Delgado, Marry Cris F.

PCU-Manila
Banking Laws Atty. Kayzer Saba

1. Pio is the president of Western Bank. His wife applied for a loan with the said bank to
finance an internet cafe. The loan officer told her that her application will not be approved
because the grant of loans to related interests of bank directors, officers, and stockholders is
prohibited by the General Banking Law.

Explain whether the loan officer is correct. 5%

The loan officer is not correct.

Grant of loans to related interests of bank directors, officers and stockholders is

prohibited under the General Banking Law as a general rule. However, this is subject to the
exception when there is a written approval of the majority of all the directors of the bank
excluding the director concerned. Upon approval of the application for loan, the related
interest of bank directors, officers, and stockholders may be granted loans subject to the
limitations set under the General Banking Law.

Pio’s wife may secure a loan with Western Bank provided majority of all the directors
approved the same and a written approval is issued.

2. Under Republic Act No.1405 (The Bank Secrecy Law), bank deposits are considered
confidential and may not be examined, inquired, or looked into by any person, government
official, bureau or office.

What are the exceptions? 5%

The general rule under the Bank Secrecy Law is all deposits of whatever nature with
banks or banking institutions in the Philippines are hereby considered absolutely confidential in
nature and may not be examined, inquired or looked into by any person, government official,
bureau or office.

This is subject to the exception when there is a written permission of the depositor, or in
cases of impeachment, or upon order of a competent court in cases of bribery or dereliction of
duty of public officials, or in cases where the money deposited or invested is the subject matter
of the litigation, the official or any employee of the bank may disclose all the details in relation
to the questioned deposit account.

3. (5%). Name at least five (5) predicate crimes to money laundering.

a. Terrorism
b. Human trafficking
c. Cybercrime
d. Environmental Crimes
e. Extortion
Delgado, Marry Cris F. PCU-Manila
Banking Laws Atty. Kayzer Saba
f. Robbery or Theft

4. TRUE or FALSE. Answer TRUE if the statement is true, or FALSE if the statement is false.
Explain your answer in not more than two (2) sentences. (5%)

"A bank is bound to know its depositor’s signature" is an inflexible rule in determining the
liability of a bank in forgery cases.