SPECIAL PROCEEDINGS | APRIL 04, 2017 | JUDGE ZALDY DOCENA

1. REPUBIC v. C.A. & SOLANO, G.R. No. 143483. January 31, 2002.
(BELLOSILLO, J.)

DOCTRINE:
A claimant to an escheated property must file his claim within 5 years from the date
of such judgment. The 5-year period is not a device capriciously conjured by the
state to defraud any claimant; on the contrary, it is decidedly prescribed to
encourage would-be claimants to be punctilious in asserting their claims, otherwise
they may lose them forever in a final judgment.

FACTS:
For more than three (3) decades (from 1952 to 1985) private respondent Amada
Solano served as the all-around personal domestic helper of the late Elizabeth
Hankins, a widow and a French national. In recognition of Solano's faithful and
dedicated service, Ms. Hankins executed in her favor two (2) deeds of donation
involving two (2) parcels of land. Amada Solano alleged that she misplaced the
deeds of donation and were nowhere to be found.

While the deeds of donation were missing, the Republic filed a petition for the
escheat of the estate of Elizabeth Hankins before the RTC of Pasay City. During the
proceedings, a motion for intervention was filed by Romeo Solano, spouse of private
respondent, and one Gaudencio Regosa, but on 24 June 1987 the motion was
denied by the trial court for the reason that "they miserably failed to show valid
claim or right to the properties in question." Since it was established that there were
no known heirs and persons entitled to the properties of decedent Hankins, the trial
court escheated the estate of the decedent in favor of petitioner Republic of the
Philippines.

In the meantime, private respondent claimed that she accidentally found the deeds
of donation she had been looking for a long time. In view of this development,
respondent Amada Solano filed on 28 January 1997 a petition before the Court of
Appeals for the annulment of the lower court's decision. The CA gave due course for
the Amadas petition, hence this petition for certiorari.

ISSUE:
Whether the lower court had jurisdiction to declare the same escheated in favor of
the state.

HELD:
The Court ruled for the petitioner. Escheat is a proceeding, unlike that of succession
or assignment, whereby the state, by virtue of its sovereignty, steps in and claims
the real or personal property of a person who dies intestate leaving no heir. In the
absence of a lawful owner, a property is claimed by the state to forestall an open
"invitation to self-service by the first comers." Since escheat is one of the incidents
of sovereignty, the state may, and usually does, prescribe the conditions and limits
the time within which a claim to such property may be made. The procedure by
which the escheated property may be recovered is generally prescribed by statue,
and a time limit is imposed within which such action must be brought.

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In the instant petition, the escheat judgment was handed down by the lower court
as early as 27 June 1989 but it was only on 28 January 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.
2. CITY OF MANILA v. ROMAN CATHOLIC ARCHBISHOP OF MANILA,
G.R. No. L-10033. August 30, 1917. (JOHNSON, J.)

ESCHEAT; WHEN MAY PROPERTY BE DECLARED ESCHEATED. Property may be

declared escheated when a person dies intestate, seized of real or personal
property, leaving no heir or person by law entitled to the same. (Here, the decedent
left a will, and had heirs. Not applicable in this case.)

FACTS:
Ana Sarmiento resided, with her husband, in the city of Manila sometime prior to 19
May 1669, she made a will that contained provisions for the establishment of a
"Capellania de Misas;" that the first chaplain of said capellania should be her
nephew Pedro del Castillo; that said will contained a provision for the administration
of said property in relation with the said "Capellania de Misas" succeeding
administration should continue perpetually; that said Ana Sarmiento died about the
year 1672; that for more than two hundred years the intervener, the Roman
Catholic Archbishop of Manila, through his various agencies, has administered said
property; that the Roman Catholic Archbishop of Manila has rightfully and legally
succeeded in accordance with the terms and provisions of the will of Ana Sarmiento.

This action was commenced in the Court of First Instance of Manila on 15 February
1913. Its purpose was to have declared escheated to the city of Manila certain
property situated in and around said city; that said property consists of five parcels
of land located in Malate and Paco in Manila. The theory of the plaintiff is that Ana
Sarmiento was the owner of said property and died in the year 1668 without leaving
"her or person entitled to the same." After hearing the evidence, the Honorable A. S.
Crossfield reached the conclusion that the prayer of the plaintiff should be denied.
From that conclusion the plaintiff appealed to this court and made a number of
assignments of error.

