REGULATORY FRAMEWORK FOR BUSINESS TRANSACTIONS – NEW TOPICS

MCQ (NEW TOPICS/SPECIAL LAWS)1

 Coverage:
o Banking Laws
 General Banking Law
 New Central Bank Act
 Anti-Money Laundering Act
 PDIC Law
 Law on Bank Secrecy
o Securities Regulation Code
o Intellectual Property Code
o Insolvency Law
o Corporate Rehabilitation

1. X is a depositor of AAA Bank. She has three (3) deposit accounts all under
her name. One, in checking account, one in saving account and another one in
time deposit account. Each account has a balance of Php250,000. AAA Bank
became insolvent. Philippine Deposit Insurance Corporation closed the Bank.
X therefore is unable to withdraw from all of the accounts. She then filed
her claims with the Philippine Deposit Insurance Corporation. Which
statement is most accurate?
a. X can claim a total of Php500,000 for all the three (3) accounts.
b. X can only claim from one (1) account of Php250,000.
c. X can claim a total of Php750,000 from all the three (3) accounts.
d. X cannot claim anything from any of the deposit accounts.

2. The Bank Secrecy Law (RA 1405) prohibits disclosing any information about
deposit records of an individual without court order except -
a. In an examination to determine gross estate of a decedent.
b. In an investigation for violation of Anti-Graft and Corrupt Practices.
c. In an investigation by the Ombudsman.
d. In an impeachment proceeding.

3. XYZ Corporation bought ten (1 0) units of Honda Civic from CCC Corporation.
ABC Bank granted a loan to XYC Corporation which executed a financing
agreement which provided for the principal amount, the installment payments,
the interest rates and the due dates. On due dates of the installment
payments, XYZ Corporation was asked to pay for some handling charges and
other fees which were not mentioned in the Financing Agreement. Can XYC
Corporation refuse to pay the same?
a. No, because handling charges and other fees are usual in certain
banking transactions.
b. Yes, because ABC Bank is required to provide XYZ Corporation not only
the amount of the monthly installments but also the details of the
finance charges as required by the Truth in Lending Act.
c. No, because the Finance Agreement is a valid document to establish the
existence of the obligation.
d. Yes, because legally, finance charges are never allowed in any banking
transaction.

4. Which of the following is an exception to the secrecy of bank deposits which

are in Philippine Pesos, but NOT an exception to the secrecy of foreign
currency deposits?
a. Upon Bangko Sentral ng Pilipinas (SSP) inquiry into or examination of
deposits or investments with any bank, when the inquiry or examination
is made in the course of the SSP's periodic special examination of
said bank to ensure compliance with the Anti-Money Laundering Act
(AMLA);
b. Upon Philippine Deposit Insurance Corporation (PDIC) and SSP inquiry
into and examination of deposit accounts in case there is a finding of
unsafe or unsound banking practice;
c. Upon inquiry in cases of impeachment;
d. Upon inquiry by the Commissioner of Internal Revenue in the event a
taxpayer files an application to compromise his tax liabilities on the
ground of financial incapacity.

1
Lifted from BAR Exam Questions & Quizzers
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5. The government agency granted with the power of supervision and examination
over banks and non-bank financial institutions performing quasi-banking
functions, to ensure that the conduct of its business is on a sound
financial basis that will provide continued solvency and liquidity is -
a. The Philippine Deposit Insurance Corporation;
b. The Bangko Sentral ng Pilipinas;
c. The Anti-Money Laundering Council;
d. The Securities and Exchange Commission.

6. X maintains a savings deposit in the amount of Php·1 Million with ABC Bank
Corporation. X also has obtained a loan from ABC Bank Corporation in the
amount of Php1 Million. In case of default,
a. ABC Bank can set-off the loan from the savings account being
maintained by X with ABC Bank.
b. Set-off is not possible because legal compensation is not allowed in
banking transaction.
c. Deposit accounts are usually earmarked for specific purpose hence
offsetting is not legally possible.
d. Off -setting is not possible because the obligation of X is a "simple
loan".

