ROSALES, MARY ROSE QUIZ 1

April 4, 2021

1. Discuss the following kinds of deposits:

A. DEMAND DEPOSIT

A demand deposit means 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. BSP Circular No. 992, Series of 2018 also defines a demand deposit
as “deposits, subject to withdrawal by check through available bank channels and/or thru
the automated tillering machines or ATM which are otherwise known as current or
checking accounts. The bank may or may not pay interest on these accounts.”

As a general rule, only a universal bank or commercial bank can accept or create
demand deposits. A bank, Other than a universal bank or commercial bank cannot accept
or create demand deposits except upon prior approval of the monetary board of the bangko
sentral of the Philippines. This means that universal bank and commercial banks do not
require a separate authority from the BSP to accept or create demand deposit. These banks
by their nature are allowed or empowered by law to accept or create demand deposits.

B. SAVINGS DEPOSIT

Savings deposits are the most common type of deposit. It is defined as interest or non-interest-
bearing deposits, which can be withdrawn upon through available bank channel. A savings deposit
has an investment feature in a sense that it is normally open for the purpose of earning interest.
This type of account can be opened in all types of banks. However, Islamic banks are expressly
authorized to open savings account for safekeeping or custody with no participation and profit and
losses except unless authorized by the account holders to be invested.
The following savings account and their definitions are provided in BSP circular number 992 series
of 2018 amending portions of the financial reporting package required under subsection x19 1.2
of the MORB:

1. Regular savings account- refers to interest-bearing account which is withdrawable either

upon presentation of a properly accomplished withdrawal slip together with the
corresponding passbook or through automated tellering machine.
2. Kiddie and teen savings account- refers to interest-bearing savings account of children and
teens up to 19 years old with an initial deposit of 100 pesos and no minimum maintaining
balance requirement.
3. Basic deposit account- refers to interest interest-bearing account design financial inclusion.
4. Other savings account- refers to interest bearing special savings account which offers tiered
interest rates depending on the size of deposit. It usually carries higher interest rate
compared to the rate for regular savings account.

C. TIME DEPOSIT

A time deposit is defined as a deposit the payment of which generally cannot legally be
required within a specified number of days. Section X23 one of the manuals of regulations for
banks prescribes the minimum term for time deposits, it states that no time deposit shall be
accepted for a term of less than 30 days’ time deposit is covered by a certificate of deposit.

In FAR EAST BANK AND TRUST COMPANY VS QUERIMIT defined a certificate of deposit as
“a written acknowledgment by a bank or banker of the receipt of a sum of money on deposit which
the bank or banker promises to pay to the depositor, to the order of the depositor, or to some other
person of his order whereby the relation of the debtor and creditor between the bank and the
depositor is created. A certificate of deposit is also defined as “a receipt issued by a bank for an
interest-bearing time deposit coming due at a specified future date.”

An account can still be considered a time deposit even if the bank calls it a special savings account
and even if a passbook represents the deposit. “a passbook representing an interest earning deposit
account issued by a bank qualifies as a certificate of deposit drawing interest. A document to be
deemed a certificate of deposit requires no specific perform as long as there is some written
memorandum that the bank accepted a deposit of a sum of money from a depositor. What is
important and controlling is the nature or meaning conveyed by the passbook and not the particular
label of nomenclature attached to it, in as much as substance, not form, is paramount.

2. ABC BANK, A THRIFT BANK, WOULD LIKE TO OFFER DEMAND DEPOSITS TO

ITS CLIENTS. WHAT ARE THE REQUIREMENTS IN ORDER FOR THE BANK TO
VALIDLY OFFER DEMAND DEPOSITS TO ITS CLIENTS?

ABC Bank as a Thrift bank may offer, accept or create demand deposits upon prior authority
of the BSP. When a thrift bank applies for authority to accept or create demand deposit it shall also
comply with the following:

• Minimum capitalization requirements under subsection x111.1 of the MORB

• It must be a member of the PDIC in good standing
• If it is not a member of the Philippine Clearing House Corporation it shall have designated
KB/TB through which it shall participate in the check clearing system; and
• That it has complied with all other conditions that the BSP may impose.

Upon compliance with the following essential requirements, ABC Bank could validly offer, accept
or create demand deposits to its clients upon authority of the BSP.