MANILA - The government lost P460 million in potential income in 2016 and 2017 due to a "disadvantageous" deal between the Bureau of Corrections (BuCor) and a company owned by the family of Davao del Norte 2nd District Rep. Antonio Floirendo, state auditors reported.

In a 2017 report, the Commission on Audit (COA) said the 25-year joint venture agreement, signed on May 21, 2003, involved 5,308 hectares of land leased by BuCor to the Tagum Agricultural Development Company (Tadeco) TADECO, owned by the Floirendos.

The deal includes a guaranteed annual income of over P26.5 million with an automatic increase of 10 percent every 5 years beginning on the sixth term of the agreement, the COA said.

"The annual guaranteed income, including the profit share as consideration for the use of the reserved land of the BuCor, is grossly disadvantageous to the government, considering the rental rate of P50,000 per hectare in the locality, or a revenue loss for the government of P460,181,652," COA said.

State auditors said the average income from TADECO's rental payments from 2014 to 2017 is around P6,655 per hectare or around P35.3 million a year.

But when the COA checked the prevailing rental rates of land in the locality where TADECO is located, it showed that the average rental fee for an agricultural plantation there was P40,000 to P50,000 per hectare.

This means in 2016 and 2017, the P70.7 million guaranteed income the government got from the deal, should have been P530.8 million based on a P50,000 per hectare rental rate, COA said.

Screengrab from the COA report.

The Office of the Ombudsman last January 2018 upheld its resolution that found probable cause to charge Floirendo with graft for allegedly having a financial interest in the deal between Tadeco and the BuCor.

Government prosecutors asked the Sandiganbayan last month to order the suspension of Floirendo pending litigation of his graft case.