GENERAL BANAKING LAW OF 2000 (R.A.

8791) consultancy or any similar management which does not create or result in
trusteeship.
● Banks
Scope and Application of the General Banking Law o Largest group of entities engaged in financial intermediation in the Philippines
o Engaged in lending of funds obtained in the for of deposits from the public
R.A 8791 (General Banking Law of 2000) GBL o An investment company which loans out the money of its customers, collects the
interests, and charges a commission to both lender and borrower
● State policy of Banks: “The State recognizes the vital role of banks providing an environment
o Must be a stock corporation and its funds must be obtained from the public, meaning
conducive to the sustained development of the national economy and the fiduciary nature of
deposits of 20 or more persons
banking that requires high standards of integrity and performance. In furtherance thereof, the
o A moneyed institute founded to facilitate the borrowing, lending, and safekeeping of
State shall promote and maintain a stable and efficient banking and financial system that is
money and to deal in notes, bills of exchanges, and credits by any person engaged in
globally competitive, dynamic and responsive to the demands of a developing economy
the business carried on by banks of deposit, of discount, or of circulationis doing a
● Banks are governed by GBL and took effect on June 13, 2000
banking business, although but one of these functions is exercised
● GBL is not in conflict with the specific laws on thrift banks, rural banks, cooperative banks,
and Islamic banks and are also applicable to said banks Primary Functions of Banks
Distinction of banks from quasi-banks and trust entities (Secs. 4-7) ● Deposit Functions
o Functions which allow a bank to receive money from the public with the obligation
● Quasi-Banks
of returning an equal amount of the same kind and quality
o Entities engage in borrowing funds through the issuance, endorsement, or
o Fixed, savings, and current deposits of money in banks and similar institutions shall
assignment with recourse or acceptance of deposit substitutes for purposes of
be governed by the provisions concerning simple loan
relending or purchasing of receivables and other obligations
● Loan/Lending Function
● Trust Entities/Corporations
o Those functions which allow a bank to extend credit and loans to persons in need of
o Authorized by the BSP to engage in trust and other fiduciary business under Sec. 79
funds to fund investments, expansion of business, or cover short term liquidity
of the GBL or to perform investment management services under Sec. 53 of the GBL
requirements
o Trust business -many activity resulting from a trustor-trustee relationship
● Other Functions of a Banks
(trusteeship) involving the appointment of a trustee by a trustor for the
o Quasi-Banking
administration, holding, management, of funds and/or properties of the trustor by the
o Provider of safety deposit boxes
trustee for us, benefit, or advantage of the trustor or beneficiaries
o Performance of functions of investment houses
o Other fiduciary business – any activity resulting from a contract or agreement
o Performance of Allied and Non-allied financial services
whereby the bank binds itself to render services or to act in a representative capacity
o Financial agent
such as an agency, guardianship, administratorship of wills, properties and estates,
o Buying and Selling by order of and for the account of their customers, shares,
executorship, receivership and other similar services which do not create or result in
evidences of indebtedness, and all types of securities
trusteeship
o Other functions
o Investment management activity – activity resulting from a contract or agreement
o Make collection and payments for the account of others and perform such other
whereby the bank binds itself to handle or manage investible funds or any investment
services for their customer as are not incompatible with banking business
portfolio in a representative capacity as financial or managing agent, adviser, or
o Receive in custody funds, documents and valuable objects (as bailee or trustee)
consultant or administrator of financial or investment management, advisory, or
 o Upon prior approval of Monetary Board (MB), act as Managing agent, adviser, ● The bank is a trusted and active associate that can help in the running of their affairs, not only
consultant or administrator of investment management/advisory/consultancy in the form of loans when needed but more often in the conduct of their day-to-day
accounts transactions like issuance or encashment of checks
● A blunder on the part of the bank, such as dishonor of a check w/out good reason, can cause
Nature of the Banking Business the depositor not a little embarrassment if not also financial loss and perhaps even civil and
● Banks have a vital role in providing an environment conducive to the sustained development criminal litigation
of the national economy and the fiduciary nature of banking that requires high standards of ● Bank is not deemed to have exercised utmost diligence if the correct balance of an account is
integrity and performance not reflected thereby rejecting withdrawal from the account or in wrongfully dishonoring a
o Through them passes the medium of exchange, and upon their healthy condition, check
commercial activity and prosperity will depend. ● Absence of utmost diligence may result in wrongfully honoring a check or withdrawal that
o They substitute their own credit which has general acceptance in the business contains forged signatures or in allowing withdrawals if the representative of the depositor
community for that of the individuals which has only limited acceptability was not duly authorized.
