Case Summary (G.R. No. 192413)
RTC Escheat Proceedings
On December 14, 2006, the Republic, through the Office of the Solicitor General, filed a Complaint for Escheat under Act No. 3936 against various banks, including RCBC. On May 19, 2008, the Makati RTC rendered judgment declaring P1,019,514.29 held by RCBC as escheated to the Republic and ordered its deposit with the Treasurer of the Philippines.
Respondents’ Intervention Attempt
Respondents learned of the escheat order only when negotiating settlement in a separate case. They filed an Omnibus Motion on June 11, 2008, seeking partial reconsideration or intervention, arguing that they had a pending claim to the funds under Civil Case No. Q-91-10719. On November 3, 2008, the RTC denied their motion, finding that publication constituted adequate notice and that intervention was untimely under Rule 19.
CA Reversal for Lack of Notice
The CA reversed the RTC on November 26, 2009. It held that (1) RCBC failed to notify respondents or the payee before filing its sworn statement on dormant accounts, and (2) the Clerk of Court likewise failed to serve individual notice on all interested claimants. The CA deemed both failures to violate respondents’ constitutional right to due process and rendered the RTC decision void for lack of jurisdiction.
Issues on Appeal
- Whether the RTC decision was void for failure to send personal notices to respondents.
- Whether RCBC had an obligation to notify respondents immediately before filing its sworn statement with the Treasurer.
- Whether the funds allocated for the Manager’s Check were subject to escheat.
Statutory Framework for Escheat Proceedings
Act No. 3936, as amended, prescribes an in rem action: service on banks by personal delivery of summons to officers, and service on depositors or other claimants by publication. A separate notice must invite all other persons claiming interest to appear within sixty days after publication. Jurisdiction attaches upon publication and service on the defendant bank.
Notice to Depositors and Preliminary Communication Requirement
Section 2 of Act No. 3936 requires banks, before filing sworn statements on dormant accounts, to “communicate with the person in whose favor the unclaimed balance stands” at the last known address. This preliminary notice ensures that genuinely active depositors are not drawn into escheat proceedings. Failure to comply deprives the bank of the safe-harbor defense under Section 5.
Nature of a Manager’s Check and Ownership of Funds
Under the Negotiable Instruments Law (Act No. 2031), a manager’s check is drawn by the bank on itself and accepted in advance. However, Section 16 provides that delivery is essential to vest property rights in the instrument: a check that remains undelivered is incomplete and revocable, and the underlying funds remain part of the drawer’s account until presentment or effective delivery.
Analysis on Notice and Jurisdiction
Escheat proceedings are in rem; publication provides constructive notice to all interested parties. Personal service on non-bank claimants is not a jurisdictional requirement. The Supreme Court affirmed that the CA erred in voiding the RTC decision solely for lack of personal
...continue readingCase Syllabus (G.R. No. 192413)
Procedural History
- Petitioner RCBC filed a Rule 45 Petition for Review on Certiorari (G.R. No. 192413) from the Court of Appeals’ 26 November 2009 Decision and 27 May 2010 Resolution.
- The CA had reversed and set aside the Makati RTC’s 19 May 2008 Decision and 3 November 2008 Order in Civil Case No. 06-244 (Escheat).
- The underlying RTC proceeding was a Complaint for Escheat filed by the Republic under Act No. 3936, as amended by P.D. 679, over unclaimed bank balances.
- Respondents Hi-Tri Development Corporation and Luz R. Bakunawa were not formally served by personal notice and moved for partial reconsideration and intervention, which the RTC denied.
- The CA ruled the RTC judgments void for lack of personal service on all interested parties.
Factual Background
- Spouses Luz and Manuel Bakunawa owned six parcels of land sequestered by the PCGG.
- In 1990, Teresita Millan offered to buy the lots for ₱6,724,085.71 and made a downpayment of ₱1,019,514.29.
- The sale was rescinded when Millan failed to clear obstacles; Millan refused return of her downpayment.
- On 28 October 1991, Hi-Tri (Bakunawas’ company) procured RCBC Manager’s Check No. ER034469 for ₱1,019,514.29 payable to Rosmil Realty and Development Corporation (Millan’s company), and retained the check.
- Millan was informed throughout that the check was available for withdrawal but never negotiated it.
- On 31 January 2003, RCBC reported the ₱1,019,514.29 credit as unclaimed to the Bureau of Treasury; its sworn statement was posted at RCBC-Ermita.
- On 14 December 2006, the Republic filed Escheat Case No. 06-244 in the Makati RTC.
- On 30 April 2008, Spouses Bakunawa and Rosmil settled for ₱3,000,000 inclusive of the ₱1,019,514.29; before settlement, Hi-Tri inquired with RCBC about the check’s availability and learned of the escheat case.
- Correspondence in April and May 2008 between Hi-Tri and RCBC disputed whether the funds remained in the bank account or were subject to escheat.
Issues
- Whether the RTC Decision and Order were void for failure to send separate personal notices to respondents.
- Whether RCBC ha