III. Problem solving. Explain your answers with basis.

Mere answer of “yes” or “no” will

not get you full points. (Total 40 points)

1) Mangungupit Bank was closed by the Monetary Board on account of insolvency. At the time it
was closed, Nicole has three (3) accounts with Mangungupit Bank and each account has an
outstanding balance of P250,000.00 or a total amount of P750,000.00. How much can Nicole
recover from PDIC? (5pts.)
ANSWER: Nicole can recover only in the amount of P500,000.00 Under the PDIC law, if the
depositor has two or more accounts with the same bank, the maximum coverage he could get is
P500,000.00 which pertains to the sum of ALL such accounts.

2) Radiant Lux Jewelry (Radiant) commissioned Jessy Mendiola and her boyfriend Luis, both noted
artists, to design a diamond ring for a contract price of P100 million. (a) Who owns the diamond
ring? Explain. (b) Who owns the copyright of the design of the ring? Explain. (10pts.)
ANSWER: (a) Since Radiant commissioned Jessy Mendiola and Luis to do the work and paid for
the work in the sum of P100 million, Radiant owns the diamond ring.(b) Jessy Mendiola and Luis
own the copyright. While Section 178.4 of the Intellectual Property Code provides that the work
belongs to the person who commissioned it, it is also provided that the copyright thereto shall
remain with the creator, unless there is written stipulation to the contrary.

3) Marian Rivera and Dingdong Dantes are famous personalities in Philippine show business who
kept their love affair secret. They use special instant messaging application which allows them to
see one another’s typing on their own screen as each letter key is pressed. When Dennis Trillo, the
controller of the messaging application, found out their identities, he kept a copy of all the
messages Marian and Dingdong sent each other and published them. Is Dennis liable for copyright
infringement? Explain. (5pts.)
ANSWER: Yes, Dennis is liable for copyright infringement. Section 172 of the Intellectual
Property Code provides that letters are protected works. Since the law does not distinguish if the
letters are handwritten or in electronic form, the publication of the letters is an infringement on the
right of Marian and Dingdong.

4) Enumerate and explain five (5) classification of banks. (5pts)

1. Universal Banks—these are those which used to be called expanded commercial banks and
the operations of which are now primarily governed by the GBL of 2000. They can exercise
the powers of an investment house and invest in non-allied enterprises. They have the highest
capitalization requirement.
2. Commercial Banks—these are ordinary or regular commercial banks, as distinguished from a
universal bank. They have a lower capitalization requirement than universal banks and cannot
exercise the powers of an investment house and invest in non-allied enterprises.
3. Thrift banks—these banks (such as savings and mortgage banks, stock savings and loan
associations, and private development banks) may exercise most of the powers and functions
of a commercial bank except that they cannot, among others, open current or check accounts
without prior Monetary Board approval, and they cannot issue letter of credit. Their
operations are governed primarily by the Thrift Banks Act of 1995 (RA No, 7906).
4. Rural Banks—these are those which are organized primarily to extend loans and other credit
facilities to farmers, fishermen or farm families, as well as cooperatives, merchants, and
 private and public employees and whose operations are primarily governed by the Rural
Banks Act of 1992 (RA No. 7353)
5. Cooperative Banks—these are those which are organized primarily to provide financial and
credit services to cooperatives and whose operations are primarily governed by the
Cooperative Code of the Philippines (RA No. 6938)
6. Islamic Banks—these are those which are organized primarily to provide financial and credit
services in a manner or transaction consistent with the Islamic Shari’a. at present, only the Al
Amana Islamic Investment Bank of the Philippines has been organized as an Islamic bank.

5) Give the requisites under Article 26 of the New Central Bank Act providing restrictions for
DOSRI Accounts. (5 points)

The requisites are the following:

a. The borrower is a director, officer, or any stockholder of a bank (and related interests);
b. He contracts a loan or any form of financial accommodation;
c. The loan or financial accommodation is from (1) his bank, (2) a bank that is subsidiary of a
bank holding company of which both his bank and lending bank are subsidiaries; (3) a bank in
which a controlling proportion of their shares is owned by the same interest that owns a
controlling proportion of the shares of his bank (4) the loan or financial accommodation of the
director, officer, or stockholder, singly or with that of his related interest, is in excess of 5% of
the capital and surplus of the lending bank or in the maximum amount permitted by law,
whichever is lower.
d. The loan or financial accommodation of the director, officer or stockholder, singly or with that
of his related interest, is in excess of 5% of the capital and surplus of the lending bank or in
the maximum amount permitted by law, whichever is lower.

6) Distinguish between the role of a conservator and that of a receiver of a bank.(5pts.)

ANSWER: The role of a conservator is to restore the viability of a bank. The role of a receiver is
to determine whether or not a bank can be rehabilitated.

7) Windie invented a method of improving the tenderness of meat by injectin an enzyme solution
into the liver of the animal shortly before slaughter. Is Windie’s invention patentable? (5pts.)
ANSWER: Yes, under the Intellectual Property Code, any technical solution of a problem in any
field of human activity which is new, involves an inventive step and is industrially applicable is
patentable. Among those that cannot be patented are processes which are not directed to making
or improving a commercial product. The process of improving the tenderness of meat appears to
be a new technical solution, hence, Windie may lawfully patent her invention.