Alumni Privelege: Deep-Thinking
By Benjie de la Cruz

"Familiarity breeds contempt." This expression may trigger opposition from persons who believe that close­ness and intimacy are the things that bind one to another or to something. And they may even go to the extent of challenging anyone or anything that destroys such closeness. But one can­not help but agree that once we have grown familiar with someone or some­thing, the gap of formality is filled and we begin to tire… contempt indeed! And the feeling of boredom is thought of as confusion and the surrounding things become chaotic and upsetting, making life absurd.

When we can no longer contain the feeling we start to show signs of irritability like abhorring our surroundings, criticizing people, finding faults and imperfections from clothing to morals, heartily be­lieving that in so doing we are being idealistic and in being idealistic is the only right thing that a man can be. Until a summit is reached where slow­ly the idealism dies down…and a temporary resignation begins. The result would be the acceptance of boredom as an occasion and not a permanent state, which in turn will result in a little bliss, a source of inner peace.

This situation is reflective of an anemic spirit, a spirit wanting in strength, strength that will enable the body to meet challenges. Challenges that is omnipresent and commonplace. Like the challenge of a changing concept of morality and ethics in trade, poli­tics, economics, religion and society.

The account may give practical thoughts and thus help one 'to reach out of his little world to a big world where a vital role has been assigned to him to destroy whatever contempt’s that the familiar brings.

The Minutes (Official Newsletter of FEU IABF Order of Parliamentarians) Volume 2 Number 2 April 1969

Education Revolution: Assumptionistas in EdRev

By Butch Hernandez*

Not many people know this, but every sum­mer since 1989, students of Assumption College in San Lorenzo have volunteered to go to far-flung barangays for days to leam what "educa­tion for social transformation" really means.

The socially-aware Assumptionistas are part of the Integrated Summer Study Pro­gram (ISSP), based on the need "for knowl­edge to serve a purpose, the more secular, the better. It must be one that is based on and pulled from existing realities.

"Sr. Mary Gertrude Borres, Assumption Col­lege dean, said the ISSP gave students the unique opportunity to apply what they learned , to social realities in disadvantaged areas.

In her send-off message to this year's vol­unteers, Sr. Gertrude said "the ISSP is only for you students who are willing to take the risk and spend your summer with your teachers in places where you can serve the people.

"Life-changing experience"

Chat Orense, facilitator of a group of psy­chology majors who went to Barangay Sta. Cruz in San Femando, Camarines Sur, re- called how the girls quickly adjusted to ex­tremely simple surroundings, particularly when they gave art lessons and regaled the pupils of the Sta. Cruz Elementary School with stories during a story-telling sessions.

Chat herself was an ISSP volunteer during her college days at Assumption. "Initially, some students join the ISSP simply because (they can skip) regular classes. But all this changes when they start interacting with their host communities," Chat said.

Ardy Batoy shepherded her Communica­tions students in Sitio Tanglaw, Barangay Sala, Cabuyao, Laguna. Ardy teaches Communica­tion Development. She said a couple of the girls were overcome with emotion after experi­encing what it was like to serve other people.

Ardy's group visited the Sala Elementary School and they saw the substandard facilities. The students also met and talked to barangay chair Amelito Alimagno and several out-of-school youth as part of their community map­ping activities in preparation for a three-year community development program.

One of Ardy's students, Justine Borres, said she was touched by the kindness of the people who, despite their problems "were still giving us food, thinking of us.

"In Bontoc, Mt. Province, Professor Ben dela Cruz and Adelle Ceradoy from the Center for Social Concern facilitated the immersion of Accounting students in the Sta. Rita parish where they conducted computer tutorial ser­vices. Dela Cruz said his students saw how lucky they were after experiencing communi­ty life in the poblacion.

*The Philippine Daily Inquirer Lifestyle Monday, May 26, 2003 page G3

Butch Hernandez, The author is the executive director of FWWPP

Assumptionists Experience Immersion in Baguio

*By Jennifer Love L. Reyes

28 senior students from the Marketing, Communi­cations, and Management Information Science De­partments participated in the Integrated Summer Study Program (ISSP) of the Center for Social Concern (CSC) in Baguio City last April 25 to May 6.

Conceived in February 1989 by the College Dean, ISSP is an integration of faith and life, academics life and co-curricular activities that reflects Mother Marie Eugenie's philosophy of "Education allowing the good in every person to break through the rock that imprisons it and bring it to light where it can blossom and shed its radiance." It aims to give Assumptionists a holistic formation by an experience of exposure - through inculturation or immersion, for a period of time, in a particular area.

Prior to the selec­tion, the applicants were asked to submit documents such as copies of their grades, medical certificates, parents' consent forms, and recommendation letters from their respective Chairpersons. Screening tests and interviews were handled by Associate Dean for Com­merce Ms Vicky Orjalo and College Dean Elizabeth Melchor. After the delibera­tions, the results of the qualified participants were announced.

On April 5, the girls attended a two-week lecture session at Assump­tion College headed by CSC Director Ms Frances Salenga. A pre-immersion training followed from April 23 to 25 which prepared the students for the program. In the morn­ing of April 26, the group left for Baguio. Ms Salenga and Pro­gram Staff Ms Bernadette Tan together with Mr. Ernie Apodaca, Mr. Ben de la Cruz, Mr. Nilo Yacat, Mr. Mike Lopez, Mr. George Garcia, Sr. Annunciata Malvar, r.a. and Associate Missionaries of Assumption (AMA) volunteer Mr. Greg Quimpo, joined the participants.

The CSC staff, profes­sors, and students stayed at Villa Consolacion, Baguio City. During the inculturation, an Igorot play was presented. It was followed by a series of talks on the Development in the Perspective of the Indigenous People, spear­headed by UP Baguio Professor Ms Brigitte Pawid.

In the following days, the participants toured the Balatok Mines, Bureau of Internal Rev­enue, and La Trinidad Valley market.

