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Suggested Answer:: Distinguish A Conservator From A Receiver of A Bank. (2%)

A bank extended a 50 million peso loan to Mr. Yamato secured by real estate, and the title showed no encumbrances. The loan agreement included an escalation clause allowing increased interest rates when central bank rates rose. Three years later, the bank invoked this clause without Mr. Yamato's consent, but he refused to pay the higher rate. The bank insists the escalation clause is binding.

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Suggested Answer:: Distinguish A Conservator From A Receiver of A Bank. (2%)

A bank extended a 50 million peso loan to Mr. Yamato secured by real estate, and the title showed no encumbrances. The loan agreement included an escalation clause allowing increased interest rates when central bank rates rose. Three years later, the bank invoked this clause without Mr. Yamato's consent, but he refused to pay the higher rate. The bank insists the escalation clause is binding.

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jon jon
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BANKS: CONSERVATOR V.

RECEIVER (2015)
Distinguish a conservator from a receiver of a bank. (2%)

Suggested answer:
The following are the distinctions:

a. As to grounds: A conservator is appointed if a bank or quasi bank is in a state of continuing


inability or unwillingness to maintain condition of liquidity, while a receiver is appointed if a
bank’s or quasi bank’s assets are less than its liabilities or has willfully violated a final cease
and desist order, involving acts or transactions amounting to fraud or a dissipation of the
assets of the institution.

b. As to termination: A conservator’s obligation is terminated after 1 year from such


appointment as such, while a receiver’s obligation is terminated within 90 days if
liquidation is decided upon or until the bank is viable again. If rehabilitation is decided
upon.

BANKS: DILIGENCE REQUIRED (2018)


YBC Bank extended a loan of Php 50 million to Mr. Yamato secured by a real estate
mortgage (REM) on a large tract of land. The covering Transfer Certificate of Title (TCT) of
the property mortgaged did not indicate any encumbrance or lien on it, and the bank was
able to obtain a certified true copy of the TCT from the Register of Deeds showing that the
owner's copy submitted to the bank was a genuine title.

The Loan Agreement provided an escalation clause which stated that, at the anniversary
date of the loan, YBC Bank was granted the option to increase the interest rate whenever
there would be an increase in the Bangko Sentral ng Pilipinas' prevailing rates. Three years
later, Mr. Yamato received a formal notice from YBC Bank raising the interest rate of the
loan based on the escalation clause provided for in the Loan Agreement. Mr. Yamato
refused to pay based on the increased interest rate that was effected without his consent.
YBC Bank insists on the binding effect of the escalation clause appearing on their Loan
Agreement.

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