1.

The following are circumstances which the 1-year redemption period applies to foreclosure, except:

A. Frank borrowed P1,000,000 from Shelby and mortgaged his land as collateral. Subsequently, he failed to
pay and his land was foreclosed.
B. Frank borrowed P1,000,000 from Payb Six Bank, a duly registered bank in the Philippines, and
mortgaged his land as collateral. Subsequently, he failed to pay and his land was foreclosed.
C. XYZ Partnership borrowed P1,000,000 from Payb Six Bank, a duly registered bank in the
Philippines, and mortgaged its land as collateral. Subsequently, the corporation failed to pay and
its land was foreclosed.
D. XYZ Partnership borrowed P1,000,000 from Shelby, and mortgaged its land as collateral. Subsequently,
the corporation failed to pay and its land was foreclosed.

2. The rule which prohibits directly or indirectly, for himself or as the representative or agent of others, to
borrow from such bank nor shall he become a guarantor, indorser or surety for loans from such bank to others,
or in any manner be an obligor or incur any contractual liability applies to the following to except:

A. Directors
B. Officers appointed only by the President
C. Officers as stated in the by-laws
D. The rule applies to all of the stated persons

3. Which of the following activities is a Universal Bank not allowed to engage?

A. Directly engaging in the business of insurance as insurer

B. Investing in a real-estate business
C. Invest in another insurance company and allow the latters agents to offer insurance policies within the
banking premises
D. Engage in investment housing activities

4. Complete the provision:

Within ______ years from the effectivity of this Act and subject to guidelines issued pursuant to the Foreign
Banks Liberalization Act, the Monetary Board may authorize a foreign bank to acquire up to __________
percent of the voting stock of only ______ bank organized under the laws of the Republic of the Philippines:

a. 2; 25%; 5
b. 3; 50; 2
c. 7; 100%; 1
d. 5; 75%; 3

5. In case of a bank merger or consolidation, the number of directors shall not exceed:

a. 21
b. 15
c. 5
d. 10
ESSAY

1. Explain the Doctrine of Fit and Proper Rule.

Definition rani.

2. Client sent a messenger to effect a deposit in his savings account. The messenger left the passbook with teller
to do other errands and because the transaction took time to conclude. Unfortunately, teller gave the passbook to
another person, leading to an unauthorized withdrawal the next day. Client sues bank. Is the bank liable?
Decide.

Yes, the bank is liable for the tellers negligence. Under the law, a banking institution is primarily liable for acts
committed by its employees that are within the scope of their employment. In this case, the teller committed the
negligent act during banking hours and within the scope of her employment.

3. Bank A dismissed a teller after she mistakenly gave a clients passbook to another person. Teller asserted that
no harm resulted from the transaction since the passbook was returned to the rightful owner. Teller sues bank for
illegal dismissal. Will the case prosper?

No, the case will not prosper. The banks relationship with its employees is founded on trust. As such, the law
allows banking institutions to dismiss employees who have committed acts that would put their trustworthiness
in question. In this case, the tellers negligence could have resulted to losses to both the bank and the depositor.
This incidence could lead to the banks loss of trust on the said employee. Thus, the teller could be terminated
by virtue of the banks loss of confidence.

4. What is a certificate of deposit? Is it a negotiable instrument?

A certificate of deposit is an acknowledgment from the bank that it has received the clients deposit. It can either
be negotiable or non-negotiable. It becomes negotiable if the certificate is the name of the depositor or his order.
This will allow the document to be negotiated to other holders.

5. What is the Single Borrowers Limit?

Definition rani.