The students were divided into groups and were assigned to three Benguet service areas namely: Dontogan, Dalupirip I and II for the three-day immersion. The first day was spent getting to know their respective foster families and familiar­izing themselves with their new environment. For the next two days, the girls focused on understanding the social realities which prevailed within the area. As a culminating activity, they presented a short skit, which according to Ms Salenga, "...was the total embodiment of the girls' learning experiences and transformation."

Charmaine Carino (4Comm), Katz Diaz De Rivera (4Comm), and Cristina Serrano (4Comm) said that their immersion experience made them realize that it was the simple lifestyle of these people which made them appreciate the blessings they received. They were struck by the relationship of love, openness, respect for nature, and respect for each other's rights.

Asked about the rel­evance of the program in the coming years, Ms Tan envisioned, "ISSP will still be very relevant in the next five years. It will always be CSC's commitment to action. AC has so much venues for social involve­ment. Through ISSP people get to go out of the walls of the institution and eventually see the outside world. Moreover, the program will continue to give AC graduates the opportunity to go places...to experience people...—MME's vision of a holistic formation for the Assumptionists."

*Assumption College - AC Times
Jennifer Love L. Reyes

Integrated Summer Study Program: Personal Analyses, Insights and Reflections

*Benjamin de la Cruz

The integrated summer study program, particularly called ISSP, started in 1989. It was inspired by Gardner's theory of multiple in­telligences and Kolb's experiential learning model. It was conceived towards integration of faith and life, academics and co-curriculars.The author was privileged to participate and handle business subjects in this program in the summers of 1996, 1998 and 1999. The following are my analyses, insights and reflections on the conduct and results of these experi­ences.

BACKGROUND

In 1989, the Office of the Dean of Assumption College started a program inte­grating social awareness through a combination of classroom learning and field exposures. This novel program, the Integrated Summer Study Program or ISSP, is a voluntary, academic, interdisciplinary program of nine academic units that provides both classroom learning and field observation.

The units are a combination of different subjects of three units each, requir­ing a total of forty-two (42) classroom lecture hours on campus, and a two-week immersion program on field in a provincial community setting.

The exposure and immersion component of the program helps build com­munity awareness, and supports the experiential-learning approach in the aca­demic subject areas. The theories taught in class are linked to realities in the communities identified and visited.

DEFINITIONS AND FRAMES OF REFERENCE

The Assumption College is an exclusive Catholic college for women owned andoperated by the Religious of the Assumption.The main objectives of the Assumption College education are:

1. to develop academic and professional competence in the students and to prepare them to become transforming and effective participants in the workplace through relevant curricula, qualified faculty and up-to-date facilities, and;

2. to form students of strong integral character imbued with a social conscience, a firm knowledge of gospel values and the moral law, with a commitment to become productive members of Philippine society through participation in dynamic development and holistic co-curricular and extra-curricular programs.

The Integrated Summer Study Program, the innovative program that started in 1989 and still being implemented at present, is conducted every summer. The differentiating features are the linkage of theories with the realities of commu­nities visited, and the attempt at webbing the course contents of the subject of­ferings. Furthermore, the students coming from the different disciplines develop bonds of friendship, together in the mixture of activities that challenge them to innovate and work in groups.

The learning objectives of the ISSP are:

1. to provide interdisciplinary, relevant and contextualized academic experience;

2. to situate learning within the context of living with the people of the community;

3. to provide opportunity to experience community living with other groups;

4. to deepen Christian faith and commitment;

5. to develop leadership and organizational capabilities, and;

6. to challenge the participants towards a simpler lifestyle.

The program consists of three subjects from the various disciplines offered in the colleges of liberal arts and business. They are offered to qualified incoming seniors and juniors.

The program package includes academic subjects bundled with adventure and hard work. The nine units are earned within a period of two months inclusive of preprogram orientation, academic classes and evalua­tion, immersion and a culminating activity.

Participants in the ISSP are recommended by the Department Chairpersons and are interviewed by the Associate Deans for liberal arts and business. They have to pass tests and interviews. Attendance in the program orientation, com­munity development service, prior to enrolment in the academic subjects and immersion are prerequisites.

The main inspiration for the ISSP is Gardner's theory of multiple intelli­gences and Kolb's experiential learning model.

Gardner has identified specific intelligences or ways of knowing that may be developed within a human being. He identified particular kinds of learning talent that seem to come easily for one or another person. Simply stated, there are many ways one can learn. Using a variety of methods and appeal to the dif­ferent intelligences can lead to effective learning. We sing to learn certain phi­losophy and values. We play games to emphasize certain concepts and prin­ciples. We recite poems and go into introspection.

The intelligences identified to date and their characteristics are:

1. Logical-Mathematical-abstract thoughts, precision, counting, organization logical, structure

2. Linguistic-sensitivity to language and the relation among words

3. Musical-sensitivity to pitch, rhyme, timbre, the emotional power and complex organization of music

4. Spatial-keen observation, visual thinking, mental images, metaphor; a sense of the whole gestalt

5. Bodily-Kinesthetic-control of one's body and objects, timing, trained responses that function like reflexes

6. Interpersonal-sensitivity to others, ability to read the intentions and desires of others and potential to influence them

7. Intrapersonal-self-knowledge, sensitivity to one's own values, purpose, feelings; a developed sense of self

8. Naturalist-sensitivity to the natural world; seeing connections and patterns within the plant and animal kingdom

9. Intuition-ability to see the future as well as what happened in the past without the use of the five physical senses

10. Spiritual-ability to commune with God

Kolb's experiential learning model is a structured learning experiences cycle characterized by the following stages:

1. Experiencing-activity, doing; the initial which is the data-generating part of the structured experience; the step often associated with games or fun

2. Publishing-the second stage which is the data processing part of the experience and activity; the sharing of what they saw and felt during the event at cognitive and affective levels

3. Processing-this is the fulcrum or pivotal stage; the systematic analysis of commonly shared experience; the group dynamic phase

4. Generalizing-this is an inferential leap from the reality inside the activity to the reality of everyday life outside the sessions

5. Applying-the final stage, the purpose for which the whole experience is designed; applying generalizations to actual situations in which they are involved

PERSONAL ANALYSES, INSIGHTS AND REFLECTIONS

On the academic experience, students are able to gain nine (9) units in a pe­riod of two months. The actual classroom hours are limited to three (3) hours daily and the theories are completed prior to exposure and immersion. The fac­ulty members try to web the subjects in terms of content and experience. Stu­dents record their experiences in daily journals and summarize them in a learning paper, submitted upon their return from the field.

