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FINDINGS OF THE UCCP FACT FINDING COMMITTEE RE: ALLEGATIONS AGAINST PCU PRES. OSCAR SUAREZ BY ATTY. LARCIA. ISSUES NPC-PCU DEAL MDP ISSUE III. P32 MILLION LOAN & INVESTMENT ISSUE. ISSUE I: THE NPC- PCU DEAL (RIGHT-OF WAY CASE).
ALLEGATIONS AGAINST PCU
PRES. OSCAR SUAREZ
THE NPC- PCU DEAL
(RIGHT-OF WAY CASE)
In the absence of any official interpretation, below is the Fact-finding Committee’s interpretation of the Quiambao Contract:
When case is filed, NPC conducts an actual survey of the area that will be affected.
Even before the contract was prepared, he already knew that the actual area is 40,000 sq. m. Provision 1 of the contract is proof of this foreknowledge.
Issues and conclusions
Extraordinary compensation higher than the standard broker’s fee or commission is not justified.
In the UTS/PCU case, NPC was offering to pay P1,000/sqm without negotiation, but P1,300/sqm was definitely within range (adjacent residential lots were being offered paid P1,500/sqm).
There are three possible scenarios in the determination of the selling price:
1.) The whole process was an honest-to-goodness procedure where NPC files the case, the court intercedes, the prices are negotiated, the commissioners make a recommendation, the court approves final price.
If this was the scenario, then there was no need for a broker to intercede because the process eventually come to a conclusion.
2.)Similar to the scenario 1 but in this case, the broker pays off the judge and/or the commissioners.
It was common knowledge will that NPC was paying between P1,000 per sq. m. to P1,500 per sq. m. According to NPC, nearby residential lots were being paid P1, 500 per sq. m.
The court’s first decision on the case was for NPC to pay UTS/PCU P1,500 per sq. m. plus an interest of 12% P.A. until the amount shall have been paid by NPC.
This decision was appealed by NPC. The court upheld NPC’s motion for reconsideration and finally awarded the reduced price of P1,300 per sq. m. plus a reduced interest rate of 6% P.A.
Clearly this decision was to UTS/PCU’s disadvantage. This scenario is improbable.
If indeed the judge was paid-off, why the reduction from P1,500 to P1,300 and from 12% to 6%? Why was the commissioner’s report of P2,200 to P4,000/sqm shot down by the judge?
It is possible that only the commissioner’s were paid off that is why a high price was recommended to the court.
If this was the case, the broker was still not doing his job and was wasting bribe money, because at the end of the day, the judge still had the final say.
Knowing our justice system, this is possible.
All the parties, PCU (through Quiambao), NPC, commissioners and the judge may have gone through the motions but colluded with each other and had in fact already agreed on P1,300 per square meter.
The first award of P1,500 per sq. m. was part of the moro-moro to protect NPC. To make it appear that NPC was doing its job, it will appeal the first decision. The appeal will be favorably decided upon by the court and a lower price will finally be awarded. PCU will no longer contest the second decision.
Everyone comes away looking clean.
Regardless of scenario, the broker was still remiss in his tasks because the possibility of getting more than P1,300/sqm was very real.
Pres. Oscar Suarez had the authority from the BOT to transact, enlist persons and sign documents, among others, in behalf of UTS/PCU to accomplish the task.
Close scrutiny of the contract would also indicate that the broker had prior knowledge of the P1,000/ sq. m. minimum price offer and the actual area of 40,000 sq. m.
It was incumbent upon the president to ask for the necessary legal contract review—a necessary step before signing any contract or document that would bind PCU to any obligation.
The FFC does not claim competence in determining the degree of morality or immorality of an act. We do not know whether, in fact, morality comes in degrees or just a simple case of “black an white” and no gray area. However, being willing and knowing participants in a transaction where bribes will allegedly be made and conveniently “looking the other way” does, indeed, bring into the fore the “morality” issue.
The fact that the board authorized the president to enlist the assistance of persons and sign the contracts to facilitate the NPC case, points to the fact that the contract was within the President’s authority to sign. However, it is clear from the beginning that the contract was grossly disadvantageous to PCU. Whether we can question the legality of a duly signed but grossly disadvantageous contract is something the PCU’s lawyers should look into.
The FFC concludes that the fees being charged by the broker are too high and undeserved. The FFC is recommending payment only of the standard broker’s fee of 5% plus receipted out-of-pocket expenses. It is strongly suggested that the BOT invite Mr. Quiambao and negotiate for the above recommendation. The BOT should ask the PCU lawyers to study the possibility of settling the issue judicially as a last resort, if necessary. It may be worth the expense.
