U.P. President asks for help in raising P47 million for U.P.'s laboratory school (UPIS) school building overhaul project

U.P. President Pascual briefs invitees to a merienda at Executive House where he briefed them about plans to raise funds for overhauling the existing K-6 structures of UPIS inside U.P. Diliman

Schematic diagram for the complete overhaul of the Narra Dormitory which will make way for the high school of UPIS

By Chanda Shahani 

University of the Philippines (U.P.) President Alfredo E. Pascual asked today for support from University of the Philippines Integrated School (UPIS) alumni, legislators and other interested parties for donor funds totalling PhP 47 million which will allow the overhaul and rebuilding of the existing U.P. Elementary School (K-6) inside the U.P. Diliman campus as part of an overall package which includes the transfer of the high school from Katipunan Road to the former Narra Residence Hall.

"The dream of coming up with a U.P. Integrated School is about to be realized," Pascual said at a merienda he hosted at Executive House at U.P. Diliman this afternoon for UPIS alumni and other interested parties. He said that in the late 1990s there were plans to transfer the high school of  UPIS from its location along Katipunan Avenue to the main academic zone of U.P. Diliman so that it would be closer to the U.P. College of education and the elementary school of UPIS.

UPIS is a laboratory school of the College of Education at U.P. Diliman with several prominent personalities having gone to school there or its predecessor school in Manila which was the U.P. Elementary School and the U.P. High School. The Diliman Diary has extensively covered the issue of the commercialization of the UPIS site along Katipunan Avenue, and our several articles on the subject may be accessed by typing in "UPIS" in this blog's search engine.

AyalaLand, Inc. won the rights to lease the UPIS property through open competitive bidding at terms which were much better than what U.P. received from AyalaLand, Inc. which leased U.P.-owned property along Commonwealth Avenue which is now the site of U.P.-Ayala Technohub, said U.P. Vice-President for Development Elvira A. Zamora, a professor administration at U.P. Diliman, who was also present at the briefing given by President Pascual.

President Pascual explained that as part of the overall package, AyalaLand, Inc. agreed to put up front PhP 180 million, which will be enough to put up the high school of UPIS where the former Narra Residence Hall now stands (please see the second picture for the schematic diagram of this). AyalaLand, Inc. also is giving some PhP 40 million for the grade school, which is not enough for U.P., since it plans to come up with an almost new structure which would require an additional PhP 47 million, bringing up the cost to overhaul the existing grade school to PhP 87 million.

The site of the former UPIS will be a town center that will be utilized for mixed use. It will be also a place for technology and business integrators which will cater to the private sector, especially techno entrepreneurs. “This will allow us to kill a number of birds with one stone,” Pascual said. There will also be an entertainment and town center, which will benefit the university community, he said.

In terms of the high school there is no problem because PhP 180 million has been raised with about 40 million also being raised that can be realigned for the elementary school but more needs to be added to this.

Former College of Architecture Dean Christopher Espina, who now heads the Campus Planning Office assured members of the audience that the new structures would be built in accordance to the national Building Code, and would take into account any possible minor earthquake faults within the area. He explained that the major fault line is the Marikina Valley Fault Line which does not cut through U.P. campus.

Espina said that the buildings would be well-landscaped, shaded and would incorporate as much green technology as possible, and would incorporate cistern tanks that would collect "grey rainwater" in order to help lessen U.P.'s carbon footprint.

Dr. Zamora said that the timetable for the construction of the new high school building would be within the next two to three months with the completion being timed for the opening of classes in the first semester or June, 2012 and with a backup plan of opening the new facility in the second semester of 2012-2013.

President Pascual said that U.P. Diliman was able to justify the retention of UPIS because as a laboratory school, it was intrumental in fulfilling the mission of the university by allowing U.P. College of Education faculty and its students to test and refine learning theories and programs.

He said that the high school attached to U.P. Cebu College could be retained by reinventing it as a high school for the arts with a concentration in high technology and animation.

