ATENEO LAW SCHOOL

BANKING LAW I
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INSTRUCTIONS
This Examination consists of EIGHTEEN (18) Multiple Choice Questions
on FIVE (5) PAGES. Read each Item VERY CAREFULLY. Choose the BEST
Answer for each Question and write down the Letter corresponding to your
choice. No explanations are necessary and none will be given credit. Answer
this Examination sequentially. Good luck! (5.5 points each, 1 point bonus)
1.

2.

3.

4.

The General Banking Law of 2000 applies

a.

to all types of banks in a suppletory manner.

b.

only to banks which are not government owned or controlled.

c.

to savings and mortgage banks, non-stock savings and loans

associations, and private development banks.

d.

to the operation of branches of foreign banks in the Philippines.

Which of the following negates a charge that an entity is engaged in

banking business?
a.

If it obtains funds only from qualified depositors.

b.

If it invests, rather than lends, the funds obtained.

c.

If at any given time, the number of its depositors falls below twenty
(20).

d.

If it has not obtained the requisite authority to operate as such from

the Bangko Sentral Ng Pilipinas (BSP).

The distinction between deposits and deposit substitutes is material in

determining
a.

whether an entity accepting either one is subject to supervision by

the BSP.

b.

whether a commercial bank that accepts both will need a separate

license from the BSP.

c.

what degree of diligence a bank is required to exercise in handling

the same.

d.

whether a universal bank may use the same purposes of lending or

relending, as the case may be.

A bank teller fails to observe the standard procedures of a bank in

verifying the signature of the drawer of a check and honors the same
when presented for payment by a person who forged the signature of the
drawer on the check entrusted to him. What defense can a bank raise to
negate or mitigate its liability to the drawer whose signature was forged?
a.

The drawer is guilty of contributory negligence.

b.

The act of the bank teller is unauthorized.

c.

The bank exercised due diligence in the selection and supervision

of its employees.

d.

The bank is not infallible.

5.

6.

7.

8.

A bank is NOT liable for its failure to observe the degree of diligence as
required by its fiduciary duty under Section 2 of the General Banking Law
of 2000
a.

If such failure was prior to the enactment of the General Banking

Law of 2000.

b.

If no actual damage was suffered by the depositor.

c.

If the transaction involves money market placements.

d.

If there is a contractual stipulation between the bank and the

depositor supported by valuable consideration which lowers the
degree of diligence required to be exercised by the bank to that of a
good father of the family.

A bank may be deemed as a mortgagee in good faith even if it did not

a.

ascertain the mortgagors title or ownership over the property

mortgaged.

b.

ascertain the identity of the person borrowing the owners duplicate

original title of property mortgaged before allowing such person to
borrow such title for photocopying purposes.

c.

check both the owners duplicate original title to the property

mortgaged and the title thereof in the registry of deeds.

d.

conduct an ocular inspection of the property, provided that there is

nothing in the title to the property which would arouse suspicion
and require an ocular inspection.

A universal bank and a commercial bank differ in terms of their power

a.

to invest in non-financial allied enterprises.

b.

to create and accept demand deposits.

c.

to act as an investment house.

b.

to perform quasi-banking functions.

Rural banks and cooperative banks are essentially differ in terms of

a.

purpose.

b.

powers.

c.

governing law in matters other than organization, ownership, capital

requirements, powers, supervision, and general conduct of
business.

d.

being authorized to create or accept demand deposits even without

Monetary Board approval.

9.

10.

11.

12.

The distinction between the three (3) modes of entry of foreign banks in
the Philippines under the Foreign Banks Liberalization Act (Republic Act
No. 7221) is immaterial in determining
a.

whether or not a foreign bank may avail of more than one (1) mode
of entry.

b.

whether or not Monetary Board approval is required for such entry.

c.

whether or not a head office guarantee is required.

d.

whether or not the foreign bank shall perform the same functions,
enjoy the same privileges, and be subject to the same limitations
imposed upon a Philippines bank of the same category.

The head office of a foreign bank authorized to operate branches in the

Philippines is sued in a Philippine court by a payee of a check drawn by a
depositor of the Philippine branch of such foreign bank which refused to
honor a check notwithstanding that funds were sufficient. What defense
can the head office raise to avoid liability to such payee?
a.

Philippine courts have no jurisdiction over the head office of the

foreign bank.

b.

The head office of a foreign bank is not liable for the unauthorized
acts of its Philippine branch

c.

The head office guarantee is applicable only to liabilities to

depositors.

d.

The bank is not liable to the payee for dishonor of checks.

