Thursday, August 13, 2009 | MANILA, PHILIPPINES [ BusinessWorld Online ]
THE COURT of Appeals has allowed the Philippine National Bank (PNB) to take over the Makati and Tagaytay properties of Ramon Jacinto-owned RJ Ventures Realty and Development Corp.
In a 32-page decision penned by Associate Justice Romeo F. Barza, the eighth division of the appellate court nullified an execution order issued by the Makati Regional Trial Court that retained the two properties in the possession of the businessman-entertainer. "The court is simply perplexed as to how the respondent court could have ordered the restoration of possession of the Buendia and Tagaytay properties, which have already been foreclosed by petitioner bank ...," the appellate court said.
First Women’s Credit Corp. (FWCC) acquired for P3.68 billion the Buendia property on July 17, 1996. The loan came from PNB itself. Before it could end the transaction, the firm assigned all its rights, claims and interests over the property to RJ Ventures. In order to pay for the balance of the purchase price, RJ Ventures in turn applied for a loan with PNB worth P2.944 billion. The Lucio Tan-led bank required a 10% downpayment or P368 million.
To pay for this, affiliate Rajah Broadcasting Network, Inc. borrowed P350 million from PNB. Used as security were a 70% stake in Rajah as well as Mr. Jacinto’s 40% stake in FWCC. Meanwhile, Rajah secured another loan worth P100 million to cover interest payments. This was secured by a chattel mortgage over broadcast equipment and the Tagaytay lot.
Loans of RJ Ventures and Rajah Broadcasting reached P5.405 billion and P841 million, respectively. When these went sour, the bank started foreclosure proceedings for both the Buendia and Tagaytay properties sometime in 1999. RJ Ventures sought an injunction from the Makati court Branch 66, but this was denied on March 2, 1999.
PNB thus began foreclosure of assets, including those pledged by Rajah Broadcasting, such as broadcast equipment. RJ Ventures tried to save the equipment and other collaterals by going anew to the trial court.
The firm lost and went to the appellate court, where it got a favorable ruling. In a decision dated Sept. 27, 2006, the Supreme Court (SC) also ruled in favor of RJ Ventures. As such, it moved for the issuance of a writ of execution with the Makati trial court, seeking that the properties be returned to it, including the Buendia and Tagaytay properties.
On Jan. 10, 2008, however, the trial court, headed by Judge Joselito Villarosa, denied the motion, saying that the issue being litigated refers only to the collateral and that both the Buendia and Tagaytay properties were not included. The firm thereafter moved for a consolidation of the cases — the collaterals and the real estate properties — before Branch 132 of the Makati court. On March 10 this year, the petition for execution was granted.
The appellate court said "there was nothing in the said SC decision, nor from the said decision of this court, about the restoration of possession over the [two properties]."
In a phone interview, Mr. Jacinto told BusinessWorld the decision would be appealed. "The spirit behind the SC decision [is a status quo order] on all collaterals pledged and mortgaged ... It said I was not in default ... So therefore, the status should be prior to the foreclosure," he said. "We knew only of the decision when we asked for a consolidation of the cases," he added. — Ira P. Pedrasa