PAARL Fact-finding Board Report

PAARL
Fact-Finding Board Report
Prepared by
FE ANGELA M. VERZOSA, CHAIR
Philippine Association of Academic/Research Librarians,
Inc.
Rm. 301, The National Library Building,
T.M. Kalaw St., Ermita 1000 Manila, Philippines

Created to investigate the missing TD

Scope and Purpose
 investigate into the circumstances surrounding the missing
time deposits placed originally with Banco de Oro (Taft Avenue
branch) in 2005 for a 5-year placement, and subsequently
transferred to BPI Family Savings Bank (Pedro Gil Branch) in the
amount of P1.25 million in December 2010
 establish a documented basis to determine liability,
culpability, and/or accountability of the parties involved in the
incident
 identify what action/s will be needed to protect
the organization
 assess any potential or developing problems
that could impact on the confidence of the members
on the governance of the Association, and on the image of the
association resulting in damage to its reputation, by disclosing the
conclusions arrived at by the Fact-Finding Board to the general
membership in a special meeting to be called for this purpose.

Photocopy of the Time Deposit Certificate for Php 1,040,000 placed in 2005
8 Sept 2010
Interest of 10% per annum
Or 50% after 5 years

Note: By Dec 2010 the total interest income was
Php 449,355.74 net of taxes, and
the total time deposit Php 1,489,355.74

On 8 September 2010 the interest earnings of the BDO
Account No. 45800-883-12 totaled to Php 425, 774.54, based
on an email dated 8 September 2010, sent by 2010 Vice-
President Roderick B. Ramos to update the 2010 Treasurer
Aisa de la Torre- Morana on the outstanding balance on the
passbook.

Facts and Sequence of Events
 13 Sept 2010 – Pres. Paras picks up original TD certificate
from Treasurer Morana, and a blank withdrawal slip signed by
Ms. Morana
 15 Sept 2010 – Board of Directors meeting minutes after MIBF
Forum at SMX Mall of Asia did not mention any resolution
authorizing him to withdraw
 14 Oct 2010 – Board of Directors meeting (no attendance
from Council of Elders who were invited) to discuss the transfer of
the TD, no Board Resolution signed for the final disposition of the
Time deposits
 18 Oct 2010 - Mr. Paras withdraws the amount of Php
250,000 in cash from the passbook account no. 45800-883-12 with
Banco de Oro, which represented the interest earnings of the time
deposit, and kept passbook and cash (no mention to the Board)
 21-24 Oct 2010 – Benchmarking tour of PAARL in Singapore

Signature of Mrs.
Aisa de la Torre-
Morana attesting
to the turn-over
Signature of Mr.
Paras acknowledging
receipt of the TD
certificate
Scanned copy of the
original TD Certificate
which was eventually
turned over to BDO on
18 Nov 2010
FACT ONE: 13 Sept 2010 – Pres. Paras picks up
original TD certificate from Treasurer Morana

FACT TWO: A blank withdrawal slip pre-
signed by Ms. Morana for Php 250,000

Paras signs receipt
of cash withdrawn
Cash
breakdown:
1000 x 200
50 x 100
This cash of Php 250,000 disappears after Paras withdrawal, since it was not
deposited to any account of PAARL with BPI Family Savings Bank since Oct 18.

FACT THREE: 9 Nov 2010
2010 Secretary Sonia Gementiza signs
Secretary’s certification prepared by
Pres. Paras authorizing him and
Treasurer Morana to open a
SCHOLARSHIP FUND at BPI Family
Savings Bank, without any Board
resolution signed by directors to effect
ANY transfer. Document was notarized
11 November.

Secretary’s certification authorizing
Paras and Morana to open a PAARL
Scholarship Fund with BPI Fam Bank
No Board resolution attached
to open a time deposit account
This certification was used to
open only a Maxi-Saver account
(savings account only) on 8 Dec

FACT FOUR: 18 Nov 2010
 Paras withdraws the time deposit of P1,040,000
from BDO, with a blank withdrawal slip and pre-
signed application for manager’s check signed
by Morana; without any board resolution
authorizing him AND Morana to withdraw
 Paras withdraws the amount of Php 198, 711.73
in cash from the passbook account no. 45800-883-12
with Banco de Oro (after obtaining passbook from VP
Roderick Ramos, which represented the interest
earnings of the time deposit, and kept passbook and
cash (no mention to the Board)

blank withdrawal slip
Pre-signed by Morana

Paras and Morana
sign application for
manager’s check
Application form for Manager’s Check
Pre-signed by Morana and Paras

Paras withdraws P 198,711.73
From passbook for interest income
Of the time deposits.

