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In the absence of any official interpretation, below is the Fact-finding Committee’s interpretation of the Quiambao Contract:


A. Area of affected Property

  • Significant Case Facts
  • The actual area affected by the right-of way case is 40,000 square meters.
  • This is the area that NPC will actually pay for.
  • NPC determines the area to be affected by the power line project by initially conducting a table survey of the area that will be traversed by the Transco lines, based on a map of the grid where the project is located.
  • NPC then presents an offer to the owner to buy the area. An initial price is offered for the area size based on the table survey.
  • If the owner agrees, the transaction is finalized, paid and consummated. If the land owner does not agree, NPC files a right-of-way case in a court where the affected area is located.
  • Depending on the progress of the case, the court may or may not appoint a commissioner or commissioners to discuss the case with the parties involved.

When case is filed, NPC conducts an actual survey of the area that will be affected.

  • Actual survey will result in either a reduction or an increase in the area affected.
  • In the case of the UTS property, the actual area increased to 40,000 sq. m.
  • NPC admitted that this figure (40,000 sq. m. ) is far from the initial table survey of 29,700 sq. ms. because it erred in its table survey in that a portion of the area identified in the table survey was the wrong property not owned by UTS.
  • The correct properties were Lot 6186 covered by TCT No. 1089259 with an area of 37,130 sq. m. and Lot 3881-B covered by TCT No. T-1093743 with an area of 3,116 sq. m.—for a total area of 40, 246 square meters.
  • NPC records on this matter are available for review.


  • The fact that NPC will have the actual area re-surveyed with the filing of the right-of-way case, the factual area or size of 40,000 square meters, more or less, would have been known by UTS/PCU—with or without a broker.
  • At best, the broker may have been helpful in securing UTS/PCU’s documents (e.g. TCTs, tax declarations, clearances, reclassification, etc.) to expedite NPC’s survey.
  • Furthermore, the contract with Quiambao was only made in June 23, 2004.
  • The actual re-survey made by NPC was made long before June 23, 2004.
  • Quiambao now claims payment for 100% of all amounts in excess of P1,000 per sq. m. for the area in excess of 29,700 sq. m.
  • For Quiambao to say that he was responsible for the increase in area from 29,700 to 40,000, and therefore has to be compensated, would have no basis.

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.

  • A diligent land owner would have also known the above facts.

Issues and conclusions

  • Was the broker instrumental in increasing Land Area- From 29,700
  • sqm to 40,000 sqm?
  • Conclusion:
  • The broker was not responsible for the increase in the area from 29,700 sq. m. to 40,000 sq. m. This was something that NPC did on its own by virtue of the processes it follows. It is possible that the broker may have assisted in securing documents to expedite the processing of and verification of the area. This is an activity that should normally be done by any broker.

2. Does the broker deserve the fees stipulated on the contract?


Extraordinary compensation higher than the standard broker’s fee or commission is not justified.


B. Price Per Square Meter

  • Significant Case Facts
  • Before any negotiations are made, NPC already has a price range of the properties affected by its project.
  • The price per square meter may, to some degree, be subject to negotiation but stays within the pre-determined price range.
  • In the case of the Dasmarinas, Cavite transmission line project, the price range was within P1,000 to P1,500 per square meter.
  • The price of the specific area would depend on the confluence of the following factors:
  • 1.) Prices of the adjacent area;
  • 2.) Zonal Valuation;
  • 3.) Independent Appraisal-Market Value.
  • The classification of the property may also affect the price but for NPC this is not major issue. In fact, NPC will not consider a price increase due to reclassification of the property after the case is filed.

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).

  • Note that these figures were based on 1995 prices. Even then, P1,300/sqm to P1,500/sqm. was still below the prevailing price in the area. According to NPC, it did a good job in keeping the price down as the properties involved were definitely worth more than P1,300/sqm.
  • The possibility that the commissioners could have been influenced to award the maximum price to PCU/UTS, however, is present. After all, the commissioners recommend the price to the court, after arbitrating the discussions between NPC and the land-owner.
  • If the broker was personally negotiating with NPC, he may probably had influence on the price (but even this is not conclusive).
  • Then NPC President Murga, through the intercession of Mr. Rollie Dizon, has already instructed his staff to positively support the UTS/PCU negotiation. (However, Mr. Murga resigned from the NPC presidency before the case was resolved. His influence, therefore, may also be doubtful.)


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.


3.The whole process was a moro-moro.

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.

  • Be that as it may, the whole exercise of getting the additional P300 per sq. m. may have been pointless.
  • This price translates to an additional revenue for UTS/PCU of P12 million (40,000 sq. m. x P300/sq. m.).
  • To date, however, Quiambao has not disclosed the actual out-of-pocket expenses (e.g. legal fees, “facilitation fees”, etc.). There is a possibility that these will run into several millions. That he will claim more than P12 million is highly probable. Pres. Suarez stated that Quiambao already mentioned this amount.
  • At the end of the day, it is very possible that UTS/PCU will have been better off at P1,000 per sq. m. without the potentially huge out-of-pocket expenses.