● It is in the nature of a public trust. ● Banks cannot merely rely on Certificate of Title in ascertaining the status of mortgaged
● It acquired the confidence of the public and become the depositories of thousands who are not properties, they are required to exercise more prudence and care
engaged in active business ● However, the bank is not required to exert the highest degree of diligence in regard to
● It is also properly subject to reasonable regulation under the police power of the state because transactions which do not involve a fiduciary relationship with a depositor such as sale and
of its nature and relation to the fiscal affairs of the people and the revenues of the state issuance of foreign exchange demand drafts
● Although most of them are organized and financed by private individuals for personal gain, Organization of Banks
banks are in a sense, “public institutions” and their business is affected with public interest
● It is a business of borrowing and lending money ● A banking or quasi-banking corporation cannot be incorporated without the authority of the
o Banks do not accept deposits to enrich themselves. BSP.
o The law allows banks to offer the lowest possible interest rate to depositors while ● The AOI to be filed with the SEC should be accompanied by the favorable recommendation
charging the highest possible interest rates on their own borrowers of the BSP or MB, otherwise it shall not be accepted or approved
o The interest spread or differential belongs to the bank, not the depositors who are not ● A new banking organization must have suitable/fir shareholders, adequate financial strength, a
beneficiaries of the bank legal structure in line with its operational structure, a management with sufficient expertise
o Banks are run for gain, and they solicit depositors in order that they can use the and integrity to operate the bank in a sound and prudent manner
money for that very purpose ● Section X103 of the MORB:
o The certificate of authority issued by the MB under its seal, unless the same is
Diligence Required of Banks satisfied from evidence submitted that:
● Utmost Diligence is required. a. All requirements for existing laws and regulations to engage in the business
● It is required to exercise utmost diligence in handling deposits for which the applicant is proposed to be incorporated have been complied
● Supreme Court even imposed the duty to exercise extraordinary diligence although there is no with
statutory provision expressly imposing such degree of care on banks b. The public interest and economic conditions, both general and local, justify
● The depositor expects the bank to treat his account with utmost fidelity, whether such account the authorization
consists only of a few hundred pesos or millions. The bank must record every single c. The amount of capital, the financing, organization, direction and
transaction accurately, down to the last centavo, and as promptly as possible administration, as well as the integrity and responsibility of the organizers
 and administrators reasonably assure the safety of the deposits and the o It is further authorized to take necessary steps against any banking institution if its
public interest continued operation would cause prejudice to its depositors, creditors and general
public as well.
