Title
Soriano vs. People
Case
G.R. No. 240458
Decision Date
Jan 8, 2020
Bank president Hilario Soriano convicted for indirect loan fraud and falsification of documents, using a depositor’s name without consent, converting funds for personal use.

Case Summary (G.R. No. 240458)

Petitioner

Hilario P. Soriano, president and director of Rural Bank of San Miguel (Bulacan), Inc., accused of (1) violating Section 83 of R.A. No. 337 as amended (DOSRI restrictions) by indirectly borrowing bank funds without written board approval, and (2) committing estafa through falsification of commercial documents.

Respondent

People of the Philippines, represented by the prosecution which presented bank examiners, bank officers and employees, and others to establish orchestration, disbursement, and diversion of loan proceeds.

Key Dates and Procedural Posture

  • Alleged loan and transactions dated June 27, 1997 and thereafter.
  • RTC Decision convicting petitioner dated October 13, 2015.
  • CA Decision affirming with modification dated February 28, 2018.
  • Supreme Court decision challenged by petition for review culminated in a final denial and modification (interest) in January 2020. Applicable constitution: 1987 Philippine Constitution.

Applicable Law and Legal Framework

Primary statutes and legal authorities invoked: Section 83, R.A. No. 337 as amended by P.D. No. 1795 (General Banking Act) — prohibition on directors/officers borrowing bank funds without written approval of the majority of directors (DOSRI rules); Articles 171 and 172, Revised Penal Code — falsification of documents and consequent use as means to commit estafa; relevant jurisprudence interpreting DOSRI restrictions and complex crime principles; R.A. No. 10951 (adjustment of penalties) and governing interest jurisprudence (BSP Circular No. 799; recent cases cited).

Charged Offenses and Informations

Two Informations: (1) Criminal Case No. 1719-M-2000 — violation of Section 83 for indirectly borrowing P15,000,000 under Malang’s name without required board consent and converting approximately P14,775,000 net proceeds; (2) Criminal Case No. 1720-M-2000 — estafa through falsification of commercial documents (loan application, promissory note, disclosure, manager’s check, check voucher) by causing the appearance that Malang applied and received the loan, resulting in diversion and conversion of P14,775,000 to the detriment of RBSM, its creditors and BSP.

Factual Findings by Trial Court and Appellate Court

The courts found consistent and corroborative testimony from nine prosecution witnesses and voluminous documentary exhibits establishing: an unsecured P15,000,000 loan purportedly granted to Malang without co-maker/collateral, without Credit Committee or Board approval; loan application/promissory note and other documents signed in blank or completed through petitioner’s orchestration; issuance of Manager’s Check No. 016514 (P14,775,000 net) payable to Malang; Malang’s denial of applying for or receiving proceeds (corroborated by affidavit of Ilagan); diversion of proceeds via MRBTI and Land Bank (checks negotiated and converted into Land Bank cashier’s checks payable to third parties Norma Rayo and Teresa Villacorta), and ultimate application of funds to pay petitioner’s prior irregular loans at RBSM. The courts credited testimony that petitioner directed the sequence of deposits, issuance of checks, and withdrawals through Ilagan and other intermediaries.

Prosecution Evidence and Its Corroboration

Key evidence included the General Examination Report (DRB-BSP), loan documents produced by Ilagan, Manager’s Check exhibit, deposit slips, MRBTI check series, Land Bank cashier’s checks and receipts, and testimony linking the checks to payments on petitioner’s loans. Witnesses (Principio, Malang, Santillana, Posada, Land Bank personnel, PCH and PDIC representatives) provided a coherent account of the scheme and fund flows.

Defense Contentions

Petitioner argued insufficiency of evidence: that the General Examination Report referred to a different irregular loan (P34,000,000) rather than the Malang transaction; non-presentation of Norma Rayo as witness was fatal; failure to show the proceeds went directly into petitioner’s bank account meant no proof of his benefit; petitioner’s role as non-frontline officer made it improbable he directly processed loans; and overall that the evidence did not establish his participation in estafa via falsification.

Standard of Review

Supreme Court reiterated the rule that it is not a trier of facts and gives great weight to trial court credibility findings, especially when affirmed by the Court of Appeals. Deviation from factual findings is warranted only under recognized exceptions (speculation, manifestly mistaken inferences, grave abuse of discretion, misapprehension of facts, conflicting findings, etc.), none of which the Court found present here.

Analysis — Violation of Section 83 (DOSRI Law)

Elements of Section 83 violation (as articulated): (1) offender is a director/officer of a banking institution; (2) offender directly or indirectly borrows bank deposits/funds, becomes guarantor/indorser/surety, or in any manner becomes an obligor for bank monies; and (3) such act occurs without written approval of majority of directors excluding the offender. The Court found all elements satisfied: petitioner was RBSM president; an indirect borrowing occurred through Malang’s name without board approval and without required report to the Superintendent of Banks; and the proceeds were applied to petitioner’s prior irregular loans. The Court rejected petitioner’s attempt to separate evidence regarding his other irregular loans from the Malang loan, holding that proof of petitioner’s prior irregular borrowings was relevant to establish motive and to show the proceeds were diverted to pay those obligations. The Court also held that it was not necessary for the proceeds to have been deposited directly into petitioner’s personal account — a circuitous scheme by a high-ranking official to conceal benefit is consistent with the nature of the offense. The Court referenced prior jurisprudence confirming that Section 83 encompasses indirect borrowings where the director/officer has a stake in the transaction.

Analysis — Estafa through Falsification of Commercial Documents (Complex Crime)

Elements of falsification under Article 172 (with reference to Article 171 acts) were found satisfied: (1) petitioner is a private individual for purposes of falsification prosecution (i.e., not taking advantage of official position for Article 171 public-officer variant); (2) petitioner committed acts of falsification enumerated in Article 171 — specifically causing it to appear that Malang participated in applying for and obtaining the loan when he did not; and (3) falsification was committed in commercial documents (loan application, promissory note, disclosure statement, checks). The Court explained falsification was a necessary means to commit estafa: falsified commercial documents were used to induce RBSM to release funds; the use of deceit and conversion of funds fulfilled the elements of est

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