Issues and Conclusion:

  • Was the broker responsible for bringing up the price form P1,000.sq.m. to P1,300/sq.m.?
  • There is no evidence that the broker was responsible for the price of P1,300 per sq. m.
  • Based on documents available to the fact-finding committee, it is possible UTS/PCU could have gotten up to P1,500 per sq. m.
  • Assuming that the broker was responsible for the increase of price from P1,000 per sq. m. to P1,300 sq. m., it does not justify his getting P300/sq. m. of the 29,700 sq. m. (29,700 sq. m. x P300= P8,910,000) plus P150/ sq. m. of the area in excess of 29,700 sq. m. (10,300 sq. m. x P150 = P1,545,000) or total of P10,455,000 by virtue of the price increase alone.
  • This claim of the broker cannot be justified.

2. Should the broker be compensated as claimed?

  • The broker should not be extraordinarily compensated beyond the standard licensed broker’s commission.
  • It is likely that the additional amounts accruing to UTS/PCU from the additional P300/sq. m. will only go to the reimbursement of Qiuambao for his out-of-pocket expenses.
  • With the amount of compensation the broker is claiming, the whole issue of increasing the price from P1,000 to P1,300 may benefit only the broker and not UTS/PCU.

C. The Contract

  • Significant Case Facts
  • No one in PCU--neither Pres. Suarez nor Atty. Larcia-- can actually compute how much is due to the broker, just by reading the contract. We can only interpret.
  • In contains double charging of fees.
  • The extent of actual expenses to be paid by PCU is open ended.
  • The contract reveals that Mr. Quiambao had previous knowledge that NPC was willing to pay P1,000 per sq. m. and that the actual affected area is 40,000 sq. m. more or less.
  • The contract terms offered by the broker was already in question from the start.
  • The EXCOM had issued an action to look for other alternatives to the Quiambao proposal.

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.

  • Documents made available to the FFC also point to the fact that the EXCOM, early on, expressed reservations about the Quiambao proposal.
  • From a disinterested person’s view-point, this would have already signified that the proposal needed to be scrutinized carefully —from a legal and financial perspective. A vigilant BOT would have realized this.
  • The case facts, as can be gleaned from the minutes of the various BOT meetings, also disclose that President Suarez admits to the BOT that “…I have never been so challenged in my life with a task as big as this one...” (BOT 3/19/04, Business Arising From Minutes of Previous Meeting, page 5).
  • In the same BOT meeting, Pres. Suarez also reported that the broker will shoulder all the expenses.
  • A legal review of the contract of June 23, 2004 prior to its signing would have revealed the provisions grossly disadvantageous to UTS/PCU.

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.

  • The provision where UTS/PCU will shoulder the expenses would have also been questioned in view of the broker’s previous statements to the contrary.
  • BOT discussions also revealed that it tabled the EXCOM Action 03-583 because the BOT “trusted” the President and has been earlier authorized to go ahead with the transaction.
  • This case is not a question of “trust” but an issue of “competence”.
  • Was the President “competent” in making a sound business, financial and legal judgment about the offer and eventually the contract? Was the President proficient in such transactions?
  • It was apparent that he was not. The president himself admits this. He had, in fact, also mentioned that he would be glad if another person was given this daunting task.

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.

  • It would have been prudent for the president not to limit his consultation with the members of the BOT. He should have at least sought the opinion of a person familiar with the real estate industry.


  • Pres. Oscar Suarez had the authority to do the NPC transactions.
  • The EXCOM action to look for other alternatives was reasonable.
  • President Suarez admits that he was incompetent in the task on hand.
  • There is nothing wrong in this. However, the president failed to exercise prudence by consulting real estate experts’ opinion on the matter.
  • A comparative offer would have revealed that the terms of the contract were quite extraordinary.
  • The Board of Trustees was negligent in not seeing through the real issues and risks related to the contract and therefore failed to see the wisdom of the earlier EXCOM recommendation.
  • While the BOT gave blanket authority to the president, it does not take away the 15-man board’s responsibility to protect the interest of PCU.
  • In their collective wisdom, the members of the BOT should be able to look beyond personalities and see, without bias, whether or not the president’s judgment was, in fact, sound.



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.


Broker’s Fees

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.






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.”

  • A major issue raised was the 5-BILLION MASTER DEVELOPMENT PLAN that has no conceptual framework and no strategic plan anchor and is yet to be documented in one comprehensive study.

- 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.

  • The campus development program has NO BUSINESS PLAN YET or feasibility study prepared either by an independent third party or the Suarez administration or its consultants.
  • There was no invitation/bidding made for the conceptualization and design of proposed PCU/UTS campus development project. No other quotation was secured from other architects for consideration of the PCU BOARD.
  • Despite the absence of contract, the following payments were authorized by the PCU President and issued to Architect Leah dela Rosa: (a) Php165, 000 to offset tuition and other student fees of her children and niece, with a partial payment as early as September 2003 and (b) Php1, 143,000 9netPhp1, 028,700) per EPCIB check No. 174028 on June 15, 2004).
  • The firm of Toledano et al was a relatively new company and has limited master planning and design experience.

No bidding occurred in seeking the services of financial advisers despite University policies requiring such.

  • Payment of Php400,000 acceptance fee for financial advisers even before confirmation of such appointment and despite information given to the Board that another prospective financial adviser did not ask for payment of acceptance fee and could perform the same functions at lower rate of success fee, and despite absence of a thorough background check on the chosen financial consultants.
  • The PCU Board has authorized the allocation of 2.5M for the visiting representatives of the World Bank educational assistance program who will conduct preliminary assessment of PCU qualification for a possible grant for PCU campus development program
  • The PCU Board has allocated the sum of 2M for the expenses of the IMC-MDP to oversee the PCU/UTS Campus Development Project.