UPIS currently has a student population of 1100 for K to 10 and can easily modify its programs to accommodate K to 12 should this plan be finalized by national government authorities, according to Ronaldo M. Jose, the principal of UPIS.

According its website UPIS is the basic education unit of UP Diliman. Other autonomoindividuals.us universities of UP maintain their own basic education units. UP Los Baños has UP Rural High School. UP Visayas has two high schools - one in Cebu and another in Iloilo. Aside from being the oldest of all basic education units in the UP System, UPIS is the only one offering both primary and secondary education.

“Hello Narra, Goodbye Katipunan” - An invitation to all Alumni, Students, Parents and other interested individuals.

The UP High, Prep, Elementary and Integrated School Foundation, Inc. will be having an event "Hello Narra, Goodbye Katipunan" on Friday, August 26, 2011, 7:00 p.m. at the UP Integrated School Multipurpose Hall, Katipunan Avenue, Quezon City.

The dinner program will present the future UPIS K-12 developments including the forthcoming transfer from its present site in Katipunan to the old Narra dorm site inside the UP Campus. The event aims to rally the support of our alumni to nurture and sustain excellence of UPIS.

Those who are interested in donating to the Foundation, which is raising the PhP 47 million for UPIS may contact Dr. Marvie M. Abesamis at marviea@gmail.com or cell phone number 0917 8102335

Photos by: Chanda Shahani

(Chanda Shahani is the editor of the Diliman Diary. An A.B. Comparative Literature graduate from U.P. Diliman, he also has a Master's degree in Entrepreneurship from the Asian Institute of Management and is a former business page reporter for the Philippine STAR).

Know the native trees at the U.P. Diliman Campus

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For more information on the Philippine Native Plants Conservation Society, Inc., please click on this link: http://www.facebook.com/PNPCSI

U.P. Integrated School alumni are questioning the basic premises for tearing down U.P.I.S. to give way to yet another Ayala mall.

By Chanda Shahani

Alumni of the University of the Philippines Integrated School (UPIS) are planning to petition U.P. President Alfredo E. Pascual for an audience and a possible public hearing to validate how carefully studied the plan to transfer UPIS to the current Narra Residence Hall in U.P. Diliman was; considering that the deal brokered by the past Roman administration and approved by a majority of the Board of Regents in favor of AyalaLand, Inc. had no public hearing which was in violation of U.P.'s own charter (R.A. 9500).
 
According to two Facebook pages made up of UPIS alumni, "Goodbye U.P. High" and "Let's Go to the Mall," many questions remained unanswered and so far there has been no sufficient dialogue yet with the new U.P. administration, headed by U.P. President Alfredo E. Pascual.

Rowena Bernardo, a UPIS alumni and founder of "Let's Go to the Mall," posted in "Goodbye U.P. High,"

"Dear Fellow Alumni -This is a small update on planned petition to Pascual for a public hearing on the UPIS deal. "

"We have a group represented by Conyap Longid who is making a position paper for a dialogue with Pascual."

"The position paper will be ready on April 1st. The petition though independently launched will have to look into the arguments of the position paper as well as all points gathered from different parties including any and all points that you would like to point out here"

"In essence, I believe that the decision on UPIS does not only affect UPIS but UP as a whole and a conscious query on where we are veering our education. I have enclosed here a link of a UK based online petition website as an example of the functionalities that the online petition I aspire to launch shortly after April 1."

Another UPIS alumnus,Eugene Lirio Tecson, said "I am from Batch 1992, a senior researcher (CSI & CPDRI) a rural development worker (CSI), a political scientist/political economist, and an international studies graduate student from UP Diliman and I would like to share my position, despite the very limited factual information that I have on the issue."

"I am against the transfer of the UPIS school building not because I am sentimental about it but because of the wrong reasons for which it is being transferred. From what I've gathered, the main arguments for the transfer of UPIS is: 1. To generate income for the UP System from the lease payment from Ayala Corp. and 2. To address the safety of the high school students from having to cross a much wider Katipunan Avenue. For me, these reasons are not sufficient grounds to transfer UPIS."