RULING:
Section 750 of Act No. 190 provides when property may be declared escheated. It
provides, "when a person dies intestate, seized of real or personal property . . .
leaving no heir or person by law entitled to the same," that then and in that case
such property under the procedure provided for by sections 751 and 752, may be
declared escheated.

The proof shows that Ana Sarmiento did not die intestate. She left a will. The will
provides for the administration of said property by her nephew as well as for the
subsequent administration of the same. She did not die without an heir nor without
persons entitled to administer her estate. It further shows that she did not die
without leaving a person by law entitled to inherit her property. In view of the facts,
therefore, the property in question cannot be declared escheated as of the property

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of Ana Sarmiento. If by any chance the property may be declared escheated, it must
be based upon the fact that persons subsequent to Ana Sarmiento died intestate
without leaving heir or person by law entitled to the same.

The will clearly, definitely and unequivocally defines and designates what
disposition shall be made of the property in question. The heir mentioned in said will
evidently accepted its terms and permitted the property to be administered in
accordance therewith. And, so far as the record shows, it is still being administered
in accordance with the terms of said will for the benefit of the real beneficiary as
was intended by the original owner. The judgment of the lower court is, therefore,
hereby affirmed, with costs in this instance. So ordered.

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 3. VICENTE TAN v. CITY OF DAVAO, G.R. No. L-44347. September 29,
1988. (GRIO-AQUINO, J.)

SPECIAL PROCEEDINGS; ESCHEATS; CASE FILED BEFORE EFFECTIVITY OF THE

REVISED RULES OF COURT GOVERNED BY THE 1940 RULES OF COURT. The
instant escheat case did not come under Rule 91 because the petition was filed on
September 12, 1962, when the applicable rule was still Rule 92 of the 1940 Rules of
Court. Rule 91 of the Revised Rules of Court, which provides that only the Republic
of the Philippines, through the Solicitor General, may commence escheat
proceedings, did not take effect until January 1, 1964. Although the escheat
proceedings were still pending then, the Revised Rules of Court could not be applied
to the petition because to do so would work injustice to the City of Davao. Rule 144
of the 1964 Rules of Court contains this "saving" clause: "These rules shall take
effect on January 1, 1964. They shall govern all cases brought after they take effect,
and also all further proceedings in cases pending, except to the extent that in the
opinion of the court, their application would not be feasible or would work injustice,
in which event the former procedure shall apply."

FACTS:
This 26-year old case involves a valuable lot in the City of Davao whose owner left
for China with her entire family in 1923 and never returned. Like all such estates
facing escheat proceedings, it is fair game for poseurs and fakers claiming to be the
missing heir of the deceased owner.
Dominga Garcia died intestate in 1955. She left in the Philippines a 1,966-square-
meter lot on Claveria Street, Townsite of Davao, District of Davao, registered in her
name. Since her departure for China with her family, neither she, nor her husband,
nor any of their children has returned to the Philippines to claim the lot.

Dominga's adoptive parent, Cornelia Pizarro, died in May 1936. In 1948, her
nephew, Ramon Pizarro, occupied a part of Dominga's property and collected the
rentals from the owners of other houses occupying the land. Another nephew of
Cornelia, Segundo Reyes, in a burst of civic spirit, informed the Solicitor General
about the property. The City Fiscal and NBI agents, Antonio Gonzaga and Felix
Valencia, investigated Segundo Reyes, Ramon Pizarro and Aurelio Pizarro regarding
the whereabouts of Dominga Garcia, Tan Seng, and their children.

During the investigation, Ramon Pizarro alleged that Vicenta Tan, daughter of
Dominga, was married and living in Bacolod City, but he did not know her exact
address. Aurelio Pizarro, on the other hand, controverted that statement because as
far as he knew, Vicenta Tan left for China with her mother and brothers in 1923.

On September 12, 1962, the City of Davao filed a petition in the Court of First
Instance of Davao, Branch I (Special Civil Case No. 1220) to declare Dominga
Garcia's land escheated in its favor. It alleged that Dominga Garcia and her children
are presumed to be dead and since Dominga Garcia left no heir person by law
entitled to inherit her estate, the same should be escheated pursuant to Rule 92 of
the Rules of Court.

