or less the contract as illegal. I believe that we could not do it. The DOJ, the Secretary of Justice cannot do it,” Aguirre told lawmakers at the hearing.

“I believe it is the President who could declare this as illegal and cancel the contract immediately. However, if the President would not tackle this, then we are going to make a recommendation to BuCor that they should institute appropriate action for the declaration of nullity of this particular contract since it is the BuCor which is the party with Tadeco in the execution of this contract,” he added.

Aguirre also acknowledged that TADECO employs thousands of workers, and its positive impact extends beyond its direct employees, because “thousands of families” benefit as well from TADECO’s operations. He also said that TADECO pays hundreds of millions of pesos in taxes to the government.

The JVA forged between BuCor and Tadeco primarily aims to help rehabilitate inmates at the Davao Prison and Penal Farm (DPPF) and prepare them for their eventual reintegration to society by providing them with a decent means of livelihood while serving their sentences. Tadeco has developed a banana plantation inside the DPPF Reservation to realize these goals.
“We respectfully would like to point out to our honorable lawmakers that the JVA is not only about money; the more important aspect to it is its core purpose of the rehabilitation of the inmates which has been a proven success,” Valoria said. “The benefits to thousands of ex-inmates, their spouses and children, and finally to the communities they eventually settled into are immeasurable.”

Upon questioning, Aguirre also admitted that he has not yet conducted any on-site inspection nor survey of the land involved in the BuCor-TADECO JVA.

Rep. Antonio Floirendo Jr., whose family owns TADECO, recused himself from attending the hearing as a member of the House justice committee “to obviate any perception of personal interference or influence on the outcome.”

The hearing, however, was attended by Alvarez who had filed a House resolution calling for an investigation into the BuCor-TADECO JVA after he figured in a personal quarrel with Floirendo.
Valoria said that aside from the benefiting inmates inside the Davao penal farm, the banana operations under the JVA “create 30,000 jobs in direct, indirect and ancillary roles,” which translates to the secure livelihood and future of at least 181,000 Filipinos.”

Tadeco also said that Tadeco paid P438 Million in taxes and fees to the Philippine government in 2016 alone. BuCor, on the other hand, gets more than P26,900 per hectare in profits and other payments from Tadeco, contrary to erroneous claims that BuCor was at the losing end of the deal, Valoria noted.

“Last year 2016, Tadeco actually paid the BuCor a total of P142,719,662. This equates to P26,900 per hectare. We must emphasize that Tadeco paid to BuCor not only the Guaranteed Annual Production and Profit Share but also the Inmates Farm Training Support, Stipend and Support Program, and Training Subsidy. The financial benefits paid by Tadeco from 2004 to 2016 amounted P 1,620,549,230,” Valoria said.

The Tadeco president also clarified before lawmakers that the contract between BuCor and the government is a JVA, and not a lease and tenancy agreement, which is the main basis for the erroneous arguments against the deal.

SAGIP Partylist Rep. Rodante Marcoleta said he also believes the contract between BuCor and TADECO is not a tenancy agreement, as erroneously pointed out by Justice Secretary Vitaliano Aguirre III at the hearing and the COA findings on the deal.

“I don’t think TADECO is cultivating and tilling the land as tenant,” Marcoleta said. “I don’t think the appreciation of the Commission on Audit is accurate,” he added.
Alvarez, however, still insisted that the agreement between BuCor and TADECO involves a “rental” and not a JVA, despite repeated explanations from Valoria.

COOP NATCCO Partylist Rep. Anthony Bravo, on his part, pointed out that TADECO provides jobs not only for the inmates but also for other workers.

Valoria and the other Tadeco officials pointed out that Tadeco workers enjoy the “highest salaries and benefits in the agricultural sector,” belying erroneous reports that they are supposedly ill treated and exploited.

“Tadeco has about 12,000 employees inclusive of a rolling average of 800 inmates that are enrolled in the DPPF’s rehabilitation program. Last year 2016, Tadeco paid out to its workers Php 2.8 Billion in wages, benefits and incentives,” Valoria said.

Tadeco workers, besides receiving above-industry standard wages, also enjoy medical coverage for them and their families, and have free access to elementary and secondary schools, chapels, a hospital, and recreation center and facilities, Valoria said.

Valoria invited the chairpersons and members of the two committees to visit the banana plantation and facilities set up by Tadeco in Tagum City so that they can “see for themselves the successes that the JVA between BuCor and Tadeco have obtained in the field of rehabilitation of prisoners.”

“We likewise would like you to see the productive, healthy and happy communities of Tadeco. It is a glimpse of what the Philippine rural communities should be,” Valoria said.

As for the legality and constitutionality of the contracts forged between BuCor and Tadeco, Valoria noted that as early as the 1970s, the Senate blue ribbon committee have already found such deals to be valid and aboveboard, with even then Senator Benigno “Ninoy” Aquino Jr. saying that the rates benefiting the government at that time were “extremely good and beyond competitive.”

Valoria noted that besides the Senate, the various agreements between Tadeco and BuCor from 1969 up to the present passed through 14 Secretaries of the Department of Justice who all upheld their validity and was also examined in 2012 by the House Committee on Agrarian Reform, which found the JVA “beneficial to the government and to the community.”

“In fact, the Department of Agrarian Reform uses Tadeco as the showcase of success of its Agrarian Reform Program. The Agrarian Reform Cooperatives in Tadeco have today assets in the hundreds of millions of pesos; whereas we understand the Agrarian Reform Cooperatives in other banana farms have quite the opposite – debt levels going into the billions of pesos,” Valoria said.

At the hearing, Valria also disputed the other flawed claims against the BuCor-Tadeco JVA, by pointing out the following:

• On the claim that the JVA is illegal because the land involved is “an inalienable land of the public domain,” the Senate Blue Ribbon Committee in 1970 already resolved this issue and upheld the validity of the agreement. The Senate panel pointed out then that the BuCor is prohibited under the law, from entering into a lease deal, and thus “we would not have approved the Bureau of Prisons-Tadeco contract if it did not clearly create a joint venture relationship between the parties.”

Under both the 1935 and 1973 Constitutions, no prohibition exists barring the government from entering into joint venture arrangements involving inalienable lands like the DPPF.
In the 1987 Philippine Constitution, “there is now an express provision allowing joint venture arrangement involving exploration, development, and utilization of natural resources” and there is no limitation as to the area to be developed.

• The agreement between the two parties is not a lease but a joint venture and the 25-year term is allowed under Section 2, Article XII of the Constitution. “There is no such thing as a prevailing practice in land leases of ‘just 10 years’. There are leases that go up to 75 years.”

Valoria said that besides receiving multiple awards here and abroad for its good agricultural and labor management practices, Tadeco’s model in rehabilitating inmates has also been recognized as a successful one that the BuCor even asked Tadeco to replicate the same program in the Iwahig Penal Colony in Palawan.