Likewise, SEC shall not register the by-laws of any bank, or any amendment thereto ● Under R.A. 7653, the BSP’s powers and functions include:
unless accompanied by a certificate of authority from the BSP. o Supervision over operation of banks
● If an entity performs banking/quasi-banking functions without the required certificate of o Regulation of operations of finance companies and non-bank financial institutions
authority, the officers concerned may be subject to criminal prosecution and their AOI may be performing quasi-banking functions
revoked o Sole power and authority to issue currency within Philippine territory
● The MB determines whether a person or entity is peroming banking or quasi-banking o Engaging in foreign exchange transactions
functions w/out BSP authority o Making rediscounts, discounts, loans, and advances to baking and other financial
o To resilve it, MB may examine, inspect, or investigate the books and records of such institutions to influence the volume of credit consistent with achieving price stability
person or entity o Engaging in open market operations
● Section 64 of GBL disallows use of word “bank” if an entity is not engaged in banking o Acting as banker and financial advisor of the Government
business Classification of Banks
● Conditions for Corporate Organization of a Domestic Bank or Quasi-Bank:
1. Entity is a stock corporation 1. Universal Banks
2. Its funds are obtained from the public, 20 or more persons 2. Commercial Banks
3. Minimum Capital requirements prescribed by MB are satisfied (Sec. 8, GBL) 3. Thrift Banks: (i) savings and mortgage banks; (ii) stock savings and loan associations; (iii)
private development banks
Authority of Bangko Sentral 4. Rural Banks
● Bangko Sentral ng Pilipinas (BSP) is the central monetary authority maintained by the State 5. Cooperative Banks
to function and operate as an independent and accountable body corporate in the discharge of 6. Islamic Banks
its mandated responsibilities concerning money, banking, and credit. 7. Other classification of banks s determined by MB of the BSP
● The powers and functions of the BSP is exercised through the Monetary Board (MB)
● The BSP is a constitutionally recognized government authority. The 1987 Constitution grants ● Universal Banks (UB)
the BSP the power to supervise the operation of banks while leaving to the Congress the o Have the authority to exercise, in addition to the powers of a commercial bank, the
authority to define BSP’s regulatory powers over the operations of finance companies and powers of an investment house and the power to invest in non-allied enterprises
other institutions o They also have the authority to exercise the ff:
● The authority shall provide policy direction in the areas of money, banking, and credit. ▪ Powers of an investment house
o It shall have supervision over the operations of banks and exercise such regulatory ▪ Invest in non-allied enterprises
powers as may be provided by law over the operations of finance companies and ▪ Own up to 100% equity in a thrift bank, a rural bank, a financial allied
other institutions performing similar functions enterprise, or a non-financial allied enterprise
● It is the Government’s responsibility to see to it that the financial interests of those who deal ▪ In case of publicly listed universal bank. Power to own up 10 100%of the
with banks and banking institutions, as sepositors or otherwise, are protected voting stock of only one other universal bank or commercial bank
o This tasked eis entrusted to the BSP ● Commercial Banks
o Banks that are given, in addition to the general powers incident to corporations, all
such powers as may be necessary to carry on the business of commercial banking
 o Powers of such banks are: ▪ Offer other banking services
(1) Accepting drafts o Thrift banks (w BSP authority) can:
(2) Issuing letters of credit ▪ Open current or checking accounts
(3) Doscounting and negotiating promissory notes, drafts, bills of exchanges, and ▪ Engage in trust, quasi-banking functions and money market operations
other evidences of debt ▪ Act as collection agent for gov’t entities
(4) Accepting or creating demand deposits ▪ Act as official depositary of national agencies and of municipal, city or
(5) Receiving other types of and deposit substitutes provincial funds in the municipality, city, or province where the bank is
(6) Buying and selling foreign exchange and gold or silver bullion located
(7) Acquiring marketable bonds and other debt securities ▪ Issue mortgage and chattel mortgage certificates, buy and sell them for its
(8) Extending credit, subject to such rules as the MB may promulgate own account or for the account of others, or accept and receive them in
● Thrift Banks payment or as amortization of its loan
o Governed by R.A. 7906 (Thrift Banks of 1995) GBL supplies suppletorily. ▪ Invest in the equity of allied undertakings
o Thrift banks include: ▪ Issue foreign letters of credit
▪ Savings and mortgage banks ▪ Pay/accept/negotiate, import/export, draft/bills of exchange
