G.R. No. 242977 . October 13, 2021
JOSE APOLINARIO, JR. Y LLAUDER, PETITIONER, VS. PEOPLE OF THE PHILIPPINES, RESPONDENT.

FACTS

Petitioner Jose Apolinario, Jr. y Llauder, along with Winefredo T. Capilitan, Motohiko Hagisaka, and Elmer T. Magpantay, were directors and officers of Unitrust Development Bank (Unitrust). They were charged in two separate Informations for violation of Section 36 of the General Banking Law of 2000 ( Republic Act No. 8791 ) in relation to Section 36 of the New Central Bank Act ( Republic Act No. 7653 ), known as the DOSRI (Directors, Officers, Stockholders, and Related Interests) law. The charges stemmed from two loans: a personal loan of P1,000,000.00 to co-accused and director Winefredo T. Capilitan on December 26, 2001, and a loan of P13,000,000.00 to G. Cosmos Philippines, Inc., represented by its President Capilitan, on December 27, 2001. The Informations alleged that these loans were granted without the required written approval of the majority of all directors of UDB, excluding the director concerned, and that such approval was not entered upon the bank’s records nor reported to the Bangko Sentral ng Pilipinas (BSP). Upon arraignment, Apolinario and Magpantay pleaded not guilty, while Hagisaka and Capilitan remained at large. Magpantay was later discharged as an accused to become a state witness.
The prosecution established that Apolinario, Magpantay, and others were hired by Unitrust and given shares to qualify for election to the Board of Directors. During a Special Stockholders’ Meeting and subsequent Organizational Meeting on December 18, 2001, Apolinario was elected Acting Chairman and President, Capilitan as Corporate Secretary, and Hagisaka as Executive Vice President. Magpantay, Quilatan, and Vasquez resigned as directors and were replaced. For Capilitan’s P1 million loan, Vice President for Loans Marcelo Vasquez was pressured by Hagisaka to process it despite the lack of a board resolution. Atty. Evelyn Gutierrez later showed Vasquez Minutes of a Board Meeting dated December 19, 2001, purportedly approving the loan and signed by individuals including Apolinario. Prosecution witnesses testified this meeting did not occur, the signatories Magpantay, Quilatan, and Vasquez had already resigned, and they signed under duress. The loan application form was dated December 21, 2001, post-dating the alleged approval. The P13 million loan to G. Cosmos was allegedly approved by a Board Resolution dated December 26, 2001, signed by Apolinario, among others. Magpantay testified this documentation was antedated and prepared after the bank’s closure. A BSP officer reviewed the loan documents and found they lacked required supporting documents and were effectively unsecured. The loans were not reported to the BSP. After a bank run, Unitrust’s operations were suspended on January 4, 2002, and it was placed under receivership.

ISSUE

Whether the Court of Appeals erred in affirming petitioner Jose Apolinario, Jr.’s conviction for violation of the DOSRI law under Section 36 of Republic Act No. 8791 in relation to Section 36 of Republic Act No. 7653 .

RULING

No, the Court of Appeals did not err. The Supreme Court denied the petition and affirmed the conviction. The Court held that all elements of the crime were proven beyond reasonable doubt. First, the loans were granted to a DOSRI, specifically to director/officer Winefredo T. Capilitan (for the personal loan) and to a corporation he represented as President (G. Cosmos Philippines, Inc.). Second, the required written approval of the majority of all directors, excluding the director concerned, was not obtained. The purported board resolutions (the December 19, 2001 Minutes and the December 26, 2001 Resolution) were invalid. The prosecution evidence showed the December 19 meeting did not take place, the signatories had resigned, and they signed under threat. The December 26 Resolution was antedated and prepared after the fact. Third, the approval was not entered in the bank’s records. Fourth, a copy of the approval was not transmitted to the BSP. The BSP officer confirmed the loans were not reported. Petitioner Apolinario, as Acting Chairman and President, participated in the approval and release of the loans by signing the spurious documents. His defense of good faith and lack of criminal intent was unavailing. The law imposes strict liability on bank directors and officers for violations of DOSRI rules to ensure the stability of the banking system. The Court emphasized that banking institutions are imbued with public interest and are required to exercise the highest degree of diligence. The DOSRI restrictions are straightforward, and non-compliance renders the responsible officers criminally liable.