G.R. No.

L-19190 November 29, 1922

THE PEOPLE OF THE PHILIPPINE ISLANDS, plaintiff-appellee, vs. VENANCIO CONCEPCION,

defendant-appellant.

FACTS:

Venancio Concepcion, President of the Philippine National Bank, sent telegra s and a confir
ation letter to the anager of the Aparri !ranch of PNB, a"thori#ing an e$tension of credit in
favo"r of P"no % Concepcion, S. en C. in the a o"nt of P&'','''.''. This special a"thori#ation li
ited the discretional po(er of the local anager of the Aparri !ranch to grant loans and
disco"nt negotia!le doc" ents to P),''', (hich in certain cases, co"ld !e increased to P*','''.
P"rs"ant to this a"thori#ation, credit aggregating P&'',''' (as granted to P"no % Concepcion,
S. en C., the onl% sec"rit% re+"ired consisting of si$ de and notes. This P"no %
Concepcion, S. en C., in realit% is a copartnership capitali#ed at P*'',''' (herein, Venancio
Concepcion s (ife o(ns half of the copartnership. Venancio Concepcion (as fo"nd g"ilt% !%
the CF for violation of Section &) of Act /0 0 (hich provides that: : 1The National Bank shall
not, directl% or indirectl%, grant loans to an% of the e !ers of the !oard of directors of the !
ank nor to agents of the !ranch !anks.1

SS23S:

*. 4hether or not the granting of a credit of P&'',''' to the copartnership (as a 5loan6
(ithin the eaning of Section &) of Act No. /0 0.

73S. The 1credit1 of an individ"al eans his a!ilit% to !orro( one% !% virt"e of the confidence
or tr"st reposed !% a lender that he (ill pa% (hat he a% pro ise. A 1loan1 eans the deliver% !
% one part% and the receipt !% the other part% of a given s" of one%, "pon an agree ent,
e$press or i plied, to repa% the s" loaned, (ith or (itho"t interest. The concession of a
1credit1 necessaril% involves the granting of 1loans1 "p to the li it of the a o"nt fi$ed in the
1credit,1

/ 4hether or not the granting of a credit of P&'',''' to the copartnership (as a 5loan6 or a
5disco"nt6.

89AN. isco"nts are favored !% !ankers !eca"se of their li+"id nat"re, gro(ing, as the% do, o"t
of an act"al, live, transaction. B"t in its last anal%sis, to disco"nt a paper is onl% a ode of
loaning one%, (ith, ho(ever, these distinctions: ;*< n a disco"nt, interest is ded"cted in
advance, (hile in a loan, interest is taken at the e$piration of a credit= ;/< a disco"nt is al(a
%s on do"!le-na e paper= a loan is generall% on single-na e paper.

Conceding, (itho"t deciding, the la( covers loans and not disco"nts, %et the concl"sion is
inevita!le that the de and notes signed !% the fir 1P"no % Concepcion, S. en C.1 (ere not
disco"nt paper !"t (ere ere evidences of inde!tedness, !eca"se ;*< interest (as not
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ded"cted fro the face of the notes, !"t (as paid (hen the notes fell d"e= and ;/< the% (ere
single-na e and not do"!le-na e paper.

& 4hether or not the granting of a credit of P&'',''' to the copartnershop (as an 5indirect
loan6 (ithin the eaning of Section &) of Act /0 0.

73S. n the interpretation and constr"ction of stat"tes, the pri ar% r"le is to ascertain and
give effect to the intention of the 8egislat"re. n this instance, the p"rpose of the 8egislat"re
is plainl% to erect a (all of safet% against te ptation for a director of the !ank. The prohi!ition
against indirect loans is a recognition of the fa iliar a$i that no an a% serve t(o asters > that
(here personal interest clashes (ith fidelit% to d"t% the latter al ost al(a%s s"ffers. f,
therefore, it is sho(n that the h"s!and is financiall% interested in the s"ccess or fail"re of his
(ife?s !"siness vent"re, a loan to partnership of (hich the (ife of a director is a e !er, falls
(ithin the prohi!ition.

Vario"s provisions of the Civil serve to esta!lish the fa iliar relationship called a con@"gal
partnership. ;Articles *&*), *& &, * '*, * '0, * ' , and * */ can !e speciall% noted.< A lo !,
"#ere$ore, "o % r"!er&#'% o$ (#')# "#e ('$e o$ *'re)"or o$ b !+ '& member, '& ! '!*'re)" lo ! "o & )#
*'re)"or.

That it (as the intention of the 8egislat"re to prohi!it e$actl% s"ch an occ"rrence is sho(n !%
the ackno(ledged fact that in this instance the defendant (as te pted to ingle his personal
and fa il% affairs (ith his official d"ties, and to per it the loan P&'',''' to a partnership of no
esta!lished rep"tation and (itho"t asking for collateral sec"rit%.