  • Dr. Oscar Suarez, in his answer to the Letter complaint claims that the charges of Atty. Sofronio Larcia are at best “half-truths”. The salient points in his answers are as follows:
  • Financial Consultants
  • The group of Mr. Matthew Salcedo was first introduced to Mr. Aniceto Fontanilla on March 24, 2004 for the purpose of getting their expert advice on how PCU could secure the needed funds for its redevelopment plan.
  • Mr. Fontanilla invited the group of Matthew Salcedo to a joint meeting of the Building and Grounds Committee and the Land Use Committee to assist evaluate a preliminary presentation by a developer named Mr. Remo Santos.
  • Mr. Remo Santos’ presentation was made on April 13, 2004 during the Board’ Special Meeting. Salcedo’s group gave their comments to the presentation made by Mr. Remo Santos.

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.

  • The Board assessed their individual capabilities and asked if they could combine their efforts and work together as financial advisers of PCU for the intended MDP.
  • Mr. Salcedo agreed pending an official Memorandum of Agreement (MOA). The financial consultants were to assist in the raising of funds (loans, investments grants and the like for the proposed MDP and give financial advise on the MDP’s financial project viability).
  • Appointment of Mr. Matthew Salcedo, et. Al. as the financial advisors, subject to the legal review of the MOA, was approved officially by the Board on its June 25, 2004 meeting.
  • BOT also created an Internal Management Committee (IMC) to oversee, manage, coordinate and monitor the work of the Design, Planning and Development Consultant, Financial Consultant and the Project management Team.

The MDP-IMC was chaired by Prof. Aniceto Fontanilla.

  • Organizational concept, assignments and functions were drafted and was formally organized on July 15, 2004, during its first meeting.
  • The MDP-IMC in its 2nd meeting on August 7, 2004 discusses several BOT issues and concerns to include among others the approved credit line facilities.
  • Dr. Suarez reported that early on, the consultants had already established the mechanisms on how the credits availments were to be executed.
  • According to him, Mr. Salcedo stressed the need for a “Special Purpose Vehicle” to be able to draw such facilities.
  • For practical purposes mentioned the name of Terra Nova, which is already, existing that might be available for use.
  • The IMC opted to use Terra Nova after the consultant told them that while the University can establish its own SPV, it would take longer time to establish one.

B. Salcedo- De la Rosa Issue

  • Dr. Suarez clarified that the check issued to Architect De la Rosa is in the amount of Php1, 028,700.00 per O.R. No.0116.
  • The issue of the 50% share allegedly asked by Mr. Salcedo from Arch. De la Rosa is between the two parties.
  • Upon his inquiry, Mr. Salcedo told him that what he got from Mrs. De la Rosa was a loan, which the latter had long offered to him upon the release of the payment.
  • Mrs. De la Rosa according to him was happy that this thing was clarified.


  • The “idea” of a Master Development Plan (MDP) was adopted and sanctioned by the Board of Trustees.
  • The issue with regard to this program is the seeming absence of MDP’s conceptual framework and strategic plan.
  • Corollary to this is the perceived lack of bidding in the hiring of consultants.
  • Documents made available to the FFC set forth the following objectives and goals of the Master Development Program as follows:
  • the primary goal is the re-invention of UTS-PCU image as a prime
  • educational institution providing best and quality mentoring;

to provide facilities that would complement the global competitive curriculum in order to create a complete and competent students;

  • the future growth of the campus is envisioned to provide for and cater to more campus activities further enhancing student and faculty population.
  • It involves comprehensive master planning of UTS-PCU Dasmarinas Campus.
  • The implementation of these plans into a full physical development that will put UTS-PCU parallel with the country’s premiere Christian training and educational providers.
  • Both Dr. Oscar Suarez and Prof. Aniceto Fontanilla, the former IMC chairman in the interview with them by the FFC, confirmed these goals and objectives.

Dr. Oscar Suarez admitted that, to date, there is no MDP to speak of yet.

  • He informed the FFC that the activities related to this program is still focused on researches, which are being undertaken, by the Dela Rosa group, and the sourcing and building of funds, which is being undertaken by Matthew Salcedo et al.
  • Professor Fontanilla on the other hand, admitted that MDP does not have performance indicators within which progress impact can be determined.
  • Monitoring of this MDP is on a project-to-project basis.
  • He reported that this monitoring was done by a project coordinator who has been hired by the IMC on a Php20, 000 monthly retainer’s fee.
  • He added though that the project Coordinator is no longer connected with the IMC.


  • Committees were created in relation to the planned MDP, as follows:
  • Internal Management Committee
  • Review and Policy Committee
  • Committee on Land Use.
  • 1. Internal Management Committee (IMC-MDP)
  • Members:
  • Bishop Daniel Arichea Rev. Reuel Norman O. Marigza

Prof. Aniceto B. Fontanilla Mr. Dave Santos

Dr. Oscar Suarez (Ex-Officio)

  • The creation of this IMC-MDP appears to be an attempt to put in place this MDP as a subsidiary unit of the University.
  • Holds office within the compound of the Shalom Center, Taft Avenue Manila where the IMC hold its day-to-day operations and where the Committee holds its meetings.

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.

