G.R. No. 162336 - Soriano vs. People

Case Summary (G.R. No. 162336)

Procedural Posture

Petitioner filed a Petition for Review on Certiorari under Rule 45 assailing a Court of Appeals decision and resolution that denied his petition for certiorari challenging the denial by the RTC of his Motion to Quash two separate informations. The September 26, 2003 CA decision (denying relief) and the February 5, 2004 CA resolution were affirmed by the Supreme Court, which denied the petition and imposed costs against petitioner.

Factual Background

BSP-OSI transmitted a March 27, 2000 transmittal letter to the DOJ attaching five affidavits alleging that an ₱8,000,000 loan had been made in the name of depositor Enrico Carlos though Carlos had not applied for or received the loan; the affidavits alleged petitioner, as RBSM president, ordered, facilitated and received the proceeds without board authorization or required reporting to supervising authorities. The BSP transmittal letter itself was not under oath; the affidavits attached were sworn before a notary public and were certified by the investigating State Prosecutor following personal examination of the affiants.

Informations Filed

Two informations were filed after a preliminary investigation: (1) Criminal Case No. 237-M-2001 — Estafa through falsification of commercial documents (Art. 315(1)(b) RPC in relation to Art. 172 RPC and PD 1689), alleging that petitioner and co-accused falsified loan documents to show that Enrico Carlos applied for and obtained an ₱8,000,000 loan which was converted by the accused for personal benefit; and (2) Criminal Case No. 238-M-2001 — Violation of Section 83 of RA 337 (DOSRI prohibition), alleging that petitioner indirectly secured an ₱8,000,000 loan for his personal use by placing it in the name of depositor Enrico Carlos, without board approval, without recording the transaction, and without transmitting required reports to supervisory authorities.

Motion to Quash and RTC Ruling

Petitioner moved to quash both informations on two grounds: (a) lack of jurisdiction because the BSP transmittal letter did not comply with Section 3(a), Rule 112 (complaint requirements) and lacked authorization under Section 18(c) and (d) of RA 7653; and (b) the facts charged did not constitute an offense because estafa under Art. 315(1)(b) and DOSRI violations under Sec. 83 are inherently incompatible and cannot coexist (the argument being that if the loan is a DOSRI loan then the proceeds became petitioner’s property and cannot be misappropriated; conversely, estafa entails holding in trust). The RTC denied the Motion to Quash, holding that the transmittal letter was not the complaint but a cover for sworn affidavits that satisfied Rule 112, and that the two offenses were separate and distinct so that prosecution on both did not bar each other.

Court of Appeals Ruling

The CA affirmed the RTC. It treated the BSP letter as a transmittal/cover letter that did not itself serve as a complaint under the Rules because it lacked averments of personal knowledge; the attached sworn affidavits were properly considered complaint-affidavits that complied with Section 3(a), Rule 112. The CA likewise rejected the incompatibility argument, applying the test for motions to quash (whether the alleged facts, if hypothetically admitted, establish the essential elements of the charged offenses) and finding that the informations, when hypothetically admitted, did establish the elements of both estafa by falsification of commercial documents and a DOSRI violation.

Issues Presented to the Supreme Court

The Court summarized the issues as: (I) whether the complaint complied with Section 3(a), Rule 112 and the authorization requirements of Section 18(c) and (d) of RA 7653; (II) whether a DOSRI loan transaction can also be the subject of estafa under Art. 315(1)(b); (III) whether certiorari under Rule 65 is the proper remedy to assail an order denying a Motion to Quash; and (IV) whether petitioner is entitled to injunctive relief.

Supreme Court Ruling — First Issue (Rule 112 and RA 7653 compliance)

The Court applied stare decisis, relying on Soriano v. Hon. Casanova and Santos-Concio v. DOJ. It held that BSP transmittal letters that merely transmit sworn affidavits and request preliminary investigation are not intended to be the complaint contemplated by the Rules; the operative complaint-affidavits are the sworn affidavits attached to such transmittals. Because the five affidavits attached to the BSP letter were sworn before a notary public and were certified by the State Prosecutor after examination, Section 3(a), Rule 112 was substantially complied with. As to RA 7653, the Court held Sections 18(c) and (d) did not apply because the BSP did not itself institute the complaint; it merely transmitted affidavits of competent persons (witnesses) who had personal knowledge of the acts charged. The Court reiterated authorities that public crimes can be initiated by "any competent person" and that a preliminary investigation can properly proceed on the basis of sworn affidavits attached to a transmittal.

