Cañete, Realyn F. Prof.

Ritchie Esponilla
BSMA 3-1 Regulatory Framework and Legal Issues in Business

Exercises 1:
1. If A has several types of accounts in a bank what is his PDIC deposit insurance
coverage?
Effective June 1, 2009, the maximum deposit insurance coverage is P500,000 per
depositor. All deposit accounts by a depositor in a closed bank maintained in the same right and
capacity shall be added together. However, deposit insurance coverage is not determined on a
per-account basis. The type of account (whether checking, savings, time, or other form of
deposit) has no bearing on the amount of insurance coverage.
If a bank has one or more branches, the main office and all branch offices are
considered as one bank. Thus, if you have deposits at the main office and at one or more
branch offices of the same bank, the deposits are added together when determining deposit
insurance coverage, the total of which shall not exceed P500,000.
2. If A has deposits in different banks, is his bank deposit per bank covered by the
Php500,000.00 PDIC insurance?
Yes, since deposits in different banking institutions are insured separately. Under R.A.
No. 9576, the PDIC may propose to adjust the MDIC, subject to the approval of the President of
the Philippines, in case of a condition that threatens the monetary and financial stability of the
banking system that may have systemic consequences.
3. What are the deposits which are not covered by the PDIC insurance?
Only risk of a bank closure ordered by the Monetary Board is covered by the PDIC. In
cases of public disorder, strike, fire, theft, or war, the bank losses will not be covered by the
PDIC, as well as the following:
1. Investment products like trust accounts, securities, bonds, and other similar instruments
2. Fraudulent, fictitious, or unfunded deposit transactions or deposit accounts
3. Deposits that come from banking practices that the PDIC and Bangko Sentral ng
Pilipinas determine unsound or unsafe, such as the following:

