Loretta film became embroiled in the infamous 1994 Manila Film Festival scandal when talent agent Lolit Solis orchestrated a scheme, instructing presenter Viveka Babajee to announce her talents, Rufa Gutierrez and Gabby Concepcion, as the winners, despite the awards rightfully belonging to Aiko Melendez for "Maalala Mo Kaya: The Movie" and Edu Manzano for "Zacarias". The original cue cards listing the real winners mysteriously disappeared after the event.
However, then-Mayor Alfredo Lim and several festival voters took the stage to reveal that Aiko and Edu were the actual winners, a moment that was ultimately cut from the live TV broadcast. Gretchen Barretto eventually came forward as a key-witness to the controversy. The scandal became the biggest in the country's film history, making headlines worldwide including "Washington Post".