The schedule is hectic, bringing reality in the day-to-day life. There is hard work coupled with games and fun. There are first-hand knowledge of the sub­jects and actual application of theories.

On the exposure and immersion experience, the students work in groups and they experience the dynamics of small group assignments and a big group output. They study, eat, sleep and play together. They develop bonds of friend­ship. They learn to respect individuality. The situation allows them to develop their full potentials.

The logical intelligence is enhanced by the activities such as that of trying to manage their limited resources. The kinesthetic intelligence gets developed through physical activities of games, tours and other energy-zapping activities. Interactions in small groups help develop the interpersonal and intrapersonal intelligences.

'Living with foster families and interacting with the community provides so­cial and spiritual dimensions to the learning of students. It makes them aware of how lucky they are compared to the people around them.

On faculty experience and relationship, the experience enhances their sense of duty and responsibilities toward managing the learning of their students. It develops a closer and fruitful collaboration among the teachers.

Although there are also differences, they are, however, easily resolved and put behind before re­turning to the campus.The experience also puts the teachers into hard work and pressure of trying to blend theories and realities. The individualities and strength of their stu­dents get appreciated. The subjects are blended and webbed maximizing everyone's best efforts.

On the spiritual experience, both the faculty and students experience real closeness and communication with God. They learn to appreciate day-to-day re­alities, challenges and opportunities, which are presented by the experience.

CONCLUSIONS AND RECOMMENDATIONS

Humans are complex intellectual, emotional, physical and spiritual beings. There is a need to harmonize and integrate the level of learning. The ISSP is one vehicle towards this development. The program provides an opportunity to enhance and develop the full potential of both the students and the faculty.

The culminating activity of the exposure and immersion is a presentation done by all the students showcasing their learnings in ISSP. The presentations are a blend of fun and serious commentary on learning and experience. The positives are accentuated and the challenges are demonstrated before the com­munity, Assumption faculty and administrators.

The message stresses the holistic view of the development of the person and community. It poses a challenge to all to change for the better and to aspire for a noble cause.The ISSP can still be enhanced. It must continue to evolve.

Emerging issues such as who should participate, and the relevant subjects to be offered should be addressed. The venues for exposure and the rationale for the activities should be spelled out earlier in the program.

The webbing of subjects must be deeper than what they are today. The skills of thinking, feeling, communicating and doing must be emphasized. « The ISSP activities that the author attended had very little variation in pro­gram and schedules. The experience, however, is varied and fruitful.Finally, a summative evaluation should be conducted for the entire duration of the program, even dating back to 1989.

This may uncover positive sugges­tions from participants. The evaluation of results on the year-to-year basis done towards the end of the program may serve as the starting point for this overall summative evaluation.The foregoing are analyses, insights and reflections of the ISSP. In writing this article, the author borrowed generously from the other people in the pro­gram and from various books and reference materials.

REFERENCES

Assumption College Student Handbook, 1998-2001
Gardner, Howard. Art Mind, and Brain: A Cognitive Approach to Creativity. 1982.
Jones, J.E. and Pfeiffer,J.W. Structured Learning Experiences
Umali, Conchita. Women and Empowerment: The Assumption San Lorenzo Experience (Pa­per distributed during the Critical Mass Formation Program)

*Assumption College Research Journal February 2000 Volume 8 No. 1
Prof. Benjamin de la Cruz is a full-time faculty at the Commerce Department of Assumption College

Far Eastern University Institute of Accounts, Business and Finance Batch 1968

Far Eastern University Institute of Accounts, Business and Finance Batch 1968

1964 Candidates for Graduation

Far Eastern University Boys High School

Commencement Exercises

Speaker: Hon. Hilarion Henares, Jr., Chairman, National Economic Council

Tuesday, April 28, 1964 at 5:00 o'clock p. m. University Campus

Afternoon Classes

EUFEMIO A. ZAMORA. Valedictorian
FIDEL V. CASTRO. Salutatorian
MARCOS L. BACANI First Honorable Mention
TERESITA S. CONTRERAS Second Honorable Mention
EDGARDO F. TABLANTE Third Honorable Mention
MIGUEL A. CARDINO, JR. Fourth Honorable Mention

IV – 1A
Arnone, Frank P.
Austria, Eddie R.
Bacani, Marcos L.
Balbuena. Alexander A.
Belos, Melvin M.
Callado, Macario B.
Cantiller, Ernesto S.
Castro, Fidel V.
Ching, Federico K.
Collantes, Manuel M.
Cruz, Benjamin D. de la
Cruz, Romeo D.
Esperida, Alberto F.
Fermin. Brigido S.
Go, Antonio Y (So)
Guzman. Roberto S. de
Javier, Jaime M.
Legaspi. Manolet P.
Lim, Crisanto A.
Mangahas, Reynaldo Z.
Marquez, Ben R. Jr.
Montiero. Bernardo M. Jr.
Nieva, Gerardo T.
Pacifico. Angelito S.
Petilla. Edurado D.
Punzalan, Catalino G.
Sales. Bienvenido B.
Sambat. Conrado
San Gabriel, Lolito C.
Santos, Rolando R.
Sare, Jose M.
Sta. Maria, Fernando T.
Sy, Antonio C.
Tablante, Edgardo F.
Tan, Sebastian G.
Tirona, Eduardo S.
Uy, Antonio B.
Vergara, Jesus T.
Vinoya, Jesus T.

