BANKING SAMPLEX SUGGESTED ANSWERS

1. CHAPTER 7 AND 5
Responsibility and Primary Objective of the Bangko Sentral (Chapter 7 Bangko Sentral p. 289)
Under the New Central Banking Act:
o Responsibility of Bangko Sentral is to provide policy directions in areas of money, banking and
credit.
o It shall have supervision over the operations of banks
o It also exercises such regulatory powers over operations of finance companies and non- banking
financial institutions performing quasi banking functions, hereafter referred to as quasi banks, and
institutions performing similar functions.
o The primary objective of the Bangko Sentral is to maintain price stability conducive to a balanced
and sustainable growth of the economy.
o It shall also promote and maintain monetary stability and the convertibility of the peso.
Busuego v. CA 199
o BSP, through the Monetary Board, is the government agency charged with responsibility of
administering the monetary banking and credit system of the country and is granted the power of
supervision and examination over banks and non bank financial institutions performing quasi
banking functions of which savings and loan associations.
Close now, Hear later scheme (Chapter 5 Prohibited Transactions and Cessation of Banking Business p. 247)
Law does not contemplate prior notice and hearing before a bank may be directed to stop operations and
placed under receivership. When the law provides for filing of a case within 10 days after receiver takes
charge of assets of the bank, it is unmistakable that assailed actions should precede filing of the case.
Legislature could not have intended to authorize no prior notice and hearing in closure of bank and at the
same time allow a suit to annul it on basis of absence there of Central Bank of Philippines v. CA 1993
Law does not require previous hearing of before the Monetary Board can implement its resolution closing a
bank since MBs actions is subject to judicial scrutiny as provided by law.
This scheme is grounded on practical and legal considerations to prevent unwarranted dissipation of banks
assets and as a valid exercise of police power to protect depositors, creditors, stockholders and general
public. Due process does not necessarily require prior hearing; a hearing or an opportunity to be heard
maybe subsequent to the closure. One can just imagine the dire consequences of a prior hearing; bank runs
would be the order of the day, resulting in panic and hysteria. In the process, fortunes may be wiped out
and disillusionment will run the gamut of the entire banking community Vide Rural Bank of Buhi v. CA
1988

2. CHAPTER 5
Grounds for a bank to be placed under receivership - The Monetary Board shall institute proceedings for
receivership whenever it finds that a bank or quasi-bank:
Is unable to pay its liabilities as they become due in the ordinary course of business; provided that this shall
not include inability to pay caused by extraordinary demands induced by financial panic in the banking
community;
Has insufficient realizable assets to meet its liabilities;
Cannot continue in business without involving probable loss to its depositors or creditors; or
Has willfully violated a cease and desist order that has become final, involving acts or transactions which
amount to fraud or a dissipation of the assets of the institution.
3.
What are the requisites for in-camera inspection of bank deposits?
1. Theres a pending case in court
2. Account must be properly identified
3. Inspection must be limited to the subject matter
What is survivorship agreement?
Survivorship agreement joint owners of a deposit agree that either of them could withdraw any part or
whole of the account during the lifetime of both; and the balance upon the death of either belongs to the
survivor

Explain survivorship agreement is not valid per se but it may be contrary to law
Survivorship agreement is not contrary to law but may be violative as it can be a mere cloak to hide
inofficious donations to transfer property in fraud
What is warehousing agreement?
Warehousing agreement agreement whereby one entity holds in trust the real property of a bank, which
is in excess of the limitation on investments on real estate at 50% of the capital assets
Not valid

