CHAPTER 2

CLASSIFICATION OF BANKS
Sec 3.2 of GBL:
1. Universal banks;
2. Commercial banks;
3. Thrift banks: i. savings & mortgage banks ii. Stocks savings and loan associations iii.
Private development banks
4. Rural banks;
5. Cooperative banks;
6. Islamic banks
7. Other classifications of banks as determined by MB of BSP;
UNIVERSAL BANKS banks that have the authority to exercise in addition to the powers of
commercial banks, powers of an investment house and power to invest in non-allied
enterprises.
Investment house any enterprise which engages in the underwriting of securities
of another person or enterprise including securities of the government and its
instrumentalities.
Underwriting of securities - act or process of guaranteeing distribution and sale
within the Philippines of securities .
Non-allied enterprises requires minimum public stock offering which is 10% of
the required minimum capital, that is, an offer to sell equity shares to the public
stockholders.
Bank whose shares are already listed in PSE at the time of filing the application
for authority = shall be deemed to have complied.
COMMERCIAL BANKS are given such powers as may be necessary to carry on the
business of commercial banking in addition to the general powers incident to corporations.
- May invest only in the equities of allied enterprises as may be determined by MB.
COOPERATIVE BANKS organized primarily to provide financial and credit services to
cooperatives.
RURAL BANKS designed to make needed credit available and readily accessible in the
rural areas on reasonable terms.
THRIFT BANKS its purpose is to meet the needs of capotal, personal and investment
credit or medium and long term loans for Filipino entrepreneurs.
- w/o separate BSP authority, functions:
- w/prior approval of MB, functions:
ISLAMIC BANKS
OTHER SPECIAL BANKS GOCCs: Land Bank of the Philippines, Development Bank of the
Philippines
GENERAL DISTINCTIONS
FOREIGN BANKS Summons and Legal processes shall be made tp the ff: 1_ Philippine
agent or head of any foreign designated to accept the service 2) in the absence thereof,
Bangko Sentral Deputy Governor In-Charge

GR: Foreign banks shall be governed by provisions of foreign banks in GBL

XPN: matters involving: i. creation, formation, organization or dissolution of corporations ii. fi

CHAPTER 3
DEPOSIT FUNCTION
BASIC
1)
2)

FUCNTIONS OF A BANK
Acceptance of deposits from public;
Lending the funds obtained from deposits
If deposit function is absent, an institution cannot be considered as a bank
VOLUNTARY CREDITOR-DEBTOR RELATIONSHIP: The contract entered into
between a bank and depositor is a contract of loan.
Art. 1980 of CC fixed, savings and current deposits of money in banks and similar
institutions shall be governed by the provisions concerning simple loans
DEPOSITOR one who pays money into the bank in the usual course of business, to
be placed to his credit and subject to his check or beneficiary held by the bank.

Nature of contract: VOLUNTARY, A bank cannot be compelled to accept deposits.

Maybe liable only if: non acceptance is discriminatory or is otherwise contrary to
morals, public policy and good customs,
CAPACITY OF DEPOSITOR
GR in contracts: A party must be capacitated
XPN: Under Special laws, for i.e governing Banks the rule is different
A minor may open , in their own right, savings and time deposits.
Married women are allowed to open bank accounts without the assistance of
their husbands.
Juridical corporations are capacitated to open banks. (As a matter of fact, it is
a requirement even before its life commences. Note: Attached to the AIC is a
bank certificate covering the deposit of paid-up capital; Board of Directors
may delegate powers XPN: but not to non-officer who is non-resident alien)
BANK AS DEBTOR- the bank has no duty to preserve the amount deposited.

RULES:
1) The bank can make use as its own, the money deposited.
2) The duty of the bank is to its creditor-depositor and not to third persons. Third
persons who may have a right to the money deposited cannot hold the bank
responsible.
3) Officers of the bank cannot be held liable for Estafa if they authorized the use of the
money deposited by depositor.
4) Bank deposits are not preferred credits.
5) The bank has right to compensation provided that thr requisites are present.

LEGAL COMPENSATION
GR: A bank has right to set-off provided that requisites for legal compensation are
present
(Insert req)

DEPOSIT NOT TRUST UNDER THE CIVIL CODE

Correlate w/ Art. 1440 of NCC

In the case of a deposit, an amount is delivered to the bank by the depositor not as a
trustor but as a creditor.

BASIC OBLIGATIONS TO DEPOSITOR

To pay the depositor equal to the amount deposited
Cannot prevent: drawing checks against depositors account or release of funds in
savings account
NOT ALLOWED:
Unilateral freezing of account (even if the deposited is alleged to be obtained
fraudulently)
Art. 559 does not apply (re possession of lost property). Why? Money is considered as
generic and fungible albeit movable.
Cannot stop the withdrawal of funds from an account on the basis of an allegation
that the money deposited is held in trust by the depositor for another person and
that the withdrawal is breach of trust. (Liability for Trust Account)
A bank maybe held liable if it took part in committing fraudlent act.
Dishonest Assistance0 liability is imposed to anyone who has dishonestly been an
accessory, assisted in a disposition in breach of trust.

REQS:
i.
There must be trust or other fiduciary relationship;
ii.
There must be breach of trust;
iii.
The person hwom liability is imposed must have been an accessory or
assisted in the malfeasance or breach of trust;
iv.
The accessory must be dishonest.
Knowing Receipt:
REQS:
i.
Disposal of the claimants assets in breach of fiduciary duty;
ii.
The beneficiall recipt by defendant of assets w/c are tracable as representing
assets of claimant;
iii.
Knowledge on the part of defendant bank that assets he received are
traceable to a breach of fiduciary duty
A court order of garnishment

EFFECT OF INSOLVENCY ON DEPOSIT

KINDS OF DEPOSITS
1.
2.
3.
4.

Demand Deposit
Savings Account
NOW Deposit
Time deposit payment of which generall cannot legally be required w/in a specified
number of days.

DEPOSIT & WITHDRAWAL OF FUNDS

Deposit it is a real contract. (need for delivery) However, an accepted promise to deliver
by way of loan is binding to the parties,