Cash
breakdown
Paras signs receipt
of cash withdrawn
total sum now withdrawn from this account
amounted to Php 448,711.73, which
disappears from the books of account.

FACT FIVE: FROM SEPT THRU NOV 2010
Although the Board of Directors met three times:
 15 September 2010 after the MIBF one-day seminar at
SMX Convention Center
 14 October 2010 at the National Library headquarters
 25 November 2010 after the NBW forum at the National
Library
Directors were not informed of the:
 Turn-over of the original TD certificate by Aisa Morana
 Turn-over of the passbook by VP Roderick Ramos
 Heavy withdrawals of the time deposit and interests
 Any Board Resolution authorizing withdrawals nor
opening of any accounts to effect the transfer of funds

FACT SIX:
 1 Dec 2010 – Manager’s check for Php 1,040,000
was deposited at BPI Family Savings Bank-Carlos
Palanca Branch and credited to the Association’s Maxi-
Check Account No. 5951-0782-06 at BPI Family Savings
Bank-Pedro Gil Branch
 8 Dec 2010 – Paras withdraws in cash P1,040,000
with a blank pay-to-cash (check no. 086073) pre-
signed by Morana; without any board resolution
authorizing him to withdraw the amount

check of Php 1,040,000 was deposited at
BPI Family Savings Bank-Carlos Palanca Branch
Pay-to-cash check for Php 1,040,000 was encashed
This bank statement was printed on 3 Jan 2011 at 12:46:23

FACT SEVEN:
8 Dec 2010 –
 Paras OPENS a PAARL Scholarship Fund
(Maxi-Saver Acct. No. 5953-3395-97) from the
cash amount of Php1,040,000 with the initial deposit of
Php 239, 355.74 after presenting the Secretary’s
Certification of Board Resolution No. 6
 TAKES OUT the remaining balance in cash
amounting to Php 800, 644.26 as indicated with
the word “out” written by hand at the back of the
check no. 086073, WITH CASH BREAKDOWN.

encashed by Mr. Paras, signed,
indicating at the back of the
check his “PRC No. 02259 and
SSS ID No. 33-2717626-1”
Check no. 086073 of PAARL’s Maxi-
Check with BPI Family Savings Bank
the amount of Php 239,355.74
deposited to Maxi-Saver Acct.
5953-3395-97
CASH BREAKDOWN:
The remaining balance in cash
amounting to Php 800, 644.26
was indicated with the word
“out” , to mean withdrawn.

FACT EIGHT:
 3 Jan 2011–
Paras emails Morana to inform that he has transferred the BDO funds
to BPI Family and opened the Scholarship Fund (On the same date
when bank statement WAS PRINTED)
 13 Jan 2011 –
Mr. Paras emails Mrs. Morana indicating that the total sum of Php 449,355.74
was withdrawn from the interest earnings of the time deposit with BDO on 8
December 2010, thereby closing the account. (This amount, when added to
the balance of the time deposit encashed by Mr. Paras of Php 800,644.26
would indicate the sum of Php 1,250,000) In truth and in fact, Paras had
already withdrawn the bulk of the interest earnings on 18 October and 18
November 2010, AND THE PASSBOOK REMAINED WITH HIM.
 25 Jan 2011 – Paras emails Morana attaching 2 scanned images:
*Certificate of Time Deposit for Php 1.25 million
* Maxi-Saver Acct. No. 5953-3395-97 for Php 239, 355.74

amount of Php 239,355.74
indicated as NCS (Non-Book Cash
Transaction) deposited to Maxi-
Saver Acct. 5953-3395-97
amount of Php 77,750.91
withdrawn from PNB savings
account, indicated as NCS (Non-
Book Cash Transaction) on 31
Jan 2011, thus closing PNB acct.

 28 Jan 2011 – Mr. Paras presented the Treasurer’s Report before the
Annual General Assembly held at the National Library’s Epifanio de los Santos
Auditorium in lieu of Mrs. Teresita Moran, who was tasked to prepare the
report on behalf of Mrs. Morana who was on maternity leave.
 31 Jan 2011 – PNB savings deposit amounting to Php 77,550.91 was
withdrawn and transferred to the Scholarship Fund with BPI, without any
Board Resolution or Secretary’s Certification authorizing him to close the
account.
 May or Jun 2011 – Mr. Paras came over to Ateneo Professional
Schools Library to deliver an envelope containing the TD Certificate of 1.25
million and the Maxi-Saver passbook for PAARL Scholarship Fund.
 8 Dec 2011 – a non-book cash transaction was posted on the passbook
of PAARL Scholarship Fund, Maxi-Saver passbook No. 5953-3395-97 with the
amount of Php 50,000, which was mistaken as interest earnings by Treasurer
Sonia David, and reported as such in the 2011 Annual Treasurer’s Report. No
effort was made by the External Auditors to verify/confirm this amount, or
to examine the TD certificate.

