PEOPLE vs.

CONCEPCION
G.R. No. L-19190 | 29 November 1922
FACTS
1. PNP President and BOD member Venancio Concepcion authorized an extension
of credit (P300k) to a partnership capitalized at P100k (Puno y Concepcion, S.
en C.), half of which was owned by his wife Rosario San Agustin.
2. Anacleto Concepcion (P5k), Clara vda de Concepcion (P5k), Miguel S. Conc
epcion (admin, P20k), Clemente Puno (P20k)
3. CFI Cagayan (Judge Enrique V. Filamor) declared him guilty of violating
of Sec 35 of Act 2747 (1y6m imprisonment, P3k fine, with subsidiary imprisonment
, costs)
4. Act 2747 (Effective 20 February 1918)
a. Sec 35: The National Bank shall not, directly or indirectly, grant loans
to any of the members of the board of the bank nor to agents of the branch bank
s.
b. Sec 49: Any person who shall violate any of the provisions of this Act s
hall be punished by a fine not to exceed P10k, or by imprisonment not to exceed
5y, or by both.
c. Above sections were in effect when alleged violation took place, but wer
e repealed by Act 2938 (app 30 Jan 1921)
ISSUE #1
Was the granting of credit to the copartnership a loan within the meaning of the
provision?
Defense s Contention: documents on record do not prove that authority to make a lo
an was given, but only the concession of credit
HELD
NO. Defense is correct; exhibits speak of credit and not loan.
Credit: Ability to borrow money by virtue of the confidence or trust reposed by
a lender that he will pay what he may promise
Loan: 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 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.
ISSUE #2
Was the granting of credit to the co-partnership a loan or discount?
Defense: the provision prohibits granting of a loan, not a discount
Background Facts: H. Parker Willis, then NB President inquired of Insular Audito
r whether Sec 37 Act 2612 applied to discounts loans alone
DISCOUNT LOAN
Interest deducted in advance Interest deducted at expiration of credit
Double-name paper Single-name paper
HELD
LOAN. In the last analysis, to discount a paper is only a mode of loaning money.
Interest on the demand notes signed by the copartnership was paid when notes fe
ll due, and single-name paper.
ISSUE #3
Was the granting of credit to co-partnership an indirect loan within meaning of
the provision?
HELD
YES. A loan to a partnership of which a wife of a bank director is a member is a
n indirect loan to the director due to conjugal partnership.
Purpose of Provision: Erect a wall of safety against temptation for a bank direc
tor (protection of stockholders, depositors and creditors of the bank)