Zamora, Eufemio A.

FEU High School Graduates Batch 1964

Centro Escolar University Elementary (Intermediate) Graduates Batch 1960

CEU Elementary (Intermediate) Batch 1960

CEU Elementary (Intermediate) Batch 1960

CEU Elementary (Intermediate) Batch 1960

San Miguel Corporation's Capital Investment Progam: A Summative Evaluation

*Benjamin D. de La Cruz

Abstract

Background

In 1974, SMC prepared an LRP with the objective of hitting P1.0 billion in sales by the year 1980. It was to be supported by a capital investment program of expansion, modernization and diversification. A capital expenditure planning and control system was then implemented. This was done in view of the contribution of investment projects to the overall profitability and growth of the company. Furthermore, the long term commitment of corporate funds stands to increase financial risk, and that the magnitude of capital expenditure is substantial and the penalties for wrong decisions are usually severe. Good results in this area depends on a seasoned business judgment aided by evaluation methods or techniques to assess profitability of proposed capital investment.

Problem Statement

This study attempted to assess the capital budgeting techniques used in evaluating proposed capital expenditures that San Miguel had been using in the last 20 years. In sum the study tried to determine:

1) What is SMC's capital budgeting system?
2) What are the evaluation methods or techniques used?
3) Which of the available methods of evaluation proved to be efficient?
4) What are the advantages and disadvantages of each method?
5) What changes are necessary?

The general objective of the study is to be able to rank the available methods being used in evaluating investment in the order of efficiency. The specific objective aimed to select the most suitable method given specific capital investment proposals.

Summative Evaluation

The Study used the historical and descriptive method of research and relied substantially on documentary analysis, library research and interviews. A summative formal evaluation of the Capital Investment Program with emphasis on the budgeting techniques was completed with stress on retrospective process evaluation. This entailed reliance on the researcher's career experience in the company and his long exposure in the CAPEX system of SMC.

Findings

The result of the study, in relation to the specific problems revealed the following:

1. SMC's Capital Budgeting System Has a two‑stage process, the planning stage and the implementation and control stage. In the planning stage, an approval in principle was obtained only after an evaluation process had been completed.

2. Evaluation Methods or Techniques Used The evaluation or techniques used are the simple measures consisting of Payback Period and the Return on Funds employed [ROFE] and the time‑adjusted, measures consisting of the Internal Rate of Return [IRR], Net Present Value [NPV] and Present Value Index [PVI].

3. Evaluation Methods Proven Effective The time‑adjusted measures were efficient, however the company also relied on the simple measures. Based on the type of budget and magnitude of expenditure, decisions were made using the cited measures.

4. Advantages and Disadvantages of Each Method

Payback Period

The advantages were:

Simple to calculate

Universally understood indicator of liquidity and risk; the sooner an investment is recovered, the shorter the period of uncertainty regarding its worth.

The disadvantages were:

Fails to consider project profitability or economic efficiency since it stops analysis with recovery of investment.

Fails to consider the time value of money.

Return on Funds Employed (ROFE)

The advantages were:

Simple to calculate

Places emphasis on profitability, rather than liquidity.

The disadvantages are:

Essentially an averaging technique

Fails to consider the time value of money.

Internal Rate of Return (IRR)

The advantages were:

It is conceptually superior to Payback Period and ROFE methods

Does not ignore any periods in the project life or any cash flows

Takes into account the time value of money

Yields a percentage that management can examine and make judgment about when cost of capital is not known with confidence.

Favors early cash flows over late ones.

The disadvantages were:

Requires an estimate of the organization's cost of capital, or at least a range of values in which it is likely to be found

Is much more difficult to apply without a computer than payback period or ROFE and when cash flows are non‑uniform, much more difficult to apply than the net present value method.

Does not distinguish between projects of different size and/or different economic lives.

Often yields multiple, thus ambiguous results when there is more than one sign change in the cash flows.

Implicitly assumes that cash flows may be reinvested at a return equal to IRR.

Net Present Value (NPV)

The advantages were:

Is conceptually superior to Payback Period and ROFE

Does not ignore any periods in the project life nor any cash flows

Takes into account the time value of funds

Is easier to apply than the IRR since it involves evaluating a polynomial rather than finding a root

Favors early cash flows than late ones.

The disadvantages were:

Requires that the organization has an estimate of its cost of capital

Is more difficult to apply than payback and ROFE, and thus less suitable for use by lower levels in the organization without proper training in its application

Gives a distorted comparison between projects of unequal size and/or unequal economic lives, unless modified by conversion to uniform annual equivalent and converted to profitability index.

Present Value Index (PVI)

The advantages were:
Provides ready comparability between investment proposals of different magnitudes
Provides a ranking or prioritization of projects.

The disadvantages are:

Expresses only relative profitability

Requires knowledge of the firm's cost of capital.


5. Necessary Changes

The present methods of evaluation, should be retained. However, concern was raised on the routine application of the measures without first understanding the underlying assumptions and or limitations of the measures. The implication of this is that the methods now in current use are still very much valid measurements of capital projects, however the now routine application could result in focusing on the numbers and percentages, rather than an interplay of the methods and other quantitative and qualitative factors when appraising capital projects.

Objectives

The general objective of ranking the available methods being used in evaluating investment in the order of efficiency was achieved. The present methods of evaluation ranked in the order of efficiency are:

Net Present Value (NPV)

Internal Rate of Return (IRR)

Return on Funds Employed (ROFE) and Payback Period

Present Value Index (PVI)

Others i.e. Economic Value Added (EVA), Cost Benefit Analysis (CBA), and Free CashFlow‑Shareholder Value (FCF‑SV)

The specific objective of selecting the most suitable method given specific capital investment proposals, was likewise achieved. Since all the measures were used simultaneously on all capital projects it was deemed that the measures were all suitable, except on projects involving land acquisitions, and emergency items.

