III.

DEPOSIT FUNCTION
A. NATURE OF DEPOSIT
1. Deposits as Simple Loans1 Arts. 1953 and 1980, Civil Code ; Serrano v. Central Bank, 96 SCRA 96 (1980) 2. Bank as Debtor a. Deposit is voluntary agreement; Know Your Customer standards xMemorandum dated 1 October 2002; xSec. X262.1, MRB b. Bank acquires ownership of money deposited; obligation to pay amount, but no obligation to return the same money 2 Guingona, Jr. v. City Fiscal of Manila , 128 SCRA 577 (1984); BPI Family Bank v. Franco, 538 SCRA 184 (2007) CHOI c. Payment to proper party-depositor Fulton Iron Works Co. v. China Banking Corp., 58 Phil. 206 (1930); Bank of the Philippine Islands v. Court of Appeals, 232 SCRA 302 (1994) d. Deposits are not preferred credits Central Bank v. Morfe, 63 SCRA 114 (1975) DELOSO e. Bank has right to compensation Gullas v. Philippine National Bank, 62 Phil. 519 (1935); Republic v. Court of Appeals, 65 SCRA 186 (1975); Bank of the Philippine Islands v. Court of Appeals , 512 SCRA 620 (2007) f. No breach of trust; Mandamus not a remedy xLucman v. Malawi, 511 SCRA 268 (2006) 3. Banks Duty of Utmost Care3 Sec. 2, GBL FERNANDEZ

B. KINDS OF DEPOSIT
1. Demand Deposits Secs. 58-60, NCBA; xSecs. X201 to X204, MRB a. For UB and KB Sec. 33, GBL b. For TB Sec. 10(b), Thrift Banks Act
1

San Carlos Milling Co., Ltd. v. Bank of the Philippine Islands , 59 Phil. 59 (1933); Hilado v. De la Costa, 83 Phil. 471 (1949); People v. Ong, 204 SCRA 942 (1991); Moran v. Court of Appeals, 230 SCRA 799 (1994); Consolidated Bank and Trust Corporation v. Court of Appeals , 410 SCRA 562 (2003) 2 Serrano v. Central Bank, 96 SCRA 96 (1980); People v. Puig, 563 SCRA 564 (2008). 3 Simex International (Manila), Inc. v. Court of Appeals , 183 SCRA 360 (1990); Go v. Intermediate Appellate Court, 197 SCRA 22 (1991); Bank of the Philippine Islands v. Intermediate Appellate Court, 206 SCRA 408 (1992); Philippine Bank of Commerce v. Court of Appeals, 269 SCRA 695 (1997); Bank of the Philippine Islands v. Court of Appeals , 326 SCRA 641 (2000); Firestone Tire & Rubber Company of the Philippines v. Court of Appeals , 353 SCRA 601 (2001)

c. For RB/Coop Bank Sec. 12(b), Rural Banks Act; xSubsec. X201.1, MRB d. For Islamic Banks Sec. 6, par. (7)(a), Islamic Bank Charter 2. Savings Deposits xSec. X213 and X214, MRB; International Exchange Bank v. Commissioner of Internal Revenue , 520 SCRA 688 (2007) LIM 3. Negotiable Order of Withdrawal (NOW) Accounts xSecs. X223 to X226, MRB; People v. Reyes, 454 SCRA 635 (2005) 4. Time Deposits xSecs. X231, MRB; BPI Family Savings Bank v. First Metro Investment Corporation, 429 SCRA 30 (2004) 5. Foreign Currency Deposits Secs. 2 and 3, FCDA4 6. Money Market Placements? Allied Banking Corporation v. Lim Sio Wan, 549 SCRA 504 (2008) PACATANG

C. CAPACITY OF DEPOSITORS
1. Minors Sec. 1, Presidential Decree No. 734 ; Sec. 22, Thrift Banks Act 2. Married Women Sec. 5, Republic Act No. 7192 3. Corporations: Through signatories designated by Board of Directors Sec. 23, Corporation Code 4. Bank Officers and Employees: Prohibited from maintaining demand deposits or current accounts in banking office where they are assigned xSec. X204, MRB

D. OPENING OF DEPOSIT ACCOUNTS

1. Know Your Customer Standards: At least 3 specimen signatures updated every 5 years, ID optional xSubsec. X262.1, MRB 2. Prohibitions: a. Anonymous Accounts/Fictitious Names Sec. 9(a), AMLA5 b. Pseudonyms xArt. 178, Revised Penal Code; xCommonwealth Act No. 142, as amended; xArts. 379-380, Civil Code c. Exception: Numbered accounts Sec. 9(a), AMLA; Sec. 3(1), FCDA 3. Joint Accounts Arts. 485, 1207 and 1208, Civil Code PADLAN

E. ADMINISTRATION OF DEPOSIT ACCOUNTS

4 5

Republic Act No. 6426, as amended (Foreign Currency Deposit Act) Republic Act No. 9160, as amended by Republic Act No. 9194 (Anti-Money Laundering Act of 2001)

1. Deposit of Funds a. Delivery required Art. 1934, Civil Code b. Acceptability of withdrawal slips as deposits Firestone Tire & Rubber Co. of the Phil. v. Court of Appeals, 353 SCRA 601 (2001) 2. Withdrawal of Funds a. From current accounts: Allowing withdrawal of value of check drawn: (i) (ii) In case of insufficiency of funds Moran v. Court of Appeals, 230 SCRA 799 (1994); Villanueva v. Nite, 496 SCRA 459 (2006) Prior to clearing Associated Bank v. Tan, 446 SCRA 282 (2004) RICO

(iii) In favor of other persons when check crossed Traders Royal Bank v. Radio Philippines Network, Inc., 390 SCRA 608 (2002) (iv) By issuing a managers check Equitable PCI Bank v. Ong , 502 SCRA 119 (2006) b. From savings accounts: Presentation of passbook and withdrawal slip Bank of the Philippine Islands v. Court of Appeals , 326 SCRA 641 (2000) c. From time deposits: Surrender of certificate of deposit Far East Bank and Trust Company v. Querimit, 373 SCRA 665 (2002) d. From foreign currency deposit accounts : Based on contract Sec. 5, FCDA e. If deceased depositor: (i) (ii) Tax clearance required Sec. 97, NIRC; But See: xSec. 28(A)(1) (a) and (6), NIRC Survivorship Agreements Vitug v. Court of Appeals, 183 SCRA 755 (1990)

3. Booking of Deposits xSec. X261, MRB 4. Interest on Deposits Citibank, N.A. v. Cabamongan , 488 SCRA 517 (2006) a. Not subject to interest ceilings xSec. X242, MRB b. Time of payment of interest on time deposits xSubsec. X242.1, MRB c. Matured time deposits xSubsec. X242.2, MRB d. Disclosure requirements xSec. X243, MRB 5. Closing of Account Far East Bank and Trust Company v. Pacilan, Jr., 465 SCRA 372 (2005)