G.R. No. 19190 - People vs. Concepcion

Case Summary (G.R. No. 19190)

Parties

Petitioner: The People of the Philippine Islands (plaintiff and appellee).
Respondent/Accused: Venancio Concepcion (defendant and appellant), President and director of the Philippine National Bank.

Key Dates

Memorandum limiting manager’s discretionary loan authority: May 17, 1918.
Authorizations by President Concepcion (telegrams/letter): April 10–May 7, 1919.
Demand notes paid: by July 17, 1919.
Act No. 2747 (containing sections 35 and 49) effective: February 20, 1918.
Act No. 2938 (repealing those sections) approved: January 30, 1921.
Decision date of the reviewing court: November 29, 1922.

Applicable Law and Constitutional Framework

Primary statutes at issue: Section 35 of Act No. 2747 (prohibiting the National Bank from granting loans directly or indirectly to board members or branch agents) and Section 49 of Act No. 2747 (penal provision for violations). Act No. 2938 repealed those sections in 1921. Constitutional/governing framework at the time of decision: the Philippine Autonomy Act (Jones Law) of 1916 served as the prevailing statutory-constitutional environment under which government institutions operated during the period in question.

Factual Summary

PNB’s Aparri branch manager had limited discretionary lending authority (P5,000, sometimes P10,000). Between April 10 and May 7, 1919, President Venancio Concepcion authorized an aggregate credit of P300,000 in favor of the partnership "Puno y Concepcion, S. en C." The bank required as security six demand notes only; interest was paid when notes matured, and the notes were single-name paper. The notes and accrued interest were paid in full by July 17, 1919. The partnership’s capital was P100,000 with partners contributing varying amounts; Rosario San Agustin, identified as the wife of Venancio Concepcion, contributed P50,000. Concepcion was tried, convicted, and sentenced in the Court of First Instance of Cagayan for violating section 35 of Act No. 2747.

Issues Presented

The court framed and resolved six principal issues: (I) whether the credit constituted a “loan” within the meaning of section 35; (II) whether the transaction was a prohibited “loan” or a permissible “discount”; (III) whether a loan to the partnership constituted an “indirect loan” to Concepcion because of his wife’s participation; (IV) whether the repeal of the statutory provisions before prosecution deprived courts of jurisdiction or removed the basis for prosecution; (V) whether the prohibition carried a penal sanction applicable to the officer personally; and (VI) whether defendant’s asserted good faith or absence of loss constituted a legal defense.

Issue I — Credit versus “Loan”

The court recognized that the authorizing documents used the term “credito” rather than “prestamo,” but it held that granting a credit necessarily contemplates the making of loans up to the credit limit. The court explained definitions: “credit” denotes the capacity to borrow based on trust, while “loan” denotes an actual advance of money repayable on agreement. Because the credit allowed advances up to a specified amount and the bank in fact extended and took up indebtedness evidenced by notes, the concession was, in substance, a loan within the statutory meaning of section 35.

Issue II — Loan versus Discount

The defense argued the transactions were discounts, which the Insular Auditor had once interpreted as outside a statutory prohibition focused on loans. The court analyzed the legal distinctions: discounts often involve deduction of interest in advance and typically are on double-name paper, whereas loans generally involve interest payable at maturity and may be on single-name paper. The demand notes here had interest paid at maturity and were single-name; they thus were not discount paper but instruments evidencing loans. The court therefore treated the transactions as loans subject to the statutory prohibition.

Issue III — Indirect Loan through Partnership (Conflict of Interest)

The court addressed whether a loan to the partnership amounted to an “indirect” loan to the director, given that the director’s wife was a partner with substantial capital. Emphasizing the legislative purpose to prevent conflicts of interest and protect depositors and stockholders, the court held that a director who has a financial interest as a member of a conjugal or family unit is effectively benefitted by advances to a partnership in which his spouse participates. The court relied on principles embodied in the Civil Code provisions concerning conjugal partnership and prior jurisprudence recognizing that loans to a firm in which an officer or his spouse has interest are prohibited as indirect loans. Consequently, the P300,000 credit to the partnership was an indirect loan to Concepcion and fell within the statutory ban.

Issue IV — Effect of Repeal of Statutory Provisions

The defense argued repeal of sections 35 and 49 by Act No. 2938 (approved Jan. 30, 1921) removed the legal basis for prosecution and punishment. The court reaffirmed established precedent that repeal of a penal statute after the commission of an offense does not deprive courts of jurisdiction to try offenses committed while the prior law was in effect. The court cited earlier decisions holding that repeal of a penal provision does not retroactively nullify liability or preclude prosecution for acts that were criminal at the time committed. Accordingly, the repeal did not bar conviction of acts done in 1919.

