The Philippine Deposit Insurance Corporation (PDIC), statutory receiver of the closed Rural Bank of Sebaste, Inc. (RB Sebaste) in Antique, filed on February 4, 2014 with the Department of Justice (DOJ) a criminal complaint against the former President and the former Vice President/General Manager of the closed bank for the creation of fictitious loans. RB Sebaste was placed under PDIC receivership by the Monetary Board on August 24, 2007.

In its complaint, the PDIC alleged that respondents Eugene T. Estrella, former President of RB Sebaste, and Norma A. Delgado, former Vice President/General Manager, directed and caused the creation of 2,988 fictitious loan accounts between 1997 and 2007 worth around P120.1 million, which seriously distorted the financial report of RB Sebaste.

Bank records showed that RB Sebaste had 3,071 total loan accounts amounting to P131.3 million. The PDIC sent demand letters to the 3,071 purported bank borrowers, but 2,060 of those letters sent were returned, while 111 of the supposed borrowers denied any loan transaction with RB Sebaste.

Attached to the complaint is a sworn affidavit of the former officer-in-charge and cashier of RB Sebaste’s head office, which stated that both Estrella and Delgado gave instructions to their subordinates to create fictitious or “indirect” loans, while all management and policy directives emanated from Delgado who supplied the list of names used in the creation of the loans.

The complaint also indicate that the fictitious loan accounts, comprising 97% of the bank’s loan accounts, did not have credit folders. A credit folder contains the promissory note, real estate/chattel mortgage, appraisal report, credit investigation report, loan and discount release sheet, loan application, board resolution, and other related documents pertaining to the grant and release of the loan. The absence of credit folders indicated deliberate failure to document such loan releases and demonstrated that the loan accounts were bogus and nonexistent.

The PDIC continues to pursue legal actions against bank officials and personnel who are found to have engaged in unsafe and unsound banking practices, as these activities pose grave threats to the stability of the country’s banking system. As co-regulator, deposit insurer and receiver/liquidator of closed banks, the Corporation is authorized to conduct investigations and file appropriate cases against erring bank officials and individuals who are found to have violated banking laws. The pursuit for justice against erring bank owners, officers and employees is an important undertaking of PDIC to protect the Deposit Insurance Fund, the funding source for payment of insured deposits, as well as to protect the depositing public and maintain financial stability.

* * * * *