  • Dr. Suarez however, revealed that, as of reporting date, the services of the project coordinator have already been terminated.
  • In his place, a group of engineers/technical people is invited from time to time to give comments on the designs given by the consultants.

2.Review and Policy Committee

  • Members:
  • Bishop Solito Toquero Bishop Benjamin Justo
  • Atty. Sofrono Larcia Mrs. Erlinda Velarga
  • Dr. Oscar Suarez.
  • Mr. Aniceto Fontanilla serves as the resource person
  • This committee is tasked to review and propose to the Board guidelines on land use and to assist the Office of the President in the implementation of the policy.
  • 3. Committee on Land Use
  • Members:
  • Mr. Dave Santos Prof. Aniceto Fontanilla
  • Bishop Daniel Arichea Dr. Oscar Suarez (Ex-Officio)
  • It appears that the Review and Policy Committee and Committee on Land Use were interrelated
  • For lack of material time and available data however, the FFC was not able to

determine whether these two committees has beenoperational and whether or not policies on land use were actually formulated.

  • It appears though that these Committees are important components of the MDP considering that acquisition of land is included in the proposed MDP.
  • Professor Fontanilla, Chairman of the IMC-MDP is also member of these two committees.
  • Sources:
  • Based on the minutes of the BOT/Execom meetings made available to the FFC, the MDP funding requirements will come from both internal and external sources in terms of loans, donations, grants, bonds, tuition fees and others.
  • The eighteen percent (18%) interest earnings from the proceeds from NAPOCOR case are also slated for the MDP.

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.

  • Six million pesos (Php6M) were allocated for re-survey and topographical analysis. This amount is in addition to the Five Million Pesos (Php5M) previously approved for the MDP.
  • MDP has separate accounts. It’s financial transactions are only incorporated to the PCU books at the end of the year.


  • Based on records, the MDP has already spent the following to date:
  • A. Design Consultant
  • P1.143M - Professional Fees
  • P .160M - For preliminary Services (Payment offset with tuition fees

of Arch. L. De la Rosa’s four children enrolled in PCU)

  • P .091M - refund of expanded tax, SSS, Pag-ibig etc.


  • B. Financial Consultant
  • P .450M - Acceptance Fee
  • P .250M - Advance P.F. charged to Success Fee
  • P .250M - Advance P.F. charged to Success Fee

P .950M

  • IMC-MDP Annual Operational Cost
  • P2.250M - (Actual records not available as of reporting time)

D. Fund Raising Expenses

  • P1.375M - PCU’s expense counterpart for visiting WB representatives

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

  • P28.792M - Contract for the master planning and architectural and

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.



  • Two groups of consultants in relation to the planned MDP were hired by PCU.
  • 1. Design and Planning Consultant
  • Prof. Aniceto Fontanilla informed FFC that Dr. Oscar Suarez recommended Architect De la Rosa to the Board.
  • Arch. Lea De la Rosa is the parent of a student in the PCU-High School and Elementary School.
  • She was hired as consultant after BOT turned down the services of LANDCO and Sta. Lucia
  • It was noted that Architect Leah De la Rosa is also the design consultant of a Mr. Fontanilla in the construction of his house in Batangas.

Financial Consultants

  • The specific duties and responsibilities of the Financial Advisors are embodied in a Memorandum of Agreement (MOA) executed by the University with Matthew C. Salcedo, on July 30, 2004.
  • Per MOA the financial consultants are basically tasked to assist and advise the University in negotiating for the most workable and suitable financial loan package in the form of credit lines and loan facilities of not more than Five Billion Pesos (Php5, 000,000,000).
  • Aside from this MOA, the Board authorized the Financial Consultants to “provide direction and plans” for the maximum returns of the investible funds of the PCU.


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.



  • Approval of the MDP
  • The MDP is the focal point of the present administration. Its time, effort and resources are geared towards its realization as can be deduced from the Actions of the Board, Execom and IMC reflected in the various minutes of their meetings.
  • No doubt, MDP has a noble goal. However, the objectives and justification for undertaking the MDP appeared to be couched in broad phrases and generalities and are devoid of specific strategies and tactics.
  • This creates confusions, risky decisions and possibly led to shaky and losing propositions.

Record shows that MDP has already spent a total of Php 2.344 M for consultants alone as of September 2004.

  • This does not include the Php 28,792M for the MDP planning and architectural designs for Taft, Dasmarinas and Malvar by Architect Lead de la Rosa and the monthly retainer’s fee for the financial consultants for the month of October 2004 to date and the operational cost of the IMC-MDP.
  • Aside from this, MDP has also spent US$25,000.00 out of the Php2.5M (equivalent of US$ 50,000.00) allocated for the representatives of the World Bank Educational Assistance Program who will conduct preliminary assessment of PCU qualifications for a possible grant for PCU campus development program.
  • On top of this, an IMC-MDP was created as a subsidiary unit of the University with separate office, separate staff and annual operational cost of Php2.2 Million. The creation of a separate office at this point when the project is still in the planning and conceptualization stage appears to be impractical.

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.