Issue V — Penal Sanction and Personal Liability

The defense contended that the prohibition in section 35 applied to the bank, and that section 49’s penal wording referred to persons other than the corporation, leaving am

Case Syllabus (G.R. No. 19190)

Citation and Panel

Reported at 44 Phil. 126, G. R. No. 19190, decided November 29, 1922.
Opinion authored by Malcolm, J.
Concurrence by Araullo, C. J., Johnson, Street, Avancena, Villamor, Ostrand, Johns, and Romualdez, JJ.

Parties and Roles

Plaintiff and Appellee: The People of the Philippine Islands.
Defendant and Appellant: Venancio Concepcion.
Trial judge in the Court of First Instance of Cagayan: Honorable Enrique V. Filamor.
Attorney-General Villa-Real represented the prosecution in the appellate proceedings.

Pertinent Facts (authorized credit and repayment)

Between April 10, 1919, and May 7, 1919, Venancio Concepcion, President of the Philippine National Bank (PNB), by telegrams and a confirming letter to the manager of the Aparri branch, authorized an extension of credit in favor of the firm "Puno y Concepcion, S. en C." in the amount of P300,000.
The special authorization was needed because of a memorandum order of President Concepcion dated May 17, 1918, which limited the discretionary power of the local Aparri manager to grant loans and discount negotiable documents to P5,000, with certain cases allowing increase to P10,000.
Pursuant to the presidential authorization, credit aggregating P300,000 was granted to "Puno y Concepcion, S. en C."; the only security required consisted of six demand notes.
The demand notes, together with interest, were taken up and paid by July 17, 1919.
"Puno y Concepcion, S. en C." was a copartnership capitalized at P100,000. Contributions were: Anacleto Concepcion P5,000; Clara Vda. de Concepcion P5,000; Miguel S. Concepcion P20,000; Clemente Puno P20,000; and Rosario San Agustin, "casada con Gral. Venancio Concepcion," P50,000.
Miguel S. Concepcion was the manager/administrator of the company.

Statutory Provisions Invoked

Section 35, Act No. 2747 (effective February 20, 1918): "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, Act No. 2747: "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."
Note: Sections 35 and 49 of Act No. 2747 were in effect in 1919 (when the acts charged occurred) but were repealed by Act No. 2938, approved January 30, 1921.

Procedural History and Conviction

Defendant Venancio Concepcion was charged in the Court of First Instance of Cagayan with violating section 35 of Act No. 2747.
The trial court, presided by Judge Filamor, found Concepcion guilty.
Sentence imposed: imprisonment for one year and six months, a fine of P3,000, with subsidiary imprisonment in case of insolvency, plus costs.
On appeal, defense assigned ten errors, fully briefed and argued; the Attorney-General answered each proposition in a comprehensive brief.
The Supreme Court reviewed the evidence, issues, prior precedent, and appellate briefs, and affirmed the conviction and sentence.

Issue I — Was the extension of P300,000 "a loan" within the meaning of section 35?

Defense contention: the documentary record shows the concession of a "credito" (credit), not a "prestamo" (loan).
Court's analysis of terminology:
- "Credit" of an individual: ability to borrow money by virtue of the lender's confidence that he will pay what he promises (citing Donnell vs. Jones; Bouvier's Law Dictionary).
- "Loan": delivery by one party and receipt by another of a sum of money, with agreement to repay, with or without interest (citing Payne vs. Gardiner).
Court's conclusion: The concession of a "credit" necessarily involves the granting of "loans" up to the limit of the amount fixed in the "credit."
Holding on Issue I: The P300,000 credit concession constituted loans within the meaning of section 35.

Issue II — Was the P300,000 transaction a "loan" or a "discount"?

Defense argument: Section 35 prohibits "loans" but not "discounts"; earlier Insular Auditor ruling (August 11, 1916) interpreted section 37 of Act No. 2612 as referring to loans alone and placing no restriction upon discounts.
Court's examination of differences between loan and discount:
- Distinctions identified: (1) Discount deducts interest in advance; loan collects interest at expiration of credit. (2) Discount is on double-name paper; loan is generally on single-name paper.
Application to the case:
- The demand notes were not discount paper because interest was not deducted from the face; interest was paid when the notes fell due.
- The notes were single-name, not double-name, paper.
Comparison: Facts are not essentially different from those in the Binalbagan Estate case, where operations were declared loans and not discounts.
Holding on Issue II: The