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)
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.
Discussion • 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? Conclusion: 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.)
Discussion 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.
Conclusion: • 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.
GENERAL CONCLUSIONS AND RECOMMENDATION Morality 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. Legality 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. Recommendation: 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.
ISSUE II: MASTER DEVELOPMENT PLAN
I. NARRATION OF FACTS 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’ VERSION • 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.
II. DISCUSSION AND ANALYSIS • 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. • THE MASTER DEVELOPMENT PLAN • PERSPECTIVE: • 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.
PROJECT MANAGEMENT • 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. • FUNDING • 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.
Expenditures: • 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. P1.394M • 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.
HIRING OF CONSULTANTS • 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.