PHILIPPINE JOURNALISTS INCORPORATED

A Written Analysis of a Case

Submitted to

DR. LUZ B. UN

BUKIDNON STATE UNIVERSITY

Malaybalay City

In Partial Fulfillment
of the Requirements for the Course

BUSINESS POLICY
(Business 104)

by

MYRJUL P. EMETERIO
I. Facts of the Case

1. Philippine Journalists, Inc (PJI) is the publishing company for the The Journal
Group of Publications that was incorporated on October 20, 1972 with an
authorized capital of P500, 000.00, consisting of P5, 000 shares with par value of
P100 each.
2. At that time of incorporation, the PJI offices located at the Meralco Building in
Pasig, Rizal. In 1976, the company transferred its offices to Railroad Street, Port
Area, Manila, after subleasing from Beta Realty Corporation a lot known as
“Block 173” with building owned by the National Government. Subsequently, it
subleased on June 21, 1979 from Capital City Realty Development Corporation
another lot, Block 168, also on Railroad Street, Port Area, Manila owned by the
National Government.
3. On April 21, 1980, Beta Realty Corporation, an affiliate of PJI, transferred or
assigned its right and interest on aforesaid “Block 173” to capital City Realty
Development Corporation (CCRDC), another affiliate, per “ Contract to sell/
Assign Leasehold Rights and Sell Improvements” which was subsequently
approved by the Ministry of General Services.
4. After the stockholders’ meeting on the same date, the undersigned took over from
Rosario Olivares as Chairman and liabilities exceeded the assets by said amount,
leaving no equity for stockholders.
5. The aforesaid sequestered shares in the name of Rosario Olivares, CCRDC, et al.
cannot be transferred other parties while PCGG Case No. 0035 against Benjamin
Romualdez, Rosario Olivares, et al. involving PJI is pending before the
Sandiganbayan. Furthermore, the PJI shares negative book value of more than P2,
000 per share, resulting from the capital deficiency of P92.7 million as of March
31, 1988. The recovery of these sequestered shares as ill-gotten wealth is,
nevertheless, part of the civil action in PCGG Case No. 0035, entitled “Republic
of the Philippines, Plaintiff vs. Benjamin Romualdez, et al., Defendants”, where
PJI is listed as one of many corporations whose shares of stocks are allegedly
owned by Benjamin Romualdez.
 6. Notwithstanding the PCGG objective to recover these sequestered shares as ill-
gotten wealth, the National Government should pursue the sale or disposition of
its rights as principal PJI creditor.

II. Statement of the Problem

What will the National Government do to recover the DBP Loan exposure resulting
from the capital deficiency and the huge negative book value?

III. Objectives
 To recover the DBP exposure resulting from the capital deficiency and the
huge negative book value
 To achieve the privatization of Philippine Journalist, Inc.

IV. Areas of Consideration

 As of March 31, 1988, the capital deficiency has been reduced to P92.7
million resulting from profitable operations and with a much improved
liquidity position despite the heavy interest burden on the DBP loans.

 The privatization of PJI is one of the highest priorities for it will mean a
substantial addition for it will mean a substantial addition to the government
and a further boost to the economic recovery program of the country. Indeed,
it is more urgent and deserves greater priority and attention then the recovery
of the alleged ill-gotten wealth of Benjamin Romualdez, who received,
directly and indirectly cash funds from PJI, and the prosecution of the former
DBP governors who approved the questionable PJI loans to the damage and
prejudice of DBP and the National Government, all in violation of the Anti-
Graft and Corrupt practices Act.
V. SWOT Analysis
 Strengths
 Acquisition of a brand-new printing press called Horizon Series2010
 Acquisition of rights and interests over “Block173”
 Recovery from the loss they have incurred
 Weaknesses
 Poor management because of no control in the disbursement of its
funds
 It take years before stock certificates are issued
 Dissemination of public information is controlled by the government
thus they must conform to what the Marcos regime wants.
 Opportunities
 Earn the trust of the public
 Can serve the true purpose of their existence of bringing the
government closer to the people
 Increase the technological aspect of the company
 Threats
 Termination of lease of the 13th Street on which PJI depended upon
 Public distrust of government information
 Existing litigation for sequestering of the shares
VI. Alternative Course of Action
1. Extra-judicial foreclosure of the mortgaged printing machinery as recommended
by Asset Privatization Trust.

Advantages Disadvantages
The company will be able to settle Need to throw all the employees out-
its loan to the DBP. of-work
Printing machinery is installed and
attached to the land thus this would
mean dismantling the printing
machinery for the purpose of sale at
 public auction.

2. PJI to resume remittances to the National Government instead of DBP as partial

payment on the DBP loans until fully settled.
Advantages Disadvantages
The company will be able to settle its It would take long years to settle
loan to the DBP the loan by the PJI

3. PJI, with PCGG, SEC, and/or Sandiganbayan approval, may probably secure
partial equity conversion of the liabilities due DBP or the National Government and
thence offer the stocks issued or acquired thereby for sale of interested buyers.
Advantages Disadvantages
The company will be able to settle its This may be a complicated process
loan to the DBP and will also take some time to
carry out because several agencies
are involved to obtain approval

4. The National Government through PCGG will sell its creditor’s rights to the
highest bidder on a cash or installment basis
Advantages Disadvantages
The company will be able to settle its loan to the
DBP

PCGG will retain its sequestration powers over

PJI and designate representatives of the buyer as
members of the new PJI Board of Directors.
The new PJI board will be under the majority This would take time to
 control of the buyer and will assume prepare all the necessary
responsibility for carrying out the debt-equity documents
conversion scheme to make PJI operations
feasible and viable.
The new buyer will exercise control and
management of PJI through the new Board of
Directors under a probably an amended Articles
of Incorporation and/or By-laws.

VII. Recommendations
The best alternative to the problem is alternative course is that The National
Government through PCGG will sell its creditor’s rights to the highest bidder on a
cash or installment basis. Aside from the goal of the National Government to
privatize the PCGG will still retain the sequestration powers it has over PJI.
Sequestration of PJI shares is done because the principal creditor of the company is
the National Government. These shares are said to have a negative book value of
more than P2, 000 per share and since it is named under Rosario Olivares which is
purported to be Benjamin Romualdez’s alleged ill-gotten wealth during Marcos
regime.

VIII. Conclusion
Privatization of the company will help to retain the sequestration powers over PJI.
Furthermore, The National Government preparation of necessary documents in
selling its rights to a highest bidder to privatize the PJI and recover the maximum
amount from the DBP loan exposure must be prioritize. This new PJI Board will be
under the majority control of the buyer and will assume responsibility for carrying out
the debt-equity conversion scheme to make PJI operations feasible and viable. The
new buyer will exercise control and management of PJI through the new Board of
Directors under a probably an amended Articles of Incorporation and/or By-laws in
this way the sequestration of PJI shares is establish.