7. XYZ Corporation is engaged in lending funds to small vendors in various

public markets. To fund the lending, XYZ Corporation raised funds through
borrowings from friends and investors. Which statement is most accurate?
a. XYZ Corporation is a bank.
b. XYZ Corporation is a quasi-bank.
c. XYZ Corporation is an Investment Company.
d. XYZ is none of the above.

8. X is being charged for violation of Anti-Graft and Corrupt Practices because

he is suspected of having accumulated unexplained wealth. X maintains
deposit accounts with ABC Bank. The Ombudsman filed criminal cases against X
before the Sandiganbayan. Can the Court issue subpoenas against ABC Bank to
produce all documents pertaining to all the deposit accounts of X?
a. Yes, because there is already a pending case and provided the subpoena
must be specific as to which account.
b. Yes, it is enough that the specific bank is identified.
c. No, because the issuance of the subpoena has no real legal basis.
d. Even without a subpoena, information about the deposit accounts of X
can be submitted to the Sandiganbayan because it will be used in a
pending case.

9. X, a private individual, maintains a dollar deposit with ABC Bank. X is

suspected to be the leader of a Kidnap for Ransom Gang and he is suspected
of depositing all ransom money in said deposit account which are all in US
Dollars. The police want to open said account to know if there are really
deposits in big amounts. Which statement is most accurate?
a. The same rules under Secrecy of Bank Deposit Act will apply.
b. An approval from the Monetary Board is necessary to open the account.
c. Because the deposit is in US Dollars, it is covered by the Foreign
Currency Deposit Act which allows disclosure only upon the written
permission of the depositor.
d. Approval from the Court is necessary to order disclosure of the
account.

10. X is a depositor of AAA Bank. She has three (3) deposit accounts all
under her name. One, in checking account, one in saving account and another
one in time deposit account. Each account has a balance of Php250,000. AAA
Bank became insolvent. Philippine Deposit Insurance Corporation closed the
Bank. X therefore is unable to withdraw from all of the accounts. She then
filed her claims with the Philippine Deposit Insurance Corporation. Which
statement is most accurate?
a. X can claim a total of Php500,000 for all the three (3) accounts.
b. X can only claim from one (1) account of Php250,000.
c. X can claim a total of Php750,000 from all the three (3) accounts.
d. X cannot claim anything from any of the deposit accounts.

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11. The Bank Secrecy Law (RA 1405) prohibits disclosing any information
about deposit records of an individual without court order except -
a. In an examination to determine gross estate of a decedent.
b. In an investigation for violation of Anti-Graft and Corrupt Practices.
c. In an investigation by the Ombudsman.
d. In an impeachment proceeding.

12. It is a legal scheme whereby a debtor, who has sufficient assets but
who may be unable to meet his obligations as and when they fall due, may
petition for more time within which to settle such obligations.
a. Insolvency Proceedings
b. Suspension of Payments
c. Corporate Rehabilitation
d. Voluntary Insolvency

13. Which among the following is not a function of the Bangko Sentral ng
Pilipinas?
a. As official depositary of the Philippine government.
b. As financial adviser of the Philippine government.
c. As fiscal agent of the Philippine government.
d. As the watchdog of government funds.

14. No. 1 – A bank may be may lend to a single borrower more than fifteen
(15%) of the bank’s unimpaired capital.
No. 2 – A deposit in a bank in foreign currency may be inquired into
provided the depositor gives his consent, orally or in writing.
a. Both are false.
b. Both are true.
c. No. 1 is true; no. 2 is false.
d. No. 1 is true; no. 2 is false.

15. It is a bank which creates or accepts demand deposits subject to

withdrawal by checks and primarily organized to carry on the business of
accepting drafts and issuing letters of credit, discounting and negotiating
promissory notes, receiving deposits, buying and selling foreign exchange
and gold and silver bullion and lending money against the borrower’s
security in property.
a. Rural bank;
b. Thrift bank;
c. Universal bank;
d. Commercial bank.