Cash deposit of Php 50,000 reported as interest when it was
indicated here as “NCS” – non-book cash transaction

reported as interest earned from the time
deposit in the Treasurer’s report presented by
Sonia David at the 2012 General Assembly held
at De La Salle University-Dasmarinas on 27
January 2012
interest

FACT NINE:
 The Reports of the Independent Auditors for 2010 (submitted on
17 December 2011) and for 2011 (submitted on 11 July 2012)
were done by the same auditor, Mario Enrique A. de los Reyes,
CPA Reg. No. 63651.
 In his report for both audits, he simply mentioned the time
deposit with the same statement (on page 15 and 16
respectively) as “The Association has a time deposit of
P1,250,000 at the Bank of the Philippine Islands (BPI)”. No
verification or confirmation was made.
 According to 2012 President Gementiza, the Independent Auditor
was recommended by Mr. Paras himself.
 The Time Deposit certificate was kept in the vault of Ateneo
Professional Schools Library under the custody of Ms. David until
an inquiry on the time deposit interest earning for 8 December
2012 was raised during the General Assembly in January 2013 at
TUCP-Cubao.

FACT TEN:
 On 7 February 2013 Ms. Cecillia Lobo went to BFB-Pedro Gil Branch to
inquire about the interest earning of the time deposit, and presented the Time
Deposit Certificate. The bank manager then told her that the certificate
bearing Account No. 5952-2816-76 was fake for the following reasons:
-The texture of the paper is different from the original, being only a scanned copy
-The certificate should bear two signatures of bank officers
-There is no annual interest payment schedule; it is either monthly or upon maturity
 In a formal reply dated 27 February 2013, BPI-Family Savings Bank declared
that the Time Deposit Certificate presented to the bank was not authentic.
-The document was not issued by the branch.
-There is no TD placement with this particular number.
-The other details on the face of the document were also manufactured or
faked.
-The signatures appearing on the authorized signature portion are not the
signatures of branch officers of the bank
-The paper used was ordinary paper, a scanned copy to make it look
original.
-The checkwrite portion is just a copy and not from the official checkwriter
of the bank.

Evaluation of findings
 2010 President “misappropriated the amount of
Php 1.25 million”, and “worse, he
misrepresented and pretended to have duly
invested the money by presenting to the
PAARL a copy of a falsified and spurious Peso
Time Deposit Certificate containing the said
amount.
 2010 Treasurer, for her gross incompetence,
neglect of duty, and reckless mishandling of
the Association’s funds at its most crucial
moments, “aided/abetted” wittingly or
unwittingly the misappropriation committed by
the President

 Strategic Lapses
-A Conspiracy of Silence
-Failure to secure bank reconciliations/certifications
-Absence of Board resolutions to record major decisions
-Rampant issuance of pay-to-cash checks/blank withdrawal slips
-Failure in proper turn-over and inventory of records
 Breach of Fiduciary Duties
(1) duty of care – to act with diligence and with the care an ordinarily
prudent person in a like position would exercise;
(2) duty of informed judgment – the process of gaining sufficient
familiarity with the background facts and circumstances to make an
informed judgment before acting;
(3) duty of disclosure – to disclose material / important information to
shareholders / members, including conflicts of interest;
(4) duty of loyalty – to act in the best interests of the corporation.
Evaluation of findings

 Imposition of sanctions/disciplinary action on:
President – expulsion, criminal action, administrative complaint
Treasurer – expulsion, criminal action, administrative complaint
Vice-President – disqualification from appointive/elective position
Secretary – disqualification from elective position
Auditor – disqualification from appointive/elective position
 Strict implementation of By-Laws, Manual, guidelines,
other rules, and Best practices
 Review of the Manual
-to include provisions to tighten internal controls over the management of
the association’s funds and assets; strict observance of proper turn-overs
-to formulate standard accounting/auditing guidelines
-to formulate election rules to guide all future elections
 Rectification of mistakes made
Recommendations

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