"UPIS as part of a national university should never resort to rely on private investments to sustain its operations. Since it is a national university, a status that is even higher than a state university, the national government is duty bound to provide public investments to sustain its operations. If UP is now considering the entry of private investments, as it already had, then it might as well be fully privatized. One should distinguish the implications of private funds from the UPIS alumni and the private funds that come from private corporations. Funds from alumni associations are donations meant to improve UPIS and have no strings attached or conditionalities. On the other hand, funds coming from private corporations would necessarily have conditionalities since they are profit and competition-driven. That is why these corporations need to set up infrastructure where they can do business during the period that they are leasing the UP property."

"The safety of the students is a flimsier reason. While I don't have a background in architecture/engineering/construction. I can only imagine that it would cost more to build new school buildings than build overpasses to address the safety of the students."

"As a concerned alumni member of UPIS, this is where I am coming from. These ideas do not necessarily represent the ideas of my other batchmates in Batch 1992 but I am hoping we can still debate from a scholarly and scientific standpoint on the merits of the proposed transfer of UPIS."

Meantime, here is a brief summary of the details of the proposed takeover by AyalaLand, Inc. of the current UPIS site along Katipunan Avenue according to "Goodbye U.P. High":

• The transfer of UPIS to the unused Narra Residence Hall  was an unsolicited proposal made by AyalaLand, Inc. to former U.P. President. Emerlinda R. Roman. The Board of Regents rejected it at first because it was not subjected to public bidding.
• The concept and transfer was eventually approved during the very last BOR meeting attended by then President Roman. 
• The new UP President Alfredo E. Pascual has ordered a review of the agreement: Just like the Ayala Tecno-hub in Commonwealth Avenue, the arrangement is a 50 year lease with guaranteed first option. U.P. only gets a percentage of the gross profit from the mall-BPO-condo complex operations. The initial payment will be PhP 200 million in orderto start the ball rolling. 
• All the other details are nebulous. Even the new principal does not know of the plans or timetable for this project. 

Former President Roman's last BOR meeting as U.P. President was on January 27, 2011 where the AyalaLand, Inc.  proposal was approved by a majority of the BOR with some regents, such as Student Regent Jacque Eroles dissenting on the grounds that there needed to be public hearings on the matter, in accordance with R.A. 9500. Outgoing President Roman subsequently turned over the authority of her office to incoming U.P. President Alfredo E. Pascual on February 10, 2011.

(Chanda Shahani is the editor of the Diliman Diary)

Ayala Land, Inc. files disclosure report to SEC on redevelopment of 7.4 ha. UPIS property along Katipunan Avenue

Editor's note: We are embedding below the corporate disclosure report submitted by Ayala Land, Inc. to the Securities and Exchange Commission (SEC) regarding Ayala Land's winning of the right to redevelop the University of the Philippines Inetgrated School (UPIS) property along Katipunan Avenue, Quezon City. Under SEC rules which stress transparency, publicly listed corporations such as Ayala Land must immediately inform the SEC of any major projects or developments which may have an impact on its stock prices, for the benefit of the investing public and institutional investors.

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Update: All U.P. Workers Union complaint vs. U.P. PGH FMAB Project leads to scathing COA criticism vs. U.P. Administration in its 2009 Consolidated Audited Annual Report

On the basis of a complaint filed by the All U.P. Workers Union (AUPWU), the Commission on Audit (COA) has now cast doubts on the legality and validity of the 25-year lease contract entered into by and between the UP, through U.P. Manila- Philippine General Hospital (UPM-PGH), and the Mercado General Hospital, Inc. (MGHI), for the conversion and development of the PGH Dispensary historical three-storey concrete building into the Faculty Medical Arts Building (FMAB) in its recently released 2009 Consolidated Audited Annual Report (CAAR).