16. No. 1 - The Ombudsman may inquire into the bank deposit of a public
officer whose case is pending criminal investigation in the Ombudsman even
if there is no actual case filed in court.
No. 2 - A writ of garnishment directed to a bank deposit is prohibited
by law.
a. Both are false.
b. Both are true.
c. No. 1 is false; No. 2 is true.
d. No. 1 is true; No. 2 is false

17. Jose and his wife, Perla, opened and maintained the following accounts
with Allied Bank Recto. (a) Savings deposit – P300,000; (b) Demand deposit –
P400,000; (c) Time deposit - P350,000. They also have the same
deposits with the same amount in Allied Bank Makati. If Allied bank becomes
insolvent the Philippine Deposit Insurance Corporation will be bound to be
liable to the spouses for its insurance liability equivalent to
a. Two deposits.
b. One deposit.
c. Six deposits.
d. Three deposits.

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18. 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.

19. A bank is NOT liable for its failure to observe the degree of
diligence as required by its fiduciary duty under Sec. 2 of the GBL of 2000.
a. If such failure was prior to the enactment of the GBL 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 family.

20. 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 investment house.
d. To perform quasi-banking functions.

21. Rural banks and cooperative banks 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.

22. 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.

23. 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.

24. 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 non-
negotiable, while instruments issued pursuant to a demand deposit are
negotiable.

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c. Funds in 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 can.

25. A bank dishonors a check drawn against an account with insufficient

funds. Under which circumstances 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 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 depositor’s 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 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.

26. A Bank is liable to the depositor if it allows withdrawal of the funds

in the depositor’s 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.

27. What 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 manager’s check.
c. Closing a demand deposit account with prior notice to a depositor who has
been misusing such account repeatedly overdrawing against it.
d. Disclosing information regarding “and/or” savings account where one of
the two depositors has given his written permission for such disclosure.

28. 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.

29. 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 officer’s 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.

30. An ex-president of the Philippines is accused of committing the crimes

of plunder and money laundering in the course of the proceedings, the Office
of the Special Prosecutor filed a Motion with the Sandiganbayan for the
issuance of an order directing the examination of such ex-President’s U.S.

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Dollar account. What ground can be validly invoked by the ex-president to
oppose such motion?
a. A foreign currency deposit cannot be inquired 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.

31. The following are functions of banks except:

a. Deposit function
b. Loan function
c. Make collections and payments
d. Outsourcing of functions

32. It is commonly known as an account with fixed term.

a. Savings account
b. Time deposit
c. Peso deposit
d. Dollars account

33. Bank accounts maybe garnished by the creditors of the depositor. Which
of the following deposits are exempt from garnishment?
a. Foreign Currency deposits and those exempt by rules of Civil Procedure
like provision for the family for four months.
b. Deposit that have become dormant for a period of ten (10) years.
c. Money or security or other evidence of indebtedness of any kind and
interests thereon with banks, buildings and loan associations.
d. Loans and other credit accommodations with maturities of more than five
(5) years.

34. When may the Anti- Money Laundering Council (AMLC) perform an inquiry
into deposits of a person?
a. For purposes of determining his liabilities.
b. To determine his assets with proper court order.
c. Upon order of the court when there is probable cause that the deposits
are related to crime of unlawful activities defined in R.A. 9194
d. When there is written consent of the depositor.

