Case Digest: Soriano vs. People, G.R. No. 162336, February 1, 2010

                         Motion to Quash | Criminal Procedure

Facts:

In 2000, the Office of Special Investigation (OSI) of the Bangko Sentral ng Pilipinas (BSP) transmitted a letter to the Chief State Prosecutor of the Department of Justice (DOJ) containing five affidavits alleging criminal charges against Hilario P. Soriano.

The affidavits accused Soriano, the president of Rural Bank of San Miguel (Bulacan), Inc. (RBSM), of estafa through falsification of commercial documents and violation of the DOSRI (Directors, Officers, Stockholders, and Their Related Interests) law.

State Prosecutor Albert R. Fonacier conducted a preliminary investigation based on the letter and filed two separate informations against Soriano before the Regional Trial Court (RTC) of Malolos, Bulacan.

The first information charged Soriano with estafa through falsification of commercial documents, alleging that he falsified loan documents and converted the loan proceeds for personal gain.

The second information charged Soriano with violating the DOSRI law by indirectly securing a loan for personal use without proper consent and approval.

Soriano moved to quash the informations, arguing that the court lacked jurisdiction and that the facts charged did not constitute an offense.

The trial court denied Soriano's motion, ruling that the OSI letter was not the complaint itself and that the offenses were separate and distinct.

The Court of Appeals (CA) upheld the trial court's decision, stating that the OSI letter was a transmittal letter and the attached affidavits served as the complaint-affidavits. The CA also rejected Soriano's argument that the offenses were inherently inconsistent, finding that the allegations in the informations constituted the elements of the charged offenses. Soriano's motion for reconsideration was denied by the CA.

Soriano filed a petition for certiorari with the Supreme Court, seeking to reverse the CA's decision.

Issue:

WoN a petition for certiorari under Rule 65 the proper remedy against an Order denying a Motion to Quash.

Held: DENIED.

The second issue was raised by petitioner in the context of his Motion to Quash Information on the ground that the facts charged do not constitute an offense.

It is settled that in considering a motion to quash on such ground, the test is "whether the facts alleged, if hypothetically admitted, would establish the essential elements of the offense charged as defined by law. The trial court may not consider a situation contrary to that set forth in the criminal complaint or information. Facts that constitute the defense of the petitioner[s] against the charge under the information must be proved by [him] during trial. Such facts or circumstances do not constitute proper grounds for a motion to quash the information on the ground that the material averments do not constitute the offense". 

We have examined the two informations against petitioner and we find that they contain allegations which, if hypothetically admitted, would establish the essential elements of the crime of DOSRI violation and estafa thru falsification of commercial documents.

In Criminal Case No. 238-M-2001 for violation of DOSRI rules, the information alleged that petitioner Soriano was the president of RBSM; that he was able to indirectly obtain a loan from RBSM by putting the loan in the name of depositor Enrico Carlos; and that he did this without complying with the requisite board approval, reportorial, and ceiling requirements.

In Criminal Case No. 237-M-2001 for estafa thru falsification of commercial documents, the information alleged that petitioner, by taking advantage of his position as president of RBSM, falsified various loan documents to make it appear that an Enrico Carlos secured a loan of ₱8 million from RBSM; that petitioner succeeded in obtaining the loan proceeds; that he later converted the loan proceeds to his own personal gain and benefit; and that his action caused damage and prejudice to RBSM, its creditors, the BSP, and the PDIC.

Significantly, this is not the first occasion that we adjudge the sufficiency of similarly worded informations. In Soriano v. People, involving the same petitioner in this case (but different transactions), we also reviewed the sufficiency of informations for DOSRI violation and estafa thru falsification of commercial documents, which were almost identical, mutatis mutandis, with the subject informations herein. We held in Soriano v. People that there is no basis for the quashal of the informations as "they contain material allegations charging Soriano with violation of DOSRI rules and estafa thru falsification of commercial documents".

Petitioner raises the theory that he could not possibly be held liable for estafa in concurrence with the charge for DOSRI violation. According to him, the DOSRI charge presupposes that he acquired a loan, which would make the loan proceeds his own money and which he could neither possibly misappropriate nor convert to the prejudice of another, as required by the statutory definition of estafa. On the other hand, if petitioner did not acquire any loan, there can be no DOSRI violation to speak of. Thus, petitioner posits that the two offenses cannot co-exist. This theory does not persuade us.

Petitioner’s theory is based on the false premises that the loan was extended to him by the bank in his own name, and that he became the owner of the loan proceeds. Both premises are wrong.