▪ Private development banks ● Rural Banks
▪ Stock savings and loan associations o The State encourages and assist in the establishment of a rural banking system
▪ And any banking corporation designed to make needed credit available and readily accessible in the rural areas om
o That have the ff. purposes: reasonable terms
▪ Accumulating savings of depositors and investing them o Powers of Rural banks (w/out separate BSP authority)
▪ Providing short-term working capital, medium and long terms financing to ▪ Extend loans and advances primarily for normal credit needs of farmers,
businesses engaged in agriculture, services, industry and housing fishermen or farm families as well as cooperatives, merchants, private and
▪ Providing diversified financial and allied services for its chosen market and public employees
constituencies specially for small and medium enterprises and individuals ▪ Accept savings and time deposits
o Thrift banks (w/out BSP authority) can: ▪ Act as correspondent of other financial institutions
▪ Grant loans, secured or unsecured, ▪ Rediscount paper with the Land Bank of the Philippines, Development
▪ Invest in readily marketable bonds and other debt securities, commercial Bank of the Philippines or any other bank and its branches and agencies
papers and accounts receivables, drafts, bills of exchange, acceptance or ▪ Act as collection agent
notes arising out of commercial transactions ▪ Offer other banking services
▪ Issue domestic letters of credit o Powers of Rural banks (w/ prior MB authority)
▪ Extend credit facilities to private and government employees ▪ Accept current or checking accounts, provided that the rural banks has net
▪ Extend credit against the security of jewelry, precious stones and articles assets of at least P5M
similar nature subject to the rules that MB may prescribe ▪ Accept NOW accounts
▪ Accept savings and time deposits ▪ Act as trustee over estates or properties of farmers and merchants
▪ Rediscount papers with government-owned or controlled banks ▪ Act as official depositary of municipal, city or provincial funds
▪ Accept foreign currency deposits as provided under R.A 6426 ▪ Sell domestic drafts
▪ Act as correspondent for other financial institutions ▪ Invest in allied undertakings
▪ Purchase, hold, and convey real estate ● Cooperative Banks
 o Organized for the primary purpose of providing a wide range of financial services to ● A filipino individual and a domestic non-bank corporation may each own up to 40%
cooperatives and their members of the voting stock of a UB, KB or TB and up to 60% only of the voting stock of a
o MORB provides that a cooperative bank shall primarily provide financial, banking, rural bank
credit services to cooperatives and its members, although it may provide the same ● The restriction on Filipinos and domestic non-bank corporations refer to individual
services to non-members equity participation
o The powers and functions of a cooperative bank shall be subject to such rules and b) Foreign Shareholding in Domestic Banks
regulations as may be promulgated by the BSP ● General Rule: Foreign individuals and foreign non-bank corporations may own or
o They may also perform any or all banking services offered by other types of banks control up to 40%of the voting stock of a domestic bank
subject to prior approval of the BSP ● Excwption:
● Islamic Banks 1. Thrift Bank – atleast 40% of its voting stock shall be owned by Filipino
o RA 6848 or Al-Almanah Islamic Investment Bank of the Philippines citizens
o Primary purpose is to promote and accelerate the socio-economic development of 2. Rural Bank – No less than 40% of the voting stocks shall be owned by
Muslim Mindanao by performing banking, financing, and investment operations and Filipino citizens while non-Filipino citizens may own up to 60% of the
establish and participate in agricultural, commercial and industrial ventures based on voting stocks
the Islamic concept of baking c) Determination of Proportional Shareholdings
● “Other Banks” ● The percentage of foreign-owned voting stocks in a bank shall be determined by the
o Other banks that are government-owned and controlled and created by special laws citizenship of the individual stockholders in that bank
for specific purposes ● The citizenship of a corporate shareholders in a bank shall follow the citizenship of
o Philippine Veterans Bank the controlling stockholders of the holding corporation, irrespective of the place of
▪ A private commercial bank owned by the Filipino veterans of WW II and incorporation
deeply imbued and impressed with public interest ● Controlling stockholders refer to individuals holding more than 50% of the voting
o Land Bank of the Philippines stock of the corporate stockholders of the bank
▪ Created to finance the acquisition and distribution of agricultural estates for d) Foreign Banks
division and resale to small landlords as well as the purchase of the ● Only established, reputable and financially sound foreign banks shall be allowed
landholding by the agricultural lessee entry in the Philippines.
