1. People vs. Concepcion – 44 Phil 126 (1922)
Facts
Venancio Concepcion, President of the PNB, authorized an extension of credit in favor of "Puno
y Concepcion, S. en C." in the amount of P300,000, a partnership wherein his wife owns one-
half of the capital.
As President of the PNB and as member of the board of directors of this bank, he was charged
in the Court of First Instance of Cagayan with a violation of section 35 of Act No. 2747. He was
found guilty and was sentenced to imprisonment for one year and six months.
Basis for conviction is Section 35 of Act No. 2747: "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." Section 49 of the same Act provides: "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." These two
sections were in effect in 1919 when the alleged unlawful acts took place, but were repealed by
Act No. 2938, approved on January 30, 1921.
Issue/Ruling
I. Was the granting of a credit of P300,000 to the copartnership "Puno y Concepcion,
S. en C." by Venancio Concepcion, President of the Philippine National Bank, a
"loan" within the meaning of section 35 of Act No. 2747?
Argument: Counsel argue that the documents of record do not prove that authority to make a
loan was given, but only show the concession of a credit.
Ruling: In this statement of fact, counsel is correct, for the exhibits in question speak of a
"credito" (credit) and not of a " prestamo" (loan).The " credit" of an individual means his ability to
borrow money by virtue of the confidence or trust reposed by a lender that he will pay what he
may promise. (Donnell vs. Jones [1848], 13 Ala., 490; Bouvier's Law Dictionary.) A "loan"
means 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 loaned, with or without interest.
(Payne vs. Gardiner [1864], 29 N. Y., 146, 167.) The concession of a "credit" necessarily
involves the granting of "loans" up to the limit of the amount fixed in the "credit,"
II. Was the granting of a credit of P300,000 to the copartnership "Puno y Concepcion,
S. en C.," by Venancio Concepcion, President of the Philippine National Bank, a
"loan" or a "discount"?
Argument: Counsel argue that while section 35 of Act No. 2747 prohibits the granting of a
"loan," it does not prohibit what is commonly known as a "discount."