Supreme Court Ruling — Second Issue (Coexistence of DOSRI violation and estafa)

The Court applied the established test for motions to quash: assume the facts in the information are true and determine whether they establish the elements of the charged offenses. The Court found both informations contained allegations which, if hypothetically admitted, would establish the essential elements of the DOSRI violation (Sec. 83 of RA 337) and estafa through falsification of commercial documents (Art. 315(1)(b) with falsified loan documents). The Court rejected petitioner’s premise that the loan proceeds necessarily became his property such that conversion or misappropriation could not occur. Instead, it concluded the bank funds obtained by petitioner—procured through fraud and placed in his possession under false pretenses—remained bank funds held in a fiduciary capacity; petitioner, by falsification and deception, converted those funds for personal use. The Court emphasized that Section 83 proscribes direct and indirect borrowings and covers situations where a DOSRI secures loan proceeds through third parties; a narrow interpretation would permit circumvention by use of dummies. Consequently the two offenses may coexist and the informations do not negate each other.

Supreme Court Ruling — Third Issue (Proper Remedy for Denial of Motion to Quash)

The Court reaffirmed precedent that a special civil action for certiorari (Rule 65) is not the proper remedy to assail an order denying a Motion to Quash an information. The correct course is to enter a plea, go to trial, p

Case Syllabus (G.R. No. 162336)

Factual Antecedents

In 2000, the Office of Special Investigation (OSI) of the Bangko Sentral ng Pilipinas (BSP), through Bank Attorney III Jose R. Fajardo, Deputy Director Alfonso C. Peñaco IV, and Director Vicente S. Aquino, transmitted a letter dated March 27, 2000 to Jovencito Zuao, Chief State Prosecutor of the Department of Justice (DOJ).
The BSP transmittal letter attached five affidavits and other documents alleging grounds for criminal charges for Estafa through Falsification of Commercial Documents (in relation to PD No. 1689) and for Violation of Section 83 of RA 337, as amended by PD 1795 (the DOSRI prohibition).
The attached affidavits and documents alleged that spouses Enrico and Amalia Carlos appeared to have an outstanding loan of PhP8,000,000 with the Rural Bank of San Miguel (Bulacan), Inc. (RBSM) though they never applied for nor received such loan.
The attachments further alleged that petitioner Hilario P. Soriano, then president of RBSM, had ordered, facilitated, and received the proceeds of the PhP8,000,000 loan; that the loan had not been authorized by RBSM’s Board of Directors; and that no report of the transaction had been submitted to the Department of Rural Banks, Supervision and Examination Sector of the BSP.
The OSI transmittal letter itself was not subscribed under oath and requested that a preliminary investigation be conducted and corresponding criminal charges filed against petitioner at his last known address.
Acting on the BSP letter and annexes, State Prosecutor Albert R. Fonacier conducted a preliminary investigation, issued a subpoena with attached affidavits and supporting documents, required petitioner to file a counter-affidavit, and thereafter the investigating officer issued a Resolution finding probable cause and filed two separate informations against petitioner before the Regional Trial Court (RTC) of Malolos, Bulacan.

Informations Filed (Charges and Allegations)

Two separate criminal informations were filed in RTC Malolos:
- Criminal Case No. 237-M-2001 (Information dated November 14, 2000): Estafa through falsification of commercial documents under Article 315, paragraph 1(b), of the Revised Penal Code (RPC), in relation to Article 172 of the RPC and PD 1689. Allegations included: petitioner and co-accused, abusing their positions as RBSM officers, falsified loan documents (undated loan application/information sheet; credit proposals; credit investigation report; promissory note; disclosure statement and other related documents) to make it appear that Enrico Carlos applied for and filed the loan documents; Enrico Carlos did not participate in execution of said documents; by virtue of said falsification and deceit, petitioner succeeded in securing a loan of PhP8,000,000 from RBSM and converted the proceeds to personal gain, to the damage and prejudice of RBSM, its creditors, BSP, and PDIC.
- Criminal Case No. 238-M-2001 (Information dated November 10, 2000): Violation of Section 83 of RA 337, as amended by PD 1795 (DOSRI prohibition). Allegations included: petitioner, as President of RBSM, indirectly secured a PhP8,000,000 loan with RBSM for his personal use and benefit without written consent and approval of the majority of the board of directors, without entry of the transaction in bank records, and without transmitting a copy of the transaction to the supervising department of the bank; petitioner placed the loan in the name of depositor Enrico Carlos who had no knowledge of the loan; once in possession of the PhP8,000,000, petitioner converted it to his personal use and benefit.
Both cases were raffled to Branch 79 of the RTC of Malolos, Bulacan (later presided by Judge Ma. Theresa V. Mendoza-Arcega after initial assignment to Hon. Arturo G. Tayag).