  • It requires integration of all initiatives already undertaken and plans for future undertaking into a Comprehensive Development Program Concept/Study where the phases/components, implementing mechanisms, budgetary requirements, specific time frame, as well as monitoring and evaluation schemes are clearly defined.
  • This Comprehensive Development Concept/Study should be on top of the Master Development Plan expected from the design consultants it appearing that the latter only involves the physical development aspect of the program.
  • The projected cost of 5 Billion has no factual basis. In the absence of the Master Development Plan, there is no way to determine how much the program would cost.

b. Irregularities in the Hiring of Consultants

  • There was no bidding conducted in the hiring of consultants. The latter were hired on the basis of personal connections and association.
  • This is not wrong per se. However, this becomes the bone of contention, the moment the financial consultants started to have a direct hand in the investment of the University funds. Because by doing so, they become more than a consultant.
  • Dr. Suarez himself admitted in his answer to the complaint, that early on, the consultants had already established the mechanisms on how credits availment were to be executed. According to him, Mr. Matthew Salcedo had already stressed the need for a “Special Purpose Vehicle” to be able to draw such facilities.
  • For “practical purposes” Matthew Salcedo mentioned the name of Terra Nova. Subsequently, portion of the University’s investible funds was transferred for investment in this Terra Nova.

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 design consultant on the other hand aside from being the parent of four students enrolled PCU also served as a design consultant in the construction of Fontanilla residence in Lipa Batangas.
  • There is nothing irregular about this. However, this becomes improper when Arch. Lea De la Rosa was allowed to offset the Php 160,000.00 payment for her professional fee for preliminary studies, as tuition fee of her four children enrolled in the University, despite absence of contract and non-submission of tangible accomplishments/report on her part.
  • Records show that this offsetting was made almost a year before the Memorandum of Agreement (MOA) with the consultant is drafted. Records also show that the P1.143 million as professional fee for the preparation of preliminary project studies for MDP-PCU was made under the same circumstances.
  • This fact lends credence to the contention that this consultant was given “undue preference and leverage”.

c.MOA with Financial Consultants

  • The MOA entered into by the University with the Financial Consultant serves as the contract between the parties.
  • There is nothing in the contract that authorizes the Financial Consultant to invest a portion of the investible funds to any agencies or corporations.
  • Since the terms of this Contract are clear and leave no doubt as to the intention of the contracting parties, the literal meaning of the stipulations controls. (Art. 1370 New Civil Code of the Philippines).
  • Nevertheless, the action of the Board (Action NO.04-1227, May 21, 2004, BOT Meeting) which authorizes the financial consultants to “provide direction and plans” for the maximum returns of the investible funds created nagging question as to the real intention of the administration in the hiring of these financial consultants.
  • If the intention of the administration is to authorize the financial consultant to invest the portion of the investible funds aside from the giving of assistance and advise on credit line and loan packaging, such intention could have been incorporated in the MOA entered into by the parties on July 30, 2004, the fact being that said Action was taken two months prior to the execution of the Contract.

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.

  • In view of this, there is a need for adherence to established policies, rules procedures and accepted practices in the overall MDP transactions to ensure that these transactions are above reproach.
  • There is also a need for the creation of an oversight committee who would review the Actions made by the Board to avoid overlapping and inconsistencies and that these Actions are in accordance with law and with the established policies, rules and procedures of the University.





  • The Board in its April 13, 2004 meeting and covered by Action 04-1220 created a Management Team to prepare a Feasibility Study for the development plan of the PCU High School and Elementary Departments and eventually oversee its implementation.
  • On the same meeting, the board also appointed Messrs. Matthew Salcedo, Don Dia and Eric Torres as financial consultants for the university. This was covered by Action 04-1221. The board confirmed this very same action in its May 21, 2004 meeting under Action 04-1227. Subsequent to this the board made another action.
  • Action 04-1228 states:
  • “To hire Mr. Matthew Salcedo, Mr. Don Dia and Dr. Enrico Torres to perform the following:

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 assist in securing and negotiating for the most efficient terms and conditions of the financial loan package for the beneficial interest of the PCU; and
  • To assist PCU in the finalization and documentation of the financial loan package as approved to facilitate the early and timely release of the loan proceeds in accordance to the agreed schedules draw downs as indicated in the project feasibility of the PCU; and

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.”

  • In July 30, 2004, a memorandum of agreement was signed by the financial advisers and PCU through the President and notarized on the same date.
  • When the financial advisers signed the memorandum of agreement with the university, a contract of agency was established.
  • Article 1868 of the New Civil Code states “by the contract of agency a person binds himself to render some service or to do something in representation or on behalf of another, with the consent or authority of the latter.”
  • All the characteristics of agency are present in the nature of the agreement. There was consent on the parties, there is a principal in this case the school. The act of the agents are merely preparatory. Meaning it is just a means to an end.

The advisers did not become part of the plantilla of the university. No employer-employee relationship was established. All their acts are merely recommendatory.

  • They cannot make any decision that can bind the university without the consent of the Board of Trustees or of the President, as the executor of the Board.
  • A loan with EPCIB was contracted on September 22, 2004 using the time deposit of the university in the bank as collateral. The amount of P32,177,130.90 was credited to the account of the University on September 22, 2004. On the same day, the amount of Thirty Million P30,000,000.00 was debited from its account and credited to the account of Terra Nova in the same bank. These transactions can be clearly seen in the photocopy of the passbook submitted by the University.
  • The money that was credited to the account of Terra Nova was not immediately withdrawn. The bank authorized its withdrawal only on October 14, 2004, after Mrs. Rose Aquino, Treasurer of PCU and Mr. Dave Santos, member of the finance committee signed a document authorizing its withdrawal. As to where the Php32 Million went next is not known.

