People of the Philippine Islands vs.

Venancio Conception

G.R. No. L-19190 November 29,

1922
• Facts: Venancio Concepcion, President of
Philippine National Bank, sent telegrams and a
confirmation letter to the manager of the
Aparri branch of PNB, authorizing an
extension of credit in favor of Puno y
Concepcion, S. en C. in the amount of
P300,000.00.
• The special authorization limited the discretional
power of the local manager of the Aparri branch
of grant loans and discount negotiable
documents to P5,000, which in certain cases, in
certain cases can be increase to P10,000.
• Pursuant to the authorization, credit aggregating
to P300,000 was granted to Puno y Concepcion,
S. en C., the only security required consisting of
six demand notes.
• This Puno y Concepcion, S. en C., in reality is a co
partnership capitalized in P100,000 wherein,
Venancio Concepcion’s wife owns have of the co
partnership.
• Venancio Concepcion was found guilty by the CFI
for violation of Section 354 of Act 2747 which
provides that: “The National Bank shall not,
directly or indirectly, grant loans to any member
of the board of directors of the bank nor the
agents of the branch banks”.
• Issues
• A) Whether or not the granting of a credit of
P300,000 to the copartnership was a “loan”
within the meaning of Section 35 of Act. No.
2747
• B) Whether or not the granting of a credit of
P300,000 to the co partnership was a “loan”
or a “discount”
• Ruling
• A) YES. 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. A “loan” means the delivery by one party and
the receipt by the other party of a given sum of money,
upon an agreement, expressed or implied, to repay the
sum loaned, with or without interest. The concession
of a “credit” necessarily involving the granting of
“loans” up to the limit of the amount fixed in the
“credit”.
• B) LOAN. Discounts are favored by bankers
because of the liquid nature, growing, as they
do, out of an actual, live, transaction. But in its
analysis, to discount a paper is only a mode of
loaning money, with, however, these
distinctions: (1) 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 a double-name paper; a
loan is generally on a single-name paper.