Apolinario, Jr. vs. People of the Philippines

A director or officer of a banking institution who participates in the approval and release of loans to another director without the written approval of the majority of the board, and without entering the approval upon the bank's records or transmitting a copy to the Bangko Sentral ng Pilipinas, is criminally liable under Section 36 of the General Banking Law, and such liability may be established through circumstantial evidence of conspiracy, including the signing of irregularly issued board minutes and participation in post-release remedial documentation.

Unitrust Development Bank (Unitrust) was a banking institution subject to the regulatory framework of the General Banking Law of 2000 and the New Central Bank Act, which impose restrictions on loans to directors, officers, stockholders, and their related interests (DOSRI loans). Jose Apolinario, Jr. y Llauder was hired as Vice President for Legal Affairs of Unitrust and was given one share of stock to qualify him for election to the bank's Board of Directors. The case arose from two loans — a ₱1,000,000.00 personal loan to director Winefredo T. Capilitan and a ₱13,000,000.00 loan to G. Cosmos Philippines, Inc., represented by Capilitan — both released in December 2001 without complying with the DOSRI law's approval and reportorial requirements. The Bangko Sentral ng Pilipinas, which suspended Unitrust's operations on January 4, 2002, subsequently filed a complaint against the bank's directors and officers before the Department of Justice.

Jose Apolinario, Jr. y Llauder, Winefredo T. Capilitan, Motohiko Hagisaka, and Elmer T. Magpantay were directors and officers of Unitrust Development Bank (Unitrust). Apolinario was hired as Vice President for Legal Affairs and, together with Magpantay, Daniel Quilatan, and Marcelo J. Vasquez, was given one share of stock so that he could participate in Unitrust's stockholders' meeting and be elected to its Board of Directors. On December 18, 2001, Unitrust held a Special Stockholder's Meeting during which Vasquez, Apolinario, Capilitan, Magpantay, Evelyn Mansit, Loreta Oba, and Quilatan were elected as members of the Board. On the same day, an Organizational Meeting was held at which Apolinario was elected Acting Chairman and President, Capilitan was elected Corporate Secretary, and the by-laws provision on nationality requirements was amended to allow four Japanese and three Filipinos to sit as directors. Magpantay, Quilatan, and Vasquez then resigned as directors to give way for the Japanese investors — Fujinori Tada, Hagisaka, and Kiyoshi Haneda — who were subsequently elected, with Hagisaka nominated as Executive Vice President.

Subsequently, Capilitan applied for a personal loan of ₱1,000,000.00. Vasquez, then Vice President for Loans and Credit, informed Hagisaka that without a board resolution, the loan application violated the DOSRI rule. Hagisaka threatened to withhold salaries and fire Vasquez and others if the loan was not approved. Vasquez hesitantly processed the loan but insisted on a board resolution. Atty. Evelyn Gutierrez, Unitrust's counsel, then showed Vasquez the Minutes of the Board Meeting dated December 19, 2001, which allegedly approved Capilitan's ₱1,000,000.00 loan. These minutes were signed by Quilatan, Vasquez, Magpantay, Apolinario, and Hagisaka. The proceeds were released on December 26, 2001, through the signatures of Vasquez, Hagisaka, and Capilitan, covered by Promissory Note No. CSM 3730. The prosecution witnesses testified that the December 19, 2001 Minutes was irregularly issued because no meeting was held on that date, Magpantay, Quilatan, and Vasquez had already resigned as directors on December 18, 2001, they signed out of fear of losing their jobs, and the loan application form was only submitted on December 21, 2001 — after the purported approval.

