Cited Laws
accordingly until LBC Bank's closure in 2011. Under the RSA, LBC Bank would service the remittance transactions for and on behalf of LBC Express through its facility structure and Automated Teller Machine network. In return, LBC Express would pay service fees for every remittance transaction at the rates fixed by the parties. The service fees were covered by monthly billing statements prepared and signed by Arlan T. Jurado (respondent Jurado), a cashier at the LBC Bank's Treasury Department, and countersigned by Ofelia F. Cuevas (Cuevas), the Head of the Treasury Department. [8] PDIC alleged that the Board of Directors and officers of LBC Bank never enforced payment from LBC Express from January 2005 to August 2011 and as a result, LBC Express unpaid service fees ballooned to PHP 1,824,686,644.00, excluding interest, penalties, and or surcharges. It further argued that the net income of LBC Express steadily grew through the unyielding assistance and at the expense of LBC Bank, which reported losses in its 2009 Audited Financial Statements (AFS). [9] Due to LBC Bank's failure to enforce payment of service fees due from LBC Express, PDIC filed an administrative complaint for violation of Section 21(f) [10] of Republic Act No. 3591, [11] as amended [12] (PDIC Charter), in relation to BSP Circular No. 341, [13] series of 2002, as amended by BSP Circular No. 640, [14] series of 2009, against the aforementioned interlocking directors of the two corporations and the following bank officers of LBC Bank: (1) Ma. Eliza G. Berenguer (Berenguer), the Chairman, President and Chief Executive Officer of LBC Bank; (2) Cuevas; (3) respondent Jurado; and (3) respondent Apolonia L. Ilio (respondent Ilio). [15] According to PDIC, their acts or omissions caused undue injury and material loss to LBC Bank's depositors and creditors. [16] In her counter-affidavit dated June 20, 2016, respondent Ilio stated that she was the Head of the Finance Department of LBC Bank from 2006 until she was promoted to become the Vice President of the Finance Department sometime in 2009. She stressed that the Finance Department was not in charge of the billing and collection of service fees from LBC Express and that she was not involved in the negotiation and execution of the RSAs with LBC Express. She, however, recalled that LBC Express paid service fees every year and that based on a Consolidated Statement of Account dated July 6, 2011, its unpaid service fees as of May 2011 was PHP 665,819.80 while the current charges for June 2011 amounted to PHP 507,604.16 for a total amount of PHP 1,173,423.96. [17] Stated otherwise, respondent Ilio questioned the correctness of the unpaid service fees as alleged by PDIC. Meanwhile, respondent Jurado stated in his counter-affidavit dated June 20, 2016, that: (1) he was the supervisor at the Treasury Department of LBC Bank from September 2004 to September 2011; (2) his immediate supervisor was Cuevas; (3) the Treasury Department prepared billing stat