Title
Apolinario, Jr. y Llauder vs. People
Case
G.R. No. 242977
Decision Date
Oct 13, 2021
Jose Apolinario, Jr. convicted for approving unsecured loans to a bank director without board approval, violating DOSRI law, leading to Unitrust Bank's collapse.

Case Summary (G.R. No. 242977)

Key Individuals and Context

  • Petitioner: Jose Apolinario, Jr. y Llauder, Acting Chairman and President of Unitrust Development Bank (Unitrust)
  • Co-accused/Key Actors: Winefredo T. Capilitan (Director/Corporate Secretary and borrower), Motohiko Hagisaka (Director/Executive Vice-President), Elmer T. Magpantay (Vice President for Branch Operations, later state witness), Daniel Quilatan, Marcelo Vasquez (both former directors), Godofredo Dela Paz and Ramon Abellon, Jr. (Bangko Sentral ng Pilipinas examiners)
  • Respondent: People of the Philippines, represented by the Office of the Solicitor General
  • Venue: Unitrust Development Bank, Makati City
  • Context: Alleged unlawful issuance of two loans to DOSRI individuals without the required board approval and reporting

Petitioner, alongside fellow directors and officers of Unitrust, was charged in two Informations with violating Section 36 of Republic Act No. 8791 (General Banking Law of 2000), in relation to Section 36 of Republic Act No. 7653 (New Central Bank Act), for granting a ₱1 million personal loan to Capilitan (Criminal Case No. 03-3631) and a ₱13 million loan to G. Cosmos Philippines, Inc. (Criminal Case No. 03-3632), both without the written approval of the majority of Unitrust’s directors (excluding the borrower) or timely reporting to the Bangko Sentral ng Pilipinas (BSP).

Applicable Law

  • 1987 Philippine Constitution (decision post-1990) – banking industry imbued with public interest; high standards of integrity and diligence required
  • RA 8791, Section 36 – DOSRI restriction: directors/officers may not borrow or become obligors without majority board approval entered in bank records and immediately reported to BSP
  • RA 7653, Section 36 – penalties for willful violation: fine of ₱50,000–₱200,000 or imprisonment of two to ten years, or both

Factual and Procedural Background
In December 2001, Unitrust held a Special Stockholders’ Meeting electing Petitioner and others to its Board. Thereafter Petitioner was named Acting President. Capilitan applied for a ₱1 million loan; despite Vice President Vasquez’s insistence on a valid board resolution, Petitioner and counsel allegedly produced ante-dated minutes dated December 19, 2001. The loan was released on December 26. On December 27 Capilitan, representing G. Cosmos, received ₱13 million under another purported board resolution dated December 26, 2001, later found irregular and unsigned by a quorum of directors. BSP examiners discovered absence of required supporting documents and non-reporting to BSP. After a bank run, BSP suspended Unitrust’s operations on January 4, 2002; Philippine Deposit Insurance Corporation took over as receiver.

Trial Court Findings
The Regional Trial Court, Branch 149, Makati City, found that:

  • Petitioner was validly elected director and Acting President;
  • Both loans were granted and released without majority board approval (excluding the borrower) and without BSP reporting;
  • Petitioner knowingly signed the minutes approving the loans despite no lawful board meetings;
  • A conspiracy existed between Petitioner and Capilitan.

It convicted Petitioner in both cases, imposing fines of ₱100,000 and ₱200,000, respectively, with subsidiary imprisonment upon insolvency.

Appellate Proceedings
The Court of Appeals affirmed, holding that all elements of the DOSRI offense were established: Petitioner’s status as director/officer, conspiracy with Capilitan, issuance of loans without proper board approval or BSP reporting. Petitioner’s motion for reconsideration was denied.

Supreme Court Issues

  1. Whether factual findings of the lower courts may be reviewed under Rule 45.
  2. Whether prosecution proved beyond reasonable doubt the elements of Section 36, RA 8791, in relation to Section 36, RA 7653.

Supreme Court Analysis: Factual Review Limitations

  • Under Rule 45, the Supreme Court’s jurisdiction is limited to errors of law; factual findings affirmed by both trial and appellate courts are binding, absent recognized exceptions (e.g., grave abuse of discretion, conclusions without citation of evidence).
  • Petitioner failed to demonstrate any exception—his allegations of witness credibility or misapprehension of facts were unsupported by specific proof. Assessment of witnesses’ demeanor and testimony credibility is reserved to the trial court.

FIDUCIARY NATURE OF BANKING AND DOSRI RESTRICTION

  • Banking is imbued with public interest under the 1987 Constitution and RA 8791; directors and officers share the bank’s duty to exercise the highest diligence.
  • DOSRI loans are strictly regulated to protect depositors; any borrowing by directors or officers without majority board approval and BSP reporting violates Section 36.

Elements of DOSRI Offense and Application to Petitioner
To convict under Section 36, RA 8791, the prosecution must prove:

  1. Petitioner was a director/officer of the bank.
  2. He became an obligor or representative in borrowing from the bank.
  3. He obtained loans without majority board approval (excluding himself).
  • Petitioner’s directorship and acting presidency were established by uncontroverted documentary and testimonial evidence, including minutes and admissions.
  • He signed the ante-dated board minutes approving both loans despite knowledge of the


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