The online news portal of TV5
While former President Gloria Macapagal-Arroyo has been slapped with one criminal suit after another, the in-laws of her son, Rep. Mikey Arroyo, the family of low-key, low profile multimillionaire businessman Herman Montenegro, seems to be in a quagmire of financial woes.
The Montenegros have lost ownership of their 1,750-square-meter, ancestral house-and-lot on Cambridge Circle in North Forbes, owing to their failure to pay million of pesos in debt to the Bank of the Philippine Islands (BPI), according to documents obtained by TV5 news.
They will have to vacate the property within the next few weeks, but the multimillionaire's lawyer, Arturo de Castro, told TV5 that the family still intends to challenge the foreclosure and auction proceedings before a court in Makati.
BPI foreclosed the sprawling property and sold it by auction to shipping magnate Emilio Tiu of Solid Shipping Lines Corp for P105 million. Lawyers of the Montenegros and the BPI supervised the auction held at the Makati City Hall on October 18 last year. A regional trial court in Makati had ordered the sale of the property. Tiu's broker Eliza Choa Tan said her principal would demand the turnover of the property after the documentation of the sale is completed.
Montenegro first obtained an initial loan amount of P60 million in July 1999, with the Cambridge property as collateral. The loan was restructured and renewed to P86.9 million, listing his companies Fujica Pacific Inc and Titan Megabags as co-borrowers. P24.5 million was credited to Fujica in March 2005 while Titan would be accountable for P62.4 million, as of September 2005.
As of September 2011, Montenegro's aggregate debt ballooned to P135.8 million, including interest and penalties.
BPI had repeatedly sent demand letters to the Montenegros, but they failed to settle anything, the document said. The last demand letters were sent on May 16, 2011, for Titan Megabags, and on May 18, 2011, for Fujica.
Another Montenegro property in Misamis Oriental is up for auction soon for the same loan default. The two Montenegro firms are now undergoing rehabilitation.
What went wrong, the document did not say. Montenegro and de Castro refused to grant an interview, except to say they were still fighting for their properties.
When he was asked how his net worth shot up after he became congressman, Mikey Arroyo, the eldest son of former president Arroyo, pointed to his marriage to Angela Montenegro; he said his assets and wealth could partly be explained by his having married into a rich family. When the Department of Justice slapped him and Angela a P73-million tax evasion case last year, the subpoena was sent to his father-in-law's house on Cambridge.
A family friend said Montenegro and his wife Charito live in another house, in Dasmarinas Village, also in Makati. This is where they host dinners and parties. The family also owns houses in the United States.
Montenegro made his fortune from real estate, his first business venture, but his empire grew when he formed Pacific Activated Carbon Co., Inc. in 1966. He later put up his own activated carbon factory and invited Japanese partners to invest. The oil crisis in 1973 became an opportunity for him to expand his business when the Japanese partner, Daichi Kogyo, decided to back out. After buying out Daichi Kogyo, he made the company the biggest coconut-activated carbon manufacturer in the world.
The Montenegro group has since diversified into other businesses, including bulk-container bags, polyvinyl floor tiles, organic and inorganic pigments, cargo-shipping services, molded-plastic components, floor coverings, cutflowers and real-estate development.
Montenegro was born in Taal, Batangas, the youngest son in a family of six girls and four boys. His family owned tracts of coconut plantations. His wife came from the huge and wealthy Arroyo clan of Bacolod. She was born and raised with her three sisters in a sugar plantation in the south. Charito and the former president's husband, lawyer Joe Miguel Arroyo, are second cousins.
Montenegro and Charito got married in 1965. In no time, they started building their own house - "this tastefully decorated Cambridge mansion," according to a family friend.