The FMAB is a priority project of the Administration of outgoing U.P. President Emerlinda R. Roman. However, the 2009 CAAR refers extensively to “unresolved legal issues and inadequacy of auditorial documentary requirements on the 25- year lease contract of the Faculty Medical Arts Building (FMAB).”

COA said the unresolved legal issues and inadequacy of the auditorial documentary requirements cast doubts on the legality and validity of the 25-year lease contract entered into by and between the UP, through the UPM-PGH, and the Mercado General Hospital, Inc. (MGHI), for the conversion and development of the PGH Dispensary historical three-storey concrete building into the FMAB.

Read the rest here: BREAKING NEWS: COA Releases 2009 Audit Report on the University of the Philippines System

I vote for MDGS: A Citizen Journalism Workshop

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Want to learn how to tweet the way newsmen do it? Want to learn how to use everyday gadgets like your cellphones, digicams, iPod, laptops PDAs, and smartphones for citizen journalism? Want to become a certified CITIZEN JOURNALIST?

Join “I Vote for MDGs!” A Citizen Journalism Workshop” on August 21-23, 9-5pm at the UP College of Mass Communication. Open and FREE for all UP Diliman students. You don’t have to be a mass communication student to join. Even if you’re taking up Biology, Engineering, Food Technology, Political Science, European Languages or any course in Diliman, you’re welcome to join! As long as you’re an ISKO or an ISKA!

This FREE workshop will be held for 3 days and it will include discussions on journalism ethics and lectures on how to use everyday technology (digi/videocams, cellphones, laptops, mp3s) in producing stories for broadcast. A hands-on exercise will be part of the workshop, where participants will be divided into groups, will be asked to do filming and editing to create a 3-minute news story. These stories will then be screened and critiqued on the last day by Probe’s producers and UP College of Mass Communication’s faculty.

The training will focus on the basics of journalistic storytelling with the Millennium Development Goals (MDGs) as the framework. The MDGs are 8 time-bound goals, set by member states of the United Nations which addresses global concerns such as poverty and hunger, universal education, gender equality, child health, maternal health, HIV/AIDS, environmental sustainability and global partnership between first and third world countries.

“I VOTE FOR MDGS! A CITIZEN JOURNALISM WORKSHOP” presented by UP Journalism Club in partnership with Probe Media Foundation, Inc., Probe Productions, Inc. and the United Nations.

For more information and to reserve slots: PRE-REGISTRATION IS A MUST!

- You may contact Iya Cailao at 09065005867

- Send an e-mail to upjc1011@yahoogroups.com

UPDATE

This workshop has been indefinitely postponed. To get updated on the new workshop dates, please communicate by utilizing the contact details above.

The U.P. Board of Regents turns down Ayala Land, Inc.'s current proposal to take over U.P. Integrated School, favors a development plan first

(Source: Facebook page of No to Ayala Land,

Inc.'s proposal to take over UPIS)

By Chanda Shahani

The University of the Philippines (U.P.) Board of Regents (BOR) has turned down Ayala Land, Inc.'s (ALI) unsolicited proposal to commercialize the U.P. Integrated School (UPIS) along Katipunan Avenue in Quezon City in favor of U.P.'s first coming out with a development plan for the UPIS site.

According to Faculty Regent Judy M. Taguiwalo, the BOR met on June 2 and discussed ALI's proposal as part of the agenda. During the meeting, the BOR instructed the UP Administration to come up with a development plan for the current UPIS site and call for a public bidding once this is approved. It turned down the unsolicited proposal of Ayala Land Inc. as not being in the best in the best interests of UP.

The Diliman Diary has previously covered this issue, where it was revealed that U.P. and therefore, the Filipino taxpayer may not necessarily have gotten the best possible deal under ALI's unsolicited proposal (See Diliman Diary, May 28 and May 26, 2010) since market forces or more competition were not given the best chance to operate. Regent Taguiwalo's revelation that the BOR's insistence that there be a development plan first before the private sector is allowed to enter the fray under competitive bidding conditions in the UPIS case effectively creates a precedent for the future development of other properties within the U.P. System.