The core issue here is whether there was board approval to obtain a loan with EPCIB using the time deposit as collateral.

  • For banking institutions, it is standard operating procedure for them to require the submission of a Secretary’s Certificate or Board Resolution when any loan application is submitted to them. The Certificate issued should state therein that on a meeting of the board of trustees or directors they passed a resolution to borrow from a bank with the amount of the loan authorized and also who the authorized signatories should be. This resolution is also usually followed with a statement indicating what will be used as collateral.
  • In this case, a Secretary’s Certificate, duly notarized and dated August 9, 2004, was issued by then acting corporate secretary Dr. Aniceto Fontanilla.
  • It stated that the Board of Trustees of the University, on its meeting dated March 6, 2003, passed an action “to apply for, negotiate and obtain loans or other credit accommodations or facilities, including letters of credit, trust receipts, etc., from EQUITABLE PCI BANK (EPCIB) from time to time in amounts which in their judgment are required by the Corporation, including renewals, extensions, re-availments, restructurings or amendments or conversion into whatever credit form or type.”

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.”

  • Checking the minutes being referred to in this Secretary’s Certificate, there is no board action authorizing said loan. The closest action there was to any financial transaction with EPCIB is action 03-2036 and 04-1227.
  • “To authorize the immediate investment of investible funds of the University in Trust Accounts with at least two of the following banks:
  • Metropolitan Bank and Trust Company
  • Equitable PCI Bank
  • Standard Chartered Bank”

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.

  • The FFC does not want to speculate on the why but suffice it to say that this cannot happen by negligence. Negligence is the omission to follow certain procedure that a prudent man exercising due diligence should follow. The preparation of a Secretary’s certificate cannot be an omission because it involves an act. Thus the act of preparing a resolution for a non-existent action requires pre-meditation. Therefore if pre-meditation is present the act is deliberate in pursuit of a plan to obtain money or use the money of the University, this much is very clear. For what purpose was unknown at that time.
  • In our interview with the President and the Treasurer, they both said that the latter is the primary custodian of the funds of the University. This fact is very clear because it is the treasurer who is expected to make a report of the financial status of the university to the Board of Trustees and to know the where the monies are. Secondly, except in this instance, it is normally the Treasurer who makes the decision when and where the placements are to be made.

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.

  • In this case, when the transfer was made, it was only the president who signed the authorization to the bank. The treasurer, by her own admission only “regularized” the withdrawal. She only signed the withdrawal slip at the same time the letter to lift the withdrawals on the Terra Nova account was signed. This was done in October 14, 2004-- more than three weeks after the withdrawal.
  • Why the President authorized the withdrawal without the presence of the signature of any of the primary signatories we do not know. What the intentions or motives were we do not want to speculate. But this is a grave violation of established financial procedure of the university. What aggravates the matter is that the transfer is made to the account of a business solely owned by the wife.

This is where another problem lies. These articles on the Family Code should give some help.

  • Article 106. “Under the Conjugal Partnership of Gains, the husband and wife place in a common funds the proceeds, products, fruits, and income from their separate properties and those acquired by either or both spouses through their efforts or by chance . . .”
  • Article 116. “All property acquired during marriage, whether the acquisition appears to have been made, contracted or registered in the name of one or both spouses, is presumed to be conjugal unless the contrary if proved.”
  • Under these provisions, the nature of the capital in Terra Nova, being a sole proprietorship is conjugal partnership. This means that the business and its funds, for all intent and purposes, is owned by the husband and the wife. Thus the transfer to the account of the wife is also a transfer to the husband.

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.

  • Despite the protestation of the President, as clearly reflected in the minutes, the MDP-IMC continued the authorization opining that there was no conflict of interest.
  • On a side note there may be some mis-interpretation here. If a congressman approves a project for paving of a road to a corporation that is owned by the wife the public will be howling nepotism and conflict of interest. Comparatively, there is minimal difference here.
  • The Financial Advisers, as they have presented themselves in their credentials, have more experience on these matters, and therefore should have been more circumspect on their recommendations. The recommendation they made is prohibited in the banking community and BSP regulations because this is classified as being DOSRI loans or loans to the members of the board of directors, their families or immediate relative. These kinds of loans are what resulted in the closure of several banks.

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.

  • A reproduction of the minutes of the August 7, 2004 meeting of MDP-IMC wherein all the concerned parties are present is very revealing. Page 4 item 4 states:

“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.

  • Prof. Fontanilla asked is such a vehicle can be done immediately? The financial consultants discussed further the diagram presented to elaborate on the mechanism.
  • Dr. Suarez vehemently objected to the proposed mechanism in view of the SPV to his knowledge having a conflict of interest whereby his wife, Mrs. Marlene Suarez will stand in as the principal for the entity named “Terra Nova” being the proposed vehicle in the diagram.

Mr. Salcedo declared this to be on the table primarily to address the following concerns:

  • PCU by itself cannot engage in such arrangements, given too that PCU cannot pledge or encumber any hard assets required by funding institutions;
  • PCU can set up its own entity although it will take some time plus no credit history can be derived;
  • The SPV proposed is already ready and able to tap various sources of funds for the re-development of the school whether local or foreign; and
  • It automatically shields the institution from the issues stated above.
  • A question was raised as to whether a conflict of interest arises if Mrs. Suarez becomes link to these fund sourced? Bishop Arichea said, there is none considering that Dr. Suarez is the President of PCU while the spouse is the Country head of Terra Nova Trading, both professionally and separately accountable to their respective institutions.”

