The Philippine Deposit Insurance Corporation (PDIC) charged former directors and officers of the closed LBC Development Bank, Inc. (LBC Bank) for violating Republic Act 3591, as amended, or the PDIC Charter by conducting business in an unsafe and unsound manner that caused LBC Bank aggregate losses of at least PHP1.8 billion. The criminal complaint was filed on April 15, 2016 before the Department of Justice Task Force on Financial Fraud.

Charged were LBC Bank's former directors Santiago G. Araneta, Juan Carlos G. Araneta, Fernando G. Araneta, Carlos G. Araneta, and Joseph Jeffrey Rodriguez; as well as former Chairman, President and CEO Ma. Eliza G. Berenguer, former Head of the Treasury Ofelia F. Cuevas, former Finance Head Apolonia L. Ilio, and former Cashier Arlan T. Jurado.

LBC Bank is a 20-unit thrift bank that was ordered closed by the Monetary Board of the Bangko Sentral ng Pilipinas on September 9, 2011. LBC Bank's closure affected 33,191 accounts with total estimated deposits of PHP5.95 billion, PHP2.97 billion of which are insured by the PDIC up to the maximum deposit insurance coverage of PHP500,000. Of the total insured deposits, 98% or PHP2.91 billion have been paid by PDIC drawn from the Deposit Insurance Fund (DIF). The DIF is PDIC's funding source for payment of deposit insurance.

The complaint alleged that the respondents positioned the bank to be an active player in the remittance business through a service agreement with LBC Express. LBC Express is a remittance company owned by LBC's Bank's stockholders and directors. Under the agreement, LBC Bank was tasked as the pay-out or distribution agent of LBC Express. In return, LBC Express was responsible for the payment of service fees for every transaction facilitated by LBC Bank.

The complaint further alleged that the respondents, taking advantage of their bank positions, deliberately acted in favor of LBC Express and disregarded their duties and responsibilities to LBC Bank when they failed to require LBC Express to pay the service fees due. The respondents were also charged for their failure to question or investigate the cause of LBC Express' non-payment of the service fees. The complaint also charged respondents for their failure to impose measures to protect the interest of LBC Bank, either by terminating the service agreement unless payment was made to LBC Bank, or by imposing sanctions to LBC Express for failure to pay. The service agreement, the complaint noted, was even renewed repeatedly from 2005 to 2011. These acts, the complaint stated, constitute the conduct by the respondents of unsafe and unsound banking practices.

The PDIC has earlier filed charges of estafa, syndicated estafa and falsification of commercial documents against former directors and officers of LBC Bank. The filing of charges against erring bank officers and employees and unscrupulous individuals is an important undertaking of the PDIC to achieve the objectives of deterring other parties from taking advantage of the deposit insurance system, and protecting the interests of the depositors and the DIF.

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