SC orders Legacy fraud trial

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“The Justice secretary has ‘the power and discretion’ to assess the documents and pleadings.”

The Supreme Court (SC) has given the green light to commence the trial of spouses Manu and Champa Gidwani and 87 others over P97.73 million in fraudulent deposit insurance claims made in 2016.

The SC overturned a 2017 Court of Appeals (CA) decision and affirmed a Department of Justice finding of probable cause against the Gidwanis and the Bacolod branch manager of Rizal Commercial Banking Corp. (RCBC), Andrew Jereza.

Impleaded with the Gidwanis and Jereza were 86 other individuals who filed claims with the Philippine Deposit Insurance Corp. (PDIC) after its takeover of the shuttered rural banks of the Legacy Group of Companies.

The accused will face charges of estafa through falsification of documents, perjury and money laundering.

In the 18-page decision penned by Associate Justice Presbitero Velasco Jr., the SC Third Division reinstated the resolution issued by then Justice Secretary Emmanuel Caparas dated June 3, 2016 which found probable cause against the accused.

SC Associate Justices Marvic Leonen, Samuel Martires and Alexander Gesmundo concurred in Justice Velasco’s decision.

Prosecutors from Department of Justice (DoJ) posited the Gidwanis, together with 86 other individuals, represented themselves to be owners of 471 deposit accounts with Legacy Banks and filed claims before the PDIC.

The claims were processed and granted, resulting in the issuance of 683 Land Bank of the Philippines (LandBank) checks with the total face value of P98.73 million in favor of the 86 individuals.

The said individuals did not deposit the checks issued in their respective bank accounts even if they are payable to the payee account only.

The checks were credited to a single RCBC account owned by the Gidwanis, allegedly in connivance with Jereza.

The scheme, however, was discovered by PDIC when the checks were cleared and returned to it.

In his ruling, Caparas said had the depositors truthfully divulged to PDIC that the beneficial owner of the bank accounts was Manu, PDIC would not have been duped into treating the bank accounts individually and separately.

He said the PDIC would have only paid the Gidwani spouses P250,000 as the maximum deposit coverage pursuant to Section 4 (g) of the PDIC charter and not P98.73 million.

The DoJ ruling said the heavy influx of deposits to the Gidwani spouses’ account should have prompted RCBC and Jereza to file a suspicious transaction report with the Anti-Money Laundering Council.

In upholding Caparas’ resolution, the SC held that the former Justice secretary “has the power and discretion” to assess the documents and pleadings submitted to him for review and come up with his own finding.

“He is not bound by the rulings of his predecessors because there is yet to be a final resolution of the issue; the matter is still pending before his officer after all. To hold otherwise would render the filing of the motion a futile exercise, and the recourse, pointless,” read the court ruling.

“It was therefore plain error on the part of the CA to have ruled that SoJ (Secretary of Justice) Caparas virtually had no option but to affirm the findings of the DoJ Task Force and of SoJ Justiniano as to the alleged absence of probable cause to charge respondent,” it added.

The High Tribunal set aside the Jan. 31, 2017 decision of the CA which reversed Caparas’ resolution and ordered the dismissal of the complaint.

In the said decision, the appellate court did not give merit to the allegations of the petitioner, the PDIC, because of its failure to prove that Manu is the owner of all the accounts subject of the complaint.