Under Republic Act 9500 or the University of the Philippines Charter of 2008, U.P. President Emerlinda R. Roman is not only the chief academic officer of the University but also its chief executive officer. As such, it is her administration that will bear the chief responsibility to come out with a workable development plan for UPIS that faitfully follows the spirit and letter of R.A. 9500.

Section 22 of R.A. 9500 (http://tinyurl.com/2wbcmzn), entitled "Land Grants and Other Real Properties of the University" states that:

• Income derived from the development of all land grants and real properties, such as the UPIS property shall be used to further the end of the national university, as may be decided by the BOR;
• The Board may plan, design, approve and/or cause the implementation of land leases: Provided, That such mechanisms and arrangements shall sustain and protect the environment in accordance with law, and be exclusive of the academic core zone of the campuses of the University of the Philippines: Provided, further, that such mechanisms and arrangements shall not conflict with the academic mission of the national university;
• The Board may approve the implementation of joint ventures: Provided, That in the event real properties of the national university are involved, only the income derived by the University from the use of the real properties shall be the subject of its participation or obligation in the joint ventures: Provided, further, That no joint venture shall result in the alienation of the real properties of the national university; and
• Any plan to generate revenues and other sources from land grants and other real properties entrusted to the national university shall be consistent with the academic mission and orientation of the national university as well as protect it from undue influence and control of commercial interests: Provided, That such programs, projects or mechanisms shall be approved by the Board subject to a transparent and democratic process of consultation with the constituents of the national university: Provided, further, That funds generated from such programs, projects or mechanisms shall not be meant to replace, in part or in whole, the annual appropriations provided by the national government to the national university.

A very likely key point person to be tasked by President Roman to participate in the development plan formulation tasked to the U.P. Administration by the BOR is U.P. College of Architecture Assistant Professor Armin B. Sathou, who currently holds the rank of Vice President for Development for the U.P. System.

A detailed interview  given by Vice President Sarthou and posted on the U.P. website, and entitled, "U.P. Forum Roundtable on the University in the next 20 years" (July-August, 2009, http://www.up.edu.ph/upforum.php?i=275&archive=yes&yr=2009&mn=8) gives a glimpse of some of the elements of such a possible development plan. The interview, quoting Sarthou extensively, and given from a trained architect's perspective, shows his point of view, which could be incorporated in the development plan and which the BOR may either adopt, reject or even modify:

• Circulation. The campus, already known for its pleasant and green ambience, will now be characterized by even wider and pedestrian-friendly sidewalks and walkways, connecting the different nodes and clusters within the campus, cutting through landscaped lushness, with more defined spaces for reflection and meditation. Vehicular access inside the campus will be limited to those with infirmities, and walking will be the norm. Parking structures will be located at the outer edges of the campus to encourage walking and the use of the public transportation system, which by then will be characterized by electric-powered transport—battery-powered ikot jeepneys drawing their power from solar panels and strategically-located charging centers, or perhaps a well laid-out monorail system conveniently connecting all areas of the campus.
• Housing. Some of the single detached housing developments on campus will have to give way to low-rise (three-storey) residential buildings, in the process eliminating altogether the long waiting lists for faculty and staff housing on campus. The new developments will be less dense than the present walk-ups, and will contain amenities that will enhance the quality of life of its residents, including localized sports and recreation facilities and multi-functional clubhouses. These projects will be made possible either though the University’s own financing and management, or in collaboration with private developers.
• Resource Generation. The University will, with the help of government, the alumni and the private sector, successfully convert hitherto unproductive real estate into resource-generating assets, decreasing dependence upon government subsidy to just under 25%.of its funding requirements. Assets such as the Sierra Madre and Mindanao land grants will by then be fully productive, with agroforest plantations in some portions to fortify University finances, and rich biodiversity in other areas to serve the University’s teaching and research functions. In all CUs, assets closer to campus will be further developed with the construction of more academic buildings and support facilities, housing for faculty, staff and students, and science and technology centers.