o Development Bank of the Philippines ● The foreign bank applicant must be widely-owned and publicly-listed in its country
▪ Primary purpose is to provide banking services principally to cater to the or origin, unless the foreign bank applicant is owned and controlled by the
medium and long-term needs of agricultural and industrial enterprises with government of its country of origin
emphasis on small and medium-scale enterprises ● MB may authorize foreign banks to operate in the Philippines through any of the ff.
o These differ from ordinary commercial and universal banks in that they are: modes of entry:
▪ Created by special law for specific public banking purposes 1. Acquiring, purchasing, or owning up to 100% of the voting stock of an
▪ Must be expressly authorized by law or approved by the MB before existing domestic bank
accepting or demanding deposits 2. Investing in up to 100% of the voting stock of a new banking subsidiary
incorporated under the laws of the Philippines
Ownership of Banks 3. Establishing branches with full banking authority
a) Filipino stockholding domestic banks e) Capital Requirement for Foreign Banks seeking to operate in the Philippines
● For locally incorporated subsidiaries
 o Minimum capital required shall be equal to that prescribed by MB for c) Independent Directors
domestic banks of the same category ● A person who is:
● For foreign bank branches 1. Not or was not a director, officer, or employee of the BSFI, its subsidiaries,
o Minimum capital required for foreign banks authorized to establish affiliates or related interests during the past 3 years counted from the date of
branches shall not be less than the capital required for domestic banks of the his election or appointment
same category 2. Not or was not a director, officer, or employee of the BFSI’s substantial
stockholders and related companies during the past 3 years counted from
Management of Banks the date of his election or appointment
a) Fit and Proper Rule 3. IS not an owner of more than 2% of the outstanding shares or a stockholder
● MB is authorized to pass rules providing for the qualifications and disqualifications with shares of stock sufficient to elect 1 set in the BOD of the institution, or
of individuals elected or appointed bank directors or officers and to disqualify those in any of its related companies or of its majority corporate shareholders
found unfit after due notice 4. Is not a close family member of any director, officer or stockholder holding
● In determining whether an individual is fit and proper to hold the position of a shares of stock sufficient to elect 1 seat in the BOD
director or officer of a bank, regard shall be given to his integrity, experience, 5. Is not acting as a nominee or representative of any director or substantial
education, training, and competence shareholder of the Banks, quasi-banks, or trust entity
b) Composition of Directors 6. Is free from any business or other relationship with the institution or any of
● At least 5 and a maximum of 15 members of the BOD of a bank its major stockholders
● 2 shall be independent directors 7. Not or was not retained as a professional adviser, consultant, agent, or
● In case of merged or consolidated banks, maximum number of directors is 21 counsel of the BSFI
● “Independent Director” – a person other than an officer or employee of the bank, its 8. Is not affiliated with any non-profit organization that receives significant
subsidiaries or affiliates or related interests funding from the BSFI or any of its related companies or substantial
● Non-Filipino citizens may become members of the BOD to the extent of of the shareholders
foreign participation in the equity of said bank 9. Not eomployed as an EO of another company where any of the BSFI’s
● BSP Guidelines for Directors and Officers: executives serve as directors
o Incorporators/subscribers and proposed directors and officers must be ● An independent director shall serve only for a total of 5 consecutive years
persons of integrity and of good credit standing in the business community d) Meetings
and subscribers must have adequate financial strength to pay for their ● Meetings may be conducted through modern technologies such as teleconferencing
proposed subscriptions and video conferencing
o Must not have been convicted of any crime involving moral turpitude ● Memorandum Circular 15 provides the guidelines for the conduct of
o Atleast 2/3’s of them BOD of any commercial bank shall be Filipino teleconferencing and video conferencing of the BoD
citizens; atleast a majority of the BOD of any thrift bank shall be Filipino ● Exercise of personal judgment is still preserved because personal participation by the
citizens; and all the members of the BOD of a rural bank shall be Filipino director is still required during the meeting
citizens o A director cannot be represented by proxy or alternates during board
o No appointive or elective public officials, whether full time or part-time meetings
shall at the same time serve as officer of a commercial bank or thrift bank ● Physical presence in the same place may be dispensed with but the director
except cases where such service is incident to financial assistance provided comcerned should still be present during the meeting and participate thru these
by the government or government-owned or -controlled corporation electric means.
