DOF probing another “onerous” contract involving leased property

January 30, 2020

The Department of Finance ( DOF) is looking into another alleged onerous contract involving a government leased property.

In a forum with the Foreign Correspondents Association of the Philippines in Makati Ciy on Thursday, Finance Secretary Carlos Dominguez III said part of the lease contract was for the company to build structure there but this did not happen.

"Yesterday, there was a report to me by one of our financial institutions that they got into contract to lease a piece of property so that lessor will put up certain structure there," he said.

Dominguez noted that the lessor did not put up the structure "and yet the lease was renewed for a very low rate again."

"And the nice thing about it, the chairman of the institution when he was replaced, left and became the chairman of that company. Do you like that?" the Department of Finance chief said without further elaborating.

"You think this administration should sit down and say 'well, that was the way it was done in the past...you forget the basis on why this administration was elected. We said we wanted to change and our change is for the better of the ordinary taxpayers," he said.

President Rodrigo Duterte has earlier ordered all government agencies to check their contracts to determine if these are onerous and disadavantagous to the people.

The government is now working on new contracts with two water concessionaires in Metro Manila after the Department of Justice found them "onerous and disadvantageous" to the public.

Last week, the DOF also disclosed a lease contract with "onerous terms" between Chevron Philippines (formerly Caltex Philippines) and a subsidiary of the National Development Co. (NDC) that allowed the former to pay a monthly rental fee of just 74 centavos per square meter (sq. m.) on a 120-hectare or 1.2 million sq. m. state property in Batangas.

Asked during the forum on the possible effect on investors' confidence in the Philippines due to the review on the contracts, particularly in the case of Manila Water Company and Maynilad Water Services, Dominguez cited the "overwhelming response" from the market for the government's 3- and 9-year global bond issuance worth 1.2 billion Euros recently.

He said this underscores the "international investor community’s deepening confidence in the Philippine economy." Celerina Monte/DMS