In Hilario P. Soriano v. People, the Supreme Court affirmed the conviction of a bank president for violating the General Banking Act and committing estafa through falsification of commercial documents. The Court found that Soriano orchestrated an indirect loan using a depositor’s name without proper consent, then used the funds for his benefit. This ruling reinforces the principle that bank officers must act with utmost responsibility and cannot exploit their positions for personal gain at the expense of the bank and its depositors. The decision underscores the importance of stringent oversight in banking to protect financial institutions and the public from fraudulent activities.

Hidden Debts: When a Bank President’s Actions Undermine Public Trust

The case of Hilario P. Soriano v. People revolves around the actions of Hilario P. Soriano, the president of Rural Bank of San Miguel (RBSM). Soriano was accused of securing an indirect loan from RBSM by falsifying loan documents, making it appear as though a certain Virgilio Malang had obtained the loan. Subsequently, Soriano allegedly converted the proceeds for his personal benefit. This case highlights the critical importance of ethical conduct and regulatory compliance within the banking sector. The central legal question is whether Soriano’s actions constitute a violation of banking laws and estafa through falsification of commercial documents.

The prosecution presented evidence showing that Soriano, as president of RBSM, facilitated the release of an unsecured loan to Malang without proper documentation or approval from the bank’s Board of Directors. Malang testified that he had been encouraged by Soriano to apply for a loan but withdrew his application due to concerns about collateral and legal advice. Despite this, loan proceeds were deposited into a purported account of Malang, from which two personal checks were issued. These checks were then deposited into another account of Malang in Merchants Rural Bank of Talavera, Inc. (MRBTI), upon Soriano’s instruction.

Building on this, Andres Santillana, the president of MRBTI, testified that Ilagan, upon Soriano’s instruction, deposited checks into Malang’s account and later withdrew them. The funds were then used to purchase Land Bank cashier’s checks payable to Norma Rayo and Teresa Villacorta. These Land Bank checks were eventually deposited to RBSM to pay off Soriano’s previous irregular loans. The official receipts issued by RBSM served as evidence of these payments. The testimonies of Principio from Bangko Sentral ng Pilipinas (BSP) and other bank representatives further corroborated these events, highlighting the scheme devised by Soriano.

The defense failed to file its formal offer of evidence, and the Regional Trial Court (RTC) found Soriano guilty as charged. The Court of Appeals (CA) affirmed the RTC’s decision, modifying only the penalties imposed. This ruling underscores the principle that factual findings of trial courts, particularly when affirmed by the CA, are entitled to great weight and respect. The Supreme Court, consistent with its role as not being a trier of facts, found no reason to deviate from the lower courts’ findings.

The legal basis for Soriano’s conviction stems from Section 83 of R.A. No. 337, as amended, also known as the DOSRI law. This provision prohibits directors or officers of banking institutions from directly or indirectly borrowing from the bank without the written approval of the majority of the directors. To constitute a violation, the offender must be a director or officer of a banking institution, must borrow funds from the bank, and must do so without the required written approval. As stated in Section 83 of R.A. No. 337:

SEC. 83. No director or officer of any banking institution shall, either directly or indirectly, for himself or as the representative or agent of others, borrow any of the deposits of funds of such bank, nor shall he become a guarantor, indorser, or surety for loans from such bank to others, or in any manner be an obligor for moneys borrowed from the bank or loaned by it, except with the written approval of the majority of the directors of the bank, excluding the director concerned.

The DOSRI law aims to prevent bank officers from exploiting their positions for personal gain, thus safeguarding the interests of the public and depositors. The essence of the crime is becoming an obligor of the bank without securing the necessary written approval of the majority of the bank’s directors. Soriano’s actions clearly violated this provision, as he orchestrated the release of a fictitious loan under Malang’s name and used the proceeds to pay his other irregular loans from RBSM.

The prosecution’s evidence, including the General Examination Report of RBSM, was critical in establishing Soriano’s motive and scheme. The General Examination Report was relevant to prove Soriano’s previous irregular loans to establish his interest or motive in obtaining the subject indirect loan, i.e., to apply the same to said previous loans, among others. As the court noted, it would be absurd for a high-ranking bank officer to deposit the proceeds directly into his personal account, which would create a clear paper trail and increase the risk of apprehension. Instead, Soriano resorted to a circuitous scheme to conceal his actions.