(Chanda Shahani is the editor of the Diliman Diary).

U.P.'s Staff Regent says "Swiss Challenge" rules will apply to Ayala Land, Inc.'s proposed privatization of the U.P. Integrated School Property

Staff Regent Clodualdo "Buboy" Cabrera

(Source: Facebook page
of Laban PGH Movement)

By Chanda Shahani

It's confirmed. "Swiss Challenge" rules will apply in the evaluation by the University of the Philippines (U.P.) Board of Regents (BOR) of the unsolicted proposal by Ayala Land, Inc. (ALI) to take over the U.P. Integrated School (UPIS) along Katipunan Avenue, Quezon City and transfer UPIS to the now non-operational Narra Residence Hall located inside the U.P. Diliman Campus, also in the same city.

According to U.P. Staff Regent Clodualdo "Buboy" Cabrera, the proposed conversion of the 20 hectare UPIS property was an unsolicited proposal submitted by ALI and discussed as part of the agenda of the May 27, 2010 BOR meeting held at Quezon Hall at U.P. Diliman.

Under the Swiss Challenge system as it is practised in the Philippines (See Diliman Diary, May 26, 2010), the government grants the original project proponent a predefined advantage through a point system in a competitive bidding process. This allows third parties to make better offers or "challenges." The original proponent then has the right to match a superior offer (http://tinyurl.com/3yow9r8). 

Cabrera said the proposal was still in its preliminary stages, and thus not enough time had elapsed for other interested competitors to submit their own proposals; given that the BOR was still in the process of evaluating and reacting to the original ALI proposal.

Here are some of the details of the ALI proposal as it currently stands: 

• ALI is proposing a 25-year lease agreement for the UPIS property
• U.P. will get 10% of any commercial building lease revenues
• U.P. will also get 15% of any land lease revenues
• Total leasable office space areas would equal 12,000 square meters
• Total gross leasable retail areas would equal 50,000 square meters
• All told, the entire leasable area under consideration equals 62,000 square meters
• ALI is proposing an overall compensation package to U.P. of PhP 177 million over the entire 25-year period

Regent Cabrera said that he did the math, and found out that the revenue accruing to U.P. came to a measly PhP 9.00 per square meter per month. The Diliman Diary validated the math by dividing PhP 177 million by 25 years and further dividing the product by 62,000 square meters to get a total compensation of PhP 114.00 per square meter year for U.P. Dividing that figure by 12 to get the monthly figure, we got PhP 9.52 per square meter per month for the coffers of U.P.

By way of comparison, Philippine Economic Zone Authority (PEZA) accredited properties in Libis, Ortigas and Makati City charge anywhere from a low of PhP 250.00 per square meter per month to a high of PhP 600.00 per square meter per month. If ALI wins the Swiss Challenge, ALI as the building developer, with U.P. concurring, is expected to apply for PEZA accreditation as it has already done so for the the 37.5 hectare North Science and Technology Park, located along Commonwealth Avenue in Diliman where the U.P.-Ayala Land Technohub is located. Even the U.P. Ayala Technohub, which is run by the Ayala Foundation, Inc., and located along C.P. Garcia Avenue, enjoys PEZA status.

According to the PEZA website (http://www.peza.gov.ph/) PEZA benefits include income tax holidays for up to four years, a special 5% tax on gross income (after the income tax holiday), payment exemptions.. Foreign investors will also be granted a permanent residency status upon initial investment of USD 150,000 to any sustainable, local enterprise. These are particularly attractive to business process outsourcing (BPO) companies, given the proximity to quality graduates from U.P. Diliman and elsewhere which will help drive the need of BPOs for comparatively cheap but skilled knowledge economy-based human resources. Since BPO workers are given comparatively higher starting salaries than their counterparts in other industries, ALI's business model hopes to capture back some of the disposable income spent by call center agents and their bosses by ensuring that there enough restaurants, convenience stores and other retail outlets. This is why a mixed-use site is being envisioned, and not just office spaces.

