State-run Philippine Deposit Insurance Corp. (PDIC) said on Monday that it filed criminal charges against 20 former officials as well as stockholders of the shuttered Banco Filipino Savings and Mortgage Bank due to “unsafe, unsound practices” that caused P1.4 billion in losses.
The criminal complaint lodged before the Department of Justice also covered ex-officers of a number of companies related to Banco Filipino, which the Monetary Board shut down and then placed under PDIC receivership in 2011.
The ex-Banco Filipino officers charged were: Albert C. Aguirre (former director and vice chairman); Teodoro O. Arcenas Jr. (former director and chairman); Orlando O. Samson (former director and executive vice president); Lualhati L. D. Nicolas (former executive vice president); Jovito N. Hernandez (former executive vice president); Serafin P. Tongco (former senior vice president); Romeo M. Avila (former senior vice president); Delfin M. Dimagiba, (former director and treasurer); Elena L. Pallasigue (former assistant vice president); Dionisio M. Domingo (former vice president); Conrado P. Banzon and Cesar S. Paguio (former directors); Grace L. Daguna (former assistant manager); and Maxy S. Abad (former executive vice president).
Some of those charged also held positions in related firms such as BF Citi, BF General Insurance Co. Inc., BF Homes Inc., BF Life Insurance Corp., Filipino Vastland Co., and Glamor World Inc.
Also charged were former officials of the six related companies, namely: Virginia V. Serrano, Rosalina E. Tacolod, Mary Lou A. Vasquez, Antonio S. Calleja, Jerome H. Velhagen, and Joseph C. Velhagen Sr.
PDIC’s complaint alleged that “in 2001, the respondents took advantage of their positions and connived with officers and stockholders of Banco Filipino and its related entities to sell the bank’s head office property to BF Homes for P685 million and use the bank’s funds to pay for the purchase.”
“The alleged sale took place when BF Homes did not have the financial capacity to pay for the sale, having been under rehabilitation,” PDIC claimed.
According to PDIC, Banco Filipino records showed that the bank “granted questionable loans in favor of Vastland and Glamor” even as both allegedly had “negative credit standings with at least 20 other banks.”
“The loans were allegedly secured by overvalued properties of BF Homes, BF General and BF Life. These loan proceeds were supposedly to be used by Vastland and Glamor to acquire and develop real estate properties in Cavite. However, the loan proceeds were allegedly diverted to fund the checks of BF Homes, which were used to pay for the purchase of the head office premises. These transactions showed that the bank used its own funds to buy its own property,” according to PDIC.
Also, the complaint alleged that “respondents planned to transfer its service offices to a cheaper property located in Las Piñas, to help generate income or savings for the bank to justify the sale of its head office property.”
“However, the bank did not relocate and instead rented said head office from BF Homes until the bank was ordered closed in 2011,” PDIC said.
Further, the PDIC complaint alleged that “respondents also made Banco Filipino pay BF Homes rental fees higher than prevailing rates with the bank paying an estimated total amount of P844.7 million from 2001 to 2011.”
“Moreover, they orchestrated other fraudulent activities and irregular transactions over the same 10-year period,” PDIC added.
“The filing of charges against officers of the closed Banco Filipino is consistent with PDIC’s efforts to protect the depositing public and to bring to justice parties that engage in acts that will put depositors and the deposit insurance fund at risk,” it said.
“Conducting business in an unsafe and unsound manner is in violation of Republic Act (RA) No. 3591, as amended or the PDIC charter, and of RA 8791 or the General Banking Law of 2000,” it noted.