Daniel Mercado Medical Center and Mercado General Hospital, Inc., are one and the same undercapitalized entity that signed the contract to privatize portions of the century-old Philippine General Hospital

By Chanda Shahani

A Facebook.com page, entitled, “University Physicians Medical Center” (http://tinyurl.com/2cug2w2) has provided the missing link confirming that Daniel Mercado Medical Center (DMMC) and Mercado General Hospital, Inc (MGHI) are the one and the same undercapitalized entity that has entered into a 25-year lease agreement with the University of the Philippines (U.P.) Administration to privatize portions of Philippine General Hospital (PGH) at an estimated cost of PhP 400 million.

On April 29, 2010 The Diliman Diary raised questions about the contract between U.P. and DMMC centering around the question as to how MGHI – which is the sole company on record recognized by the Securities and Exchange Commission (SEC) – could afford to put a state-of-the-art diagnostics center, pharmacy and Faculty Medical Arts Building worth some PhP 400 million out of its own money, when it only had PhP 2 million in its subscribed capital stock on record (http://tinyurl.com/2alk8ob).

The SEC request sheet embedded above shows that there is no legal entity (at least from the SEC perspective) named Daniel Mercado Medical Center or any variants thereof. What is the juridical personality on record is Mercado General Hospital, Inc., despite the fact that the website of PGH itself makes no reference to MGHI but to DMMC only in the signing of the agreement with U.P. (http://www.pgh.gov.ph/upm-pgh-faculty-medical-arts-building-fmab-project-it%E2%80%99s-go)

But it is in fact the Facebook.com page entitled “University Physicians Medical Center” (http://tinyurl.com/2cug2w2) that clarifies the matter entirely. “The project is a joint undertaking of the University of the Philippines ... the lessor, and the Mercado General Hospital, Inc. / Daniel Mercado Medical Center (DMMC), the lessee, to convert, rehabilitate, develop and operate the old Dispensary Building as the University of the Philippines Manila - Philippine General Hospital Faculty Medical Arts Building (UPM-PGH FMAB),” it says.

Moreover, the website/link of DMMC (http://www.dmmcinc.com/miles.html) reveals the following information:

1) In 1957, Dr. Daniel Mercado opened the Mercado Clinic.
2) In 1988 Mercado Clinic's name was changed to Mercado General Hospital
3)In 1997, Mercado General Hospital, Inc was incorporated (The articles and by-laws were amended in 1998 and are embedded in the Diliman Diary, April 29, 2010 ((http://tinyurl.com/2alk8ob).
4) In 2000, the name of the hospital was changed from Mercado General Hospital to Daniel Mercado Medical Center.

The following questions therefore, still remain unaswered. What other parties are funding the 25-year lease agreement with U.P. given that MGHI/DMMC does not have the cash equity to fund this project? Moreover, the Diliman Diary checked with SEC, and no financial statements of MGHI could be obtained, so it could not be verified that MGHI could fund the project from its own cash reserves. What is not clear from the website of either DMMC, U.P. PGH or the Facebook.com page, entitled, “University Physicians Medical Center,” where the money is coming from to fund this project and what sorts covenants or side agreements have been made by DMMC/MGHI with third-party entities to provide external financing to this project.

The Diliman Diary will continue to provide updates to this story as soon as they are made available.

(Chanda Shahani is the editor of the Diliman Diary)