Later, Hagisaka informed Vasquez of another loan application for ₱27,000,000.00 filed by G. Cosmos Philippines, Inc., represented by its President, Capilitan. The Board allegedly approved the loan on December 26, 2001, as evidenced by a Board Resolution signed by Magpantay, Apolinario, Capilitan, and Oba. On December 27, 2001, Capilitan received Manager's Check No. 8283 for ₱13,000,000.00, payable to G. Cosmos, representing the proceeds of the ₱27,000,000.00 loan. Apolinario, Capilitan, and Hagisaka released the loan as evidenced by Promissory Note CL-3731. On the same day, the Bangko Sentral ng Pilipinas notified Apolinario, Hagisaka, and Capilitan that the two loans violated the DOSRI law. Examination of the loan documents revealed that they lacked necessary supporting documents and were effectively unsecured, being secured only by Capilitan's Unitrust shares of stock. The loans were also not reported to the Bangko Sentral ng Pilipinas.

After Unitrust experienced a bank run, the Bangko Sentral ng Pilipinas suspended its operations on January 4, 2002, placing it under receivership with the Philippine Deposit Insurance Company directed to take over. Following the closure, Apolinario and Gutierrez approached Magpantay, asking him to deliver a check to PDIC as payment for G. Cosmos' ₱13,000,000.00 loan. Apolinario then asked Magpantay to sign the Minutes approving the ₱13,000,000.00 loan, which Magpantay did, thinking the loan would be regularized. Magpantay admitted that the documentation for the ₱13,000,000.00 loan was antedated and prepared only after the loan had been paid. For his part, Apolinario testified that he was not a stockholder of Unitrust, that the December 18, 2001 Stockholder's Meeting was simulated, and that he could not have been validly elected as Chairman since he was not a shareholder. He pointed to Vasquez and Gutierrez as responsible for endorsing and recommending the loans. He admitted receiving the BSP letter but only after the loan proceeds had been released.

• Factual Review Under Exceptions: Petitioner maintained that the case falls under the exceptions to the rule against factual review in Rule 45 petitions as enumerated in Burgos vs. Pascual, citing grave abuse of discretion by the Court of Appeals, conclusions grounded on speculation and conjectures, judgment based on misapprehension of facts, findings of fact without citation of specific evidence, and incorrect interpretation and application of the law.
• Exculpating Evidence: Petitioner argued that the lower courts erred in not appreciating the prosecution witnesses' testimonies as exculpating evidence of his guilt, reproducing their affidavits and testimonies in his petition.
• Not a Director: Petitioner contended that the prosecution failed to prove he was a director of Unitrust, pointing to the absence of a stock certificate in his name, no Notice of Election submitted to the SEC or BSP, no General Information Sheet proving his election, and no evidence of SEC approval of Unitrust's by-laws amendments.
• Not a Borrower or Obligor: Petitioner claimed he neither borrowed from the bank nor incurred any contractual liability for himself or others, asserting that Vasquez was the one who processed and approved the loans under Hagisaka's threats. He characterized the non-filing of a case against Vasquez as selective prosecution.
• No Conspiracy: Petitioner argued that the prosecution failed to prove he conspired with the other accused to commit the offense charged.
• Impossibility of Reporting: Petitioner maintained that Unitrust could no longer report the loans to the BSP because of the subsequent takeover by BSP and PDIC, which effectively dissolved Unitrust's operations. He also argued that since BSP Assisting Examiner Dela Paz was assigned at Unitrust during the material period, he should have been aware of the loans' existence.

• Questions of Fact: Respondent argued that the petition should be dismissed outright because it raises questions of fact beyond the ambit of a Rule 45 petition.
• All Elements Present: Respondent maintained that the RTC correctly ruled that all elements of the offense were present and established.
• Conspiracy Proven: Respondent contended that the facts surrounding the case proved the existence of conspiracy between Apolinario and Capilitan.

• Propriety of Factual Review: Whether the Supreme Court may review the factual findings of the Regional Trial Court and the Court of Appeals in a Petition for Review on Certiorari under Rule 45.
• Sufficiency of Evidence: Whether the prosecution proved beyond reasonable doubt all the elements of the offense under Section 36 of Republic Act No. 8791, in relation to Section 36 of Republic Act No. 7653, specifically: (1) whether petitioner was a director or officer of Unitrust; (2) whether petitioner, directly or indirectly, borrowed from the bank or became an obligor, or conspired with Capilitan in doing so; and (3) whether the loans were approved and released without the written approval of the majority of the board and without the required reportorial compliance.