But the bottom-line, said Regent Cabrera, is that U.P. can do much better than the ALI proposal as it now stands, in terms of revenues obtained by U.P. He said that he is not even in favor a Swiss Challenge as he thinks that the UPIS property can be put to better use by constructing dormitory facilities for students or other essential university structures. In fact, a huge secondary market for bedspaces, apartments, houses, etcetra exists now precisely because of the university's inability to provide safe, decent and affordable housing to the entire population of students who needs this service.

Other critics have criticized U.P.'s decision to mimic the overall outsourcing boom in the country by attracting facilities that cater to the low-end call center and outsourcing market which represents a "dumbing down" of the job offerings being promoted by U.P. to U.P. graduates within U.P.'s vicinity. By way of comparison, India, which is the world leader in outsourcing, has already made the shift from BPO development to Knowledge Process Outsourcing (KPO) development. KPO are processes that demand advanced knowledge, analytical interpretation and technical skills as opposed to BPO work which typically entail standardized routine processes and data entry kind of work or sales or order fulfillment work. Given the high level of capabilities of the typical U.P. graduate, there is clearly a mismatch between the types of jobs being offered and the students' capabilities.

In other developments:

The search process for a new U.P. President to replace U.P. President Emerlinda Roman may be said to have already begun by way of Faculty Regent Judy Taguiwalo's recent submission to the BOR for  a proposal to initiate the search process for a new UP President as President Roman's term ends on February 2011. During the 2004 search, the BOR members were already provided relevant documents related to the search process as early as February 2004, Regent Taguiwalo said in an email message to the Diliman Diary. Based on the search process in 2004, the search for a new U.P. President should commence this June and the election should be in November, she added.

(Chanda Shahani is the editor of the Diliman Diary. He has a master's in entrepreneurship (M.E.) from the Asian Institute of Management and is a former business page reporter from the Philippine STAR).

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)

U.P. Philippine General Hospital contract with DMMC to privatize portions of PGH may be lopsided

By Chanda Shahani

The University of the Philippines (U.P.) Philippine General Hospital (PGH) may have entered into a grossly disadvantageous relationship resembling a kind of corporate neocolonialism where the numerous assets and resources of one entity (PGH) are hijacked by a smaller but more technologically advanced entity (Daniel Mercado Medical Center) to the gross disadvantage of PGH, and consequently the Filipino people.

At least that's how the the contract looks like between the UP administration and the Daniel Mercado Medical Center (DMMC), a private hospital in Batangas leasing the old Dispensary Building, to be renamed the Faculty Medical Arts Building (FMAB) a three-storey structure which used to serve as the old outpatient department (OPD) of PGH, to DMMC.

The Diliman Diary obtained copies of the Articles of Incorporation and By-laws on April 21, 2010 of the owner of DMMC from the Securities and Exchange Commission (SEC) (embedded in the scans above and below), which is Mercado General Hospital, Inc. (MGHI). What is baffling is the failure of the U.P. Administration-dominated Board of Regents to disqualify MGHI from bidding on the contract which was signed on July, 2009 when a minimum amount of PhP 400 million will be spent on a pharmacy and a medical diagnostics center where the capital stock of MGHI that is actually subscribed is a meager PhP 2 million only.

It is clear that MGHI is not a credible company in that it does not have the resources to pursue a project of such magnitude on its own, in order to bring added value to the relationship. The Diliman Diary checked with the records department of the SEC and failed to get any financial statement of MGHI, which is not in accordance with current SEC rules, as all corporations are required to submit their audited annual financial statements to SEC. In order to fund this project, there must be other “silent investors” who may have internal agreements with MGHI. But like all “hot money,” this money is subject to capital flight if the terms of reference between U.P. and MGHI are questioned or investigated by the either the next U.P. President or by Congress itself.