Motion to Quash (Petitioner’s Grounds)

On June 8, 2001, petitioner moved to quash both informations on two principal grounds:
- Lack of jurisdiction: the BSP letter constituted the complaint and was defective for failure to comply with Section 3(a), Rule 112 of the Rules of Court (e.g., absence of address and oath/subscription); further asserted that OSI officers who signed the BSP transmittal letter lacked authority of the BSP Governor or the Monetary Board to file the complaint, thereby violating Section 18, paragraphs (c) and (d) of the New Central Bank Act (RA 7653).
- Facts charged do not constitute an offense: contention that commission of estafa under Article 315(1)(b) RPC is inherently incompatible with violation of DOSRI law (Section 83 of RA 337 as amended). Petitioner’s theory: (a) a DOSRI violation presupposes acquisition of a loan and ownership of proceeds (making conversion impossible), whereas (b) estafa under par. 1(b) requires misappropriation/conversion of something held in trust or for administration; thus the characterization of possession is different and mutually exclusive.
Petitioner’s Motion for Reconsideration was denied.

Ruling of the Regional Trial Court (RTC)

By Order dated August 8, 2001, the trial court denied petitioner’s Motion to Quash for lack of merit.
RTC held that the BSP transmittal letter was not the complaint-affidavit itself; rather, the affidavits attached to the letter comprised the complaint-affidavit, and those affidavits were duly subscribed and sworn before a notary public, thereby satisfying Rule 112, Section 3(a).
The trial court also held that the two offenses (estafa through falsification and DOSRI violation) were separate and distinct, so prosecution of one did not bar prosecution of the other.
Motion for Reconsideration before RTC was denied by Order dated September 5, 2001.

Ruling of the Court of Appeals (CA)

Petitioner filed a petition for certiorari with the CA which was denied in a Decision dated September 26, 2003 and in a Resolution dated February 5, 2004 (CA-G.R. SP No. 67657).
CA determined that the BSP letter was a transmittal or cover letter summarizing the attached affidavits and containing no averments of personal knowledge of the events; therefore, the letter need not comply with Section 3(a), Rule 112 of the Rules of Court.
The CA treated the five affidavits attached to the transmittal letter as the complaint-affidavits; found them to be subscribed and sworn to before a notary public and certified by State Prosecutor Fonacier following personal examination of the affiants; hence the complaint-affidavits complied with the Rules.
On the motion-to-quash ground, the CA applied the test whether the facts alleged, if hypothetically admitted, constitute elements of the offenses charged, and concluded that they did. The CA therefore found no merit in petitioner’s claim of incompatibility between DOSRI violation and estafa through falsification of commercial documents.
Petitioner’s Motion for Reconsideration before the CA was likewise denied.

Issues Presented to the Supreme Court

I Whether the complaint complied with the mandatory requirements provided under Section 3(a), Rule 112 of the Rules of Court and Section 18, paragraphs (c) and (d) of RA 7653.
II Whether a loan transaction within the ambit of the DOSRI law (violation of Section 83 of RA 337, as amended) could also be the subject of Estafa under Article 315(1)(b) of the Revised Penal Code.
III Whether a petition for certiorari under Rule 65 is the proper remedy against an Order denying a Motion to Quash.
IV Whether petitioner is entitled to a writ of injunction.

Supreme Court — Disposition and General Holding

The Supreme Court denied the petition for review on certiorari; the CA’s September 26, 2003 Decision and February 5, 2004 Resolution we