• Propriety of Factual Review: No. The Court is not a trier of facts in a Rule 45 petition, and petitioner failed to substantiate that the case falls under any recognized exception to the rule.
• Sufficiency of Evidence — Directorship: Yes. Petitioner's directorship was established by his own admissions and exhibits, including his signed minutes of board meetings and his representation of himself as Acting President before the PDIC.
• Sufficiency of Evidence — Conspiracy and Borrowing/Obliging: Yes. Conspiracy with Capilitan was established through circumstantial evidence showing concerted acts, including petitioner's signing of irregular board minutes and his post-release remedial actions.
• Sufficiency of Evidence — Lack of Approval and Reporting: Yes. The loans were released without valid board approval, as the signatures of resigned directors could not be counted, and the bank failed to transmit the required approval to the BSP; the bank's subsequent closure did not excuse compliance.

• Propriety of Factual Review: The Court's jurisdiction in a Rule 45 petition is limited to reviewing errors of law; factual findings of the trial court, especially when affirmed by the appellate court, are deemed binding and conclusive. While exceptions exist — as enumerated in Medina vs. Mayor Asistio, Jr. and cited in Burgos vs. Pascual — the party raising questions of fact must not only allege the exception but also prove and substantiate that the case clearly falls under it. Petitioner reproduced prosecution witnesses' affidavits and testimonies but failed to explain with cogent reasons how the lower courts erred in appreciating them. His sweeping statements, unsupported by substantiation, deserved no merit. The assessment of witness credibility is a task best performed by the trial court, which has the unique opportunity to observe witnesses firsthand. A review of the records confirmed that the lower courts were correct in their appreciation of the evidence.

• Sufficiency of Evidence — Directorship: The determination of whether the prosecution established petitioner's directorship is a factual issue beyond the Court's power of judicial review in a Rule 45 petition. The RTC found petitioner to be a bona fide Unitrust director based on evidence including his own exhibits: Quilatan's testimony that he nominated Apolinario as Acting Chairperson during the December 18, 2001 stockholders' meeting, and Exhibits 11 and 15, which declared Apolinario as Director and Acting President. Apolinario also represented himself as Acting President in a letter to the PDIC President. Under Section 4, Rule 129 of the Revised Rules of Court, an admission — verbal or written — made by a party in the course of the proceedings does not require proof. While petitioner insisted the board meetings were simulated, he never denied signing the Minutes of the Board Meetings approving the two loans. His own Exhibit 11, compared with the prosecution's Exhibit S, lacked Oba's signature, proving the ₱27,000,000.00 loan was released without the board's prior approval. The December 19, 2001 Minutes approving the ₱1,000,000.00 loan and the December 26, 2001 Minutes approving the ₱27,000,000.00 loan both bore petitioner's signature, but Magpantay, Quilatan, and Vasquez had resigned as directors on December 18, 2001, making their signatures invalid for purposes of loan approval. With their exclusion, the board could not have validly approved the loans with only one or two out of seven directors signing.

• Sufficiency of Evidence — Conspiracy and Borrowing/Obliging: Under the Informations, petitioner was charged with committing the crimes in conspiracy with Capilitan. Conspiracy exists when two or more persons come to an agreement concerning the commission of a felony and decide to commit it; once established, all conspirators are liable as co-principals regardless of the extent of their participation. Conspiracy need not be proved by direct evidence but may be inferred from concerted acts revealing unity of purpose and common design. The Court agreed with the lower courts that petitioner acted in conspiracy with Capilitan. First, Capilitan, a Unitrust director, obtained two loans from Unitrust, and while petitioner denied participation, Vasquez approved the loans under duress from Hagisaka. Petitioner admitted that the Vice President for Loans and Credit merely recommends approval and the final decision rests on the board; since petitioner signed the minutes of the board meetings, he had a "principal and indispensable role" in the loans' approval and release. Second, petitioner admitted that after the BSP investigation and bank run, he contacted Magpantay to pay PDIC the ₱13,000,000.00 loan of G. Cosmos. Third, petitioner is a lawyer presumed to know the law, yet he signed the minutes and participated in preparing remedial documents after the loans were released.