 ● Meetings shall be held only within the Philippines except if head office is outside the ● In one case, SC stated that “a depositor, in one who pays money into the bank ion the
Philippines usual course of business, to be placed to his credit and subject to his check or the
● Full BoD Meetings beneficiary of the funds held by the bank as trustee
o May be conducted thru modern technologies, provided that: ● A bank is not bound to receive deposits from anyone but may choose those whom it
▪ Every member of the BoD shall participate in at least 50% and will accept as depositors and the terms and conditions on which it will accept
shall physically attend at least 25% of all meetings of the BoD deposits
every year o Banks may be liable for non-acceptance if it is discriminatory or is contrary
▪ Absence of a director in more than 50%nof all regular and special to laws, morals, and good customs
meetings of the BoD during their incumbency is a ground for b) Deposits
disqualification on the next election ● The unpaid balance of money or its equivalent received b a bank in the usual course
● Board-level committee Meetings of business and for which it has given, or is obliged to give credit to a commercial,
o May likewise be in person or modern provided that: checking, savings, time, or thrift account or issued in accordance with BSP rules and
▪ The attendance and participation of members in committee regulations and other laws
meetings shall be considered in the assessment of continuing c) Characteristics of Bank Deposits
fitness and propriety of each director as a member of board-level 1. Not Regular Deposit Contracts
committees and BoD ● They are in the nature of irregular deposits
e) Prohibition of Public Officials ● They are really loans because they earn interest
● No appointive or elective public official, full time or part-time, shall serve as officer 2. Loans Made to the Bank
of any private bank ● All kinds of bank deposits, are to be treated as loans and are covered by the law on
o Exception: Such service is incident to financial assistance provided by the loans
government or a government owned or -controlled corporation to the bank ● The contract b/w the bank and its depositor is governed by the Civil Code on simple
or unless otherwise provided under existing laws loan
o Exception 2: In Sec. 5 of Rural Banks Act provides that nothing in the said ● There is a debtor-creditor relationship b/w the bank and its depositor, respectively.