4. CHAPTER 8
If your friend has no other currency to pay for her indebtedness, would you accept the following:
a. 1-dollar coin with an age of 10 years
NO. Art 1249 of NCC states that all payments of debts shall be in currency stipulated and if not possible
currency in legal tender. DOLLAR IS NOT THE LEGAL TENDER IN THE PHILIPPINES.
b. P50 with 2/5 of the surface is lost
YES. BSP shall not replace notes under mutilated condition and without compensation to bearer. Mutilated
condition: (1) identification is impossible, (2) signs of filing, clipping, (3) notes lost MORE THAN 2/5 of
surface or all signatures. ONLY 2/5 IS LOST.
c. P70 for denomination of 25c
YES. Maximum amount of coins to be considered as legal tender is P100.00 for denominations of 1sentimo, 5-sentimo, 10-sentimo, and 25-sentimo coins. P70 IS WELL WITHIN THE LIMIT.
d. P20 without the signature of the President
YES. BSP shall not replace notes under mutilated condition and without compensation to bearer. Mutilated
condition: (1) identification is impossible, (2) signs of filing, clipping, (3) notes lost more than 2/5 of
surface or ALL signature. ONLY SIGNATURE OF PRESIDENT IS MISSING.
e. P100 note which is 364 years old
NO. Retirement of old notes. BSP may call for replacement of notes (more than 5 yrs old). Notes shall
remain legal tender for 1 year from date of call. After period, such shall cease to be legal tender but can be
exchanged at par and without charge in BSP during following year. After said period, notes and coins not
exchanged shall cease to be a liability of BSP and shall be demonetize. IF BSP HAS CALLED FOR
REPLACEMENT, NO.
f. P25 for denominations of 10c
YES. Maximum amount of coins to be considered as legal tender is P100.00 for denominations of 1sentimo, 5-sentimo, 10-sentimo, and 25-sentimo coins. P25 IS WELL WITHIN THE LIMIT.
5. CHAPTERS 1, 4 AND 5
Bank p. 2
Entities engaged in lending of
funds obtained in the form of
deposits. Sec. 3.2 GBL

Quasi Bank p. 37
Entities engaged in borrowing of funds, through the issuance , endorsement or
assignment with recourse to acceptance of deposit substitutes for purposes of
relending or purchasing of receivables and other obligations. Sec. 4 GBL
In this connection, deposit substitutes is an alternative form of obtaining funds
from the public, other than deposits, through the issuance, endorsement, or
acceptance of debt instruments for the borrowers own account, for the purpose
of relending or purchasing of receivables and other obligations. These
instruments may include but need not be limited to bankers acceptance,
promissory notes, participations, certificates of assignment and similar
instruments with recourse and repurchase agreements Sec. 94 NCBA

Commercial Bank p. 124

Savings/Mortgage Bank - I couldnt find it in the

General powers incident to corporations

All such powers as may be necessary to carry on the
business of commercial banking such as
o accepting drafts and issuing letters of credit
o Discounting and negotiating Promissory
Notes, drafts, Bills of Exchange, and other
evidences of debt
o Accepting or creating demand deposits
o Receiving other types of deposits and deposit
substitutes
o buying and selling foreign exchange and gold
or silver bullion acquiring marketable bonds
and other debt securities
o extending credit, subject to rules as the
monetary board may promulgate
these
rules
may
include
determination for bonds and other
debt
securities
eligible
for
investment, the maturities and
aggregate
amount
of
such
investment Sec. 29

Receiver p. 231
The grounds and procedures for
placing a bank under receivership
or liquidation, as well as the
powers and duties of the receiver
or liquidator appointed for the
bank shall be governed by the
provisions of Sections 30, 31, 32,
and 33 of the New Central Bank
Act: Provided, That the petitioner
or plaintiff files with the clerk or
judge of the court in which the
action is pending a bond, executed
in favor of the Bangko Sentral, in
an amount to be fixed by the court.
This Section shall also apply to the
extent possible to the receivership
and liquidation proceedings of
quasi-banks.- Sec. 69 GBL

book/notes. So I used Blacks Law. Sorry!

An institution in the nature of a bank, formed or
established for the purpose of receiving deposits
of money, for the benefit of the persons
depositing, to accumulate the produce of so much
thereof as shall not be required by the depositors,
their executors or administrators, at compound
interest, and to return the whole or any part of
such deposit, and the produce thereof, to the
depositors, their executors or administrators,
deducting out of such produce so much as shall be
required for the necessary expenses attending the
management of such institution, but deriving no
benefit whatever from any such deposit or the
produce thereof.