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The court set the petition for hearing and directed the City to caused the publication
of its petition in a newspaper of general circulation in the city and province of
Davao, and in the Official Gazette, once a week for six (6) consecutive weeks.

Ramon Pizarro opposed the escheat petition on the ground that courts are not
authorized to declare that a person is presumed to be dead and that Dominga
Garcia's being in Red China is not a sufficient ground to deprive her of her property
by escheat proceedings. On June 15, 1966, Pizarro filed a motion to dismiss the
escheat petition, but he withdrew his motion three days later.

ISSUES:
(1) Whether or not the City of Davao has personality to file an escheat petition.
(2) Whether or not the trial court erred in declaring Vicenta Tan presumed dead.

HELD:
(1) The Court held in the affirmative. With respect to the argument that only the
Republic of the Philippines, represented by the Solicitor-General, may file the
escheat petition under Section 1, Rule 91 of the Revised (1964) Rules of Court, the
Appellate Court correctly ruled that the case did not come under Rule 91 because
the petition was filed on September 12, 1962, when the applicable rule was still
Rule 92 of the 1940 Rules of Court which provided:
Sec. 1. When and by whom, petition filed.When a person dies intestate,
seized of real or personal property in the Philippines, leaving no heirs or
person by law entitled to the same, the municipality or city where the
deceased last resided, if he resided in the Philippines, or the municipality or
city in which he had estate if he resided out of the Philippines, may file a
petition in the court of first instance of the province setting forth the facts,
and praying that the estate of the deceased be declared escheated.

Rule 91 of the Revised Rules of Court, which provides that only the Republic of the
Philippines, through the Solicitor General, may commence escheat proceedings, did
not take effect until January 1, 1964. Although the escheat proceedings were still
pending then, the Revised Rules of Court could not be applied to the petition
because to do so would work injustice to the City of Davao. Rule 144 of the 1964
Rules of Court contains this "saving" clause:
These rules shall take effect on January 1, 1964. They shall govern all cases
brought after they take effect, and also all further proceedings in cases
pending, except to the extent that in the opinion of the court, their
application would not be feasible or would work injustice, in which event the
former procedure shall apply.

(2) The Court of Appeals did not err in affirming the trial court's ruling that Dominga
Garcia and her heirs may be presumed dead in the escheat proceedings as they are,
in effect, proceedings to settle her estate. Indeed, while a petition instituted for the
sole purpose of securing a judicial declaration that a person is presumptively dead
cannot be entertained if that were the only question or matter involved in the case,
the courts are not barred from declaring an absentee presumptively dead as an
incident of, or in connection with, an action or proceeding for the settlement of the
intestate estate of such absentee.

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 4. MUNICIPAL COUNCIL OF SAN PEDRO, LAGUNA, v. COLEGIO DE SAN
JOSE
G.R. No. L-45460. February 25, 1938. (IMPERIAL, J.)

ESCHEAT; NATURE OF THE PROCEEDING. Escheat is not an ordinary action but

a special proceeding. The proceeding should be commenced by petition and not
by complaint.
In a special proceeding, the petitioner is not the sole and exclusive interested
party. 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.

FACTS:
The Municipality of San Pedro, Laguna filed in the CFI a petition claiming the
Hacienda de San Pedro Tunasan by the right of Escheat. Colegio de San Jose (CdSJ),
claiming to be the exclusive owner of the said hacienda, assailed the petition upon
the grounds that the petition does not allege sufficient facts to entitle the applicants
to the remedy prayed for. Carlos Young, claiming to be a lessee of the hacienda
under a contract legally entered with Colegio de San Jose, also intervened in the
case. Municipal Council of San Pedro, Laguna objected to the appearance and
intervention of CdSJ and Carlos Young but such objection was overruled.
Furthermore the lower court dismissed the petition filed for by Municipal Council of
San Pedro.

ISSUE:
Whether or not the petition for escheats should be dismissed?