Act “shall be construed as prohibiting any appointive or elective official The depositor lends money to the bank, the bank pays the depositor on demand
from serving as directir, officer, consultant, or in any capacity in the bank. o Their savings-deposit agreement is the contract that determines the rights
and obligations of the parties
Deposit Function of Banks ● The bank has the right to compensation and can set-off the deposit accounts in its
a) Deposit Function hands for the payment of any outstanding indebtedness of the depositor to it that are
● Bank has for its services/functions: 1) acceptance of deposits from the public and 2) due and demandable from the latter
lending the funds obtained from the deposits ● Article 1287 of the NCC, that prohibits compensation when one of the debts arises
● Banks are not considered such if they do not accept deposits from the public from a depositum does not apply to bank deposits
● Functions which allow a bank to receive money from the public with the obligation 3. Form part of the Generic Funds of the Bank
of returning an equal amount of the same kind and quality ● A person who receives loan of money or any other fungible acquires ownership
● Contract b/w the bank and the depositor is substantially a contract of loan thereof and is bound to pay to the creditor an equal amount of same kind and quality
o However, unlike ordinary contracts of simple loan, bank deposits are ● It can make use of the amount deposited for its banking operations. A bank has no
subjevt to special rules provided under special laws and BSP regulations obligation to return or deliver the same money that was deposited

Types of Deposit Accounts

● Current Deposit o Time deposit is covered by a certificate of deposit
o Meant to facilitate business and accommodate a higher rate or frequency of o Certificate of Deposit: written acknowledgement by a bank or banker of the receipt
transactions between businesses by imposing no restrictions on withdrawal amounts of a sum of money on deposit which the bank or banker promises to pay to the
or frequency. depositor, to the order of the depositor, or to some other person or to his order,
o In exchange, no interest is paid on such accounts whereby the relation of debtor and creditor b/w the bank and the depositor is created
● Savings Deposit ▪ Also defined as a receipt issued by a bank for an interest bearing time
o Most common type of deposit deposit coming due at a specified future date
o Deined as interest or non-interest bearing deposits, which can be withdrawn upon o An account can still be considered a time deposit even if the bank calls it a special
demand thru available bank channels. savings account and even if a passbook represents the deposit
o It has an investment feature in the sense that it is normally opened for the purpose of o These deposits offer higher interest rates on the amount deposited in exchange for
earning interest the fixed tenure of deposit where the depositor undertakes not to withdraw the
o This type can be opened on all types of banks amount deposited.
o Requirement of presentation of passbooks is usually included in the terms and ▪ The longer the term, the higher the interest
conditions printed in the passbooks. ▪ In some cases, a bank may allow an early withdrawal although a penalty is
o A bank is negligent if it allows the withdrawal w/out requiring presentation of a imposed
passbook ● Individual or Single Account
o Withdrawal may also now be through ATM ● Joint Account
● Trust Account o Created when 2 or more persons open an account, the same may be an “and/or
o A savings account established under a trust agreement, containing funds account” or an “and” account.
administered by the bank for the benefit of the trustor or other person/s o If the joint account is an “and/or” account, any one of the depositors may withdraw
o An account where transactions arising from trusteeship are kept and recorded funds, any one of the depositors may withdraw therefrom and signature of one is
● Demand Deposit sufficient to authorize bank to allow such withdrawal
o All those liabilities of banks that are denominated in the Philippine currency and are o If it is an “and” account, the depositors are joint creditors of the bank and signature
subject to payment in legal tender upon demand of presentation of checks of all of the depositors are necessary to allow withdrawals
o Accdg. to BSP Circular 992 s. 2018, demand deposits are: “deposits, subject to o Concurrence of 2 or more creditors in one and the same obligation does not imply
withdrawal by check thru available bank channels and or through ATM which are that each one has the right to demand compliance with the obligation.
otherwise known as current or checking accounts ▪ Presumption is that depositors own equal shares in the deposit
o The bank may or may not pay interests on these accounts ▪ In case of death of one of the depositors, the share belonging to the
o General Rule: Only universal bank or commercial bank can accept or create demand deceased depositor forms part of his/her estate and withdrawal of such is
deposits subject to tax laws
▪ Exception other banks may also have this right if authorized by MB of the ● Foreign Currency Deposit
BSP o Any person, natural or juridical, may deposit with such Philippine banks in good
● Fixed/Time/Term Deposits standing, as may, upon application, be designated by the BSP for the purpose,
o Defined as a deposit the payment of which generally cannot legally be required foreign currencies which are acceptable as part of the international reserve, except
within a specified number of days those which are required by the BSP to be surrendered
o Section X231 of MORB: “no time deposit shall be accepted for a term less than 30 o Banks designated by the BSP shall have the authority to:
days 1. Accept deposits and to accept foreign currencies in trust
 2. Accept said deposits as Collateral for loans subject to such rules and ergulatiosn ● Minors
as may be promulgated by the BSP o Allowed under special laws to open, in their own right, savings and time deposits.