Conservator p. 225
The grounds and procedures for
placing
a
bank
under
conservatorship, as well as, the
powers and duties of the
conservator appointed for the bank
shall be governed by the provisions
of Section 29 and the last two
paragraphs of Section 30 of the
New Central Bank Act: Provided,
That this Section shall also apply to
conservatorship proceedings of
quasi-banks. - Sec. 67 GBL

Bank Depositor Minor p. 97

Minors are vested with the special capacity and power, in their own
right and in their own names, to make savings or time deposits with
and withdraw the same as well as receive interests thereon form
banking institutions, without assistance of their parents or guardians,
provided the following are met
1. at least 7 years of age
2. able to read and write
3. have sufficient discretion
4. not otherwise disqualified by any other incapacity
Parents may nevertheless deposit for their minor children and
guardians in their wards.
Minors in their own right and in their own name may also make
deposits and withdraw in Thrift Banks and may receive dividends

Liquidator p. 230
In case of the voluntary liquidation
of any bank organized under the
laws of the Philippines, or of any
branch or office in the Philippines
of a foreign bank, written notice of
such liquidation shall be sent to the
Monetary Board before such
liquidation is undertaken, and the
Monetary Board shall have the
right to intervene and take such
steps as may be necessary to
protect the interests of creditors.
Sec. 68 GBL

Bank Depositor
- I dont really get what hes asking for
here but in the book, along with the subchapter regarding Minors as depositors,
the only other depositor Dizon refers to
is Corporations. So I really dont know.
Check out p. 96 nalang.

and interest. Provided however that if any guardian shall give notice
in writing to any thrift bank not to make payments of deposits,
dividends or interest to the minor of whom he is the guardian, then
such payment shall be made only to the guardian.

6.
a.

How state discourages and regulates loans obtained from a bank by its own director, officers and
stockholders.

b. How diffusion of bank ownership is carried out

Ownership of stocks in banks by corporations

The total voting stocks which any corporation, including its wholly or majority owned
subsidiaries, may own in any bank shall not exceed thirty percent (30%) of the voting stock of
that bank

In the case of a corporation which is wholly owned, or the majority of the voting stock of which is
owned, by any one person or by persons related to each other within the third degree of
consanguinity or affinity, that corporation may own not more than twenty percent (20%) of the
voting stock of any bank.

c. The process of liquidation of a bankrupt bank and the defenses available if any to such move.
Procedure for liquidation - The receiver shall then:
1.
File ex parte with the proper regional trial court, and without the requirement of prior notice or
any other action, a petition for assistance in the liquidation of the institution pursuant to a liquidation
plan adopted by the Philippine Deposit Insurance Corporation in the case of a bank or by the Monetary
Board in the case of a quasi-bank;
2.
Upon acquiring jurisdiction, the court shall, upon motion by the institution, assist the
enforcement of individual liabilities of the stockholders, directors and officers, and decide on other issues
as may be material to implement the liquidation plan adopted; and
3.
Convert the assets of the institution to money, dispose of the same to creditors and other parties,
for the purpose of paying the debts of such institution in accordance with the rules on concurrence and
preference of credit under the Civil Code of the Philippines and he may, in the name of the institution,
institute such actions as may be necessary to collect and recover accounts and assets of, or defend any
action against, the institution.

7. GULLAS V. PNB
FACTS: The United States Veterans Bureau issued a warrant payable to the order of Francico Sabectoria Bacos.
Paulino Gullas and Pedro Lopez signed as endorsers of the aforementioned check. Thereupon, it was cashed by
the Philippine National Bank. Subsequently, the treasury warrant was dishonored. The bank sent notices by mail
to Mr. Gullas which could not be delivered to him at that time because he was in Manila. The bank then
proceeded to apply the outstanding balances of Mr. Gullas account with the part payment of the subject check.
ISSUE: Whether or not PNB properly set off the account of Gullas with the payment of the indorsed check.

