A Makati Court has issued an order to attach the assets of Celso Delos Angeles, Jr., and three (3) Legacy-affiliated companies following the filing of a case for sum of money with application for the issuance of writ of preliminary attachment by statutory receiver Philippine Deposit Insurance (PDIC).

“After a careful study…the Court is satisfied that the plaintiff (Philippine Countryside Rural Bank, Inc. (PCRBI)/PDIC) was able to prove the allegations in support of the prayer for the issuance of writ of attachment,” the three-page Order dated June 8, 2009 stated.

The case entitled “PCRBI vs. Celso Delos Angeles, Jr., Shining Armour Property, Inc., Galaxy Realty & Holdings, Inc., and Legacy Card Inc.” is among those filed by PDIC to recover the assets of the closed Legacy banks to protect the interest of creditors and depositors. It is for the recovery of cash advances aggregating to P10 million granted by PCRBI to Shining Armour Property, Inc., Galaxy Realty & Holdings, Inc., and Legacy Card, Inc. All three companies are believed to be owned by delos Angeles.

De los Angeles’s sweetheart deals

According to the complaint filed by PDIC, the P10 million worth of cash advances given to the three corporations owned by delos Angeles were “sweetheart deals” obtained in violation of existing banking regulations and with preconceived plans to defraud PCRBI.

PDIC asserted that delos Angeles should be made personally liable for the cash advances extended by plaintiff PCRBI to defendant corporations under the doctrine of piercing the veil of corporate fiction. Delos Angeles controlled all three corporations and used such control to siphon off funds of PCRBI to the prejudice of its creditors and depositors.

The cash advances were highly irregular, improper and fraudulent in violation of PCRBI’s Manual of Operations which provides that only officers and employees of PCRBI are entitled to cash advances subject to 30-day liquidation.

Such cash advances are in reality, loans granted to directors, officers, stockholders and related interests (DOSRI). The grant of such is restricted under Section 36 of the General Banking Law which provides that no bank director or officer shall directly or indirectly borrow from the bank except with the written approval of the majority of all the directors of the bank, excluding the director concerned. There is however nothing in the records of PCRBI that would show that the said requirement was complied with.

Moreover, the DOSRI rule was circumvented when loans were granted to defendants Shining Armour, Galaxy and Legacy Card which were mere alter egos and conduits of delos Angeles.

PDIC lauds success

PDIC President Jose C. Nograles sees said Court order as a welcome and positive development for the depositors who were defrauded by the bank owners. He said that PDIC is continuously building solid cases to prosecute the perpetrators that caused the collapse of the Legacy banks. Nograles said that Punongbayan & Araullo, a globally-affiliated audit firm, has been engaged by PDIC to conduct forensic fraud investigation on the Legacy banks to uncover the fraudulent schemes employed to defraud the depositors and to build strong cases to bring the responsible officers to justice.

“We at the PDIC will continue to stand at the forefront of the crusade against those who misuse and abuse the banking system. We will not let a few individuals or group of individuals defraud PDIC and the Deposit Insurance Fund (DIF). The DIF is the funding source for payments of deposit insurance claims. It is a public fund governed by government regulations and subject to the audit of the Commission on Audit,” Nograles said.