The bank money (amounting to ₱8 million) which came to the possession of petitioner was money held in trust or administration by him for the bank, in his fiduciary capacity as the President of said bank. It is not accurate to say that petitioner became the owner of the ₱8 million because it was the proceeds of a loan. That would have been correct if the bank knowingly extended the loan to petitioner himself. But that is not the case here. According to the information for estafa, the loan was supposed to be for another person, a certain "Enrico Carlos"; petitioner, through falsification, made it appear that said "Enrico Carlos" applied for the loan when in fact he ("Enrico Carlos") did not. Through such fraudulent device, petitioner obtained the loan proceeds and converted the same. Under these circumstances, it cannot be said that petitioner became the legal owner of the ₱8 million. Thus, petitioner remained the bank’s fiduciary with respect to that money, which makes it capable of misappropriation or conversion in his hands.

The next question is whether there can also be, at the same time, a charge for DOSRI violation in such a situation wherein the accused bank officer did not secure a loan in his own name, but was alleged to have used the name of another person in order to indirectly secure a loan from the bank. We answer this in the affirmative. Section 83 of RA 337 reads:

Section 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. Any such approval shall be entered upon the records of the corporation and a copy of such entry shall be transmitted forthwith to the Superintendent of Banks. The office of any director or officer of a bank who violates the provisions of this section shall immediately become vacant and the director or officer shall be punished by imprisonment of not less than one year nor more than ten years and by a fine of not less than one thousand nor more than ten thousand pesos. x x x

The prohibition in Section 83 is broad enough to cover various modes of borrowing. 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 covered transactions are prohibited unless the approval, reportorial and ceiling requirements under Section 83 are complied with. The prohibition is intended to protect the public, especially the depositors, from the overborrowing of bank funds by bank officers, directors, stockholders and related interests, as such overborrowing may lead to bank failures. It has been said that "banking institutions are not created for the benefit of the directors [or officers]. While directors have great powers as directors, they have no special privileges as individuals. They cannot use the assets of the bank for their own benefit except as permitted by law. Stringent restrictions are placed about them so that when acting both for the bank and for one of themselves at the same time, they must keep within certain prescribed lines regarded by the legislature as essential to safety in the banking business"

A direct borrowing is obviously one that is made in the name of the DOSRI himself or where the DOSRI is a named party, while an indirect borrowing includes one that is made by a third party, but the DOSRI has a stake in the transaction. The latter type – indirect borrowing – applies here. The information in Criminal Case 238-M-2001 alleges that petitioner "in his capacity as President of Rural Bank of San Miguel – San Ildefonso branch x x x indirectly borrow[ed] or secure[d] a loan with [RBSM] x x x knowing fully well that the same has been done by him without the written consent and approval of the majority of the board of directors x x x, and which consent and approval the said accused deliberately failed to obtain and enter the same upon the records of said banking institution and to transmit a copy thereof to the supervising department of the said bank x x x by using the name of one depositor Enrico Carlos x x x, the latter having no knowledge of the said loan, and once in possession of the said amount of eight million pesos (₱8 million), [petitioner] converted the same to his own personal use and benefit".

The foregoing information describes the manner of securing the loan as indirect; names petitioner as the benefactor of the indirect loan; and states that the requirements of the law were not complied with. It contains all the required elements for a violation of Section 83, even if petitioner did not secure the loan in his own name.

The broad interpretation of the prohibition in Section 83 is justified by the fact that it even expressly covers loans to third parties where the third parties are aware of the transaction (such as principals represented by the DOSRI), and where the DOSRI’s interest does not appear to be beneficial but even burdensome (such as in cases when the DOSRI acts as a mere guarantor or surety). If the law finds it necessary to protect the bank and the banking system in such situations, it will surely be illogical for it to exclude a case like this where the DOSRI acted for his own benefit, using the name of an unsuspecting person. A contrary interpretation will effectively allow a DOSRI to use dummies to circumvent the requirements of the law.

In sum, the informations filed against petitioner do not negate each other.

Is a Rule 65 petition for certiorari the proper remedy against an Order denying a Motion to Quash?

This issue may be speedily resolved by adopting our ruling in Soriano v. People, where we held:

In fine, the Court has consistently held that a special civil action for certiorari is not the proper remedy to assail the denial of a motion to quash an information. The proper procedure in such a case is for the accused to enter a plea, go to trial without prejudice on his part to present the special defenses he had invoked in his motion to quash and if after trial on the merits, an adverse decision is rendered, to appeal therefrom in the manner authorized by law. Thus, petitioners should not have forthwith filed a special civil action for certiorari with the CA and instead, they should have gone to trial and reiterated the special defenses contained in their motion to quash. There are no special or exceptional circumstances in the present case that would justify immediate resort to a filing of a petition for certiorari. Clearly, the CA did not commit any reversible error, much less, grave abuse of discretion in dismissing the petition.