ATENEO DE MANILA UNIVERSITY

Graduate School of Business

ATENEO MBA REGIS PROGRAM

Business Ethics
TSETHICS R09

The Stars Are Falling

An Ethical Dilemma Case Study
(Final Requirement in Ethics)

Prepared by:
Juan Carlo G. Gagate
R14001
Presented to:
Dr. Manny Dy

#20 APS Building, Rockwell Drive, Rockwell Center, City of Makati, Philippines

Juan Carlo Gagate

R140001

MBA-Regis
Ethics R09

The Stars Are Falling

The majority shareholders of a broadcast company blamed Businessman A for the

botched attempt to buy into the listed broadcast company, citing the additional
demands as the deal breaker. The vendors disclosed that Businessman A imposed
additional demands on the planned acquisition even if the proposals made by him
were already accepted early this year. The broadcast company was constrained to
terminate the talks after Businessman A

failed to finalize the transaction within a

reasonable time.

The Vendee interprets the discontinuation of transaction as abrupt termination for the
talks of the planned acquisition and denied the allegation of imposing additional
demands. He cited that the broadcasting company have been sending revised drafts of
transaction documents as of midyear. In addition the company have sent a
correspondence stating their own views on the unresolved matters without saying they
would no longer proceed with the transaction.

The Vendee have made 100M down payment after a letter of intent were signed and
exchanged between two parties. The down payment remains in the custody of the
broadcasting company under the name of its primary individual shareholder. It was
decided that this will be used to answer for the damages for opportunity loss that the

Juan Carlo Gagate

R140001

MBA-Regis
Ethics R09

company sustained by reason of Businessman As violation in his obligation to

negotiate in good faith.

Failing to return the 100M down payment, Businessman A filed a syndicated estafa
charges against the shareholders of a broadcasting company. In his complaint,
Businessman A claimed all the elements of estafa were present in the case - money
received in trust or under the obligation to return it, misappropriation or conversion of
such money by the offender, prejudice or damage and demand.

It was documented from the head of broadcasting company saying From the very
beginning, even before, we are not selling our shares. But there are many buyers who
want to buy and so we are entertaining the offers,"

As a result of this botched transaction, another intent buyer is open to renewing talks
with the shareholders after previous botched attempts to buy into the listed broadcast
company.

Though it is apparent that settlement of this matters will be best raised in the court.
Various ethical issues comes into light.

Juan Carlo Gagate

R140001

MBA-Regis
Ethics R09

Questions:

1. Is it ethical to place custody of down payent under an individuals name which

transcends that it is under his full control to the exclusion of everybody else?
2. It is ethical to declare no intention to sell shares of stocks while on the other
hand still entertain negotiations and proposals for acquisition?
3. While no intention of sale is an apparent challenge to those who wish to aquire,
this impending acquisition creates a from buzz an may positively and negatively
affect its stock value. Is this action intently placed by both parties? Is this an
ethical maneuver?