People v. Concepcion (1922) Malcolm, J. Venancio Concepcion is the President of PNB.

. He executed a special authorization of an extension of credit for P300,000 to the Aparri bank manager in favour of a co-partnership named Puno y Concepcion of which his wife was a member. o This was a special authorization because by a memo, Concepcion originally limited the discretional power of the manager to grant loans to only P5,000 which could be increased to P10,000. o The only security consisted of 6 demand notes. The co-partnership itself was capitalized at P100,000. The notes and interest were taken up and paid. Concepcion was then charged with a violation of Sec 35 Act 2747 which states that the National Bank shall not directly or indirectly grant loans to any of the members of the board or directors of the bank nor to agents of the branch banks. Argument of Concepcion The documents of record do not prove that authority to make a loan was given, but only show a concession of credit. (exhibits speak of a credit and not of a loan) Answer Credit v. Loan Credit 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. 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. The concession of a credit necessarily involves the granting of loans up to the limit of the amount fixed in the credit. Discount v. Loan Discount Interest is deducted in advance Always in double-name paper Loan Interest is taken at the expiration of a credit Generally on single-name paper

Question 1. Was the granting of a credit to the co-partnership a loan within the meaning of Sec 35 Act 2747?

2.

Was the granting of a credit of P300,000 a loan or a discount?

Act 2747 prohibits the granting of loans, but does not prohibit discounts Ruling of the Acting Insular Auditor when the President of the National Bank in 1916 inquired if Act 2616 was intended to apply to discounts as well as to loans: refers to loans alone and placed no restriction upon discount transactions

Conceding, without deciding, that, as ruled by the Insular Auditor, the law covers loans, not discounts, conclusion is inevitable that the demand notes were NOT discount paper but mere evidence of indebtedness because: 1. Interest was not deducted from the face of the notes, but was paid when the notes fell due 2. They were single-name and not double-name paper In the Binalbagan Estate case: similar facts and the ruling was that the operations constituted a loan and not a discount Ascertain the intention of the Legislature: 1. To erect a wall of safety against temptation for a director of the bank 2. Recognition of the familiar maxim that no man may serve 2 masters 3. If it is shown that the husband is financially interested in the success of failure of his wifes business venture, a loan to the partnership falls within the prohibition 4. To protect the stockholders, depositors, and creditors of the bank against the temptation that the directors might be exposed to Provisions of the NCC establish the familiar relationship called a conjugal partnership (1315, 1393, 1401, 1407, 1408, 1412) A loan to a partnership of which the wife is a member, is an indirect loan to such director When the corporation itself is forbidden to do an act, the prohibition extends to the board of directors.

3.

Was the granting of a credit an indirect loan within the meaning of Sec 35 Act 2747?

The loan was not an indirect loan because it should be recalled that the wife of Concepcion held 50% of the capital of the co-partnership.

4.

Was granting of credit a violation of Sec 35 Act 2747?

5.

Does the alleged good faith constitute a legal defense?

Since the prohibition in Sec 35 was on the bank and sec 49 provides a punishment not on the bank but on a person, the prohibition in Sec 35 is without a penal sanction. It was because he was misled by the rulings of the Insular Auditor and since the loans have been paid, there was no loss.

Under the statute, criminal intent, not necessarily material; doing of the act constitutes the crime. It is fraud for directors to secure by means of their trust, any advantage not common to the other stockholders Where an Act penalizing an offense repeals a former Act which penalized the same offense, such repeal does not have the effect of depriving the jurisdiction of the courts to try, convict, and sentence offenders charged with violations of the old law.

6.

Could Concepcion be convicted when Sec 35 & 49 of Act 2747 were repealed, prior to the filing of the information?

Dispositive: Concepcion guilty beyond reasonable doubt.