KINDS OF DEPOSITS

Bilar, William Karol Benedict W.

I. DEMAND DEPOSITS
- All those liabilities of banks that are denominated in Philippine Currency and are
subject to payment in legal tender upon demand by presentation of checks
- GENERAL RULE : Only a Universal or Commercial Bank can accept or create
demand deposits
Exception: All other banks upon prior approval by the Monetary Board

a. Manual of Regulations of Banks (MORB) Rules, The highlights of the

provisions of the MORB on demand deposits are as follows

1. Commercial and Universal Banks may accept or create

demand deposits subject to withdrawal by check without prior
authority from the BSP
2. A thrift bank, rural bank, cooperative bank may accept or
create demand deposits upon prior authority from BSP
3. Such banks should also comply with
i. Capitalization requirements provided for in pertinent
BSP Circular
ii. Must be a member of the Philippine Deposit Insurance
Corporation in good standing, If not a member it shall
have a designated Universal/ Commercial banks thru
which it will participate in the check clearing system
iii. Complied with all other conditions the BSP may impose
4. Temporary overdrawing not allowed, unless caused by normal
bank charges or other incidental fees
5. Drawings against uncollected deposits are prohibited
6. Certain bank officers and employees are prohibited from
maintaining demand accounts with the banking office in which
they are assigned
i. All officers
ii. Employees of the bank’s cash department
iii. Other employees who have direct and immediate
responsibility in handling demand accounts
*Includes spouses and relatives within the 2nd degree
of consanguinity and affinity

7. May also earn interest

b. Stopping payment of checks and Countermanding

  As a check is a mere order on a bank to pay, it is subject to
revocation from the drawer at ANY TIME before it is accepted.
 If a bank pays a check after it has been notifies, it pays on its own
responsibility and should not charge the account
 Drawer may countermand payment if he has a valid defense
against the holder of the check.
 If no valid reason to countermand, Drawee still obligated to
dishonor the check on the basis of the stop payment order

II. SAVINGS ACCOUNT

- Most common type of deposit
- Opened generally because of its investment feature
- Can be opened in ALL TYPES of banks
- Funds are withdrawn by use of withdrawal slips, which are verified by the
signature cards
- GENERAL RULE: Banks are prohibited from accepting a deposit slip if the
passbook is not presented
Exception : Banks may be authorized by the BSP to adopt a no- passbook
withdrawal system

III. NEGOTIABLE ORDER OF WITHDRAWAL ACCOUNTS (NOW)

- Are interest bearing deposit accounts that combine the payable on demand
feature of checks and investment feature of savings accounts
- Demand feature is served by the issuance of a “Order of Withdrawal” similar to a
check
- MORB requires the order shall have a size of 3 inches by 7 inches and shall be on
security/check paper
- Such withdrawal order similar to checks, may be prosecuted under Art.315(b) of
the RPC or Estafa
- GENERAL RULE: Universal or Commercial Banks may offer NOW accounts
Exception: other banks upon approval by the Monetary Board

a. Servicing of NOW accounts, as provided for by Sec X224 of the MORB

1. The bank shall inform the depositor of all terms and conditions
2. It shall require 2 specimen signatures and other pertinent information
3. Deposits are covered by deposit slips in duplicate
4. Separate from regular savings deposits
5. Blank NOW forms shall be prenumbered
6. Bank statements shall be sent to each depositor at the end of each month
for confirmation
 7. Must use the form prescribed by the present rules on NOW accounts

IV. TIME DEPOSITS

- Deposit which cannot be withdrawn before a set date or for which notice of
withdrawal is required
- Sec X231 of the MORB “No time deposit shall be accepted for a term less than
30 days”
- The certificate requires no specific form as long as there is some written
memorandum that the bank accepted a deposit.
- It may be in the form of a passbook, because what is controlling is the nature or
meaning conveyed by the passbook, not the particular label attached to it.

DEPOSITING FUNDS
- The function is similar to that of a loan, where it shall not be perfected until the
delivery of the object of the contract.
- The duty of the bank over the amount shall commence only from delivery of the
amount by the depositor.

I. THE PROCESS
- As decided by the Supreme Court in Philippine Bank of Commerce v CA
1. Deposit slips are prepared and signed by the depositor or an agent
2. Indicates therein the current account number to which the deposit is to be
credited
3. Name of depositor or current account number
4. Date of deposit
5. Amount in deposit either in cash or checks
6. Original slip remains in the bank and the duplicate is given to the depositor

II. VALIDATION OF DEPOSIT

- “ The Supreme Court ruled in one case that the bank cannot be relieved of
liability if it validated blank or incomplete duplicate copies of deposit slips
thereby facilitating the taking of the funds of the depositor by the latter’s
employee” (PBCom v CA)

- “A bank was likewise made liable when it accepted withdrawal slips for deposit
that turned out to be unfunded. The face that withdrawal slips were honored in
the past does not excuse it from liability” (Firestone v CA)

WITHDRAWAL OF FUNDS
 - When cash is deposited in the account, the depositor can withdraw the amount
at any time provided he complies with the prescribed procedure
- However, a deposit made by a check cannot be withdrawn until it has been
cleared
- Similarly with Drawings and withdrawals against uncollected deposits is also
prohibited Unless, the same is made against a uncollected treasurer’s check,
managers check, cashier’s checks, treasury warrants, and postal money orders
and duly funded “on us” which may be permitted at the discretion of the bank.
I. METHODS OF WITHDRAWAL
1. Encashment Slip
 Commercial documents normally used by merchants and
businessmen to promote or facilitate trade
 It allows for the person whose name and signature appears
thereon to enchash a check and withdraw the amount indicated

2. Through Electronic Instructions

 A bank may make agreements with its depositor that withdrawal
of funds may be made through electronic instructions or messages
3. Automatic transfer from savings account
 A depositor may maintain a savings and checking account with the
same bank and agree to automatic transfers is the balance of the
checking account would be insufficient
 Also called “Combo Plan Accounts”

4. Cash Card or ATM Card

 Where a PIN is encoded in the card to facilitate the withdrawal
through the ATM