Conclusions

Good results to be realized in this area of decision making will highly depend on a combination of seasoned business judgment and the effective use of available planning and control devices for capital expenditure.
Conversely, excessive spending can raise operating costs and tie‑up corporate funds. Failure to make timely replacements of inefficient equipment can impair the quantity and quality of the corporation's output. The company can also lose its position as No. 1 by failing to expand or diversify to meet growing market demands.

Recommendations

The following are recommended to strengthen SMC's Capital budgeting process:
SMC's Corporate Planning and Funds Planning departments be involved in the early stages of planning at operating levels so that the proper combination of measures and ranking methods of evaluation can be ascertained.
Project justifications and measures used should be highlighted and the corresponding assumptions and projections be reviewed thoroughly and not mechanically and that of the technical groups endorsing the project, be streamlined.
Evaluation method for land acquisition be a subject of further studies as to the applicability of the present methods versus the methods used by property developers.

Emergency capital budget items be limited to payback and ROFE measurements similar to those of government required projects.

The amount of capitalizable limits should be reviewed. Frequent review should be made in relation to inflation. This will make the current methods of evaluation effective.

The overlapping of evaluation being done by the proponents of capital expenditure and that of the technical groups endorsing the project, be streamlined.

The post evaluation of capital projects proposal versus actual, should proceed so as to validate the results of evaluation methods currently in use.

In view of the foregoing, it is recommended that the present methods of evaluation be retained, while new methods are being explored. SMC should build further on the experience of the last two decades and strengthen not only the knowledge of techniques but rather not to lose sight of other factors and aspects of capital expenditure. The present methods of evaluation, are useful and should be retained and usage enhanced.

A Special Research Project
Presented to the Faculty of the Graduate School of Polytechnic University of the Philippines
In Partial Fulfillment of the Requirements in RH 511

*BENJAMIN D. DE LA CRUZ

31 October 1995

Approved by:

DR. Mercedes M. Leuterio
Chairman

DR. Carolina V. Prada
Member

Dean Rodolfo T. dE Lara, Ph.D.

Program Coordinator

Prof. Leticia R. Arbis
Research Adviser

The paper is available at the PUP Graduate School Library.

AC Research Journal

Volume 9 Number 1

February 2001

SMC Corporate Ad Circa '70s

Cost Averaging: Investment Strategy for Selected Philippine Stocks

*Benjamin D. de la Cruz

Introduction

Investment must be safe, secure, and whose return must exceed that of a savings account. Savings are invested with the end in view of making additional profit for the saver. It is therefore imperative for an investor to develop an investment strategy that will maximize the return on investment.

Background of the Study

When people have excess funds, they look for investment that will give them a return that will provide for their future needs. A share of stock of a company requires a long-term investment of funds rather than placement of savings in a bank deposit.

Some investors go to the stock market to invest their excess funds or savings without the benefit of a thorough understanding of the market mechanism and an apparent lack of a strategy to employ. Some even make investment, hoping to make a substantial return for a short period of time.

The researcher feels that to improve the current situation, there is a need to look deeper to find a strategy that will provide a better way of investing in the stock market.

In the United States, cost averaging is a popular investing strategy. This paper intends to provide an investment solution to local investors by doing a simulation using the cost averaging strategy. The simulation will test the cost averaging approach for two Philippine companies.

Statement of the Problem

In this paper, the researcher intends to find out if cost averaging will work as an investment strategy by doing a simulation on two Philippine companies. San Miguel Corporation, and Philippine Long Distance Telephone Company. Specifically, the study through simulation, answered the following:

1. What is the cost averaging investing strategy? If an investor puts in a fixed amount of investment regularly over a long period of time, would he come out ahead?

2. By how much would the investor be ahead if, by cost averaging, he bought these shares at the average of high and low prices of shares for the same period?

Research Paradigm

Using an input-process-output model, the conceptual paradigm was designed to illustrate graphical dimensions involved in the study.


Methodology

This section explains the research design and procedures which were followed in the conduct of the study.

Research Design

The research design used the descriptive evaluative method of research. This method of study describes a particular situation after which an evaluative judgment is done. The researcher felt that this was the appropriate and effective method of research for the study.

Descriptive method is a general procedure employed in studies that have for their chief purpose the description of phenomena. It is also a design, which describes the nature of a situation as it exists at the time of the study and explores the course of particular phenomenon.

Descriptive is a basic method of reflective thinking in seeking solution of a problem. The researcher thought that this scheme would ensure the attainment of the specific objectives of the study and a quality research output.

Procedure

An excel spreadsheet model named bencostavg was developed by Engineer Virgil Leslie Fonacier in collaboration with the researcher to do simulation on the stock cost, and price averages. Data on market stock high and low prices were inputted and processed to come out with price and cost averages. The data were taken from the annual reports of San Miguel Corporation (1978-2003) and Philippine Long Distance Company (1997-2001 Quarterly).

The model tried to answer the following questions:

1. If an investor puts in a fixed amount of investment, regularly over a long period of time, would he come out ahead?

2. By how much would the investor be ahead if, by cost averaging, he bought these shares at the average of high and low prices of shares for the same period?

Presentation, analysis and Interpretation of Data

From the researcher's findings, analysis, presentation, and interpretation of data, the data and results of the simulation were textual and tabular. The results were based on the problems and objectives that were set at the outset of the study.

What is the cost averaging investing strategy?

Based on the review of literature and studies, the researcher found that strategy is a plan or course of action that is of vital, pervasive, and continuing importance. While, investing is the committing of current fund in anticipation of the receipt of an increased return of funds at some point, investing strategy, is^he plan or course of action that is of vital, pervasive continuing importance of committing current funds in anticipation of an increased return of funds at some point.