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.

  • As learned people in their field, it is assumed that in making recommendations they have evaluated the risks involved and the options available. In fact, when making recommendations, options must be available unless it is impossible to make.

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:

  • During the interview when we asked the Advisers as to the risk they replied that the investment is covered by a Fidelity Bond. A Fidelity Bond, however, limits the insurance to acts constituting embezzlement, malversation but not against bad investment decisions.
  • Conclusion: The investment is a high risk investment.

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.”

  • The primary purpose of Terra Nova as stated in its articles of incorporation is to engage in the business of trading of goods such as industrial goods, petroleum on wholesale or retail basis. It had no power engaging in the business of investment. What Terra Nova did is an ultra vires act or an act beyond its powers.
  • Let us examine next this investment in light of existing investment policies of the University. In its March 19, 2004 meeting, the board passed action 04-1209 that defined the investment policy of the university.

“PCU investment objective is to maximize returns with the least possible risk.

  • PCU investments are internally managed by the Administration and consist of fixed-income investments intended for general operation and special projects. Certain funds in trust may be handled by fund managers, as deemed appropriate by the donor.

A cursory review of the actions taken in connection with the EPCIB loan will reveal that all these policies were violated.

  • In making a recommendation that the investment must be made to Terra Nova, the advisers violated the very reason they cited for the need to have a special purpose vehicle. Secondly, they failed to perform their primary duty of putting the interest of the principal and instead placed their own interest beforehand.
  • The FFC cannot see the logic as to why PCU itself cannot do the investing. The advisers said that PCU cannot encumber hard assets. IN the first place, there were no hard assets that was encumbered in this case. What happened in fact is that PCU lost some margin by taking a back-to-back. Had the time deposit been withdrawn and invested directly then no margin is lost for the difference in the interest in the term investment and the loan interest with the bank. This should have been very obvious for people with years with years of banking and investing experience.
  • The only explanation why this is not done is if there is an intention to preserve the time deposit so that it will appear that the money was not put at risk and no investment policy was violated. This is possible because according to the treasurer transactions like this is not immediately book in the records until after the books are closed for audit.

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.

  • The second point raised was that there was no time and no credit history. Again, this will go into the expertise of the advisers. The express lane of the Securities and Exchange Commission (SEC) can process an application for incorporation within a week’s time if all the documents submitted are complete. This could have been known if due diligence was exerted by exploring other possibilities or consulting with lawyers
  • Furthermore, Terra Nova, as a newly incorporated entity has no credit history by itself. On this point, what happened is that the advisers implemented the very same reason given to the MDP-IMC members why PCU should not establish its own. If that were so, then why incorporate when the sole proprietorship have a longer existence than the corporation?

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.

  • There is nothing wrong per se with being personally interested to earn from legitimate business dealings.
  • What is lamentable here is the fact that the consultant, whose primary duty as an agent of the university and whose relation to his principal are fiduciary in character since they are based on trust and confidence, (Severino vs. Severino, 44 Phil 343 [1923].) has play both side of the fields.
  • Mr. Salcedo is being singled out because when Terra Nova was subsequently converted into a stock corporation. He became the President and also owned the most capital stock together with Mrs. Marlene Suarez.
  • As the two major stockholders, they stand to gain the most from the profit of the proceeds of the loan in terms of salaries from Terra Nova and also share in the profits the company will earn using the as capital the Php 32 Million of the university since the capital of Terra Nova is only P62,500.00.

If the intention is to earn from the money of the university, then the rightful action to do is resign as a consultant.

  • In this situation, there is no conflict of interest being violated and the playing field is level. Furthermore, this averts any suspicion since everything is above board.
  • The FFC from the start has reviewed the nature of the transaction involving the transfer of the Php 32 million.
  • We had to do this because when we asked for a copy of the contract, instrument, or document which serves as a basis for the transfer for the huge sum of money, the answer we got from the President, Financial Advisers and the Treasurer is that it is between the Financial advisers and Terra Nova.

Two contracts of loan were established, first, between the PCU and the financial advisers and second, between the financial advisers and Terra Nova.

  • The first one is not possible because the advisers are merely agents of PCU. Even as agents, for the advisers to be able to get the money for and on behalf of the university, article 1878 of the New Civil code should be complied with.
  • “Art. 1878. Special powers of attorney are necessary in the following cases:
  • (7) To loan or borrow money, unless the latter act be urgent and indispensable for the preservation of the things which are under administration;”
  • In the situation here no special power of attorney was issued. Again, this could not have happened because the board never really authorized the said loan. Had this been the case, the board would have been explicit in its authority. Thus, it was impossible for the advisers to withdraw the money.

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.

  • “By the contract of loan, one of the parties delivers to another, either something not consumable so that the latter may use the same for a certain time and return it, in which case the contract is called a commodatum; or money or other consumable thing, upon the condition that the same amount of the same kind and quality shall be paid, in which case the contract is simply called a loan or mutuum.”
  • If a loan was established this should be covered by a contract especially in view of the amount involved. But there is none as has been requested by the FFC. There is no document which the MDP-IMC can show to prove that the loan is “between the financial advisers and Terra Nova”.