The default preference of the BOR should normally be with a deep-pocketed investor that is willing to advance project construction funds from its own internal funds subject to certain covenants that protect the investor in case of government non-performance or default in case a new U.P. President or the BOR itself or even Congress or the courts reverse the original contract or even scuttle it completely. In the case of MGHI, MGHI's commitment to funding this project itself is held hostage by its silent investors if groups like the All-U.P. Workers Union succeed in getting the contract cancelled or modified such that the terms of reference are no longer appealing to the outside investors.

Under the contract, MGHI has lease rights to this PGH property for 25 years. According to the Facebook page, Ibalik ang Tama - Laban UP-PGH Movement UP will be paid by DMMC only 1 million pesos a months for 25 years as payment for renting the FMAB. DMMC will earn 1 million pesos a month from doctors renting in the renovated FMAB clinics. In other words DMMC will put up an advanced pharmacy, laboratory and diagnostic center within PGH at practically no cost at all since the money generated from clinics has already covered their rental expenses.

The National Council of the All UP Workers Union also adopted a resolution authorizing the National Executive Board to initiate and file appropriate charges to responsible UP officals related to the ill-advised contract on the PGH Faculty Medical Arts Building - deemed violative of Section 23 of the new UP Charter by the Department of Justice.

Both groups are saying that the existing contract in its current form is grossly disadvantageous to PGH and thus to the Filipino people.

According to the website of U.P. PGH (http://www.pgh.gov.ph/upm-pgh-faculty-medical-arts-building-fmab-project-it%E2%80%99s-go) as originally envisioned, the FMAB would, among others:

(1) generate additional resources to supplement PGH's budget allocation for hospital operations from the national government; (2) provide affordable, accessible high-quality, competent, comprehensive, integrated and humane health care services to ambulatory pay patient clientele of PGH; (3) provide a centralized teaching, training, and research-related facility for the faculty, trainees and relevant staff; (4) strengthen the geographic practice of profession among faculty members; (5) provide a faculty incentive package of affordable clinic spaces and income opportunities to UPM faculty in order to augment the faculty's regular compensation package from the University; (6) promote faculty retention and career development, (7) strengthen the distinction of UPM as the National Health Sciences Center, and; (8) serve as an essential component of a strong National University Hospital.

The BOR's September 2005 resolution mandated that the administration of FMAB be undertaken by a Management Team with UPM-PGH taking care of the clinical part (providing exclusively the physicians and other health care professionals and exercising control and supervision over credentialing, peer review and other medical affairs) and DMMC the non-clinical and fiscal operations. The Project entails lease of clinical spaces to twelve (12) departments/special services (singly or in conjunction with other groups) and four (4) concessions --- pharmacy, laboratories, radiology and business sector --- with prior improvement of common areas,including the installation of elevators, generator set, water supply, computerization system, and other utilities that conform with National Historical Institute and National University Hospital requirements.

DMMC became UPM-PGH's new partner following three (3) years and nine (9) months of bidding presided over by a Special Bids and Awards Committee (SBAC), created by Chancellor Ramon Arcadio, led by Dean Yolanda Robles and a Technical Working Group (TWG) headed by Dr. Federico Cruz. The initial Terms of Reference (TOR), approved by the BOR during its 1214th meeting of October 26, 2006, was amended/modified during subsequent BOR meetings. SBAC's recommendation to award the project to DMMC was approved by the BOR at its 1240th meeting on January 28, 2009.

Finally, the Notice of Award was issued by President Roman on February 5, 2009 and received by DMMC on February 11, 2009.

(Chanda Shahani is the editor of the Diliman Diary)

(To see the remaining scanned and uploaded Amended Articles of Incorporation of Mercado General Hospital, Inc. please click on this link: http://diliman-diary-sidebars.blogspot.com/2010/04/mercado-general-hospital-inc-amended.html and to see the scanned and uploaded Amended By-laws of Mercado General Hospital, Inc., please click on this link: http://diliman-diary-sidebars.blogspot.com/2010/04/mercado-general-hospital-inc-amended-by.html