35. The total amount of loans, credit accommodations and guarantees that
may be extended by a bank to any person, partnership, association,
corporation, or other entity is known as CEILING.
What is the percentage required of the net worth of such bank?
a. 20%
b. 30%
c. 25%
d. 35%

36. The BSP upon approval of at least five (5) members of the Monetary
Board, may also grant this kind of loan or advances in the amount not
exceeding 50% of its total deposits and deposits substitutes is known as:
a. Loans without collateral
b. Emergency loans
c. Salary loans
d. Banking loans

37. Entities engaged in the lending of funds obtained in the form of

deposits from the public.
a. Quasi Banks
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b. Banks
c. Pawnshop
d. Commercial Banks

38. Ramon was asked to enumerate the classification of Banks in the

Philippines. Upon answering he enumerated that Universal Bank, Commercial
bank, Cooperative Bank Islamic Bank, Thrift and Rural Banks are the
different classifications of Banks. After Ramon recited the professor called
Ann and asked her the same question. Ann reply and said that bank are
classified as the Central Bank, Metro Bank, Banco de Oro , Bank of the
Philippine Island and Banco Filipino. If you are called to recite too, will
you support Ramon’s answer?:

a. No. Ramon’s answer is incorrect as Ann correctly enumerated the

classifications of Bank in the Philippines
b. Yes. Ramon correctly enumerated the classifications of Bank in the
Philippines
c. No Ramon and Ann is incorrect
d. No. Ann correctly enumerated the classifications of Bank in the
Philippines

39. Which of the following statement is not true about the nature of
Banking business?

a. Banking business is fiduciary in nature and requires high standard of

integrity and performance
b. Bank must exercise utmost diligence or the highest degree of care in the
handling of deposits
c. Banking business is fiduciary in nature and require extraordinary
diligence
d. Bank must exercise that degree of care like that of a good father of the
family in the handling of deposits
e. Both A and B are correct while C and D are incorrect

40. All foreign currency deposits are considered of an absolutely

confidential in nature and shall exempt from attachment, garnishment or any
other order or process of any court, legislative body, government agency or
any administrative body whosoever. The following are the exemption to the
secrecy of foreign currency deposit except:
a. Upon the written permission of the depositor
b. Upon order of competent court in cases of violation of AMLA when it
established that there probable cause that the deposits or investments
involved are in any way related to a money laundering offense
c. The BSP and PDIC to the Corporation and/or Bangko Sentral may inquire
into or examine deposit accounts pursuant to explanation
d. The PDIC with prior approval of the Monetary Board

41. All of the following are exceptions to the Bank Secrecy Law except?
a. Upon order of the competent court in cases involving Graft and
Corrupt Practices Act
b. Examination by an independent auditor hired by the bank
c. The BSP and PDIC to the Corporation and/or Bangko Sentral may
inquire into or examine deposit accounts pursuant to explanation
d. In- camera inspection by the Ombudsman

42. The following are the grounds when the Monetary Board may close a bank
or quasi-bank except?
a. If unable to pay its liabilities (cash flow test)
b. Has insufficient realizable assets to meet its liabilities (balance sheet
test)
c. If cannot continue without involving probable losses to its depositors or
creditors.
d. It persistently conducts business in a sound and safe manner

43. Ritchie love to shop and she has a habit of paying only in cash. In
one of her shopping sprees in SM North Edsa, she got the shock of he life
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when for the first time, a store cashier refuse to accept her coins in
payment for a purchase worth not more than one hundred pesos. Ritchie was
paying 70 pesos in 25-centavo coins and twenty five pesos in 10-centavo
coin. The salesgirl told her that her coins where not legal tender. Do you
agree?
a. Yes, Coins shall be legal tender in amounts not exceeding P 75.00 for
denominations of 25 centavos and above and 25.00 for denominations of 10
centavos or less
b. No. Coins shall be legal tender in amounts not exceeding P 100.00 for
denominations of 25 centavos and above and 25.00 for denominations of 10
centavos or less
c. Yes. All notes and coins shall be legal tender for all debts , public and
private, in amounts not exceeding 100 for denominations of 1, 5, 10 and 25
sentimo coins

d. Yes. All notes and coins issued by the Bangko Sentral shall be fully
guaranteed as legal tender in the Philippines unless otherwise fixed by the
Monetary Board, that coins shall be legal tender in amounts not exceeding
Fifty pesos (P50.00) for denominations of Twenty-five centavos and above,
and in amounts not exceeding Twenty pesos (P20.00) for denominations of Ten
centavos or less.