Investment therefore should be viewed as a long-term commitment of funds. In business, long-term suggests a period of more than one year or one operating cycle. The investor therefore must be prepared to anticipate the fact that the fund invested will not be available for current use. Investment fund must be considered in excess of current requirement. It may also be viewed as reserve fund for long-term use.

The investment must be available at the anticipated value in the future. Investing must be prudent and conservative. There is therefore a need to find an investment strategy that optimizes the placement of funds.

Investing in stocks is a long-term placement of excess funds. To be prudent and conservative, this study did a simulation of cost averaging as an investment strategy.

Cost averaging is a method of buying the same amount of a stock each period so that the price investor buys averages out over time. This systematic approach saves the investor from the turmoil of moving in and out of a number of stocks, or trying to time stock purchases. The investor can disregard current market conditions and emphasize long-term growth.

Investor may buy low or high, but in the long run his total cost is averaged. Fewer shares are purchased for the same amount of money when the market demands a high price per share; more shares are purchased for the same amount when the share price drops. Most importantly, dividends always are reinvested and automatically become parts of his cost averaged portfolio.

Aside from the obvious discipline that cost averaging encourages, studies show that over time, an investor can purchase more shares at a lower than market cost through cost averaging, than if he tries to buy the shares by timing the market.

There is a better chance for reward for an investor in a volatile market. As long as the investor is in this for the long-term of 10 years or more, he can assume that the value will go up since the market has higher averaged returns annually. This return should be higher than what most banks can give.

While cost averaging cannot prevent loss in a steadily declining market, it can prove to be a very successful investment strategy, making the most of market fluctuations over the long term. Investors can further reduce the risk through investment diversification. Choosing a portfolio with a mix of common stock, bonds and preferred stocks offers a greater protection against market risk than a common stock portfolio.

If an investor puts in a fixed amount of investment, regularly over a long period of time, would he come out ahead?

The simulation result shows that over the period 1978-2001 both SMC A and B shares of stocks the investor was ahead if he puts in a fixed amount of investment. If the investor puts a fixed amount of investment of PI 8,000 and P23,150 annually on SMC A and B respectively, these initial investments in 1978 followed by annual investment of the same amount accumulated to P432,000 and P555,600 respectively. This translates to an average share cost ofP37.00 versus average share price of P58.32 for SMC A. In the case of SMC B the average share cost was P41.94 as against average share price ofP76.16. In both cases it was to the advantage of the investor.

In the case of PLDT Common and ADS shares, the simulation result shows that over the period 1997-2001 both PLDT Common and ADS shares of stocks the investor was ahead if he puts in a fixed amount of investment. The initial investment of PI 1,525 and $300 respectively in the first quarter ofl977 followed by annual investment of the same amount accumulated to P230,500 and $6,000 respectively. This translates to an average share cost of P805.94 versus average share price ofP847.63 for PLDT Common. In the case of PLDT ADS the average share cost was $19.42 as against average share price of $21.67. In both cases it was to the advantage of the investor.

By how much would the investor be ahead if, by cost averaging, he bought these shares at the average of high and low prices of shares for the same period?

The SMC investor would be ahead, if by cost averaging the shares were bought at the average of high and low prices annually. The investor was ahead at the end of 2001. Using the high closing prices amounted to P50,909,898 and P81,132,798 or a difference ofP50,477,898.and P80,577,198 respectively. This is shown on Tables below.

In the case of PLDT Common and ADS shares, the simulation result shows that on most quarters of the years the investor was ahead. However in the last quarter of 2001, using the high closing prices the total value of shares acquired amounted to PI 88,895 and $3,835 for Common and ADS respectively. This is lower than the accumulated acquisition price ofP230,500 and $6,000

The result shows that over a long period cost averaging works for the investor, particularly with large corporations with proven track record like SMC and PLDT. The investor should however, be very conscious of the development internally by attending regularly the stockholders meeting and press releases.

The cost averaging formula appears to work with stocks that fluctuate substantially. Quality stocks that will continue to produce above average growth in revenue and earnings, like SMC and PLDT become attractive.

Summary, Conclusion and Recommendation

Summary

Results of the analysis indicated these findings:

1. The simulation proved that cost averaging works with SMC and PLDT shares traded in the Philippine Stock Exchange.
2. The gains were substantial over a long period of time when the investor holds on to the investment.
3. There were fluctuations in the increases due to stock dividends, cash dividends and stock splits in the case of SMC.
4. Both SMC and PLDT had significant change in ownership and management over the years. This contributed to the fluctuations in market values of their stocks
5. The investors gained substantially, if the cost averaging strategy was employed in investing.

Conclusions

In the light of the findings derived from this simulation study, the following conclusions are deduced:

1. Cost averaging as an investing strategy works on the basis of the result of the simulation. The selected stocks are from profitable companies backed by large asset holdings. Care should be taken in selecting companies to invest. Using SMC and PLDT as benchmarks would increase the chance of success.
2. An investor generally, is ahead in terms of the cumulative cost on investment placed versus the high market value of the shares. The investor should determine the amount he could afford to invest for the long term, as well as the board lot requirement of the stock exchange.
3. The gains are substantial over a long period of holding the investment. When the gains are known, the temptation to withdraw must be tempered, since cost averaging requires the maintenance of the investment over a long period of time.

Recommendations

After a careful review of the findings and analysis of the results of simulation, these recommendations are presented:

1. Prospective investors should gain substantial knowledge of cost averaging if they do simulation of the stocks of intended investment. They can only do this by using the annual reports and other company publications where share prices and movements are available.
2. Prospective investors should set aside an amount intended for regular periodic investment, whether, monthly, or annually or some other time.
3. Cost averaging works best with stocks that fluctuate substantially. Prospective investor should, however, avoid high risks stocks. He can only buy those shares of companies with proven track record in their operations. Cost averaging will not work if prices continue to move downwards in price.

