Banking, Mercantile Law

Soriano v. People G.R. No. 162336 February 1, 2010 Banking Law, DOSRI


The Office of Special Investigation (OSI) of the BSP transmitted a letter  to  the  DOJ, which was attached  with five affidavits, which would allegedly serve as bases for filing criminal charges for Estafa thru Falsification of Commercial Documents, in relation to PD No. 1689, and for Violation of Section 83 of RA 337, as amended by PD 1795, against, inter alia, petitioner Hilario P. Soriano. These five affidavits, along with other documents, stated that spouses Enrico and Amalia Carlos appeared to have an outstanding loan of P8 million with the Rural Bank of San Miguel, Inc. (RBSM), but had never applied for nor received such loan; that it was petitioner, who was then president of RBSM who had ordered, facilitated, and received the proceeds of the loan; and that the P8 million loan had never been authorized by RBSM’s Board of Directors and no report thereof had ever been submitted to the Department of Rural Banks, Supervision and Examination Sector of the BSP.

Two separate informations against petitioner.

Petitioner moved to quash these information.

Essentially, the petitioner theorized that the characterization of possession is different in the two offenses. If petitioner acquired the loan as DOSRI, he owned the loaned money and therefore, cannot misappropriate or convert it as contemplated in the offense of estafa. Conversely, if petitioner committed estafa, then he merely held the money in trust for someone else and therefore, did not acquire a loan in violation of DOSRI rules.

The trial court denied petitioner’s Motion to Quash for lack of merit. The MR was denied as well.

Aggrieved, petitioner filed a Petition for Certiorari before the CA which was also denied. Hence, this petition.


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.



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 P8 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.

Petitioners 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.

Under the circumstances, it cannot be said that petitioner became the legal owner of the P8 million. Thus, petitioner remained the banks fiduciary with respect to that money, which makes it capable of misappropriation or conversion in his hands.

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.


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