SC orders criminal prosecution of defunct Orient Bank owner

Posted at 08/27/2014 9:44 AM

MANILA, Philippines - The Supreme Court (SC) has ordered the Regional Trial Court (RTC) in Manila to proceed with the criminal prosecution of the former officials of the now-defunct Orient Commercial Banking Corp.(OCBC) for misappropriating the bank’s funds that led to its closure in 1998.

In a 23-page decision penned by Associate Justice Mariano del Castillo, the Court’s Second Division set aside the Court of Appeals decision issued in 2010 affirming the RTC in Manila Branch 49’s dismissal of the estafa case filed by the Philippine Deposit Insurance Corp. (PDIC).

The High Tribunal held that the RTC in Manila’s dismissal of the case was null and void for having been issued with grave abuse of discretion and “manifest irregularity, thus causing substantial injury to the banking industry and public interest.”

“The Court finds that the prosecution has presented competent evidence to sustain the indictment for the crime of estafa through falsification of commercial documents, and that respondents appear to be the perpetrators thereof,” the SC pointed out.

The Court noted that simulating OCBC loan documents such as loan applications, credit approval memorandums, and the resultant promissory notes and other credit documents by making it appear that persons have participated in any act or proceeding when they did not in fact participate, and by counterfeiting or imitating their handwriting or signatures constitute falsification of commercial and public documents.

The SC said that as beneficiary of the proceeds, Jose Go, principal sharesholder, is presumed to be the author of the falsification.

“In evaluating the evidence, the trial court effectively failed and/or refused to weigh the prosecution’s evidence against the respondents, which it was duty-bound to do as a trier of facts; considering that the case involved hundreds of millions of pesos of OCBC depositors’ money—not to mention that the banking industry is impressed with,” it added.

The SC noted that it had previously ruled that the president of a bank is a trustee with respect to the bank’s funds, and he holds the same in trust or for administration for the bank’s benefit.

It added that when such bank president makes it appear through falsification that an individual or entity applied for a loan when, in fact, such individual or entity did not, and the bank president obtains the loan proceeds and converts the same, estafa is committed.

“There is no question that as a consequence of the misappropriation of OCBC’s funds, the bank and its depositors have been prejudiced; the bank has been placed under receivership, and the depositors’ money is no longer under their unimpeded disposal,” the SC noted.

The anomaly was discovered after the Monetary Board of the Bangko Sentral ng Pilipinas issued a resolution on October 14, 1998, ordering the closure of OCBC and placing the bank under the receivership of the PDIC.

Subsequently, PDIC began collecting on OCBC’s past due loans receivable by sending demand letters to its borrowers for the immediate settlement of their outstanding loans.

Allegedly among the borrowers of OCBC are Timmy’s Inc. and Asia Textile Mills Inc. (ATMI) which appeared to have obtained a loan of P10 million each

However, both companies denied being granted any loan by OCBC and insisted that their signatures on the loan documents were falsified.

The two manager’s checks issued to Timmy’s and ATMI amounting to P10 million each together with several other manager’s checks totaling to P120,819,475.0024—were encashed and then deposited in the OCBC savings account of Go.

The SC noted the fact that Go’s personal checks totaling P145,488,274.48 were previously dishonored, and the day after, the amount of P120,819,475 was immediately credited to his account, which included funds the loan proceeds of the supposed Timmy’s Inc. and ATMI accounts, bolsters the accusations against Go and his co-respondents.

Aida de la Rosa and Felecitas Necomedes were also charged for the same offenses.

Concurring with the ruling were Associate Justices Antonio Carpio, Arturo Brion, Jose Portugal Perez and Martine Villarama Jr.

It can be recalled that the SC also previously ordered the RTC in Manila to proceed with the criminal prosecution of tycoon Jose C. Go for allegedly guaranteeing loans to others and borrowing at least P2.75-billion deposits of OCBC.