*Benjamin D. de la Cruz is Lecturer and MBA, Area Head at Jose Rizal University Graduate School

The Growth of the Accounting Profession in the Philippines

*Benjamin D. de la Cruz

The accounting profession is one of the most rapidly progressing professions in the Philippines today. It showed a tremendous growth in 45 years after given formal recognition by the Government in 1923. The growth is evidenced by an ever increasing membership and spe­cialized services. It would be wrong, however, to assume that account­ancy in the country is of recent development, for according to histori­cal notes it existed centuries back. Pioneers in the profession believe it was employed in its crudest form in business dealings of our pre-Spanish rulers, traders and property owners. Later when the Span­iards came, a new and more systematic form was introduced. The sin­gle-entry system of bookkeeping which is more or less scientific was practiced by the Spaniards with some Filipino participation.

In 1898 the double-entry system became popular. It replaced the old Spanish single-entry. The transition began after the Philippines were ceded to the United States by Spain in December of 1898. The new system which gained wide acceptance in the United States and subsequently in the Philippines was refined from the Italian system by the British practitioners, who greatly influenced accounting prac­tice in the Far East. It is significant to note that Philippine account­ing practice varies slightly from other far eastern countries, due to its having American influence aside from British.

Commercial Schools

It was in 1916 that the present accounting and bookkeeping forms in use developed. It was the college of Liberal Arts of the University of the Philippines that started giving economic courses with some accountancy. Then followed the Jose Rizal College and soon other universities and colleges starred offering business courses. New business schools began to rise as trade, commerce and agricul­ture grew with a corresponding demand for the service of book­keepers and individuals skilled in commercial arithmetic. In later years, bookkeepers and individuals skilled in commercial arithmetic multiplied, but still they were not called professionals. Though they were regularly employed in commercial houses, they were not considered as engaged in the practice of accounting as a profession. Although there were some professional English, Scottish and American accountant immigrants who engaged in the practice of accounting profession here still they did not share a common standard as to the scope of subject and responsibility with respect to practice. They were even known or referred to in various titles, such as public ac­countants, chartered accountants, certified public accountants, "contadores publicos autorizados," "auditores autorizados," "peritos mercantiles" and others.


In 1923 the Philippine government formally recognized ac­counting as a profession. The sixth Philippines Legislature gave official recognition by passing Act No. 3105 on March 17, 1923. The law created the Board of Accountancy vested with authority to promulgate rules and regulations, to set professional standards for the accounting profession practice and to issue certified public accountant certificates to those who have qualified in accordance with the requirements of the law either by a waiver of the certified public accountant examination or after passing the same. The Board is composed of chairman and two members. The first Board of Accountancy was composed of Chairman W. W. Larkin, who worked out for the passage of the law, Domingo T. Dikit and Felix Tiongson, members.

PICPA Formed

Six years after the passage of the Accountancy Act, a group of 50 CPAs, mostly practitioners, organized the Philippines Institute of Certified Public Accountants (PICPA) to promote and maintain high professional and ethical standards among CPAs and to encourage cordial relations among them. W. W. Larkin became the first pres­ident of the Institute. The years that followed saw the growth of the Institute parallel to the growth of the profession as evidenced by the: yearly increase in membership and establishment of provincial chapters throughout the country. Conferences, seminars and meet­ings were held in Manila and in the different chapters.

In 1957 under the initiative of the Institute, the First Far East
Conference of Accountants was held in Manila with representatives from various far eastern countries attending. The conference laid the grounds for future conferences and congresses which were sub­sequently held abroad and the Institute, being the sole national or­ganization of accountants, represented the country. Others who headed the Institute through all this years were: Jaime Hernandez, Francisco Dalupan, Enrique Caguiat, Santiago de la Cruz, Washing­ton Sycip, Prisco Evangelista, Belen E. Gutierrez, Artemio Tulio, Jose Torres, J. S. Zulueta, Gregorio Licaros, Pascasio S. Banana, Alfredo Velayo, Ranulto Tulio, Francisco Gonzalez IV, Eduardo Villanueva, Cesar Bocaling, Arsenio Narciso, Tomas G. Mapa, Jesus Casino and Arsenio Maralit.

The R. A. No. 5166

Several amendatory legislations to the Accountancy Act (1923) were passed. Noteworthy were Acts Nos. 3264 (1925), 3302 (1926), 3401 (1927), Commonwealth Act No. 342 (1938) and Republic Act No. 546 (1956).

Last year on August 4, 1967 a new accountancy law was passed by Congress. This is Republic Act No. 5166. The new law created the Board of Accounting Education empowered to prescribe necessary collegiate courses and employment or apprenticeship requirements for admission to the CPA examination. The membership of the Board of Accountancy was increased from three to six. The subjects of the CPA examination were also increased from four to six, the additional subjects being taxation and management services. Other provisions are geared towards meeting the needs and challenge of the accounting profession.

In conclusion, accounting profession today, although recognized only 45 years ago, has attained progress parallel to that of the othci professions in the country and also has gained the confidence and respect of all sectors of Philippine community. It faces a bright future with the passage of the new Accountancy Act, and having a strong and vigilant association such as the PICPA.

In the words of President Marcos "the accounting profession has contributed so much to the attainment of economic progress. Its role in the conduct of commerce and industry has expanded with the years. Its membership has enlarged and its services have broadened."

*Benjamin D. de la Cruz is a BSC – Accounting Senior Student

Business Forum: A Quarterly Published by the Institute of Accounts, Business, and Finance
Far Eastern University Manila

Volume 1 Number 1 March 1968

GMA 7 Studio Visit

The Business Men: Ernie and Ben
(featuring character sketches of Commerce Department Faculty)

*Victoria G. Orjalo

This is not an amended version of the Sesame Street characters, but an amateur character analysis of two professors at the Commerce Department: Ernie Apodaca and Ben de la Cruz.

