RCBC vs.

Hi-Tri Development
G.R. No. 192413
June 13, 2012

FACTS:
Before the Court is a Rule 45 Petition for Review on Certiorari filed by petitioner Rizal
Commercial Banking Corporation (RCBC) against respondents Hi-Tri Development Corporation
(Hi-Tri) and Luz R. Bakunawa (Bakunawa). Petitioner seeks to appeal from the 26 November
2009 Decision and 27 May 2010 Resolution of the Court of Appeals (CA), 1 which reversed and
set aside the 19 May 2008 Decision and 3 November 2008 Order of the Makati City Regional
Trial Court (RTC) in Civil Case No. 06-244. The case before the RTC involved the Complaint
for Escheat filed by the Republic of the Philippines (Republic) pursuant to Act No. 3936, as
amended by Presidential Decree No. 679 (P.D. 679), against certain deposits, credits, and
unclaimed balances held by the branches of various banks in the Philippines. The trial court
declared the amounts, subject of the special proceedings, escheated to the Republic and ordered
them deposited with the Treasurer of the Philippines (Treasurer) and credited in favor of the
Republic. The assailed RTC judgments included an unclaimed balance in the amount
of P 1,019,514.29, maintained by RCBC in its Ermita Business Center branch.

ISSUE:
Whether or not the allocated funds may be escheated in favor of the Republic?

HELD:
The Court held in the negative. An ordinary check refers to a bill of exchange drawn by a
depositor (drawer) on a bank (drawee), requesting the latter to pay a person named therein
(payee) or to the order of the payee or to the bearer, a named sum of money. 25 The issuance of
the check does not of itself operate as an assignment of any part of the funds in the bank to the
credit of the drawer.26 Here, the bank becomes liable only after it accepts or certifies the check.
After the check is accepted for payment, the bank would then debit the amount to be paid to the
holder of the check from the account of the depositor-drawer.
There are checks of a special type called manager’s or cashier’s checks. These are bills of
exchange drawn by the bank’s manager or cashier, in the name of the bank, against the bank
itself. Typically, a manager’s or a cashier’s check is procured from the bank by allocating a
particular amount of funds to be debited from the depositor’s account or by directly paying or
depositing to the bank the value of the check to be drawn. Since the bank issues the check in its
name, with itself as the drawee, the check is deemed accepted in advance. Ordinarily, the check
becomes the primary obligation of the issuing bank and constitutes its written promise to pay
upon demand.

Nevertheless, the mere issuance of a manager’s check does not ipso facto work as an automatic
transfer of funds to the account of the payee. In case the procurer of the manager’s or cashier’s
check retains custody of the instrument, does not tender it to the intended payee, or fails to make
an effective delivery, we find the following provision on undelivered instruments under the
Negotiable Instruments Law applicable:
Sec. 16. Delivery; when effectual; when presumed. – Every contract on a negotiable
instrument is incomplete and revocable until delivery of the instrument for the purpose of
giving effect thereto. As between immediate parties and as regards a remote party other
than a holder in due course, the delivery, in order to be effectual, must be made either by
or under the authority of the party making, drawing, accepting, or indorsing, as the case
may be; and, in such case, the delivery may be shown to have been conditional, or for a
special purpose only, and not for the purpose of transferring the property in the
instrument. But where the instrument is in the hands of a holder in due course, a valid
delivery thereof by all parties prior to him so as to make them liable to him is
conclusively presumed. And where the instrument is no longer in the possession of a
party whose signature appears thereon, a valid and intentional delivery by him is
presumed until the contrary is proved.

Petitioner acknowledges that the Manager’s Check was procured by respondents, and that the
amount to be paid for the check would be sourced from the deposit account of Hi-Tri. When
Rosmil did not accept the Manager’s Check offered by respondents, the latter retained custody of
the instrument instead of cancelling it. As the Manager’s Check neither went to the hands of
Rosmil nor was it further negotiated to other persons, the instrument remained undelivered.
Petitioner does not dispute the fact that respondents retained custody of the instrument.

