The Commission on Audit has called out the University of Makati (UMak) for entering into an unauthorized and unfavorable academic agreement with a private association controlled by its own officials in 2011.

In its 2016 annual audit report, COA urged Makati City Mayor Abigail Binay to “restrain the UMak President” from entering into such contracts with private organizations without the express approval of the Sangguniang Panlungsod.

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It also called on Binay and the city council to review the propriety and legality of all similar contracts entered into by the UMak president and other university officials.

State auditors said the legality of the agreement between UMak and the University of Makati Educational Foundation, Inc., was questionable and contained terms that were “grossly unfavorable” to the city government.

Under a December 2011 memorandum of agreement, UMak and the nonprofit UMEDFI pool resources to operate and manage various academic programs for “a special captured market not significantly situated within that of the conventional students of the University.”

Stripped of jargon, COA said this referred primarily to non-Makati residents and was also intended to cover programs not offered by UMak.

Not approved by city council

COA said the UMak president “acted beyond his legal powers” when he represented the city and signed the MOA without authority from the Sanggunian—making the deal void ab initio (from the start).

It added that nothing in the UMak Charter allows the university Board of Regents to delegate its mandate of offering degree and non-degree courses and post-graduate programs beyond its primary purpose without the city council’s approval.

There was also allegedly conflict of interest because UMEDFI’s incorporators were also UMak officials who pooled their resources in their personal capacity. For one, UMak’s vice-president for administration and finance was also an UMEDFI treasurer.

“It appears that UMEDFI is an adjunct, a business conduit or an alter ego of UMak, in the guise of a private association, performing functions that are not within the legal authority of the latter,” the report read.

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Private use of government resources

COA said the deal was “clearly detrimental to the interest of the City of Makati,” because it allowed a private entity to use government-funded UMak facilities for free. This was also the case for city human resources, since UMEDFI was also managed by UMak officials.

The MOA also authorized UMEDFI to receive and collect tuition and other fees at market rates for its academic programs; the foundation then pays prescribed university rates to formally enroll the students. For COA, this showed UMEDFI was “dependent on [UMak] to sustain its existence.”

COA also assailed the MOA provision allowing UMEDFI to design its own curriculum for its academic offerings subject to approval by the university’s academic advisory council, university council and board of regents.

Auditors said this did not conform with Article VI of the UMak Charter, which made these functions the sole responsibility of the Board of Regents.

While state universities and colleges enjoy an enormous amount of autonomy for academic freedom, COA said UMak is a unit of the Makati City government and is still bound by existing laws.

“In this case, serious infringement to existing laws, rules and regulations and generally accepted moral standards was committed by UMak officials,” the report read.

UMak defense

UMak, however, said it was up to the courts, not COA, to determine the legality of the MOA.

The university also said it paid the city P1.6 million for the actual usage of facilities and utilities, and denied that government employees use their paid hours to render services for a private foundation.

UMak explained that faculty members are paid honoraria for UMEDFI courses. Meanwhile, the university officials meet only once a month as UMEDFI trustees.

State auditors maintained their stand and elevated the agreement to the COA Fraud Audit Office for a special audit team to look into UMak’s other agreements with private entities.

Unauthorized honoraria

Besides the UMEDFI issue, COA also flagged the grant of P7.545 million in honoraria to UMak supervisory, committee and regular employees in 2015 and 2016 “without basis.”

This was also found to be unauthorized by the Makati city council, contrary to the Joint Resolution No. 4 of the Senate and the House of Representatives.

It urged Binay to stop the payment of honoraria, require the officials to refund the payments, and follow the guidelines set in the Manual on Position Classification and Compensation.

The UMak management committee claimed that there was no specific manual for local colleges and universities, and that the Department of Budget Circular No. 2007-2, which sets honoraria guidelines, did not apply to the locally funded university because it has its own charter.

State auditors, however, rebutted that having its own charter does not separate the university or make it independent from Makati City.

Since it was a “mere creation of the Sangguniang Panlungsod,” it remains within the jurisdiction of the Local Government Code, which requires the city council’s prior concurrence in the grant of honoraria.

COA also did not buy the UMak management’s justification that the honoraria was meant to correct the “disparity and distortion” of the compensation to deans, executive directors and directors who hold lower academic ranks despite performing weighty functions.

It noted that higher university officials from the president to the university secretary, who already receive representation and transportation allowance, were also granted honoraria. CBB

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