The Department of Justice (DOJ) will conduct preliminary investigation on the criminal complaint filed by the Philippine Deposit Insurance Corporation (PDIC) against eight former stockholders and officers of the closed LBC Development Bank (LBC Bank). The hearing is set on May 29, 2015. The PDIC, Receiver and Liquidator of the closed LBC Bank, filed the criminal complaint with the DOJ on April 29. LBC Bank is a 19-unit thrift bank ordered closed by the Monetary Board and placed under the receivership of the PDIC on September 9, 2011.

In the criminal complaint, PDIC charged LBC Bank stockholders Juan Carlos G. Araneta, Santiago G. Araneta, Fernando G. Araneta, and Monica G. Araneta and former LBC Bank officers Ma. Eliza G. Berenguer, Ofelia F. Cuevas, Arlan T. Jurado, Jennifer E. Cerrada with Estafa and Falsification of Commercial Documents under the Revised Penal Code and Conducting Business in an Unsafe and Unsound Manner under Section 21 (f) and (g) of Republic Act No. 3591, as amended.

The complaint alleged that LBC Bank officers fraudulently caused the issuance of LBC shares of stocks to Juan Carlos G. Araneta, Santiago G. Araneta, Fernando G. Araneta, and Monica G. Araneta in July 2008 and made it appear as if these stockholders infused P39.15 million to LBC Bank. However, allegedly, LBC Bank did not actually receive from the Aranetas the consideration for the stocks issued to them.

The PDIC further alleged that the respondents took advantage of their positions and connived to deceive regulators and the depositing public into believing that the bank had sufficient capital to continue operations. Depositors thus continued to entrust their money to the bank, resulting in the increase in deposits from P2.064 billion in 2004 to P6.094 billion in 2011 despite being capital deficient since 2004.

LBC Bank's extensive capital deficiency led to its closure in 2011 affecting more than 26,000 depositors, whose aggregate deposits of P6.1 billion took a toll on PDIC's Deposit Insurance Fund (DIF), the Corporation's main fund source for payout of insured deposits. The PDIC paid LBC Bank depositors P2.9 billion in insured deposits as of March 31, 2015. Uninsured deposits amounting to P2.7 billion involving 1,437 accounts shall be paid out of the bank's assets.

This is the second case that the PDIC has filed against LBC Bank officials. The first case resulted in the filing of a criminal case for estafa (Criminal Case No. 14-1092-1107) against former LBC Bank President Ma. Eliza G. Berenguer and a borrower of the bank, Benito Ramon V. Araneta before the Regional Trial Court of Makati City, Branch 143 for allegedly defrauding the bank in the amount of P229.5 million. The filing of charges against the LBC Bank officers is in support of PDIC's efforts to bring to justice parties that engage in acts that will put depositors and the 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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