NEWS/PRESS RELEASE
PR-100-19
Date of Release: June 18, 2019
FOR IMMEDIATE RELEASE

The Philippine Deposit Insurance Corporation (PDIC) is warning the public of a scam involving individuals who use other individuals as dummy depositors to take advantage of the country's deposit insurance system for their personal benefit. The warning came in the light of recent bank closures.

As state deposit insurer, it is PDIC's mandate to protect the Deposit Insurance Fund (DIF), the funding source for payment of deposit insurance claims during bank closures. Hence, PDIC needs to safeguard the stability of the DIF against any act that threatens it. In carrying out its mandate as deposit insurer and receiver of closed banks, PDIC is authorized to conduct investigations and file necessary cases against erring bank officials and individuals who circumvent the deposit insurance scheme.

The warning comes on the heels of the decision of the Supreme Court (http://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/64208) finding that there is probable cause in the criminal charges filed by PDIC for estafa through falsification and money laundering in relation to the deposit insurance claims on deposits in banks under the Legacy Group of Companies, a group of 12 affiliated banks ordered closed successively by the Bangko Sentral ng Pilipinas (BSP) in December 2008.

The PDIC had earlier filed with the Department of Justice (DOJ) said criminal complaint against 88 individuals for conspiring to defraud the government by as much as PhP97.73 million in bogus deposit insurance claims under misrepresentation that they are owners of deposits of various closed Legacy banks based on falsified commercial and official documents when they filed their claims for deposit insurance. Referred to by the PDIC as deposit insurance fraud, the fraudulent scheme involved acts of misrepresentation as owners of certain deposits when, in truth they are not; filing of claims for deposit insurance and receiving deposit insurance payments from the PDIC. The Supreme Court decision found probable cause for the crimes of estafa through falsification and money laundering and reversed the earlier resolutions of the Court of Appeals and the DOJ. Under Republic Act No. 8791 or the General Banking Law, a bank's failure to heed warnings of the supervisory and regulatory authorities was tantamount to conducting business in an unsafe and unsound manner.

According to the Supreme Court decision, “If not for the fact that the 683 Landbank crossed checks amounting to P97,733,690.21 were deposited in the xxx account of respondent xxx, petitioner (PDIC) would not have gotten wind of this probable concealment of true ownership over the subject bank accounts.” Crossed checks issued by PDIC carry a specific instruction that the checks should be deposited only to the account of the payee.

The Supreme Court decision also declared that PDIC's determination, which found that there was only one beneficial owner of the 471 bank deposit accounts with the Legacy banks as most of the alleged individual depositors lack financial capacity to own these bank deposit accounts and that said individuals reported the office or business address of only one respondent as their own, arouses serious suspicion on the true ownership of the funds deposited. Under the PDIC Charter, all deposits in a bank maintained in the same right and capacity of the depositor for his benefit either in his own name or in the name of others shall be consolidated into one deposit account entitled to the maximum deposit insurance coverage (MDIC). At the time of the closure of the Legacy banks, the MDIC was PhP250,000.00. The closure of these Legacy banks hit PDIC's DIF by more than P14 billion.

PDIC President Roberto B. Tan said that the Supreme Court decision was a welcome development in the government's pursuit of justice against erring bankers and depositors as this protects the DIF and the deposit insurance system. This also supports PDIC's depositor protection mandate highlighted in this year's observance of the 17th Depositor Protection and Awareness Week (DPAW) on June 16 to 22, 2019. This year's theme is, “Bank deposit mo, protektado!”, PDIC's pledge of protection to the depositing public.

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The Philippine Deposit Insurance Corporation (PDIC) was established on June 22, 1963 by Republic Act 3591 to provide depositor protection and help maintain stability in the financial system by providing deposit insurance. Effective June 1, 2009, the maximum deposit insurance coverage is PhP500,000 per depositor. All deposit accounts by a depositor in a closed bank maintained in the same right and capacity shall be added together. A joint account shall be insured separately from any individually-owned deposit account.

PDIC news/press releases and other information are available at the website, www.pdic.gov.ph.

Corporate Communications Dept.
PHILIPPINE DEPOSIT INSURANCE CORPORATION
Tel: (02) 841-4637 / Fax (02) 841-4833
Trunkline: (02) 841-4000
Website: www.pdic.gov.ph.
Email: ccd@pdic.gov.ph
Facebook: www.facebook.com/OfficialPDIC
Twitter: www.twitter.com/OfficialPDIC
http://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/64208