University of the Philippines - College of Law

Case Name
People v. Concepcion
Topic Introduction
Case No. | Date G.R. No. 19190 - November 29, 1922
Ponente J. Malcolm
PNB President Concepcion authorized an extension of credit in favor of the copartnership
“Puno y Conception, S. en C” in the amount of Php300,000. He was later on charged for
violating Sec. 35 of Act 2747, and was sentenced to imprisonment and to pay a fine.
Concepcion argues that the documents only show the concession of a credit, not an authority
to make a loan. The SC held that the "credit" of an individual means his ability to borrow
Case Summary money by virtue of the confidence or trust reposed by a lender that he will pay what he may
promise. Loan is the delivery by one party and the receipt by the other party of a given sum of
money, upon an agreement, express or implied, to repay the sum of money, upon an
agreement, express or implied, to repay the sum loaned, with or without interest. The
concession of a "credit" necessarily involves the granting of "loans" up to the limit of the
amount fixed in the "credit."
The "credit" of an individual means his ability to borrow money by virtue of the confidence or
Doctrine trust reposed by a lender that he will pay what he may promise. The concession of a "credit"
necessarily involves the granting of "loans" up to the limit of the amount fixed in the "credit."
FACTS
● Venancio Concepcion, President of PNB, authorized an extension of credit in favor of “Puno y Conception, S. en
C”1 in the amount of Php300,000 through telegrams and a letter of confirmation to the manager of PNB Aparri
branch.
○ This special authorization was essential in view of the memorandum order issued by Pres. Concepcion
limiting the discretionary power of Apari’s local manager to grant loans and discount negotiable
documents to Php5,000.
○ The only security required consisted of 6 demand notes, which were paid together with the interest in July
17, 1919.
○ Venancio was the husband of Rosario San Agustin, one of the co-partners.
● Pres. Concepcion was charged by the CFI Cagayan with a violation of Section 35 2 of Act 2747 for violating the
prohibition against granting of loans in/directly to BOD/agents of the bank. He was found guilty and was
sentenced to imprisonment of 1yr and 6mos, and to pay a fine of Php3,000 as provided under Section 49 of the
same Act3.

● ISSUES + RATIONALE

1. W/N the granting of a Php300,000 credit to the copartnership by Pres. Concepcion is considered a “loan”
within the meaning of Sec. 35 Act 2747 = YES
Concepcion argues:
● the documents of record do not prove that the authority to make a loan was given, but only show the concession
of a credit.
SC says:
● “Credit (credito)” = ability to borrow money by virtue of the confidence or trust reposed by a lender that he will pay
what he may promise.

1 A copartnership capitalized at P100,000. Anacleto Concepcion contributed P5,000; Clara Vda. de Concepcion, P5,000; Miguel S. Concepcion,
P20,000; Clemente Puno, P20,000; and Rosario San Agustin, "casada con. Gral. Venancio Concepcion," P50,000. Member Miguel S. Conception
was the administrator of the company.
2 "The National Bank shall not, directly or indirectly, grant loans to any of the members of the board of directors of the bank nor to agents of the
branch banks."
3 "Any person who shall violate any of the provisions of this Act shall be punished by a fine not to exceed ten thousand pesos, or by imprisonment
not to exceed five years, or by both such fine and imprisonment."
 University of the Philippines - College of Law
● “Loan (prestamo)” = delivery by one party and the receipt by the other party of a given sum of money, upon an
agreement, express or implied, to repay the sum of money, upon an agreement, express or implied, to repay the
sum loaned, with or without interest.
● The concession of a "credit" necessarily involves the granting of "loans" up to the limit of the amount fixed in the
"credit."

2. W/N the granting of a Php300,000 credit to the copartnership by Pres. Concepcion is considered a
“discount” = NO
● In a discount, interest is deducted in advance, while in a loan, interest is taken at the expiration of a credit; (2) a
discount is always on double-name paper; a loan is generally on single-name paper.
● The demand notes signed by the firm "Puno y Concepcion, S. en C." were not discount paper but were mere
evidences of indebtedness, because (1) interest was not deducted from the face of the notes, but was paid when
the notes fell due; and (2) they were single-name and not double-name paper.

3. W/N the granting of a Php300,000 credit to the copartnership by Pres. Concepcion is considered an “indirect
loan” within the meaning of Sec. 35 Act 2747 = YES
● Concepcion argues that the loan to the partnership was not an indirect loan. Do note that the wife of
Concepcion held one-half of the capital of the partnership.
● The prohibition against indirect loans is a recognition of the familiar maxim that no man may serve two
masters. If it is shown that the husband is financially interested in the success or failure of his wife's business
venture, a loan to a partnership of which the wife of a director is a member, falls within the prohibition.
● Various provisions of the Civil serve to establish the familiar relationship called a conjugal partnership. A
loan to a partnership of which the wife of a director of a bank is a member, is an indirect loan to such
director.
● It was this exact situation that the legislature was trying to prevent – the intermingling of personal and
professional affairs. ITC, it manifested as Venancio permitting a 300k loan to the partnership owned by his
wife that has no established reputation, and without collateral.

4. W/N Concepcion can be convicted of such violation when portions of Act No. 2747 were repealed by Act No.
2938, prior to the filing of the information and the rendition of the judgment = YES
● Where an Act of the Legislature which penalizes an offense, such repeal does not have the effect of thereafter
depriving the courts of jurisdiction to try, convict, and sentence offenders charged with violations of the old law.

5. Was the granting of a credit of P300,000 to the copartnership by Pres. Concepcion in violation of section 35 of
Act No. 2747, penalized by this law? = YES
● Concepcion argues that the prohibition under the law is only on banks, but the punishment is not on the bank but
on a person violating the provisions, so the corporation itself has no sanctions
● When the corporation itself is forbidden to act, the prohibition extends to the board of directors, and to each
director separately and individually.

6. W/N the alleged good faith of Concepcion in extending the credit of Php300,000 to the copartnership
constitute a legal defense = NO
● Concepcion argues that the loans made to the copartnership have been paid, so PNB suffered no loss.
● SC says that it is the doing of the inhabited act, inhibited on account of public policy and public interest, which
constitutes the crime.

RULING
CFI judgment affirmed.