II.

Problems
The main issue regarding this case is how will the National Government
privatize the Philippine Journalist Inc. and still retain the sequestered shares with
the PCGG. The privatization of PJI is of the highest priority for it will mean a
substantial addition to the government coffers and a further boost to the economic
recovery program of the country.
The minor problems for this case are how to recover DBP Loan exposure
resulting from the capital deficiency and huge negative book value. Also how the
National Government may recover DBP Loan exposure, which is due to the violations of
Anti-Graft and Corruption Practices Act involving Rosario Olivares, PCGG, Benjamin
Romualdez and DBP governors.

III. Alternative Solutions

Several ways for the National Government to recover its loan investment in PJI
include extrajudicial foreclosure of the mortgage printing machinery as recommended by
Asset Privatization Trust. Extrajudicial foreclosure takes place when an entity had a load
transaction with the government financial institution fails to comply with the terms of
said transaction, in which in this case, PJI failed to conform with the terms for its loans to
DBP. All assets held by the Asset Privatization Trust, all moneys and properties belonging
to it, and all its liabilities outstanding upon the expiration of its term shall revert to and be
assumed by the National Government. Although this is a viable solution, foreclosure will
also adversely affect or render useless the prosecution of PCGG before the
Sandiganbayan for the recovery of ill-gotten shares of Benjamin Romualdez et al. An

inventory and valuation of Phil. Journalist Inc. printing machinery and equipment
conducted by Asian Appraisal Company as of September 24, 1986 gave a fair market
value of P39, 976, 000.00 only which is not enough to pay off its debt.
Another way is for Phil. Journalist Inc. to resume remittances to the National
Government instead of DBP as partial payment on the DBP loans until settled. However,
this may take many years, and it does not confirm with the privatization policy or the
urgency of the economic recovery program of the government. The privatization policy
of the national government is intended to relieve the government of the burden of holding
on to the assets acquired through foreclosure or sequestration. This alternative is feasible
but may not conform with the privatization of the government.
A 3rd solution is for Phil. Journalist Inc. with PCGG or with the Sandiganbayan
approval, may secure partial equity conversion of the liabilities due to DBP or National
Government and offer the stocks issued or acquire for sale to interest buyers. This type of
process is not new in the business and trade market. This is sometimes called debt
restructuring, where instead of paying the liabilities with cash or equivalents, issuing or
converting the liability into an equity is possible. Although this may be a complex
process and takes time to accomplish due to the need of approval from several
government agencies. This is because the Committee on Privatization (CoP) is carried out
and composed of inter-agency committee.
The final alternative would be for the National Government through PCGG will
sell its creditors rights to he highest bidder under such terms and conditions. Through
this the company will be able to settle its loan to the DBP at the same time the
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 control of the buyer and will assume responsibility for
carrying out the debt-equity conversion scheme to make PJI operations feasible and
viable. In line with this, 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.

IV.

Conclusion
In perspective of the previous, it is presented that the fourth alternative for the

administration, which is the National Government through PCGG will sell its
creditors rights

to the highest

bidder on a cash

or installment

basis, is

unquestionably the most useful and reasonable answer to accomplish privatization and
empower the National Government to recoup the greatest measure of DBP presentation.
Presidential Commission on Good Government (PCCG) will give back its
sequestration controls over Philippine Journalist, Inc. (PJI) and assign delegates of the
purchaser as individuals from another PJI governing body. The new PJI board will be
under the greater part control of the buyer and will accept accountability for doing the
obligation value change plan to make the PJI operation possible and practical. The new
purchaser will practice control and administration of PJI through the new directorate
under most likely an altered Articles of Incorporations or by-laws.