3. Issue certificates to evidence such deposits o Section 1 of PD 734: “Minors who are atleast 7 years of age, are able to read and
4. Pay interest in foreign currency on such deposits write, have sufficient discretion, and are not otherwise disqualified by any other
5. Discount said certificates capacity, are hereby vested with special capacity and power in their own right and
o Foreign currency deposits are exempt from attachment, garnishment, and other court name, to make savings or time deposits with and withdraw the same as well as
order and processes receive interests from banking institutions, without assistance from their parents or
o Other features of FCD’s: guardians.”
1. They may adopt a numbered account system for recording and servicing ▪ Parents may deposit for their minor children and guardians for their wards
deposits ▪ Demand deposits cannot be opened by mimors w/out the assistance of their
2. FCDs are exempt from taxes including interests, income or earnings of deposit parents or guardians
3. In the event a new law or regulation is issued decreasing the rights previously o Section 22 of Thrift Banks Act of 1995: “Minors in their own rights and in their own
granted, it shall not apply to FCD’s already made or existing at the time of the names may make deposits and withdraw the same, and may receive dividends and
issuance of such new regulation or enactment interest: Provided, however, That, if any guardian shall give notice in writing to any
4. There is no restriction on the withdrawal by the depositor of his deposit or on the thrift bank not to make payments of deposits, dividends, or interest to the minor of
trabsferability of the same abroad. whom he is the guardian, then such payment shall be made only to the guardian.”
Exception: those arising from the contract b/w depositor and bank ● Corporations
● Anonymous Accounts o Juridical persons are capacitated to open bank accounts
o Generally prohibited by AMLA 2001 o For corporations the power to open bank accounts or to deposit in the bank is part of
o When accounts are opened, banks must employ a system to establish the identity of the general powers of the corporation.
the depositor o Banks shall open and maintain accounts only in true and full name of the entity and
▪ Atleast 3 specimen of the depositor’s signature is required shall have primary responsibility to ensure that the entity has not been, or is not in
o The use of pseudonyms or alias may amount to criminal offenses under existing laws the process of being dissolved, struck-off, wound-up, terminated, or placed under
o Exception: Under Foreign Currency Deposit Act provides that “numbered accounts receivership or liquidation
for recording and servicing of said FCD are allowed. o Opening of a bank account for a corporation normally precedes commencement of
▪ This was amended by AMLA 2001 and MORB which now allows only life of a corporation because payments of subscribers that will be initial paid up
numbered non-checking accounts and absolutely prohibits numbered capital are deposited in the bank
checking accounts o With respect to opening of corporate accounts after incorporation, power to do so
● Numbered Accounts rests with the BoD or Trustees
o Section X806.2.q ▪ Required that there be Corporate Secretary’s Certificare on the Board
▪ No peso or foreign currency non-checking numbered accounts shall be Resolution approving the opening of a corporate account and designating
allowed w/out establishing the true and full identity and existence of the account signatory/ies must be submitted before an account is opened
customers and applying enhanced due diligence in accordance with
Subsection X806.1.b Married Women
xxx ● They are allowed to opem bank accounts w/out assistance of their husbands (DUH!)
Minors and Corporations as Depositors
 ● R.A 7192: Women of legal age, regardless of civil status, shall have the capacity to act and
enter into contracts which shall in every respect be equal to that of men under similar
circumstances.
In all contractual situations where married men have the capacity to act, married women shall
have equal rights.

Corporations not Required to Open Deposit Accounts Prior to Incorporation

● SEC has dispensed with the requirement of a Certificate of Bank Deposit for the registration
of the AOI of New Corporations.
o Previous requirement required opening of corporate bank account as pre-requisite to
incorporation rendered nugatory inmline with remival of requirement of 25%
subscribed capital be paid-up prior incorporation