• Sufficiency of Evidence — Lack of Approval and Reporting: Under the General Banking Law, a DOSRI loan's validity requires that the written approval of the majority of the bank's directors be entered into the bank's records, with a copy transmitted to the BSP's supervising and examining department. Petitioner did not deny that the loans were not reported to the BSP but argued that the subsequent takeover made reporting impossible. This argument was rejected because the responsibility of entering the approval upon the records and transmitting a copy to the BSP rests on the bank itself. While BSP Assisting Examiner Dela Paz was assigned at Unitrust during the material period, his job was to monitor the transfer of ownership from the previous owners to the Japanese group; his presence alone could not equate to knowledge of the loans. Even assuming Dela Paz had acquired information about the loans, Unitrust still had the duty to comply with the reportorial requirements of the law.

• DOSRI Restriction (Section 36, R.A. No. 8791) — No director or officer of any bank shall, directly or indirectly, for himself or as representative or agent of others, borrow from such bank, nor become a guarantor, endorser, or surety for loans from such bank to others, or in any manner be an obligor or incur any contractual liability to the bank, except with the written approval of the majority of all the directors of the bank, excluding the director concerned. The required approval shall be entered upon the records of the bank and a copy of such entry shall be transmitted forthwith to the appropriate supervising and examining department of the BSP. The Court applied this restriction to hold Apolinario criminally liable for participating in the approval and release of two loans without valid board approval and without reporting to the BSP.

• Elements of DOSRI Violation — To sustain a conviction for violation of the DOSRI restriction, the prosecution must prove: (1) the offender is a director or officer of any banking institution; (2) the offender, either directly or indirectly, for himself or as representative or agent of another, performs any of the following acts: (a) borrows any of the deposits or funds of such bank, (b) becomes a guarantor, indorser, or surety for loans from such bank to others, or (c) becomes in any manner an obligor for money borrowed from bank or loaned by it; and (3) the offender has performed any such acts without the written approval of the majority of the directors of the bank, excluding the offender. The Court found all three elements present, with the second element satisfied through conspiracy with the borrower-director Capilitan.

• Rule 45 Factual Findings Are Binding — In a Petition for Review on Certiorari under Rule 45, the Court's jurisdiction is limited to reviewing errors of law. Factual findings of the trial court, especially when affirmed by the appellate court, are deemed binding and conclusive. The party invoking an exception must not only allege it but also substantiate that the case clearly falls under it. The Court found petitioner failed to substantiate any exception.

• Conspiracy by Circumstantial Evidence — Conspiracy need not be proved by direct evidence; it may be inferred from the concerted acts of the accused, indubitably revealing unity of purpose, intent, and sentiment in committing the crime. It is sufficient that the accused acted in concert at the time of the commission of the offense and had the same purpose or common design. The Court found conspiracy established through petitioner's signing of irregular board minutes, his principal role in loan approval, and his post-release remedial actions.

• Fiduciary Nature of Banks — Banking institutions are imbued with public interest and the trust and confidence of the public are of paramount importance. Banks are expected to exercise the highest degree of diligence and high standards of integrity and performance. This fiduciary obligation extends to their directors, officers, and employees. The Court invoked this doctrine to underscore the rationale for the DOSRI restriction and the corresponding criminal liability.

• "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. The DOSRI law was enacted as the Congress deemed it essential to impose certain restrictions on the borrowings undertaken by directors and officers in order to protect the public, especially the depositors." — This passage, quoted from Soriano vs. People, articulates the rationale behind the DOSRI restriction and the essential character of the offense.

