2016 (Mercantile Law) Bar Exam Questions: Question 8

[Answer/discuss the question below, or see 2016 bar exam Mercantile Law Instructions; 2016 Mercantile Law Questions: 1234567910111213141516171819 and 20; See also 2016 Bar Exam: Information, Discussions, Tips, Questions and Results]

-VIII-

In 2015, Total Bank (Total) proposed to sell to Royal Bank (Royal) its banking business for P 10 billion consisting o f specified assets and liabilities. The parties reached an eventual agreement, which they termed as “Purchase and Assumption (P & A) Agreement,” in which Royal would acquire Total’s specified assets and liabilities, excluding contingent claims, with the further stipulation that it should be approved by the Bangko Sentral ng Pilipinas (BSP). BSP imposed the condition that Total should place in escrow Pl billion to cover for contingent claims against it. Total complied. After securing the approval of the BSP, the two banks signed the agreement. BSP thereafter issued a circular advising all bank and non-bank intermediaries that effective January 1, 2016, “the banking activities of Total Bank and Royal Bank have been consolidated and the latter has carried out their operations since then.”

[a] Was there a merger and consolidation of the two banks in point of the Corporation Code? Explain. (2.5%)

[b] What is meant by a de facto merger? Discuss. (2.5%)

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