RULING:
YES. According to Sec. 750 of the Code of Civil Procedure (now Sec 1 of Rule 91), the
essential facts which should be alleged in the petition, which are jurisdictional
because they confer jurisdiction upon the CFI are:
1. That a person died intestate or without leaving any will,
2. That he has left real or personal property and he was the owner thereof,
3. That he has not left any heir or person by law entitled to the property, and
4. That the one who applies for the escheat is the municipality where
deceased has his last residence or in case he should have no residence in the
country, the municipality where the property is situated.

Sec. 751 (now Sec 3 of Rule 91) provides that after the publications and trial, if the
court finds that the deceased is in fact the owner of real and personal property
situated in the country and has not left any heir or other person entitled there to, it
may order, after payment of debts and other legal expenses, the escheat and in
such case, it shall adjudicate the personal property to the municipality where the
deceased had his last residence and the real property to the municipality/ies where
they are situated.

Escheat is a proceeding whereby the real and personal property of a deceased

person become the property of the State upon his death without leaving any will or
legal heirs. It is not an ordinary action but a special proceeding. The proceeding
should be commenced by a petition and not by a complaint.

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In a special proceeding for Escheat under section 750 to 752 (now sec 1 to 3 of Rule
91), the petitioner is not the sole and exclusive interested party. Any person alleging
to have a direct right or Interest in the property sought to be escheated is likewise
an interested and necessary party and may appear and oppose the petition for
escheat.
When a petition for escheat does not state facts which entitle the petitioner to the
remedy prayed for and even admitting them hypothetically, it is clear that there is
no ground for the court to proceed to the Inquisition provided by law, an interested
party should not be disallowed from filing a motion to dismiss the petition which is
untenable from all standpoint. And when the motion to dismiss is entertained upon
this ground the petition may be dismissed unconditionally.

In this case, Colegio de San Jose and Carlos Young had a right to intervene as an
alleged exclusive owner and a lessee of the property respectively.

The Municipal base its right to escheat on the fact that the Hacienda de San Pedro
Tunasan, temporal property of the Father of the Society of Jesus, were confiscated
by the order of the King of Spain. From the moment it was confiscated, it became
the property of the commonwealth of the Philippines. Given this fact, it is evident
that the Municipality cannot claim that the same be escheated to them, because it
is no longer the case of real property owned by a deceased person who has not left
any person which may legally claim it (2nd requirement lacking).

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 5. REPUBLIC OF THE PHILIPPINES v. PHILIPPINE NATIONAL BANK et.
al.
G.R. No. L-16106. December 30, 1961. (BAUTISTA ANGELO, J.)

NOTA BENE: THIS IS A CASE ON THE NEGOTIABLE INSTRUMENTS LAW

FACTS:
The Republic of the Philippines filed on September 25, 1957 before the Court of
First Instance of Manila a complaint for escheat of certain unclaimed bank
deposits balances under the provisions of Act No. 3936 against several banks,
among them the First National City Bank of New York. It is alleged that pursuant
to Section 2 of said Act defendant banks forwarded to the Treasurer of the
Philippines a statement under oath of their respective managing officials of all
the credits and deposits held by them in favor of persons known to be dead or
who have not made further deposits or withdrawals during the period of 10 years
or more. Wherefore, it is prayed that said credits and deposits be escheated to
the Republic of the Philippines by ordering defendant banks to deposit them to
its credit with the Treasurer of the Philippines.

In its Answer the respondent First National City Bank of New York claims that,
while it admits that various savings deposits, pre-war inactive accounts, and
sundry accounts contained in its report submitted to the Treasurer of the
Philippines pursuant to Act No. 3936, totalling more than P100,000.00, which
remained dormant for 10 years or more, are subject to escheat however, it has
inadvertently included in said report certain items amounting to P18,589.89
which, properly speaking, are not credits or deposits within the contemplation of
Act No. 3936. Hence, it prayed that said items be not included in the claim of
plaintiff.

After hearing the court a quo rendered judgment holding that cashier's is or
manager's checks and demand drafts as those which defendant wants excluded
from the complaint come within the purview of Act No. 3936, but not the
telegraphic transfer payment which orders are of different category.
Consequently, the complaint was dismissed with regard to the latter. But, after a
motion to reconsider was filed by defendant, the court a quo changed its view
and held that even said demand drafts do not come within the purview of said
Act and so amended its decision accordingly. Plaintiff has appealed.