• "Conspiracy need not be proved by direct evidence. It may be inferred from the concerted acts of the accused, indubitably revealing their unity of purpose, intent and sentiment in committing the crime." — This formulation, drawn from People vs. Albaran, states the governing standard for proving conspiracy through circumstantial evidence, which the Court applied to establish petitioner's liability as a co-conspirator.

• "The general rule is that only questions of law or 'those which ask to resolve which law applies on a given set of facts' may be raised in a Petition for Review on Certiorari under Rule 45 of the Rules of Court." — This passage from Philippine Savings Bank vs. Sakata defines the jurisdictional boundary of Rule 45 petitions and the Court's limited role as a reviewer of errors of law, not a trier of facts.

• Philippine Savings Bank vs. Sakata, G.R. No. 229450, June 17, 2020 — Followed for the proposition that only questions of law may be raised in a Rule 45 petition and that banks are imbued with public interest requiring the highest degree of diligence.
• Burgos vs. Pascual, 776 Phil. 167 (2016) — Cited by petitioner for the enumerated exceptions to the rule against factual review in Rule 45 petitions; the Court found petitioner failed to substantiate that any exception applied.
• Soriano vs. People, G.R. No. 240458, January 8, 2020 — Followed for the elements of the DOSRI offense and the rationale behind the restriction on borrowings by directors and officers.
• People vs. Peralta, 134 Phil. 703 (1968) — Followed for the principle that once conspiracy is established, all conspirators are liable as co-principals regardless of the extent of their participation.
• People vs. Albaran, G.R. No. 233194, September 14, 2020 — Followed for the rule that conspiracy may be proven by circumstantial evidence inferred from concerted acts revealing unity of purpose.
• Westmont Bank vs. Dela Rosa-Ramos, 698 Phil. 23 (2012) — Followed for the fiduciary nature of banks and the extension of fiduciary obligations to bank employees and officers.
• People vs. Sapigao, Jr., 614 Phil. 589 (2009) — Followed for the principle that the evaluation of witness credibility is best undertaken by the trial court.

• Section 36, Republic Act No. 8791 (General Banking Law of 2000) — Restricts bank exposure to directors, officers, stockholders, and their related interests by requiring the written approval of the majority of all directors (excluding the director concerned), entry of the approval upon the bank's records, and transmission of a copy to the BSP. Applied as the primary offense for which petitioner was convicted.
• Section 36, Republic Act No. 7653 (New Central Bank Act) — Provides the penalty for violation of banking laws: a fine of not less than ₱50,000.00 nor more than ₱200,000.00, or imprisonment of not less than two years nor more than ten years, or both, at the discretion of the court. Applied to determine the penalties imposed: ₱100,000.00 for Criminal Case No. 03-3631 and ₱200,000.00 for Criminal Case No. 03-3632.
• Section 2, Republic Act No. 8791 — Declaration of policy recognizing the fiduciary nature of banking and requiring high standards of integrity and performance. Cited to underscore the public interest character of banking institutions.
• Section 31, Batas Pambansa Bilang 68 (Corporation Code of the Philippines) — Provides for the liability of directors, trustees, or officers who vote for or assent to patently unlawful acts. Cited by the RTC in finding that Apolinario violated the provision when he allowed the loans' release without requisite board approval and documentation.
• Article 8, Revised Penal Code — Defines conspiracy as existing when two or more persons come to an agreement concerning the commission of a felony and decide to commit it. Applied to establish petitioner's co-principal liability.
• Section 4, Rule 129, Revised Rules of Court — Provides that an admission, verbal or written, made by a party in the course of the proceedings does not require proof. Applied by the RTC to hold petitioner's own exhibits and admissions as establishing his directorship.

Carandang, Zalameda, Rosario, and Dimaampao, JJ., concurred. (Justice Dimaampao was designated additional Member per Special Order No. 2839 dated September 16, 2021.)