UST Hospital controversy

A controversy is swirling over at the University of Sto. Tomas (UST) that started on charges of a tax-dodging mechanism and that has now morphed into accusations of Machiavellian machinations designed to benefit just a few individuals at the expense of UST.

The controversy has apparently reached Pope Benedict XVI, the Papal Nuncio and all the Dominicans in the Philippines, and from the looks of it, there is a snowballing move for UST to “cut and cut cleanly.”

The subject of the controversy is a seemingly innocuous filing and eventual registration of the corporate papers of UST Hospital Inc. with the Securities and Exchange Commission (SEC) in December 2005. At first glance, UST Hospital, which has a tax-exempt status, would appear to be a subsidiary of UST Hospital Inc.

However, some UST doctors have found out that UST Hospital Inc. was never capitalized by funds from the Dominican Order and was in fact a juridical entity separate and distinct from UST Hospital itself. And that is just for starters.

A paper trail of the incorporation of UST Hospital Inc. and several business transactions it entered into with UST Hospital, as well as the discovery of donations of two auditoriums by a business personality and philanthropist with a kingly name, are now threatening to engulf the Dominican Order—and not in inflammatory rhetoric.

 We understand a papal communication has been sent to the Dominicans on the complaints about the questionable relationship between UST Hospital and UST Hospital Inc.

There were several business transactions involving UST Hospital and UST Hospital Inc. that have been unearthed, threatening to swamp the religious order with corporate filth. These range from the use of the tax identification number (TIN) of the former by the latter to the donation of some assets of the UST’s Faculty of Medicine and Surgery to UST Hospital Inc. The unfolding paper trail that conscientious doctors of UST have discovered does not speak well of the development and underscores Machiavellian machinations involving conflict-of-interest situations.

One question that reverberates within the confines of the UST church and the university grounds is this: Why is UST Hospital Inc. using the TIN of UST Hospital, a tax-exempt entity, when the former was incorporated outside of the Dominican Order?

For some of the UST doctors following the controversy, there are legal ramifications that could take out the prevailing tax-exempt status of UST Hospital. And these are not comforting thoughts that put them in limbo.

“The corporate name [of UST Hospital Inc.] is deceiving as it would at first glance appear to be part of UST. Closer examination, however, reveals otherwise; there is no connection except as lessor and lessee as will be explained later,” says the third paragraph of a briefing paper that was sent to the Holy See.

The explanation hints of incestuous relationship arising from many of the business transactions entered by and between UST Hospital and UST Hospital Inc. although the two are supposed to be separate juridical entities.

One case pointedly referred to in the briefing paper is that a deed of donation was made donating some assets of the UST’s Faculty of Medicine and Surgery to UST Hospital Inc. that immediately increased several times the assets of the latter. And yet, the said company was incorporated with each member of the board of trustees contributing P100,000 each of their own personal money.

“There is no record that the money came from Dominican funds,” the paper emphasized.

Another point that reached the Holy See is that the contract of lease between the university and the UST Hospital Inc. showed that everything is stacked in favor of the corporation, an awkward case of the tenant demanding and getting the best options in its contract with the landlord. For instance, the corporation complained of pays at a very low lease. On top of that, the UST Hospital Inc. can terminate the contract at will clearly giving it undue advantage over the school. As they say, this happens only in the Philippines.

E-mail: hugagni@yahoo.com.

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A controversy is swirling over at the University of Sto. Tomas (UST) that started on charges of a tax-dodging mechanism and that has now morphed into accusations of Machiavellian machinations designed to benefit just a few individuals at the expense of UST.