Since there was no delivery, presentment of the check to the bank for payment did not occur. An
order to debit the account of respondents was never made. In fact, petitioner confirms that the
Manager’s Check was never negotiated or presented for payment to its Ermita Branch, and that
the allocated fund is still held by the bank. As a result, the assigned fund is deemed to remain
part of the account of Hi-Tri, which procured the Manager’s Check. The doctrine that the deposit
represented by a manager’s check automatically passes to the payee is inapplicable, because the
instrument – although accepted in advance – remains undelivered. Hence, respondents should
have been informed that the deposit had been left inactive for more than 10 years, and that it may
be subjected to escheat proceedings if left unclaimed.

After a careful review of the RTC records, we find that it is no longer necessary to remand the
case for hearing to determine whether the claim of respondents was valid. There was no
contention that they were the procurers of the Manager’s Check. It is undisputed that there was
no effective delivery of the check, rendering the instrument incomplete. In addition, we have
already settled that respondents retained ownership of the funds. As it is obvious from their
foregoing actions that they have not abandoned their claim over the fund, we rule that the
allocated deposit, subject of the Manager’s Check, should be excluded from the escheat
proceedings. We reiterate our pronouncement that the objective of escheat proceedings is state
forfeiture of unclaimed balances. We further note that there is nothing in the records that would
show that the OSG appealed the assailed CA judgments. We take this failure to appeal as an
indication of disinterest in pursuing the escheat proceedings in favor of the Republic.

Republic vs. CA and Solano

Doctrine: A claimant to an escheated property must file his claim "within five (5) years from the
date of such judgment, such person shall have possession of and title to the same, or if sold, the
municipality or city shall be accountable to him for the proceeds, after deducting the estate;
but a claim not made shall be barred forever."
Facts:

 The late Elizabeth Hankins donated 2 parcels of land located in Pasay City in favor of
Amada Solano for her dedicated service as her personal domestic helper.
 Solano alleged that she misplaced the deeds of donation
 The Republic filed a petition for the escheat of the estate of Hankins in 1987.
 The spouse of Solano filed a motion for intervention but was denied by the RTC.
 On 1989, The RTC decided in favor of the Republic and ordered that the TCTs of the
subject lands be cancelled and a new one be issued in the name of Pasay City.
 On Jan. 28, 1997, Solano claims that she found the deeds of donation. She then filed a
petition to annul the lower court’s judgment alleging that: (1) the properties were not
part of Hawkins estate when she died as they were validly donated to her; and (2) the
decision is legally infirm as the properties should be escheated in favor of the Republic
of the Philippines, not the Pasay City Government.
 The SolGen, representing the RTC and RD, argues that (1) the CA has no jurisdiction over
the nature of the action; and (2) that the cause of action was barred by the statute of
limitations.
 CA: in favor of Solano.

Issue:

(1) WON Solano, not being an heir but a done, has the personality to be a claimant in
escheat proceedings - Yes
(2) WON the 5 year prescriptive period under Rule 91 has already prescribed – Yes
(3) WON the subject properties formed part of Hankin’s estate - Yes
Ruling:

(1) Yes
In an escheat proceeding, any person alleging to have a direct right or interest in the property sought to
be escheated is likewise an interested party and may appear and oppose the petition for escheat.

(2)
A claimant to an escheated property must file his claim "within five (5) years from the date of
such judgment, such person shall have possession of and title to the same, or if sold, the
municipality or city shall be accountable to him for the proceeds, after deducting the estate;
but a claim not made shall be barred forever."

In the case at bar, the escheat judgment was handed down by as early as 1989 but it was only
on 1997, more or less seven (7) years after, when private respondent decided to contest the
escheat judgment in the guise of a petition for annulment of judgment before the Court of
Appeals. Obviously, private respondent's belated assertion of her right over the escheated
properties militates against recovery.

(3) Yes
Where a person comes into an escheat proceeding as a claimant, the burden is on such
intervenor to establish his title to the property and his right to intervene. In the absence of of
any clear and convincing proof showing that the subject lands had been conveyed by Hankins to
private respondent Solano, the same still remained, at least before the escheat, part of the
estate of the decedent and the lower court was right not to assume otherwise.