Bishop Accused of Diverting Millions

By Aries Rufo
June 21, 2012

CONTROVERSIAL BISHOP. Bishop Jesse Mercado of the Diocese of Paranaque is in the eye of a storm.

MANILA, Philippines - Tempest is brewing in one of the richest dioceses in the Philippines.

Priests and lay leaders have asked the Apostolic Nuncio to the Philippines, Archbishop Giuseppi Pinto, to look into the finances of the Diocese of Paranaque under Bishop Jesse Mercado for alleged misuse of funds.

They also want Mercado removed, for sowing division among the clergy for his double-standard policy.

After meeting with the papal representative a few times, the group finally secured a commitment from Pinto that he will refer the complaint to the Curia in Rome.

The move comes on the heels of growing sensitivity within the Catholic Church hierarchy on the issue of finances. This follows the backlash on the leaks of documents in the Vatican.

Complaints against a bishop endorsed to the Vatican are handled by the Congregation for Bishops. "If they find preliminary merit, Rome sends someone or appoints a retired archbishop or bishop to investigate and evaluate the case. Then the report is sent back to the Vatican," a retired archbishop explained.

Mercado is being accused of diverting multi-million donations for victims of typhoons and other calamities.

This is in violation of the Church law, or the Canon 1300 which states that “the intentions of the faithful who give or leave goods to pious causes…once lawfully accepted, are to be most carefully observed, even in the manner of the administration and the expending of the goods…”

In simpler terms, the Church law states that the donation must be used for the intended purpose.

Still, this is just the tip of the controversy.

Pattern of misuse

In one letter submitted to the Papal Nuncio, one disgruntled priest indicated a “pattern of misuse of the (diocese’s) funds” and said that “there are more anomalous practices to be uncovered.”

“The clergy and the laity have been questioning the lack of transparency and we are concerned that if this is not addressed properly and immediately, this potential scandal would really hurt our Church especially our young diocese,” the priest added.

Even as donations for the intended beneficiaries do not reach them, the diocese is also not funding its social programs.

Some priests who sought the donations are at a loss explaining to donors and beneficiaries that the money is locked up in banks.

The tight-fisted set-up has prompted some members of the Paranaque clergy to inquire about the diocese’s finances.

Like the Vatican leaks, they got hold of the smoking gun.

As is the usual practice of most Church officials, Mercado chose to remain silent. He ignored requests for interviews, either by text or by email.

We also called his mobile number several times to no avail.

Millions diverted to investments

The diocese covers the cities of Paranaque, Las Pinas and Muntinlupa, where some of the most exclusive subdivisions are located. Mercado’s parishioners are among the richest, and some of the most generous donors of the Church.

The Paranaque diocese is part of the ecclesiastical province of the Archdiocese of Manila. In 2002, it was one of the dioceses carved out from the Archdiocese of Manila, in response to the growing Catholic population in Metro Manila.

Mercado, a protege of the late Manila Archbishop Jaime Cardinal Sin, was installed as its first bishop.

The 61-year-old Mercado became bishop in 1997 and was named as auxiliary bishop of Manila. He was also previous rector of the Pontificio Collegio Filippino based in Rome.

At the height of Typhoon Ondoy which submerged Metro Manila in 2009, Mercado sought contributions to help the flood victims. The diocese’s financial report showed it collected P1,631,473.05.

When a destructive earthquake hit Haiti in January 2010, the diocese racked up P1,031,456.37 in collections. That same year, it also collected P129,201.25 for the fire victims in Muntinlupa.

In December 2011, when Typhoon Sendong flooded Mindanao, the diocese rallied parishioners for donations, getting P3,470,589.95.

However, not all the funds were received by the beneficiaries.

For Typhoon Ondoy, only P263,236.60 was released, leaving a balance of P1,368,236.55 not given to intended beneficiaries. For the Haiti collection, a total of P168,891.10 has not been remitted. For Typhoon Sendong, the diocese kept P970,589.95.

The fire victims of Muntinlupa were victimized twice over. The entire amount of collections was not released.

Special collections of calamity victims were not the only ones withheld by the diocese for the intended purpose.

For the 2011 National Youth Day, total collections reached P316,123.40 but only a mere P10,000 was remitted, leaving a balance of P306,123.40 that was not turned over.

For Palm Sunday collections, which should be remitted to Caritas, Manila, total collection reached P799,942.45 but only P400,000 has been remitted.

These reached P3.2-M, which a priest said, appears to have been diverted to the diocesan cash fund that was reflected on a financial report of the diocese. The cash fund was, in turn, diverted to deposit investments with the Bank of the Philippine Islands (BPI) that range from time and dollar deposits, to Central Bank-issued special deposit accounts.

As of latest report, the BPI account already had a balance of P91.52-M.

Awash with cash

In a complaint before the Papal Nuncio, one of Mercado’s priests said there was clearly a violation of Canon 1300 where “intentions of those who give goods to pious causes, once they are lawfully accepted, must be carefully observed.”

Although technically the unremitted funds are tucked in deposits accounts and earning higher interest, “the fact is that the donors did not give their money for that purpose. It will only be natural for the faithful to seriously object once they become aware of these malpractices,” the complaint said.

Even as the diocese is apparently awash with cash, “it is disturbing for us to discover that there are existing funds for the various ministries but again, these have not been spent for their intended purposes.”

On a regular basis, every third Thursday of the month, Mercado meets with his priests to discuss diocesan concerns.

But whenever priests told the bishop that they needed funds for their programs, the standard reply was, there was no money.

