PNB, RJ Group ink compromise agreement

MANILA, Philippines - The Philippine National Bank (PNB) and the RJ Group, led by its chairman, Ramon “RJ” Jacinto have entered into a compromise agreement settling the long-standing dispute over the prime 8,000 sq. meter lot at the corner of Buendia and Paseo de Roxas.

Under the agreement, the PNB paid the RJ Group an undisclosed sum of money and returned a property in Tagaytay previously foreclosed by PNB, to the RJ Group.

The RJ Group in turn agreed to drop all cases in court against the PNB and return the Buendia property to PNB.

Both parties dropped all claims against each other and PNB cleared the RJ Group of all the group’s loan obligations including the loans that PNB sold to Opal investments under the special assets vehicle (spav) arrangement.

The RJ Group won the bidding for the prime property in 1996 and paid a down payment of 20 percent or $28 million and paid an interest payment of $12 million on the 80-percent mortgage loan given by PNB on the property.

The onset of the Asian crisis in 1997 necessitated a restructuring but the PNB proceeded to foreclose. The RJ Group secured a permanent injunction stopping the foreclosure.

RJ Group chairman RJ Jacinto had claimed in court that the PNB foreclosure in the late 90’s was politically motivated quoting a Senate speech by Sen. Jinggoy Estrada in 2007 saying “my father ordered the government to go after RJ”. Jacinto was perceived to be closely associated with former President Fidel V. Ramos, a political rival of former President Joseph Estrada.

The PNB at that time was controlled by the government. The dispute began before the Lucio Tan group purchased control of the PNB.

The settlement clears the way for PNB to do what it wants with the prime Makati property and the RJ group is cleared of all its obligations and gets back other assets mortgaged to PNB for other loans free and clear.