UNIVERSITY officials are optimistic a consortium of banks which had agreed to finance the P3-billion expansion of the UST Hospital will soon release funds for the ambitious project, a move expected to clear once and for all a controversy that has spilled over to the opinion pages of several newspapers.

UST Rector and hospital chairman Fr. Ernesto Arceo, O.P. is lashing out at critics of the hospital upgrade and expansion, pointing out that the University only wanted to put an end to years of financial losses.

Contrary to allegations, UST Hospital will continue to operate the country’s largest charity ward, something other private hospitals cannot do.

“These are just black propaganda to destroy the noble objectives of the hospital,” Arceo told the Varsitarian.

It all started when the UST Hospital incurred a P62-million debt that almost paralyzed its operations in 2004.

“There came a point when the hospital sulked in bankruptcy. To salvage the situation, we came up with a recovery plan anchored on the construction of the new hospital building. ” Arceo said.

In 2005, UST Hospital, Inc. was formed as a separate entity from the University to undertake the construction of a 19-story hospital tower.

Twelve members of the new corporation’s board of trustees agreed not to benefit from the hospital’s income aside from their regular salaries as stipulated in the hospital by-laws.

The by-laws states that nine out of 12 seats in the board of trustees must be occupied by Dominican priests including the provincial of the Filipino Dominicans who is also the University’s vice-grand chancellor; the Rector, Vice-Rector, Vice-Rector of Finance and the Secretary-General, belying claims UST has lost control over the hospital.

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Still, questions were raised as to why the nine incorporator-priests used their “personal funds” amounting to P100,000 each when they are supposed to be “penniless” in accordance with their vow of poverty.

But Arceo said the incorporators actually held the money in trust on the University’s behalf, precisely to ensure that UST officials dominate the hospital board. By law, only natural persons can become incorporators, prohibiting the University, as a judicial entity, to form a corporation.

The University, through the transfer of P240 million in medical equipment, is the largest contributor to the hospital.

The hospital is leasing the land from UST, at P400 per square foot, with the rate renewable annually for a 50-year period.

Arceo also defended UST Hospital’s tax privileges, saying the hospital has remained a charitable and educational institution.

“We offer post-graduate practice in the hospital. The interns, fellows and residents in medicine and nursing train there,” Arceo said. “The hospital has also the largest clinical division in the country that attends to patients who cannot afford to pay their medical fees.”

Arceo added that 70 to 80 per cent of the income of the hospital’s pay division subsidizes the 460-bed clinical division for indigent patients.

Faculty of Arts and Letters professor and lawyer Gerardo Banzon agreed, saying the hospital is not in violation of the law unless it fails to prove its educational and charitable mission – the main criteria for being a non-stock and non-profit organization.

Under negotiation

With a P3-billion loan expected to be released soon by the Development Bank of the Philippines, Land Bank of the Philippines, Philtrust Bank and DBP Trust Services, the hospital expansion is set to begin this year.

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UST Hospital chief executive officer Dr. Cenon Alfonso clarified that the loan was still “undergoing settlements.”

As soon as the three-year expansion project is completed, the hospital tower will begin operations to pay the loan in 10 years.

Before embarking on the hospital expansion, Arceo said that the hospital came up with a two-year study on the project’s risks and viability.

“We consulted legal luminaries, experts and financial groups to help us with the viability and diligent study,” he said.

It was also agreed through a comfort letter to be issued by UST that the University will never become collateral.

Alfonso said the letter assures banks that UST will exert “moral suasion” over the hospital in paying its debts and complying with the provisions of the loan agreement.

Arceo said that the University will never taint its reputation nor submit itself to a risky deal.

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