Not a few priests were surprised by Mercado’s answer, “knowing the huge collections we get from Sunday services,” one parish priest said.

Out of these weekly collections, 12% is remitted to Mercado’s office for the operational expenses of the diocese on a monthly basis. Of the 12%, about 1% is reserved for the health insurance of priests and another 1% for their retirement.

Modest estimates show that the remaining 10% amounts to P15-M, based on the P150-M estimated collections annually from the 57 parishes of the diocese.

Apart from the weekly collections, the diocese was also then receiving P225,000 quarterly from the Philippine Charity Sweepstakes Office (PCSO), according to a former staff. The PCSO largesse however stopped when President Aquino assumed office.

Punished for questioning

Those who persistently question how the finances are being handled are either put on a “floating” status, or arbitrarily replaced.

This happened in the case of one parish priest in Muntinlupa who headed the diocesan pastoral department.

When the priest started questioning why funds were not being released for a livelihood project for workers in Bgy. Tunasan in Muntinlupa, he found himself removed as director and co-signatory for the project’s account.

Priests we interviewed said that 5 of their colleagues have already left the priesthood, out of frustration and desperation.

“There are others who are suffering from low morale and are thinking of leaving the priesthood,” one said.

Lay leaders who also sought transparency in the diocese’s finances are regarded as “dissenters,” and are slowly being eased out of the diocese’s affairs.

One lay leader we interviewed said, “What’s happening is no longer ministry but all about money, money.”

P14-M cover up

In contrast to his iron-grip policy on financial transparency, the bishop was however quick to pardon erring clergymen who had misappropriated Church funds.

A case in point was Fr. Bayani Valenzuela, who was formerly director of the St. Andrew’s School. There was also an attempt to cover up the anomaly, but the stench could not be covered.

In 1998, Valenzuela invested school funds amounting to P14-M in Prime Bank, without securing permission from the school board. He got away with the act by forging a supposed resolution issued by the board, one priest knowledgeable about the case, said.

In June 1999, however, the bank declared a bank holiday and was later put under the receivership of the Bangko Sentral ng Pilipinas.

This put the school’s investment in jeopardy.

The mishandling of the school fund was kept secret for 6 years, until finally, Valenzuela was replaced by Monsignor Manny Gabriel.

Gabriel found out the blunder during an internal audit when he assumed office in 2004.

In an interview, Monsignor Gabriel said he uncovered more financial anomalies committed by Valenzuela and has asked the bishop to go after the erring priest by filing charges.

Instead of punishing Valenzuela however, Mercado simply terminated him as school director and barred him from having any assignments within the diocese.

Valenzuela’s case was kept hush-hush from the clergy and the laity until October 2011 when the board of trustees of St. Andrew’s School, which is headed by Mercado, resolved to put closure to Valenzuela’s case through a resolution.

In the resolution, the Board acknowledged “the loss of huge amount of money…as uncollectible amount with the total amount of P10,324,946.03” from the P14-M placed by Valenzuela in Prime Bank.

The resolution was signed by Mercado and 4 other board members who are also priests.

The entire clergy and lay leaders found out the anomaly when a copy of the resolution was leaked.

“For mishandling millions of school funds, Fr. Valenzuela got a slap on the wrist,” one disgruntled priest observed.

To add to the cover-up, Valenzuela was also given permission by Mercado to resume his priestly duties in New York.

War among Men of Peace

The simmering revolt among the clergy came to a head last April 20, 2012 at the annual clergy formation held by the diocese in Tagaytay.

The last day of the week-long formation was allotted for discussing pending issues raised during previous vicariate meeting.

Previous to this, letters were sent to the Papal Nuncio asking Mercado to be replaced for financial mismanagement, failed leadership and sowing discord among priests resulting in a “demoralized, divided and disillusioned clergy,” one letter said.

A copy of the incident report on the formation’s last day showed disgruntled priests and those loyal to Mercado warring among themselves.

It was a messy affair, where priests took turns in telling on each other.

Two priests identified with Mercado, Fr. John Paul del Rosario and Fr. Lambert Legaspino, castigated their peers for sending letters to the Nuncio that portrayed Mercado in a bad light.

Mercado, who was present, left the room and did not come back.

Three priests – Fr. Benjamin Molina, Monsignor Mel David, and Fr. Christian Gabinete – admitted to the plenary that they sent letters to the Nuncio reporting the state of disorder in the diocese.

Tejido said he told the Nuncio that he had considered leaving the priesthood because of his negative experiences with Mercado. Molina admitted he reported the lack of financial transparency and the lack of funding for diocesan ministries, as well as his arbitrary removal from his parish without due process.

David, for his part, also said he told the Nuncio about the misuse of diocesan funds and the lack of due process in his case. Gabinete said he complained to the Nuncio about the bishop’s witch-hunt.

Priests allied with Mercado countered that the complaining priests had issues on morality and celibacy themselves, and that they had no moral high ground to speak of.

This led to two priests on both sides accusing each other of having separate affairs.

In one of the letters submitted to the Nuncio, some “concerned clergy” warned that the Church “will further be divided and damaged and our credibility brought into question” if Mercado remains as their bishop. They insisted that “the bishop is not capable of running the diocese.”

The Nuncio initially resisted acting on the complaints but eventually relented. The Nuncio serves as the eyes and ears of the Pope. He can exercise "persuasive powers" to settle disputes and work out issues in dioceses, if he so wishes.

But like Pontius Pilate, the Nuncio opted to wash his hands and refer Mercado’s case to Rome. –

This story is part of a groundbreaking book on the Philippine Catholic Church that Aries Rufo is completing.








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