Further solidifying the case, the Supreme Court referenced the related case of Soriano v. People, which emphasizes the broad scope of the DOSRI law:

It covers loans by a bank director or officer (like herein petitioner) which are made either: (1) directly, (2) indirectly, (3) for himself, (4) or as the representative or agent of others. It applies even if the director or officer is a mere guarantor, indorser or surety for someone else’s loan or is in any manner an obligor for money borrowed from the bank or loaned by it.

The Court also found Soriano guilty of estafa through falsification of commercial documents. The elements of falsification under Article 172 of the Revised Penal Code (RPC) include being a private individual or public officer, committing acts of falsification, and committing the falsification in a public, official, or commercial document. In this case, Soriano, as a private individual, caused it to appear that Malang applied for the subject loan when he did not. This act of falsification was committed in bank loan applications, promissory notes, checks, and disclosure statements, all of which are considered commercial documents.

The falsification was a necessary means to commit estafa. Estafa occurs when the accused defrauds another by abuse of confidence or deceit, causing damage or prejudice capable of pecuniary estimation. As established, Soriano falsely represented that Malang pursued the loan application, orchestrated the withdrawal of proceeds, and used them for his benefit, resulting in damage to RBSM. The elements of estafa include (a) the accused defrauded another by abuse of confidence, or by means of deceit, and (b) the offended party or a third party suffered damage or prejudice capable of pecuniary estimation. The Court in Tanenggee explained that:

The falsification of a public, official, or commercial document may be a means of committing estafa, because before the falsified document is actually utilized to defraud another, the crime of falsification has already been consummated, damage or intent to cause damage not being an element of the crime of falsification of public, official or commercial document.

Thus, the complex crime of estafa through falsification of documents is committed when the offender commits on a public, official or commercial document any of the acts of falsification enumerated in Article 171 as a necessary means to commit estafa. It was Soriano’s scheme that made the issuance of the check in the name of Malang possible. While Soriano was not engaged in frontline services, his direct participation in the scheme that perpetrated the falsification and deception cannot be denied, as he devised the scheme and executed it through his instructions to the participants.

Regarding the imposable penalty, the Court affirmed the CA’s modifications pursuant to R.A. No. 10951. Soriano was sentenced to imprisonment of 10 years and a fine of P10,000.00 for violating the DOSRI law. For estafa through falsification, he received an indeterminate sentence of imprisonment ranging from four years and two months of prision correccional as minimum to thirteen years of reclusion temporal as maximum. The Court, however, modified the 12% interest imposed by the CA on the civil indemnity to 6% per annum from the date of finality of the Decision until full payment, pursuant to recent jurisprudence and BSP Circular No. 799.

FAQs

What was the key issue in this case?	The key issue was whether Hilario P. Soriano violated the General Banking Act (DOSRI law) and committed estafa through falsification of commercial documents by securing an indirect loan without proper consent and converting the proceeds for his benefit.
Who was Hilario P. Soriano?	Hilario P. Soriano was the president of Rural Bank of San Miguel (RBSM), who was found guilty of orchestrating an illegal loan scheme.
What is the DOSRI law?	The DOSRI law, Section 83 of R.A. No. 337, as amended, prohibits bank directors and officers from borrowing from their bank without the written approval of the majority of the board of directors, excluding the director concerned.
What is estafa through falsification of commercial documents?	Estafa through falsification of commercial documents is a complex crime where an individual commits falsification of documents to defraud another party, causing damage or prejudice.
What evidence was presented against Soriano?	The prosecution presented testimonies from bank officials, the purported borrower, and documentary evidence, including loan documents, checks, and examination reports, to demonstrate Soriano’s involvement in the fraudulent scheme.
What was the ruling of the Supreme Court?	The Supreme Court affirmed the conviction of Hilario P. Soriano for violating the DOSRI law and committing estafa through falsification of commercial documents, reinforcing the penalties imposed by the lower courts with slight modifications to the interest rate.
What was the penalty imposed on Soriano?	Soriano was sentenced to imprisonment of 10 years and a fine of P10,000.00 for violating the DOSRI law, and an indeterminate sentence of imprisonment for estafa through falsification of commercial documents.
What is the significance of this case?	This case highlights the importance of ethical conduct and regulatory compliance within the banking sector, emphasizing that bank officers must not exploit their positions for personal gain at the expense of the bank and its depositors.

The Supreme Court’s decision in Hilario P. Soriano v. People serves as a reminder of the stringent standards expected of bank officers and the severe consequences of abusing their positions. It reinforces the need for robust regulatory oversight and ethical governance within the banking industry to protect public trust and financial stability.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Hilario P. Soriano v. People, G.R. No. 240458, January 08, 2020