The Regional Trial Court (RTC) of Mandaue City, Cebu, convicted the former Chairman of the Board of Directors of the now closed Rural Bank of Mabinay (Negros Oriental), Inc. (RBMI) for violation of Republic Act (R.A.) No. 8791 (The General Banking Law of 2000), as implemented by R.A. No. 7653 (The New Central Bank Act).
The court found the bank’s former Chairman Nicolas P. Libre guilty of the criminal charge of conducting banking business in an unsafe and unsound manner in violation of Section 56 of RA No. 8791, which was filed by the Bangko Sentral ng Pilipinas (BSP) with the Department of Justice in 2019.
The criminal case arose when Libre, together with several other directors of RBMI, entered into a gratuitous Bank Guarantee Agreement (BGA) with V8 Motors, Inc. (V8). Under the BGA, there was no payment or compensation to be made by V8 to RBMI for the latter’s guarantee to pay the investments of the former’s investors. Because of the BGA, V8 was able to amass money from its investors without assuming any risks. On the other hand, the burden of paying the investors of V8, in the event that V8 fails to return its investors’ capital investments, was shifted to RBMI, to the detriment of the bank.
In its Judgment dated 27 April 2022, RTC-Mandaue found Libre guilty beyond reasonable doubt of violation of R.A. No. 8791 in relation to RA No. 7653, and sentenced him to pay a fine of Fifty Thousand Pesos (Php 50,000.00).
The BSP is committed to fostering financial stability and protecting the public interest by ensuring that its supervised financial institutions strictly adhere to BSP’s good governance policies and comply with existing banking laws, rules or regulations.