The broker, Mr. Raymundo Quiambao, somehow did some work related to the UTS/PCU property in regard to the NPC case. However, whatever work was done was in no way an uncommon broker’s task and, therefore, should not be compensated in an extraordinary manner. Mr. Quiambao may be:
1.) Compensated by not more than 5% of the total amount to be paid by NPC
to UTS/PCU, assuming he has the necessary realtor’s license.
2.) The out-of-pocket expenses may be reimbursed to Mr. Quiambao upon
presentation of proper receipts and documents.
MASTER DEVELOPMENT PLAN
Atty. Sofronio Larcia in his Letter of Complaint alleges that the developments in PCU in the last four years present a “disturbing picture of a reign of corruption and incompetence.”
- the University has already spent 39 million in favor of contractors and consultants chosen and recommended by the PCU Board without bidding nor objective selection processes and in utter disregard to standard practice of requiring submission of performance bonds.
- once the MDP materializes, the architects get at least 28 million professional fee and the financial consultants 250 million commissions.
He also cited as disturbing the delivery to Mr. Matthew Salcedo upon the latter’s demand of the 50% share of 2 million in the MDP’s architects fee, which was released to the architects.
No bidding occurred in seeking the services of financial advisers despite University policies requiring such.
On May 21, 2004, Mr. Salcedo et al presented their proposed financing scheme, after which the Board voted Mr. Salcedo et al as financial consultants of the University.
to provide facilities that would complement the global competitive curriculum in order to create a complete and competent students;
Prof. Aniceto B. Fontanilla Mr. Dave Santos
Dr. Oscar Suarez (Ex-Officio)
Personnel component compose of a Project Coordinator, who is paid Php30, 000 monthly, a Secretary who also acts as the IMC bookkeeper, and an accountant in the person of the University Treasurer.
determine whether these two committees has beenoperational and whether or not policies on land use were actually formulated.
Professor Fontanilla reported that based on the “initiatives of the financial consultants”, loans will constitute 20% of the MDP funding, while 80% will come from bonds, grants, donations etc.
of Arch. L. De la Rosa’s four children enrolled in PCU)
who will conduct preliminary assessment of PCU
qualification for a possible grant for PCU campus dev.
program (US$25,000 of the budgetted US$50,000)
Total Expenses: P5.969 Million
Architects’ Professional Fees
engineering designs for Taft, Dasmarinas and Malvar. As
of reporting date however, there is no showing as to
whether or not this has already been paid.
The FFC finds no reason to discuss this matter, this issue being hearsay in the absence of a written complaint from Architect Leah De la Rosa herself.
Record shows that MDP has already spent a total of Php 2.344 M for consultants alone as of September 2004.
At the conceptualization and planning stage, requires consultation and information dissemination among the members and key leaders of the two institution namely: UCCP and the UMC as well as the University clients and stakeholders coupled with environmental scanning to determine viability of the project vis a vis existing conditions and realities.
Records show that Matthew Salcedo,is also one of the incorporators of the Terra Nova and wherein the treasurer is the wife of the President.
The contract of the Financial Consultant expires on July 2005 but there was no provision nor safety measures formulated to ensure that the initiatives so far undertaken will not go to waste should the Board decides not to renew the contract.
To assist in securing and negotiating the most workable and suitable financial loan package from domestic or international institutions in the form of Credit Lines and/or Term Loan facilities of ONE BILLION PESOS (Php 1,000,000,000.00) or more as may be required in the development projects of the University in its Taft Ave. and Vasquez St., Manila and Dasmarinas;
To mandate the Finance Committee, through its chairman, Mrs. Linda Velarga, to gather comparative rates of financial advisers and send it to the members of the Board through email.”
The advisers did not become part of the plantilla of the university. No employer-employee relationship was established. All their acts are merely recommendatory.
The core issue here is whether there was board approval to obtain a loan with EPCIB using the time deposit as collateral.
It further gave the authorization for the authorized people to “mortgage, pledge, assign or otherwise encumber properties of the Corporation, whether real or personal, as collaterals for the said loan/credit accommodations/facilities, including renewals, extensions reavailments, reschedulings, restructuring or amendments or conversion into whatever credit form or type.”
In interview with Dr. Aniceto Fontanilla, the person who signed the Secretary’s Certificate and who was acting Corp. Secretary, he said that he did sign this document but added that it was prepared by the office of the President. He was not the one who prepared this, he was just requested to sign it.
It is also clear that in order that there is some form of control and protection on the funds of the university, two signatories are required. According to the minutes, it is the Treasurer and the Chairperson of the Board who are the primary signatories with the President or the VP for academic affairs as counter-signatories.
This is where another problem lies. These articles on the Family Code should give some help.
This may not be very clear to people not aware of the law, the financial advisers should have been aware of this and foresaw that there will be a conflict of interest issue, as what had happened in this instant case.
