US-based Chevron Philippines Inc. has renewed its property lease for another 25 years at P16 billion, National Development Co. (NDC) General Manager Saturnino Mejia said on Thursday.
NDC, the government’s investment arm, owns 60 percent of Batangas Land Co. Inc. (BLCI), the joint venture corporation formed by NDC and Chevron after the termination of the Laurel-Langley Agreement in 1975. Chevron owns the remaining 40 percent.
Chevron primarily markets Caltex’s fuels, lubricants and other petroleum products through nearly 600 service stations nationwide.
Mejia said the agreement provides for a “ P400 million to P500 million lease per year,” with a provision allowing for escalation and/or review of the terms.
Mejia said Chevron will get a share of the rental payments.
The lease covers the period from October 2025 to September 2050.
Mejia said the new terms are an improvement from the current ones, but declined to elaborate, except to say that the “rate followed market value.”
The transaction was reviewed by the Privatization Management Office of the Department of Finance (DOF), he added.
Chevron’s most significant asset is the 120-hectare depot in San Pascual, Batangas, which Mejia said is an important component of the company’s operations in the Philippines.
The new lease agreement was signed by BLCI President Lilia Arce and CPI Country Chairman Billy Liu on April 2 in Makati City.
“This signing event seals another renewal of the partnership originally signed in 1975 and serves as witness to the continuing robust bilateral relationship between the Philippines and the US,” Mejia said in his speech at the signing event.
“This collaboration attests to the solid growth of the energy sector in the country and ensures continuing revenue generation for the government, creating additional employment, as well as ensuring sustainable linkages to the supply chain,” he said.
The DOF, in a Jan. 22, 2020 report of Malaya Business Insight, said that since 2010, Chevron has been paying P10.66 million per year to lease the San Pascual depot, an amount below fair market rental rates in Batangas.
The current lease ending September 2025 marks 75 years of partnership between Chevron and the Philippines, NDC said.
Chevron, then known as Caltex, was one of American entities granted “parity rights” under the 1946 Bell Trade Act of the US on land ownership in the country as a condition for the US government’s payment of $800 -million war damage claims to the Philippines, the NDC added.
These parity rights were extended for 20 years through the Laurel-Langley Agreement signed in 1955.
With the expiration of the 1946 Bell Trade Act, the DOF said Caltex was granted preferential treatment to occupy and use various real properties, including the Batangas industrial park.
Letter of Instruction No. 276, as issued by then President Ferdinand Marcos Sr., required the lease-back of the properties occupied by Caltex for a maximum of 50 years from 1975, at minimum rates of 1.5 to 2.5 percent of the property’s valuation in 1974.
