The Philippine Deposit Insurance Corporation (PDIC) filed with the Department of Justice a criminal complaint against 20 former stockholders and officers of the closed Banco Filipino Savings and Mortgage Bank (Banco Filipino) and its related entities for conducting business in an unsafe and unsound manner that resulted in estimated losses of P1.4 billion to the bank. Banco Filipino is a 62-unit bank ordered closed by the Monetary Board and placed under receivership of the PDIC on March 17, 2011.

Conducting business in an unsafe and unsound manner is in violation of Republic Act 3591, as amended or the PDIC Charter, and of RA 8791 or the General Banking Law of 2000.

Charged were Banco Filipino officers namely: Albert C. Aguirre, Director and Vice Chairman (also stockholder of BF Citi and sole receiver of BF Homes, Inc. (BF Homes) at the time the alleged violation was committed) ; Teodoro O. Arcenas, Jr., Director and Chairman; Orlando O. Samson, Director and Executive Vice President (also Director of BF Homes); Lualhati L. D. Nicolas, Executive VP; Jovito N. Hernandez, Executive VP; Serafin P. Tongco, Senior VP; Romeo M. Avila, Senior VP; Delfin M. Dimagiba, Director and Treasurer (also a BF Citi stockholder); Elena L. Pallasigue, Assistant VP; Dionisio M. Domingo, VP; Directors Conrado P. Banzon and Cesar S. Paguio; Grace L. Daguna, Assistant Manager; Maxy S. Abad, Executive VP (also Chairman and President of Filipino Vastland Company (Vastland), Director and Vice Chairman of BF Citi, BF General Insurance Co., Inc. (BF General) and BF Life Insurance Corporation (BF Life), and Treasurer of BF Homes); and officers of related entities namely: Virginia V. Serrano, Director and President of BF Citi (also Assistant Treasurer of Glamor World, Inc. (Glamor), and stockholder of Pro Managers, Inc.); BF Homes VPs Rosalina E. Tacolod and Mary Lou A. Vasquez; Antonio S. Calleja, Executive VP (BF Citi); Jerome H. Velhagen, Treasurer (Glamor); and Joseph C. Velhagen, Sr., Director (Glamor and Vastland).

BF Homes, BF Citi, BF General, BF Life, Glamor and Vastland are entities related to the Bank.

The 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. Records of the bank revealed that Banco Filipino granted questionable loans in favor of Vastland and Glamor. Both entities allegedly have 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.

The complaint also 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.

The complaint further 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.

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 (DIF) at risk. The PDIC continues to pursue legal actions against bank officials and personnel who engage in unsafe and unsound banking practices that pose grave threats to the stability of the country's banking system. The PDIC is mandated to generate, preserve, maintain faith and confidence in the country's banking system, and protect it from illegal schemes and machinations.

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