44. Which is not true about the Bangko Sentral ng Pilipinas?

a. The Bangko Sentral shall provide policy directions in the areas of money,
banking and credit
b. The Bangko Sentral is hereby authorized to adopt, alter, and use corporate
seal which shall be judicially noticed: to enter into contracts ; to
lease or own real and personal property
c. BSP may compromise, condone or release, in whole or in part , any claim
of or settled liability to the Bangko Sentral regardless of the amount
involved under such term and condition as may be prescribed by the Monetary
Board to protect the interest of the Bangko Sentral
d. The Bangko Sentral may acquire and hold assets and incur such liabilities
in connections with its operations authorized by the provision of RA 7653.

45. Unilevel Corporation asked your legal advice regarding their plan to
use a trademark with the words “SWEET CANDY” However, there is an existing
and registered trademark using the words “TWEET CANDY” Which of the
following advices are correct.

a. The firm must abandon the plan because another company uses the trademark
Tweet Candy and there is a danger of a suit for infringement. The words
Sweet and Tweet is almost similar in sound and they can confuse or mislead
the public.
b. They can use the SWEET CANDY as long as there will be a very different
packaging and flavors so as not to mislead the public.
c. Unilevel is a well-known company and their products are patronized country-
wide, they can use the trademark SWEET CANDY because TWEET CANDY is owned
by a small-time company whose market is within Luzon only.
d. None of the above

46. Which of the following works are protected and can be copyrighted?
a. A biography containing your life, love and success.
b. Your musical compositions with or without words.
c. News of the day and other facts having the character of mere press
information.
d. A and B only

47. The Sogod Hotel chain reproduces DVD’s, distributes the copies thereof
to its hotels and makes them available to hotel guests for viewing in the
hotel guest rooms and charges a separate fee for the use of the DVD players.
Is Sogod Hotel liable for infringement?
a. No, the DVD viewing is done privately in the hotel guest rooms.
b. Yes, because the reproduction of the DVD’s violate the copyright or
economic rights of the owner of the film. The hotel charge fees for the use

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of DVD player as well as there are room charges, they earn gain from the
use of the DVD because it entices the guests to check-in in their hotel.
c. No, the DVD viewing is part of the hotel services and it is the use of the
DVD players that is charged and not the cost of the DVD.
d. None of the above

48. Narciso Planas invented a gas-saving device, manufactured and sold it

to the market without securing a patent. San Miguel Co., a rich and well-
known company, bought one gadget, dismantled the device and studied it. In
due time, the company is manufacturing a gas-saving device similar to the
invention of Narciso Planas. Before offering it for sale, the company
secured a patent. Below are the actions and defenses available for Narciso
Planas. Which of the following statements are correct?
I. Narciso Planas should first bring an action for the cancellation of
the patent illegally secured by San Miguel Company and on the said
proceedings, he must prove that he invented the device.
II. Narciso Planas, being the inventor of the gadget, is the owner of an
intellectual creation and is entitled to legal protection of said
property right from the unauthorized use of the same by another person
or entity.
III. While the cancellation proceedings are pending, Narciso Planas may
ask the court for preliminary injunction to prevent San Miguel from
manufacturing more gadgets.
IV. San Miguel Co. has a better right over the invention because they
secured a patent before selling the device.
a. Statements I and II are correct.
b. Statements I and III are correct
c. Statement IV is correct
d. Statements I, II and III are correct

49. The infringer is liable to the following:

I. An injunction for such infringement
II. Pay actual, moral and exemplary damages
III. Deliver for impounding of the articles alleged to infringe a copyright
IV. Deliver for destruction all copies, devices and other means used for
making the infringing copies
Which of the statements above are TRUE:
a. Statement 1
b. Statement 2
c. Statement 3
d. Statement 4
e. All of the above

**Good Luck & God Bless!!!**

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