BANKING LAWS Atty. Nicasio Cabaneiro Final Examinations October 2010 Part I.

(True or False ) 20 points 20 items/statements Part II (Matching Type) 40 points 1. At this stage, the launderer inserts the dirty money into a legitimate financial institution. PLACEMENT 2. It involves sending the money through various financial transactions to change its form and make it difficult to follow. LAYERING 3. At this stage, the money re-enters the mainstream economy in legitimate-looking form. INTEGRATION 4. Refers to the person holding title over the goods, documents, or instruments subject of a trust receipt transaction, and any succesor-in-interest of such person. ENTRUSTER 5. Refers to participation certificates, debt instruments or similar instruments issued by the SPV. INVESTMENT UNIT INSTRUMENTS (IUIs) 6-10 Part III (Fill in the blanks) 15 points 1. TRUST BUSINESS refers to any activity resulting from a trustor-trustee relationship involving the appointment of a trustee by a trustor for the administration, holding, management of funds and/or properties of the trustor by the trustee for the use, benefit or advantage of the trustor or of others called beneficiaries. 2. When there is a covered transaction report made, and the court has, in a petition filed for the purpose ordered seizure of any monetary instrument or property, in whole or in part, directly or indirectly, related to said report, the Revised Rules of Court in CIVIL FORFEITURE applies. 3. It is basic that after consolidation of title in the buyers name for failure of the mortgagor to redeem, WRIT OF POSSESSION becomes a matter of right and its issuance to a purchaser in an extra-judicial foreclosure is merely a ministerial function. 4. ROPOA refers to real and other properties owned or acquired by a financial institution in settlemet of loans and receivables, including real properties, shares of stock and chattels formerly constituting collaterals for secured loans. 5. DEPOSIT means the unpaid balance of money or its equivalent received by a bank in the usual course of business and for which it has given or its obliged to give credit.

Part IV (Essay based on 2010 Bar Exam in Commercial Law) 25 points 1. When OCCIDENTAL Bank folded up due to insolvency, Manuel had the following deposits in his name: Php 20, 000 in savings deposit; Php 250, 000 in time deposit; Php 50, 000 in a current account; Php 1M in a trust account; and Php 3M in money market placement. Under the Philippine Deposit Insurance Corporation Act, how much could Manuel recover? Explain. 2. How do you characterize the legal relationship between a commercial bank and its safety deposit box client? 3. Why are banks required to maintain reserves against their deposits and deposit substitutes? State one of three purposes for these reserves.