FINAL EXAM

BANKING LAWS

INSTRUCTIONS:

1. Answer the questions briefly, using the three-paragraph rule.

2. Do not copy-paste answers. Craft your sentences and paragraphs in your own words.
3. Submit your exam:

a. In Microsoft word format with size 14 font;

b. With a file name using the following format: BankingLaws_Finals_Andes, Jay;
c. To the following email address: andesjaym@gmail.com;
d. On or before 11:59 PM of January 19, 2023. Late submissions will not be entertained.

Good luck.

I.

On December 1, 2016, LLC, Inc. obtained a loan in the amount of P10,000,000.00 from BC Bank. The
loan was secured by a real estate mortgage (REM) over a parcel of land covered by TCT No. 1234.
BC Bank eventually sold its rights and interests over the loan and mortgage contract to MS. Inc,, a
juridical person. MS. Inc, thereafter, also assigned the same rights and interests to Oyala, Inc., also a
juridical person.

On December 1, 2017, after LLC, Inc. failed to pay the loan which already amounted to
P16,000,000.00, Oyala, Inc. initiated extrajudicial foreclosure proceedings of the real estate mortgage.
During the Auction Sale on January 30, 2018, Goisono, Inc., a juridical person, was declared the
highest bidder and a certificate of sale was issued in its favor.

On February 13, 2018, the certificate of sale was registered and annotated on TCT No. 1234. On
March 30, 2018, or two months after the foreclosure sale, LLC, Inc. attempted to redeem the property
from Goisono, Inc. Goisono, Inc. informed LLC, Inc. that it no longer had the right to redeem the
property.

a. Is Goisono, Inc. correct? (10 pts.)

b. Would your answer in item (a) be the same if, instead of Goisono, Inc., a natural person
by the name of J. Andes was declared the highest bidder who subsequently registered
the certificate of sale on February 13, 2018? Explain your answer briefly. (10 pts.)

II.

Ian M, a minority stockholder of BC Bank, filed before RTC Legazpi City a Complaint against the directors
and officers of BC Bank for violation of Sections 31 to 34 of the Corporation Code which prohibit self-
dealing and conflicts of interest of directors and officers. The Complaint was docketed under Civil Case
No. 1234. He claims that these self-dealings have led to massive loss to depositors and creditors alike
owing to the insolvency to which the bank has been plunged. Pursuant thereto, Ian M prayed that BC
Bank be placed under receivership and appoint the PDIC as receiver pursuant to the New Central Bank
Act.

The directors and officers of BC Bank raised, as issue, the RTC’s lack of jurisdiction to hear and decide
the case. RTC Legazpi City brushed aside said argument pursuant to its mandate as a court of general
jurisdiction.

a. Are the directors and officers of BC Bank correct? (10 pts.)

 b. Assume that, during the pendency of the case filed by Ian M, the Monetary Board (MB) assessed
and evaluated the condition of BC Bank in order to determine whether there was a need to place
BC Bank under receivership.

Assume that, during the pendency of the case filed by Ian M, the Monetary Board (MB) assessed
and evaluated the condition of BC Bank in order to determine whether there was a need to place
BC Bank under receivership.

Ian M found out about the evaluation being done by the MB. Inside sources informed Ian M that
the MB will most probably rule against placing BC Bank under receivership. Thus, in Civil Case
No. 1234, Ian M filed a Motion for the Issuance of a Temporary Restraining Order and Injunction
against the Monetary Board praying that the MB be enjoined from further proceeding with said
investigation. Ian M argued that both the RTC and the MB had concurrent jurisdiction over the
issue on receivership and postulated that, in instances of concurrent jurisdiction, the court which
takes cognizance of the case acquires jurisdiction over the same to the exclusion of all others.
The RTC having already assumed jurisdiction, the MB was thus excluded from conducting its
own determination of whether BC Bank should be placed under receivership.

Is Ian M’s remedy correct? (10 pts.)

III.

On October 1, 2019, the Monetary Board (MB) placed BC Bank under receivership. The PDIC, acting as
receiver, filed a Petition for Assistance in the Liquidation of BC Bank with RTC Legazpi City. During the
pendency of said petition, PDIC also filed with RTC Ligao City a separate civil action against J. Andes
for recovery of a sum of money, alleging that prior to BC Bank’s closure, J. Andes obtained a loan from
it in the amount of P3,000,000.00. In his answer, J. Andes argued that the PDIC resorted to a wrong
remedy since PDIC should have included this claim in its Petition for Assistance in the Liquidation of BC
Bank in RTC Legazpi City.

Is J. Andes correct? (10 pts.)

~nothing follows~