ISSUE:
Do demand drafts and telegraphic orders come within the meaning of the term
"credits" or "deposits" employed in the law [and, under Act No. 3936, to be
escheated to the Republic]?

HELD:
Section 1, Act No. 3936, provides:

"SECTION 1.Unclaimed balances within the meaning of this Act shall include
credits or deposits of money, bullion, security or other evidence of indebtedness
of any kind, and interest thereon with banks, as hereinafter defined, in favor of
any person unheard from for a period of ten years or more. Such unclaimed

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balances, together with the increase and proceeds thereof, shall be deposited
with the Insular Treasurer to the credit of the Government of the Philippine
Islands to be used as the Philippine Legislature may direct."

It would appear that the terms "unclaimed balances" that are subject to escheat
include credits or deposits of money, or other evidence of indebtedness of any
kind, with banks, in favor of any person unheard from for a period of 10 years or
more. And as correctly stated by the trial court, the term "credit" in its usual
meaning is a sum credited on the books of a company to a person who appears
to be entitled to it. It presupposes a creditor-debtor relationship, and may be said
to imply ability, by reason of property or estates, to make a promised payment.
It is the correlative to debt or indebtedness, and that which is due to any person,
as distinguished from that which he owes. The same is true with the term
"deposits" in banks where the relationship created between the depositor and
the bank is that of creditor and debtor (Article 1980, Civil Code).

A demand draft is a bill of exchange payable on demand. Considered as a bill

of exchange, a draft is said to be, like the former, an open letter of request from,
and an order by, one person on another to pay a sum of money therein
mentioned to a third person, on demand or at a future time therein specified (13
Words and Phrases, 371.) As a matter of fact, the term "draft" is often used, and
is the common term, for all bills of exchange. And the words "draft" and "bill of
exchange" are used indiscriminately (Ennis v. Coshoctan National Bank, 108 S.
R., 811; Hinneman v. Rosenback, 39 N.C. 98: 100, 101; Wilson v. Buchenau, 43
Supp. 272, 275.)

Since it is admitted that the demand drafts herein involved have not been
presented either for acceptance or for payment, the inevitable consequence is
that the appellee bank never had any chance of accepting or rejecting them.
Verily, appellee bank never became a debtor of the payee concerned and as
such the aforesaid drafts cannot be considered as credits subject to escheat
within the meaning of the law.

A demand draft is very different from a cashier's or manager's cheek, contrary to

appellant's pretense, for it has been held that the latter is a primary obligation of
the bank which issues it and constitutes its written promise to pay upon demand.
A demand draft is not therefore of the same category as a cashier's check which
should come within the purview of the law.

The case, however, is different with regard to a telegraphic payment order. It is

said that as the transaction is for the establishment of a telegraphic or cable
transfer, the agreement to remit creates a contractual obligation and has been
termed a purchase and sale transaction (9 C.J.S. 368). The purchaser of a
telegraphic transfer upon making payment completes the transaction insofar as
he is concerned, though insofar as the remitting bank is concerned the contract
is executory until the credit is established. We agree with the following comment
of the Solicitor General: "This is so because the drawer bank was already paid
the value of the telegraphic transfer payment order. In the particular cases under
consideration it appears in the books of the defendant bank that the amounts
represented by the telegraphic payment orders appear in the names of the

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respective payees. If the latter choose to demand payment of their telegraphic
transfers at the time the same was (were) received by the defendant bank, there
could be no question that this bank would have to pay them. Now, the question
is, if the payees decide to have their money remain for sometime in the
defendant bank, can the latter maintain that the ownership of said telegraphic
payment orders is now with the drawer bank? The latter was already paid the
value of the telegraphic payment orders otherwise it would not have transmitted
the same to the defendant bank. Hence, it is absurd to say that the drawer
banks are still the owners of said telegraphic payment orders."

WHEREFORE, the decision of the trial court is hereby modified in the sense that
the items specifically referred to and listed under paragraph 3 of appellee bank's
answer representing telegraphic transfer payment orders should be
escheated in favor of the Republic of the Philippines. No costs.

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