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Minors as depositors


Atty. Jun de Zuñiga

Atty. Jun de Zuñiga

The relationship between a bank and its depositors is one of contract and the basic rule is that one should have legal capacity to act as a requisite for entering into contracts. A minor who has not reached 18 years of age, the majority age, is incapable of giving valid consent to a contract. A contract entered into by a minor is considered voidable. It means it remains valid and binding unless annulled by the court, but is susceptible of ratification by the minor himself upon reaching majority age.

The general rule thus is that a minor cannot enter into a deposit contract with a bank. An exception was made in the old General Banking Act (Republic Act No. 337) which provided in Section 35 thereof, under Chapter V titled “Savings and Mortgage Bank”, that “minors may, in their own right and in their own names, make deposits and withdraw the same and may receive dividends and interest; Provided, however, that if any guardian shall give notice in writing to any savings bank not to make payments of deposits, dividends or interest to the minor of whom he is a guardian then such payment shall be made only to the guardian.”

The above provision was not incorporated in the General Banking Law of 2000 (RA No. 8791) which replaced the General Banking Act. Nonetheless, under Presidential Decree No. 734 issued in 1975, the following was provided: “Minors who are at least seven years of age, are able to read and write, have sufficient discretion, and are not otherwise disqualified by any other incapacity, are hereby vested with special capacity and power, in their own right and in their own names, to make savings or time deposits and withdraw the same as well as receive interests thereon from banking institutions, without the assistance of their parents or guardians.”

Subsequently, the Thrift Banks Act of 1995 (RA No. 7906) repealed Chapter V of RA No. 337 but completely incorporated Section 35 thereof, quoted above, as Section 22 of RA No. 7906. In other words, Section 35 of the old General Banking Act was transposed to Section 22 of the Thrift Banks Act.
From the foregoing, I derive the following conclusions:

Under Section 22 of the Thrift Banks Act, minors are allowed to open savings and time deposit accounts with thrift banks (savings and mortgage banks, stock savings and loan associations, and private development banks). As mentioned, this is the same provision embodied in Section in Section 35 of the old General Banking Act. Both the old General Banking Act and the Thrift Banks Act referred to opening of deposit accounts by minors only with savings banks and thrift banks. They therefore excluded the deposits by minors in other types of banks such as commercial banks and rural banks.

On the other hand, Presidential Decree 734, which also refers to deposits by minors, has a broader coverage since it applies not only to thrift banks but, notably, to all “banking institutions” which can include, aside from thrift banks, universal banks, commercial banks, rural banks, cooperative banks and government banks. It may be noted that the Thrift Banks Act did not provide for the repeal of Presidential Decree No. 734 which means, under the principles of statutory construction, that these two (2) laws can co-exist since they are not repugnant nor inconsistent with each other. In conclusion, it means that minors may open deposit accounts in thrift banks by virtue of the Thrift Banks Act, and in all other types of banks (including also thrift banks) by virtue of Presidential Decree No. 734.

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

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