From a sole proprietorship Terra Nova became Terra Nova Trading Corp., a stock corporation established in December of 2004. It was incorporated with an authorized capital stock of One Million Pesos and a paid-up capital of P62,500.00. The primary purpose of the corporation is to engage in the business of trading of goods such as industrial goods, petroleum on wholesale or retail basis. Matthew Salcedo and Marlene Suarez are the primary owners with 2,125 of the 3,000 subscribed shares.
“4. Mr. Salcedo reported the following with regard to the investible funds:
4.1 . PHP 34 Million has been deposited with Banco de Oro. PHP 30 Million will be maintained with Metrobank and where appropriate, funds may also be moved to EPCI.
The funds were moved to enhance income from investments. These will also secure the credit lines that were given by these banks as discussed in item 2 and 3 above. The funds themselves will not be used for project purposes.
4.2. Since PCU is a non-stock/non-profit organization, the IMC deemed it is best to transact revenue enhancement programs through financial advisors who could utilize appropriate vehicles to insulate the University from the possible effects or repercussion related to corporate liabilities, tax implications, voluminous corporate documentation and the like.”
Mr. Salcedo stressed the fact that investments and/or potential borrowings can be done through the discussed mode called “Special Purpose Vehicle” (SPV) which enables corporations to expand the concept of value enhancement.
Mr. Salcedo declared this to be on the table primarily to address the following concerns:
As Financial Advisers, their primary task is to give advice. They were hired to provide wise counsel and give an objective view of situations. They should not be directly involved in the affairs of their principal as this will affect their objectivity and create a conflict of interest. Protecting the interest of the principal is the primary responsibility of the consultants.
In terms of risk, let us look at the investment made by the MDP-IMC to Terra Nova in the amount of Php 32 Million:
Another factor that can be added to the high risk nature of this investment is the capability of Terra Nova as a corporation to engage in this kind of business. Section 45 of the Corporation Code of the Philippines defines the limitation of the powers of a corporation. It states, “No corporation under this Code shall possess or exercise any corporate powers except those conferred by this Code or by its articles of incorporation and except such as are necessary or incidental to the exercise of the powers so conferred.”
“PCU investment objective is to maximize returns with the least possible risk.
A cursory review of the actions taken in connection with the EPCIB loan will reveal that all these policies were violated.
With this practice, it is possible to take out a loan at the start of the fiscal year using the deposit of bank as collateral, invest it and make money out of it. Before the end of the fiscal year pay-off the loan, and no record will appear because the loans does not get booked until after this fiscal year is over.
What had been very evident from all these facts and actions is the desire to corner the funds of the university and use it for personal gain. This is especially true on the part of Mr. Matthew Salcedo.
If the intention is to earn from the money of the university, then the rightful action to do is resign as a consultant.
Two contracts of loan were established, first, between the PCU and the financial advisers and second, between the financial advisers and Terra Nova.
Assuming that there were two contracts, what was established is a debtor and creditor relationship. Art. 1933 of the New Civil Code explains how this happens.
A direct transfer was made from the account of PCU to the account of Terra Nova.
There is a latin maxim in law that states “res ipsa loquitor”. The facts speak for themselves.
What is very clear is that there are people who needs to make some explanation how this thing could have happened and for a long time. We will not recommend specific actions, the Board of Trustees or the Corporate board of the UCCP can surely take it from here.
If the intention of the “special purpose vehicle” as the advisers have recommended, is to go around these limitations, what is happening becomes an issue of “the end justifying the means”
What is needed, as a conclusion to this mission, is for the University to clearly set forth policies or parameters as to the nature of investment that the university can make.
For immediate implementation
It is strongly recommended to withdraw the investment or require the payment of the loan from Terra Nova;
Offer to Mr. Quiambao the amount equivalent to a Broker’s Commission and reimbursement of all receipted expenses connected with the NAPOCOR case.
4) Institute more control mechanisms especially particularly in financial transactions.
5) In relation to nos. 2-4, involve people with diverse experience or expertise so that the overall operation of the school is seen from different perspective.
6) Come up with a Comprehensive Development Program that does not only include real property development but total or holistic development.
No BOT Action
P32-M EPCIB BACK-2-BACK
(Money Max Rate +___%)
P32-M EPCIB MONEY-MAX
Qrtrly Interest Earned- P 720,000.00
Qrtrly Interest Paid - (P 921,195.48)
Shortfall - (P 201,195.00)
Terra Nova Adv. - P 201,195.00
Int. On Investment - P1,718,805.00
Net Int. Earned(18%)- P1,920,000.00
Only pres. Signed
-Paid up 62.5k
-Inc. Jan 05
POOL OF FUNDS
advanced in 12/04
MDP Financial Consultant
/ Dia / Torres
P400k Acceptance Fee + P50k a month
Loan- P32 M
- No BOT approval
Salcedo - 45%
Suarez - 40%
Saludo - 5%
Singson - 5%
Loan proceeds credited