August 8, 2016

The Philippine Deposit Insurance Corporation (PDIC) filed with the Department of Justice (DOJ) a criminal complaint against the former directors, officers, employees and consultants of the closed Banco Filipino Savings and Mortgage Bank for syndicated estafa that resulted in estimated losses of about PHP669.6 million to the Bank. The complaint filed on July 5, 2016 is scheduled for setting of initial hearing by the DOJ Task Force on Financial Fraud. Banco Filipino is a 62-unit bank ordered closed by the Monetary Board and placed under receivership of the PDIC on March 17, 2011.

Charged with committing syndicated estafa in violation of Presidential Decree No. 1689 (1980) were Albert C. Aguirre (former Vice Chairman), Teodoro O. Arcenas (former Chairman and President), and 31 other former officers, employees and consultants of Banco Filipino.

In its Complaint-Affidavit, PDIC alleged that the respondents, with abuse of confidence as bank directors/officers, conspired and misappropriated Banco Filipino funds solicited from the depositing public approximating PHP669.6 million to pay for their travels abroad from January 2000 to July 2003. The syndicated estafa led to bank losses. Even after the bank was ordered closed on March 17, 2011, respondents failed to return the amount.

Banco Filipino, which started operations in 1964, was first ordered closed in January 1985. It was in 1991 when the Supreme Court ordered its re-opening and three years later, Banco Filipino resumed operations under the comptrollership of the Bangko Sentral ng Pilipinas (BSP), in compliance with the Supreme Court order. Due to the Bank's good financial health, BSP's comptrollership of the Bank was lifted in January 2000. PDIC alleged that based on investigation, the crime of syndicated estafa was committed after BSP's comptrollership was lifted. With a net loss of PHP1.778 billion and a net asset decline of almost 50% for a three-year period since 2000, Banco Filipino was again placed under BSP comptrollership.

In 2011 when the Monetary Board ordered the bank's closure again, PDIC discovered several anomalous expenditures incurred by the Bank starting 2000 until July 2003 representing travel expenses of the Bank's directors, officers, consultants, and employees in the total amount of PHP669.6 million. Of this amount, PHP621.2 million was unliquidated. Another amount of PHP48.4 million was spent for the activities of Los Tamaraos Polo and Equestrian Center, Inc., an affiliate company of respondent Aguirre, and sponsorship of a tournament in London, England as well as personal expenses such as clothing, toiletries, perfume and accessories, groceries, freight services, vehicle repair and maintenance, license registration, drugstore purchases, and medical fees. The respondents justified that their travel expenses were incurred to prepare for Banco Filipino's operations as a universal bank, conduct image build-up activities, expand contacts, and explore unspecified business opportunities. Upon investigation, the expenses were found to be not at all related to the business of the Bank.

Syndicated estafa is a non-bailable criminal offense punishable by life imprisonment.

PDIC had earlier filed criminal complaints against former directors, officers and employees of Banco Filipino for conducting business in an unsafe and unsound manner, in violation of the PDIC Charter. The filing of charges is in support of PDIC's efforts to bring to justice parties who 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 unscrupulous 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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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 P500,000 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.