Passions run high whenever capitalist interests conflict with basic services such as education. Take the case of the row between STI Education System Holdings of businessman Eusebio Tanco and the Benitez family of Philippine Women’s University. Tanco has initiated foreclosure proceedings on the Benitezes’ assets, particularly the campuses of the 96-year-old PWU in Manila and of a sister school in Quezon City, as well as an affiliate’s property in Davao City. Now the media are barraged with emotional commentaries, mostly favoring the education side.
All this stemmed from the implementation—or more like the failure of it—of the terms of an agreement when STI Holdings absorbed PWU’s loan with Banco de Oro Unibank worth P223 million in 2011 and extended a P198-million loan to Unlad Resources Development Corp., the corporate arm of the Benitezes.
STI president Monico Jacob claimed that STI was supposed to have been paid in shares of stock in 2011 but that to date, no payment has been made. The shares of stock would have come from an increase in the authorized capital of PWU’s sister firm, Unlad Resources. (STI would have ended up owning 40 percent of PWU through the conversion of the loans into equity.) This prompted Tanco’s group to declare the Benitez family in default of its obligations in December 2014, and to demand P923 million as payment for the loans. Last Feb. 10, STI asked a Manila court to start the foreclosure of PWU’s Manila campuses for failing to pay STI the P923 million in accumulated loans, interest and other expenses. Jacob argued that the court filing was meant to protect the interests of STI and its shareholders. STI has to date filed separate foreclosure petitions against PWU properties, particularly the Taft and Indiana campuses in Manila, the Jose Abad Santos Memorial School (JASMS) Quezon City campus, and a property in Davao under Unlad Resources.
The Benitez family, for its part, has called the declaration of default “illegal and baseless” and filed a case contesting it in a Manila court. From the family’s point of view, Tanco agreed to waive all interest when STI took over the loan from BDO, although STI countered that interest would have been waived only if the Benitezes had complied with the original agreement to pay STI in the form of shares in Unlad Resources.
In an effort to amicably settle the dispute, the Benitez family offered P550 million as a “fair and just” amount. In a letter to Jacob dated Feb. 4, Unlad Resources proposed the settlement, of which the down payment of P150 million was committed to be paid within three weeks after STI agrees to the settlement, and the balance of P400 million in six months. In an earlier statement, PWU media director Lydia Benitez-Brown pointed out that the family’s offer was based on a fair settlement in ongoing efforts to find a mutually acceptable resolution, and that STI was “unreasonable” in its “demand that [PWU] settle P923 million in seven days.”
This offer, however, has been rejected outright by Tanco, who claimed that the amount was “not acceptable.” He said it would now be up to the courts to resolve this matter.
Ordinary people may view Tanco as a shrewd capitalist who would not care a bit about closing an educational institution if the opportunity to earn more in putting up a commercial complex on the school’s campus presents itself. Yet by and large, that is how it is in the corporate world. The University of the Philippines Integrated School, for example, has given way to a commercial complex called UP Town Center. A city school in Manila has earlier given way to Lucky Chinatown Mall.
Still, there are businessmen with heart and compassion. If Tanco assures the public that PWU will remain an educational institution in his group’s overall plan, then public sentiment can reverse. This will dispel suspicions that he is only after the prime property on which the school campuses stand. At this point, the court may be the best judge on who is right insofar as the loan involved is concerned.
Tanco’s demand for the Benitez family to pay P923 million for obligations of P448 million may be legally correct (from a creditor’s standpoint), but is it morally right (considering that the borrower is a not-for-profit educational institution)? At the end of the day, the best solution remains a compromise between the Tanco and Benitez camps. A protracted legal battle will benefit no one, and only adversely affect the educational institution that is PWU.