When one first meets with Ernie and Ben, the impression is one of serious academic miens. The impressions are not entirely false - Ernie, after all, has only Chapters 4 and 5 of his dissertation to complete his Doctorate degree in Business Administration from the De la Salle University. He is also in the process of updating his book on Distribution Management (Marketing Logistics) under the De la Salle University Press. He is partial to tea, prefers cool barong outfits and attends mass regularly. Having said that, you get the image of an outright bore, or at the very least, an academic know-it-all

Ben, on the other hand, is a real heavyweight - physically and in other terms. Ben de la Cruz has spent a good number of years in the academe, and many years in the corporate world, just like Ernie. He is also partial to barong outfits, wears
dark-rimmed spectacles, and has received his nth award from Don Bosco Technical College in Mandaluyong for exemplary professional aptitude. Ben is also close to finishing his doctoral studies at the PUP. Yep - another outright bore, by those credentials.

The Ernie we know, however, woke up the Strategic Planning meeting at one o'clock in the morning of June 15 in Antipolo with his report on the action plans of the Commerce Department. The report was short and direct to the point - he told the participants that the topics have all been taken up, and he had nothing else to add. It was a comic and subtle way to send a message - let's all go to sleep -we're not sharp enough to tackle anymore at this time of the night.

Ernie is just like that memorable Strategic Planning event - he has a humorous streak that has a lot of sense, and he delivers it seriously, lest you miss the point. Some of the humor is so light and obvious that one misses it if one strains to get the joke. The Mr. Apodaca you know also has a lot of religious sense -but his jokes on the religious sector is never irreverent, but decidedly "knowing" (not in the Biblical sense)
The next time you get a yen for tea and the popular version of what the Bible stories mean - get a ring side seat during Ernie's afternoon break at the Commerce Department.
Ben is the Papa bear version of Ernie's teddy bear built. Ben's build is imposing - almost 6 ft. all and a heavyweight at the scale. His heart and character is bigger than that physical impression. Ben is the Bert to Ernie's Ernie (as in Sesame Street ). Ben will explain Ernie's joke - in case you missed it. He will dissect it for you, and may deliver a dissertation on the spot, if you let him. That analytical bent probably stems from his Finance experience with San Miguel Corporation. He is used getting into the details of the matter - he will get you reacquainted with the trees. when you et lost in the forest. He will bother to explain - he will take time to make you understand - he will guide you where you need to be led.
We have a treasure in Ben - he has maintained a warm networking relationship with his past and present colleagues that he brings to wealth and depth to his bearing. He also brings a naughty, but never offensive, streak to it.

In the Palawan trip of Summer 1996, Ben almost got the entire ISSP group in a bad patch when he got them invited to the Asia World Hotel. The activity was not in the approved itinerary. But the network is everywhere - Ben gets invited and he likes to bring the, rest of the gang along. Ed - the other de la Cruz of the Commerce Department, invariably gets a whole gang to his North Park lunches because he invites Ben.
The other way to get a stimulating! dissertation on the Bible is to get Ben (who was invited by Ed) to that North Park lunch.

There is a hypothesis that the Biblical aptitude of Ben and Ernie stem from the fact that they were both born on the day we commemorate the death of infants at the hands of Herod. You are invited to elevate the hypothesis to a theory during one of the North Park lunches or afternoon tea lunches with Ben and Emie. The sessions will surely be more fun than watching reruns of Ernie and Bert (Sesame version).

Next "Business" Men: Free lunch with the other De la Cruz - Ed

*Ms. Victoria G. Orjalo is Associate Dean of the Commerce at Assumption College

The Commerce Agenda
Volume 1 No.1 February 1998

Assumption College Service Awards

*Dr. Maria Corazon T. Lopez

Good afternoon.

Today I am honoring a dear colleague at the School of Business, who of late, we have started to call endearingly as "Lolo Ben." Despite the fact that he is an accountant by training, by profession, and active practice, he has taken the role of being our resident nutritionist and wellness moderator - closely watching over what we eat and how we take care of ourselves. His caring of us is so very much in the core of his being that his concern was about us in the department even at the worst time of his stay in the hospital.

Our "Lolo Ben" is Professor Benjamin de la Cruz. He came to join us in 1994 as part time faculty, the youngest of the batch of seasoned gentlemen professors such as Mr. Lao, Mr. Buhay, Dr. Handog and Mr. Apodaca.

He came to us with a portfolio of experiences gained from 22 productive years of working in San Miguel Corporation. His skill in teaching was honed by his exposure in Ateneo and Don Bosco as part time faculty. In 1997, he became an "Asumptionist" and took on the mantle of a true Assumption educator focusing mostly on teaching accounting and finance subjects. As an administrator, he nurtured the Marketing Department as the Chairperson. He actively involved himself in the PAASCU committees on curriculum and on physical plant. I am sure his sojourns as an ISSP professor would remain permanently embedded in his memory. "Lolo Ben" always spoke very fondly of his ISSP times with the students.

"Lolo Ben" is retiring. He will be missed by the students because he is so well loved by them - always referring to his fatherly concerns. We, his colleagues, will miss his edgy jokes, his ministerings to our wellness, his towering strength at times of adversity. We will miss having an unofficial photographer and documentor in our midst.

In behalf of the department and the rest of the Assumption College, today we honor this man - Professor Benjamin de la Cruz - for thirteen years of unstinting service; for thirteen years of embracing this life of a mentor to a bevy of young women, many of whom are now successful professionals, mothers, and leaders. Ladies and gentlemen, a warm applause to our man of the hour - PROF. BENJAMIN DELA CRUZ.


*Maria Corazon T. Lopez, PhD.
Associate Dean, School of Business
Assumption College

9 March 2007 5F Therese Emmanuel Building