Finance dept sues 4 more former LWUA execs

ABS-CBN News

Posted at Aug 20 2011 12:42 PM | Updated as of Aug 21 2011 05:51 AM

MANILA, Philippines - Four more former executives of the Local Water Utilities Administration (LWUA) are facing charges for the "illegal" acquisition of a financially-troubled thrift bank based in Cabuyao, Laguna in 2008.

In a 36-page complaint filed before the Department of Justice, the finance department said former LWUA trustees Eduardo Bangayan, Aurelio Puentevella, Enrique Senen Montilla III, and former LWUA acting administrator for finance Wilfredo Feleo violated the Manual Regulations for Banks, Republic Act 3019 or the Anti-Graft and Corrupt Practices Act, RA 7653 or the New Central Bank Act, and Article 217 of the Revised Penal Code.

“We just garnered the pieces of evidence against these people so the case against them was just filed now,” Finance Secretary Cesar Purisima said in a statement.

Purisima said the respondents were involved in the approval of the acquisition of Express Savings Bank Inc. without clearance from the Monetary Board of the Bangko Sentral ng Pilipinas.

Section X126.2 of the Manual Regulations for Banks states that any sale or transfer of shares that will result in “ownership of more than 20% of the voting stock of a bank” shall be undertaken with “prior approval of the Monetary Board.”

“The respondents are public officers who acted in the discharge of their official functions. The act was done through manifest partiality, evident bad faith, or gross inexcusable negligence,” Purisima said.

The DoF earlier filed a complaint against former LWUA chairman Prospero Pichay Jr. and trustees Renato Velasco, Susana Vargas, Bonifacio Maria Peña and Daniel Landingin for the purchase of a total of 445,337 shares equivalent to 60% of Express Savings for P80 million in 2008.

The department said LWUA spent another P400 million to infuse fresh capital in the bank and deposited another P300 million as savings in 2009.

Pichay was ordered suspended and dismissed from service by the Ombudsman last May in connection with the transactions. Velasco, Vargas and Peña were slapped with 90-day preventive suspension by Malacañang.

A separate Ombudsman case was lodged against Pichay on the same grounds, while an administrative case against him and the other respondents was pending before the Office of the President.

In the new complaint, the finance department noted of the respondents' participation in the bank acquisition.

“Respondents, in their May 19, 2009 special meeting, unanimously passed and approved, upon the active recommendation of respondent Wilfredo Feleo , LWUA Resolution No. 120, series of 2009, expressly authorizing the acquisition."

Bank now under receivership

Last July, the Monetary Board placed Express Savings under the receivership of the Philippine Deposit Insurance Corp. (PDIC) due to its financial woes.

The PDIC said that as of March 31, Express Savings had estimated total deposit liabilities of P608.36 million, consisting of 2,673 accounts.

Express Savings was originally controlled by the Gatchalian family, who also owns the Wellex Group. Express Savings has three branches in Laguna -- Santa Rosa, Biñan, and San Pedro -- while its head office is located on J.P. Rizal Avenue, Cabuyao.