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Joint deposit accounts

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By Atty. Jun de Zuñiga

A deposit transaction, which is peculiar to the banking business, is the act of placing money with a bank. It is a contract whereby one of the parties delivers money to another and the latter acquires ownership thereof upon the condition that the same amount shall be paid back. The relationship between a bank and the depositor is governed by contract and such contract may stipulate on the payment of interest.

Bank deposit accounts may either be single accounts or joint accounts. Single accounts are individually-owned accounts or accounts under one name. On the other hand, joint accounts are accounts held under more than one name and use the conjunction “and”, “or” or “and/or”.

The funds deposited in the joint deposit account are under co-ownership because the ownership or right over the same belongs to different persons, the joint depositors. Co-ownership is that state where an undivided thing belongs to two or more persons. The share or portion belonging to the joint depositors in the joint deposit account shall be presumed equal and the benefits as well as the charges in the joint account shall be proportional to their respective shares (Banking Laws of the Philippines, BSP, Vol. II, p. 39).

As mentioned, joint accounts can either be “and,” “or,” or “and/or” accounts.

A joint “and” account is a type of account, commonly used by business partners, in which the approval of both owners is needed to make withdrawals. The conjunctive word “and” means “in addition to,” and whether it is used to connect words, phrases or full sentences, must be accepted as binding together and as relating to one another. “And” in statutory construction implies conjunction or union. Thus, a joint “and” account implies that withdrawal from said account may only be made with the signatures of all co-depositors (Ibid.).

A joint “or” and “and/or” account are types of accounts commonly used by husband and wife in which either, acting separately, can make deposits or withdrawals at any time (Ibid., p. 40). It offers the convenience of needing only one signatory.

Joint accounts have legal significance for taxation and deposit insurance purposes.

Under Section 97 of the Chapter of the National Internal Revenue Code on estate taxes, it is provided that all bank withdrawal slips shall contain a statement to the effect that all of the joint depositors are still living at the time of withdrawal by any one of the joint depositors and such statement shall be under oath by said depositors. In the event a joint depositor passes away, the presumption comes in that he or she owns an equal share in the joint deposit and that any withdrawal from the joint deposit account should be subject to estate proceedings, including the payment of the estate tax.

The burden is thus on the withdrawing depositor to attest that the other joint depositor is still living under pain of perjury if it turns out that the statement is untrue, since the attestation is deemed under oath.

For deposit insurance purposes, the rule, under PDIC guidelines, is that in case of bank receivership the maximum deposit insurance coverage of P500,000 shall be divided equally between or among the co-owners of a joint account, unless a different sharing is stipulated in the deposit documents.

 

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The above comments are the personal views of the writer. His email address is jzuniga@bsp.gov.ph

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