The government lost P460.18 million in potential revenues over the past two years because the Bureau of Corrections (BuCor) charged “grossly disadvantageous” rental rates on Tagum Agricultural Development Co. Inc. (Tadeco), the Commission on Audit (COA) said.
In its 2017 annual audit, the COA said the BuCor should “revisit” the terms of its 2003 joint venture agreement with Tadeco even as its constitutionality issues have yet to be resolved.
In response, the BuCor leadership informed auditors that they would soon negotiate with Tadeco for higher rental rates to keep up with the prevailing market prices.
The government only received from Tadeco an annual guaranteed income of P35.33 million, or P70.65 million from 2016 to 2017, for the use of Davao Prison and Penal Farm land.
Rental rates
State auditors claimed the 5,308.36-hectare penal farm land could have generated an annual income of P265.42 million, or P530.84 million during the past two years.
Tadeco’s current rental of P6,655.01 per ha (adjustable by 10 percent every five years) paled in comparison to the prevailing rates found by the COA.
The “possible maximum income” was computed based on the prevailing rental rate of P40,000 to P50,000 per ha of developed banana-growing lands, according to the COA.
In response, the BuCor defended the deal as “beneficial” because the banana-growing agreement fulfilled its mandate.