 deposits received outside the bank

 not complying with depositor’s required documents and identification for account
opening
 depositing or withdrawing money without proper or duly accomplished forms
 giving high interest rates when the bank does not have the capacity or the capital
to
4. Deposits that are proceeds of unlawful activities as stated in Republic Act 9160 or the
Anti-Money Laundering Act
4. What action can be taken if probable cause exists that a monetary instrument is being
used or related to an unlawful activity?
Upon a verified ex parte petition by the AMLC and after determination that probable
cause exists that any monetary instrument or property is in any way related to an unlawful
activity as defined in Section 3(i) hereof, the Court of Appeals may issue a freeze order which
shall be effective immediately, and which shall not exceed six (6) months depending upon the
circumstances of the case: Provided, That if there is no case filed against a person whose
account has been frozen within the period determined by the court, the freeze order shall be
deemed ipso facto lifted: Provided, further, That this new rule shall not apply to pending cases in
the courts. In any case, the court should act on the petition to freeze within twenty-four (24)
hours from filing of the petition. If the application is filed a day before a nonworking day, the
computation of the twenty-four (24)-hour period shall exclude the nonworking days.
5. How will you reconcile the authority of the Anti-Money Laundering Council (AMLC) to
inquire into bank deposits vis-a-vis the secrecy of one’s bank deposit?
Under Section 9 of RA No. 10365, covered persons shall report to the AMLC all covered
transactions and suspicious transactions within five (5) working days from occurrence thereof,
unless the AMLC prescribes a different period not exceeding fifteen (15) working days.
When reporting covered or suspicious transactions to the AMLC, covered persons and
their officers and employees are prohibited from communicating, directly or indirectly, in any
manner or by any means, to any person or entity, the media, the fact that a covered or
suspicious transaction has been reported or is about to be reported, the contents of the report,
or any other information in relation thereto. Neither may such reporting be published or aired in
any manner or form by the mass media, electronic mail, or other similar devices. In case of
violation thereof, the concerned officer and employee of the covered person and media shall be
held criminally liable.
Exercises 2:
1. A obtained a loan from XYZ Bank/ What are the information required to be furnished to
him relative to his loan application?
Any creditor shall furnish to each person to whom credit is extended, prior to the
consummation of the transaction, a clear statement in writing setting forth, to the extent
applicable and in accordance with rules and regulations prescribed by the Board, the following
information:
1. the cash price or delivered price of the property or service to be acquired;
2. the amounts, if any, to be credited as down payment and/or trade-in;
3. the difference between the amounts set forth under clauses (1) and (2);
4. the charges, individually itemized, which are paid or to be paid by such person in
connection with the transaction, but which are not incident to the extension of credit;
5. the total amount to be financed;
6. the finance charge expressed in terms of pesos and centavos; and
7. the percentage that the finance bears to the total amount to be financed expressed as a
simple annual rate on the outstanding unpaid balance of the obligation.
2. In case the bank failed to provide the needed information to be disclosed to its
borrower, will it affect the validity of their contract?
No, but under section 6 of RA No. 3765 any creditor who in connection with any credit
transaction fails to disclose to any person any information in violation of this Act or any
regulation issued thereunder shall be liable to such person in the amount of P100 or in an
amount equal to twice the finance charged required by such creditor in connection with such
transaction, whichever is the greater, except that such liability shall not exceed P2,000 on any
credit transaction.
3. A’s wife wanted to know the financial status of her husband. Can he inquire from the
bank of her husband considering that they are husband and wife?
No, because Bank Secrecy Law protects all deposits of whatever nature in banks or
banking institutions in the Philippines as well as investments in government bond. This law
prohibits any person, subject to the exceptions below, from disclosing to any person any
information, relative to the funds or properties belonging to the depositors in the custody of the
bank. Simply put, no one can just go to your bank and ask for your bank balance. However, it
also subjection to exception:
1. Written permission or consent in writing by the depositor;
2. In cases of impeachment;
3. Upon order of the court in cases of bribery or dereliction of duty of public officials;
4. Upon order of the court in cases where the money deposited or invested is the subject
matter of the litigation;
5. Upon a subpoena issued by the Ombudsman concerning an investigation it is
conducting, provided that there must already be a case pending in court, the account be
clearly identified, the inspection be limited to the subject matter of the pending case; and
the bank personnel and the depositor must be notified to be present during the
inspection;
6. The BIR can inquire into bank deposits in an application for compromise of tax liability or
determination of a decedent’s gross estate;
7. The Anti-Money Laundering Council (“AMLC”) can examine bank accounts pursuant to a
court order, where there is probable cause that the deposits are related to an unlawful
activity or money laundering offense;
8. The AMLC can examine bank accounts, WITHOUT a court order, where there is
probable cause that the deposits are related to certain crimes such as kidnapping for
ransom, violation of the Dangerous Drugs Act, hijacking, destructive arson, murder, and
violations of RA 6235 (acts inimical to civil aviation);
9. The Bangko Sentral can examine bank accounts in the course of its periodic or special
examination regarding compliance with Anti-Money Laundering Law.

