July 26, 2016

The Department of Justice (DOJ) granted the motion for reconsideration filed by the Philippine Deposit Insurance Corporation (PDIC) and directed the Prosecutor General to file charges against spouses Manu and Champa Gidwani, 86 other depositors of Legacy Banks, and the branch manager of Rizal Commercial Banking Corporation (RCBC) Bacolod Main branch, Andrew A. Jereza, for committing the complex crime of estafa through falsification of documents. In addition, the DOJ directed the filing of perjury charges under Article 183 of the Revised Penal Code against the 86 depositors.

The DOJ further directed that the Gidwani spouses and the 86 depositors be charged for violating Section 4 (a) of the Anti-Money Laundering Act (AMLA). The Prosecutor General was also directed to charge Jereza with violation of Section 4 (c) of the AMLA.

Spouses Gidwani and the 86 other respondents filed with the PDIC deposit insurance claims with respect to various accounts maintained with the Legacy Banks. Per Resolution dated 03 June 2016, the DOJ found sufficient evidence that through the respondents' false pretenses and misrepresentations, PDIC was made to pay fraudulent deposit insurance claims amounting to PHP97.73 million. The DOJ said that the respondents made it appear that they were the legitimate owners of the subject accounts with the Legacy Banks, when in truth and in fact, they did not personally own them but were instead owned and controlled by Manu Gidwani. The DOJ further noted that some of the respondents were helpers and/or rank and file employees of Spouses Gidwani who obviously did not have the financial capacity to fund the hundreds of thousands of pesos deposited in their respective names with the Legacy Banks.

The DOJ added that had the respondents truthfully divulged to PDIC that the true and beneficial owner of the subject bank accounts was Manu Gidwani, PDIC would not have been duped into treating the subject bank accounts individually and separately, and would have only paid Gidwani PHP250,000 for each Legacy Bank involved. The maximum deposit insurance coverage (MDIC) at the time was PHP250,000 per depositor per bank.

It was later discovered that the total amount of PHP97.73 million which PDIC paid to the respondents as deposit insurance was deposited to an account of Spouses Gidwani in RCBC.

The branch manager was included in the charges for allowing the deposit to a single account, the account of Spouses Gidwani in RCBC, of the various "crossed checks" issued by the PDIC, despite PDIC's specific instruction that the checks should be "For Payees Account Only." In its Resolution, the DOJ ruled that the heavy influx of deposits to the Gidwani spouses' account should have already prompted RCBC and Jereza to file a suspicious transaction report with the Anti-Money Laundering Council (AMLC). Jereza's deliberate failure to do so is a violation of the AMLA and PDIC Bulletin No. 2010-14 enjoining all member-banks to strictly observe the provisions of the manual of regulations for banks on second-endorsed checks in relation to payments approved by PDIC for deposit insurance claims.

PDIC vigorously pursues legal action against erring parties that circumvent the deposit insurance scheme for their personal benefit. The quest for justice against unscrupulous depositors is an important undertaking of PDIC to protect the Deposit Insurance Fund, PDIC's funding source for payment of insured deposits.

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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.