HELD: No. Although PNB had with respect to the deposit of Gullas a right of set off, its remedy was not
enforced properly. Notice of dishonor is necessary in order to charge an indorser and that the right of action
against him does not accrue until the notice is given. Prior to the mailing of notice of dishonor, and without
waiting for any action by Gullas, the bank made use of the money standing in his account to make good for the
treasury warrant. The action of the bank was prejudicial to Gullas. As such, Gullas should be awarded nominal
damages because of the premature action of the bank.
8. CHAPTER 3
Secrecy of Bank Deposits
Purpose:
(1) give encouragement to the people to deposit their money in banking institution
(2) discourage private hoarding of depositors so that could be used in economic development
All deposits of whatever nature with bas including investment bonds are considered absolutely confidential and
may not be examined, inquired or looked into even by government officials
RA 8367 prohibits inquire or disclosure of deposits
Exception: (1) written permission of depositor, (2) impeachment, (3) order of court in case of bribery or
dereliction or (4) subject matter of litigation
It shall also apply to foreign currency deposits with the only exception of written permission
In Islamic banks that only exceptions are: (1) inspection of bank auditor, (2) written permission by depositor (3)
subject matter of litigation
Exceptions to Secrecy of Deposits
Accounts can be garnished to insure satisfaction of judgment as there is no real inquiry and some disclosure are
merely incidental
Congress not intended for debtors to escape
General exemption against garnishment shall not apply to foreign transients
Foreign currency deposits of a foreigner who was convicted of crime of rape may be garnished to satisfy
judgment
Under RA 1405 and Anti-Money Laundering Act, the secrecy of deposits do not apply
BSP can also inquire in deposits for periodic and special examinations
Ombudsman has the In-Camera Inspection power to look into deposits provided that there is a pending case is
court and
1.) the account must be properly identified
2.) inspection limited to the subject matter
CIR can also look into deposits to determine gross estate of a decedent or he has applied for compromise tax
liability
9. CHAPTER 3
Rules of RA 1405 Secrecy of Bank Deposits Act
All deposits of whatever nature with banks or banking institutions in the Philippines including investments
in bonds issued by the Government of the Philippines, its political subdivisions and its instrumentalities, are
hereby considered as of an absolutely confidential nature and may not be examined, inquired or looked into
by any person, government official, bureau or office, except upon 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.Sec 2
It shall be unlawful for any official or employee of a banking institution to disclose to any person other than
those mentioned in Section two hereof any information concerning said deposits. Sec. 3
Sanction
Any violation of this law will subject offender upon conviction, to an imprisonment of not more than five
years or a fine of not more than twenty thousand pesos or both, in the discretion of the court. Sec. 5
Exceptions
Upon written permission of depositor
In cases of impeachment
Upon order of competent court in cases of bribery, dereliction of duty of public officials or
in cases where money deposited or invested is the subject matter of litigation
Purpose of Bank Secrecy - policy of the Government to give encouragement to the people to deposit their
money in banking institutions and to discourage private hoarding so that the same may be properly utilized by
banks in authorized loans to assist in the economic development of the country. Sec. 1
Since this is a hypothetical case, Im not really sure of the answer, but Im guessing bank and manager are both
liable under Sec. 5 of the BSL since the scenario doesnt fall under the exceptions.
10. CHAPTER 1
Classification of banks
1.

Commercial banks
Commercial banks, including Government banks and foreign banks with existing local branches, may
invest in equities of allied undertakings. Equity investments shall not be included in non-related
activities.

2.

Thrift banks
Thrift banks shall include savings and mortgage banks, private development banks, and stock
savings and loan associations organized under existing laws and any banking corporation that may be
organized for the following purposes:

1.
Accumulating the savings of depositors and investing them together with capital loans secured by
bonds, mortgages in real estate and insured improvements thereon, chattel mortgage, bonds, and other forms of
security or in loans for personal and household finance, whether secured or unsecured, or in financing for home
building and home development, in readily marketable and debt securities; in commercial papers, and accounts
receivables, drafts, bills of exchange, acceptances or notes arising out of commercial transactions; and in such
other investments and loans which the Monetary Board will determine as necessary in the furtherance of
national economic objectives;
2.
Providing short term working capital, or medium- and long-term financing to businesses engaged in
agriculture, services, industry and housing; and
3.
Providing diversified financial and allied services for its chosen market and constituencies especially
for small and medium enterprises and individuals.
3.

Rural banks

The rural banking system is the need to promote comprehensive rural development with the end in view of the
following:
1.
2.
people; and

A more equitable distribution of opportunities, income and wealth;

A sustained increase of goods and services produced by the nation for the benefit of the

3.

An expanding productivity as a key to raising the quality of life for all.

11.CHAPTER 1
Quasi-banks entities engaged in the borrowing of funds through the issuance, endorsement, or assignment
with recourse or acceptance of deposit substitutes for purposes of relending or purchasing of receivables and
other obligations
Banks entities engaged in the lending of funds obtained in the form of deposits
12. CHAPTER 9
Unclaimed balances includes credits or deposits of money, bullions, security and any evidence of
indebtedness with banks, loan associations and trust corporations in favor of any person (1) known to be dead or
(2) who has not made further deposits or withdrawal during the preceding 10 years or more
Governed by Act No. 3936 Requiring Banks to Transfer Unclaimed Balances to Insular Treasury
Such unclaimed balances, together with crease and proceeds shall be deposited to the Treasurer to the credit of
the government.