Thus, if the wife has any of the following in the given exception she can inquire and
know the financial status of his husband.
4. What are the covered deposits under the Bank Secrecy Act?
Republic Act No. 1405, otherwise known as An Act Prohibiting Disclosure of or Inquiry
into, Deposits with any Banking Institution (“Bank Secrecy Law”), was approved. It protects all
deposits of whatever nature in banks or banking institutions in the Philippines as well as
investments in government bond. This law was enacted to encourage individuals to deposit their
money in banks instead of hoarding them. This law prohibits any person, subject to the
exceptions below, from disclosing to any person any information, relative to the funds or
properties belonging to the depositors in the custody of the bank
5. What are those deposits which are not protected by the Bank Secrecy Act?
Aside from money markets, trust funds, mutual funds, and the likes, exception under
Bank Secrecy Law are also not covered by the law and these are:
1. Written permission or consent in writing by the depositor;
2. In cases of impeachment;
3. Upon order of the court in cases of bribery or dereliction of duty of public officials;
4. Upon order of the court in cases where the money deposited or invested is the subject
matter of the litigation;
5. Upon a subpoena issued by the Ombudsman concerning an investigation it is
conducting, provided that there must already be a case pending in court, the account be
clearly identified, the inspection be limited to the subject matter of the pending case; and
the bank personnel and the depositor must be notified to be present during the
inspection;
6. The BIR can inquire into bank deposits in an application for compromise of tax liability or
determination of a decedent’s gross estate;
7. The Anti-Money Laundering Council (“AMLC”) can examine bank accounts pursuant to a
court order, where there is probable cause that the deposits are related to an unlawful
activity or money laundering offense;
8. The AMLC can examine bank accounts, WITHOUT a court order, where there is
probable cause that the deposits are related to certain crimes such as kidnapping for
ransom, violation of the Dangerous Drugs Act, hijacking, destructive arson, murder, and
violations of RA 6235 (acts inimical to civil aviation);
9. The Bangko Sentral can examine bank accounts in the course of its periodic or special
examination regarding compliance with Anti-Money Laundering Law.
Exercises 3:
1. What is protected — first to invent or first to register?
Under Intellectual Property Law, First to file rule applies. This means that if two or more
persons separately made the same invention, priority is given to one who filed first. Thus, their
patent/s granted a protection.
2. Who is the owner of the ‘Anonymous and Pseudonymous Works’?
For purposes of Intellectual Property Code of the Philippines, the publishers shall be
deemed to represent the authors of articles and other writings published without the names of
the authors or under pseudonyms, unless the contrary appears, or the pseudonyms or adopted
name leaves no doubts as to the author’s identity, or if the author of the anonymous works
discloses his identity.
3. Discuss the principles of ‘idem sonans’ and ‘dominancy test’ in trademarks.
 Idem sonans is a legal doctrine whereby a person's identity is presumed known despite
the misspelling of his or her name. The presumption lies in the similarity between the Phonology
or sounds of the correct name and the name as written. Such similar-sounding words are called
a homonym, while similar-sounding phrases or names would be a holorime. And in determining
if names are "idem sonans", the test is whether, though names are spelled differently, the
attentive ear finds difficulty in distinguishing the name when pronounced.
The Dominancy Test focuses on the similarity of the dominant features of the
competing trademarks that might cause confusion, mistake, and deception in the mind of the
ordinary purchaser, and gives more consideration to the aural and visual impressions created
by the marks on the buyers of goods, giving little weight to factors like prices, quality, sales
outlets, and market segments. The test of dominancy is now explicitly incorporated into law in
Section 155.l of R.A. No. 8293.
4. What are those which are patentable inventions?
According to Section 21 of Republic Act No. 8293, patentable inventions are any
technical solution of a problem in any field of human activity which is new, involves an inventive
step and is industrially applicable. It may be, or may relate to, a product, or process, or an
improvement of any of the foregoing.
5. What are those which are not patentable inventions?
Discussed on the Section 22 of Intellectual Property Code are Non-Patentable
Inventions which shall be excluded from patent protection:
1. Discoveries, scientific theories, and mathematical methods, and in the case of drugs and
medicines, the mere discovery of a new form or new property of a known substance
which does not result in the enhancement of the known efficacy of that substance, or the
mere discovery of any new property or new use for a known substance, or the mere use
of a known process unless such known process results in a new product that employs at
least one new reactant.
For the purpose of this clause, salts, esters, ethers, polymorphs, metabolites, pure form,
particle size, isomers, mixtures of isomers, complexes, combinations, and other derivatives of a
known substance shall be considered to be the same substance, unless they differ significantly
in properties with regard to efficacy;
2. Schemes, rules, and methods of performing mental acts, playing games, or doing
business, and programs for computers;
3. Methods for treatment of the human or animal body by surgery or therapy and diagnostic
methods practiced on the human or animal body. This provision shall not apply to
products and composition for use in any of these methods;
4. Plant varieties or animal breeds or essentially biological process for the production of
plants or animals. This provision shall not apply to micro-organisms and non-biological
and microbiological processes.
Provisions under this subsection shall not preclude Congress to consider the enactment of a
law providing sui generis protection of plant varieties and animal breeds and a system of
community intellectual rights protection:
5. Aesthetic creations; and
6. Anything which is contrary to public order or morality