A direct transfer was made from the account of PCU to the account of Terra Nova.

  • By operation of law, a simple loan was thus established between PCU and Terra Nova. In legal effect, when the money was transferred to the account of the sole proprietorship of Mrs. Marlene Suarez, the conjugal partnership of the President and his wife became indebted to the university in the amount of Php 32 Million.
  • In the course of the investigation of the FFC, we discovered some grossly negligent acts of the people entrusted with the funds of the University.
  • As of today, we have yet to receive any document, contract, investment paper, promissory note, or any instrument showing the indebtedness of Terra Nova to Philippine Christian University. Over 9 months have passed and there is nothing to show on this.
  • was submitted is merely a summary of the yields of the investment, payments made to the loan with EPCIB with a footnote or a fine print that the money is withdrawable anytime.
  • There is no instrument to show the term of the loan and other applicable conditions.

PCU contracted a loan for Php 32 million.

  • The same amount was transferred to a sole proprietorship which later became a corporation.
  • Through all of this, no proper documentation was even made. There is nothing to show whether the transfer is an investment, short-term loan, loan-term loan, or even a donation.
  • The President authorized the release of the loan prior to the signature of the treasurer or the chairman of the board who are the primary signatories.
  • The wife of the President was the recipient of the loan by virtue of Terra Nova and was subsequently the treasurer when it became a corporation.
  • Mr. Matthew Salcedo is the financial adviser who became a major stockholder of Terra Nova when it became a corporation and without relinquishing his post as adviser and in the process became a person recommending and recipient of the very same funds all of which without prior disclosure.

There is a latin maxim in law that states “res ipsa loquitor”. The facts speak for themselves.

  • From the facts the FFC has gathered, the conclusion that can be arrived is that everything that transpired is deliberate or planned.
  • This is the conclusion because the very original act, the preparation of a secretary’s certificate to get a loan from a bank citing non-existent board action required a conscious effort. If there was gross negligence it was post facto.
  • With this as a conclusion, it is up to the Fact Finding Committee of the Board of Trustees to find the extent of participation each had in this deliberate act. But should this be the case, there may be direct criminal or civil liability. We leave this to people more knowledgeable in law and with more time to analyze the series of events and evidences available.

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.

  • There may be some mitigating circumstances, especially on the part of the financial advisers, like the mandate of the Board to provide a return of 14% to 18% of the investible funds.
  • But what was lost throughout the discussion and desire to meet this yield is the fact that the school remains to be a Christian University.-- a university owned by two major Protestant Churches, the United Methodist Church and the United Church of Christ in the Philippines.
  • Being a Christian University, there are certain principles of stewardship and basic church belief and tenets that should be followed or must be recognized as inherent limitations in the task that they are supposed to accomplish.

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”

  • . The University, and in the process the church partners to this school, will be doing indirectly what it cannot directly do.
  • If the SPV decides to invest in a company that abuses the environment or violates environmental laws, promotes child labor, or manufactures ammunitions or weapon for war, all for the purpose of gaining an additional 10% to 15% more on the return of their investment. Would the church be violating its own dogma?
  • Legally it would not because the one making the investment has a separate legal personality. But the issue is not legal but moral. Will the church allow something to be done indirectly which it cannot do directly? The FFC is sure the churches will not allow it.

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.

  • It can also set different amounts which the university can risk in making these investments. It is the opinion of the FFC that these can be done directly by the university through its own people so that there is direct accountability and openness.


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.


For Board Discussion and Decision

  • An External Evaluation should be conducted on the University. This is being recommended for the long-term benefit it can provide the school. An external evaluation will allow a disinterested person a perspective as to how the school is being run. The good and bad side of its operation, decision making process, financial management, academic development, etc.
  • In the more immediate term, a Management Audit should be done to see how well the organization is being run and possible changes to improve its management and operation.
  • Create an Oversight Committee that can review, on an annual basis, all the actions the board passed during the year and try to harmonize this with existing policies so that there will be no conflicting policies or duplication of tasks.

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



(Money Max Rate +___%)



(91-day TB)


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

Loan Proceeds

Only pres. Signed


P32 M

PCU Fund










(Terra Nova)


P32 M

SPV Fund

Foreign Currencies

No Documents

-Capital M

-Paid up 62.5k

-Trading Co.

-Inc. Jan 05

P32 M

SPV Funds


Foreign Bank

(Fund Manager)


P Funds


$ Funds

No Documents


Salcedo Advise







P32 M

  • Pays Int. Quarterly- 18% P.A.
  • P5 million Interest was

advanced in 12/04



50% ??

Internal Management


MDP Architects

Toledano/Dela Rosa/Assocs.





MDP Financial Consultant

/ Dia / Torres

P1.1 million



P400k Acceptance Fee + P50k a month


Money-Max Acct.


PCU Long-Term

Loan- P32 M



  • Instructs Bank to transfer to Terra Nova Acct. w/ proceeds of loan
  • - No BOT approval

No Engagement

- No BOT approval

Terra Nova

Salcedo - 45%

Suarez - 40%

Natividad- 5%

Saludo - 5%

Singson - 5%

Loan proceeds credited


  • No Investment
  • Papers?
  • with or w/o recourse?
  • No Terms &
  • Conditions?
  • No Warranties?
  • No Investment
  • Risks Analysis?







  • Conflict of Interest ?