That a deposit is in the nature of a loan

a.

is inconsistent with the fiduciary duty imposed on banks in the

handling thereof.

b.

means that the same may be classified as a preferred credit.

c.

means that the bank which has loaned the depositor money has a
right to compensation if both loan obligations are already due and
demandable, even without prior consent of the depositor.

d.

means that in cases where banks are placed under receivership or

liquidation, a depositor has no other means to recover on his
deposit except through such receivership and liquidation
proceedings where he will be treated as a creditor of the bank.

A time deposit differs from a demand deposit in that

a.

numbered accounts are not allowed for time deposits, but are
allowed for demand deposits.

b.

instruments issued pursuant to a time deposit are generally nonnegotiable, while instruments issued pursuant to a demand deposit
are negotiable.

c.

funds in a time deposit account earn interest, while funds in a

demand deposit account cannot earn interest.

d.

funds in a time deposit account cannot be withdrawn at any time,

while funds in a demand deposit account.

13.

14.

15.

A bank dishonors a check drawn against an account with insufficient

funds. Under which circumstance can the bank be held liable for such
dishonor?
a.

If the depositor has another account in the bank with sufficient

funds to cover the amount of the check drawn but the bank did not
apply such funds to cover the said check.

b.

If the bank did not notify the depositor that it had previously availed
of its legal right to compensation and applied the funds in the
checking account in payment of the depositors loan to the bank,
resulting in the insufficiency of the funds to cover the amount of the
check drawn.

c.

If, before dishonoring the check, the bank did not notify the
depositor that his funds are insufficient to cover the amount of the
check drawn so as to give him an opportunity to deposit sufficient
funds.

d.

If the bank does not allow the depositor to deposit the funds
needed to cover the check drawn within a reasonable time after
presentment in order to avoid dishonor of said check.

A bank is liable to the depositor if it allows withdrawal of the funds in the

depositors account by someone who is not actually authorized by the
depositor, but who
a.

presents the passbook and a withdrawal slip signed by the

depositor.

b.

surrenders the certificate of time deposit.

c.

appears as an authorized signatory of a corporate depositor in the

latest board resolution submitted to the bank, but is actually no
longer connected with the corporate depositor.

d.

appears in the bank records as the depositor, but is actually merely

a trustee for the true owner of the funds.

What acts can a bank lawfully do or omit to do without violating its duty to
exercise extraordinary diligence in the handling of deposits?
a.

Allowing a crossed check to be cashed provided that the payee is

personally known to the bank.

b.

Accepting as deposit a check which is not indorsed by the payee,

provided that the check is a managers check.

c.

Closing a demand deposit account without prior notice to a

depositor who has been misusing such account by repeatedly
overdrawing against it.

d.

Disclosing information regarding an and/or savings account where

one of the two (2) depositors has given his written permission for
such disclosure.

16.

17.

18.

The right to secrecy of bank deposits

a.

being part of municipal law, does not apply to deposits in branches

of foreign banks in the Philippines.

b.

is a constitutional right which may, however, be regulated by

statute.

c.

cannot be invoked in the absence of an express statutory provision

d.

if violated, will render the information obtained thereby inadmissible

as evidence in any proceeding against the depositor.

A public officer is charged with violation of the anti-graft and corrupt

practices act before the Office of the Ombudsman. The Ombudsman
requests a bank to disclose information regarding the accounts in the
name of the public officers immediate family. What principle or ground
may the bank invoke to resist such inquiry?
a.

An inquiry into bank deposits cannot be had at the preliminary

investigation level.

b.

No inquiry into bank deposits can be had in the absence of a court

order.

c.

No inquiry can be made except into bank accounts of the person

charged.

d.

The Office of the Ombudsman has no power to inquire into bank

deposits.

An ex-President of the Philippines is accused of committing the crimes of

plunder and money-laundering. In the course of the proceedings, a Office
of the Special Prosecutor filed a motion with the Sandiganbayan for the
issuance of an order directing the examination of such ex-Presidents U.S.
Dollar account. What ground can be validly invoked by the ex-President
to oppose such motion?
a.

A foreign currency deposit cannot be inquired into without the

consent of the depositor.

b.

Plunder is not an exception to the prohibition against disclosure

under the Foreign Currency Deposit Act.

c.

Money-laundering is not an exception to the prohibition against

disclosure under the Foreign Currency Deposit Act.

d.

Assuming that money-laundering is an exception to the prohibition

against disclosure under the Foreign Currency Deposit Act, the
court must first find probable cause of money-laundering since the
instant charges do not fall within the cases where no court order is
required.
- nothingness follows -

Assignment for Friday the 13th of August 2010: Rest of Chapter on Deposit;
Rest of Outline for the Semester will be distributed then.