MANILA, Philippines—A former bank manager from Bacolod City will face charges related to the 2008 banking scandal that defrauded the government of millions of pesos in deposit insurance payments as part of a multi-billion peso scam.
The P14.1-billion scam — first exposed by the Philippine Daily Inquirer in 2008 — involved the acquisition of several financially troubled thrift and rural banks by the defunct Legacy Group.
It enticed clients to deposit their funds in these banks with high yields, after which the bank owner would siphon off cash, leaving the Philippine Deposit Insurance Corp. to pay off the insured deposits of the subsequently collapsed banks’ clients.
In a statement, the PDIC said the Court of Appeals’ 11th Division in Manila upheld the decision of the Monetary Board of the Bangko Sentral ng Pilipinas to administratively indict Andrew Jereza, the former manager of the Rizal Commercial Banking Corp.’s Bacolod branch “for conducting banking business in an unsafe and unsound manner.”
“The PDIC continues with its pursuit of justice against erring bank owners, officers and unscrupulous parties who take advantage of the deposit insurance system for their personal gain,” the agency said.
“The corporation’s vigorous legal actions are critical in protecting the interests of the depositors and the deposit insurance fund, PDIC’s funding source for payment of deposit insurance and in deterring other parties from taking advantage of the deposit insurance system,” it added.
The court decision—dated July 12, 202—upheld the Monetary Board resolution directing the filing of a formal charge against Jereza, after finding that there is a prima facie case against him for conducting banking business in an unsafe or unsound manner.
These acts are prohibited by the New Central Bank Act of 1993, the General Banking Law of 2000, which penalizes acceptance of second-endorsed crossed checks for deposit to an account other than payees of those checks.
On various dates in December 2008, and on February 26, 2010, the Monetary Board ordered the closure of 13 different banking institutions collectively referred to as the Legacy Banks. The Legacy Banks had a total of 49 banking units with an estimated insured deposit of P14.1 billion.
As deposit insurer, the PDIC paid the deposit insurance claims of concerned depositors through crossed checks “For Payee’s Account Only” drawn against the PDIC’s depository account with the Land Bank of the Philippines.
However, some 683 returned cleared checks in the total amount of P98.73 million paid to 86 depositors were deposited to a single account with RCBC-Bacolod branch via second endorsement.
In its decision, the Court of Appeals agreed with the Monetary Board that with the deposit of the subject checks in a single account in a questionable manner, there exists prima facie case against Jereza for acts constituting the conduct of business in an unsafe and unsound manner.
In a related case, the Supreme Court, in a decision dated June 20, 2018 — after finding probable cause for estafa and money laundering — directed the Department of Justice to file criminal information against the depositor in whose account the 683 crossed checks were deposited.