G.R. No.

192413               June 13, 2012 Consequently, the deposit that was supposed to be allocated for the payment of the Manager’s
Check was supposed to remain part of the Corporation[’s] RCBC bank account, which,
thereafter, continued to be actively maintained and operated. For this reason, We hereby
Rizal Commercial Banking Corporation, Petitioner, demand your confirmation that the amount of Php 1,019,514.29 continues to form part of the
vs. funds in the Corporation’s RCBC bank account, since pay-out of said amount was never
Hi-Tri Development Corporation and Luz R. Bakunawa, Respondents. ordered. We wish to point out that if there was any attempt on the part of RCBC to consider the
amount indicated in the Manager’s Check separate from the Corporation’s bank account,
RCBC would have issued a statement to that effect, and repeatedly reminded the Corporation
DECISION that the deposit would be considered dormant absent any fund movement. Since the
Corporation never received any statements of account from RCBC to that effect, and more
importantly, never received any single letter from RCBC noting the absence of fund movement
SERENO, J.: and advising the Corporation that the deposit would be treated as dormant."

Before the Court is a Rule 45 Petition for Review on Certiorari filed by petitioner Rizal On April 28, 2008, [Manuel Bakunawa] sent another letter to x x x RCBC reiterating their
Commercial Banking Corporation (RCBC) against respondents Hi-Tri Development position as above-quoted.
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 In a letter dated May 19, 2008, x x x RCBC replied and informed [Hi-Tri and Spouses
City Regional Trial Court (RTC) in Civil Case No. 06-244.2 The case before the RTC involved Bakunawa] that:
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 "The Bank’s Ermita BC informed Hi-Tri and/or its principals regarding the inclusion of
trial court declared the amounts, subject of the special proceedings, escheated to the Republic Manager’s Check No. ER034469 in the escheat proceedings docketed as Civil Case No. 06-
and ordered them deposited with the Treasurer of the Philippines (Treasurer) and credited in 244, as well as the status thereof, between 28 January 2008 and 1 February 2008.
favor of the Republic.3 The assailed RTC judgments included an unclaimed balance in the
amount of ₱ 1,019,514.29, maintained by RCBC in its Ermita Business Center branch.
x x x           x x x          x x x
4 
We quote the narration of facts of the CA as follows:
Contrary to what Hi-Tri hopes for, the funds covered by the Manager’s Check No. ER034469
does not form part of the Bank’s own account. By simple operation of law, the funds covered
x x x Luz [R.] Bakunawa and her husband Manuel, now deceased ("Spouses Bakunawa") are by the manager’s check in issue became a deposit/credit susceptible for inclusion in the
registered owners of six (6) parcels of land covered by TCT Nos. 324985 and 324986 of the escheat case initiated by the OSG and/or Bureau of Treasury.
Quezon City Register of Deeds, and TCT Nos. 103724, 98827, 98828 and 98829 of the
Marikina Register of Deeds. These lots were sequestered by the Presidential Commission on
Good Government [(PCGG)]. x x x           x x x          x x x

Sometime in 1990, a certain Teresita Millan ("Millan"), through her representative, Jerry Granting arguendo that the Bank was duty-bound to make good the check, the Bank’s
Montemayor, offered to buy said lots for "₱ 6,724,085.71", with the promise that she will take obligation to do so prescribed as early as October 2001."
care of clearing whatever preliminary obstacles there may[]be to effect a "completion of the
sale". The Spouses Bakunawa gave to Millan the Owner’s Copies of said TCTs and in turn,
Millan made a down[]payment of "₱ 1,019,514.29" for the intended purchase. However, for one (Emphases, citations, and annotations were omitted.)
reason or another, Millan was not able to clear said obstacles. As a result, the Spouses
Bakunawa rescinded the sale and offered to return to Millan her down[]payment of ₱
1,019,514.29. However, Millan refused to accept back the ₱ 1,019,514.29 down[]payment. The RTC Ruling
Consequently, the Spouses Bakunawa, through their company, the Hi-Tri Development
Corporation ("Hi-Tri") took out on October 28, 1991, a Manager’s Check from RCBC-Ermita in
the amount of ₱ 1,019,514.29, payable to Millan’s company Rosmil Realty and Development The escheat proceedings before the Makati City RTC continued. On 19 May 2008, the trial
Corporation ("Rosmil") c/o Teresita Millan and used this as one of their basis for a complaint court rendered its assailed Decision declaring the deposits, credits, and unclaimed balances
against Millan and Montemayor which they filed with the Regional Trial Court of Quezon City, subject of Civil Case No. 06-244 escheated to the Republic. Among those included in the order
Branch 99, docketed as Civil Case No. Q-91-10719 [in 1991], praying that: of forfeiture was the amount of ₱ 1,019,514.29 held by RCBC as allocated funds intended for
the payment of the Manager’s Check issued in favor of Rosmil. The trial court ordered the
deposit of the escheated balances with the Treasurer and credited in favor of the Republic.
1. That the defendants Teresita Mil[l]an and Jerry Montemayor may be ordered to Respondents claim that they were not able to participate in the trial, as they were not informed
return to plaintiffs spouses the Owners’ Copies of Transfer Certificates of Title of the ongoing escheat proceedings.
Nos. 324985, 324986, 103724, 98827, 98828 and 98829;
Consequently, respondents filed an Omnibus Motion dated 11 June 2008, seeking the partial
2. That the defendant Teresita Mil[l]an be correspondingly ordered to receive the reconsideration of the RTC Decision insofar as it escheated the fund allocated for the payment
amount of One Million Nineteen Thousand Five Hundred Fourteen Pesos and of the Manager’s Check. They asked that they be included as party-defendants or, in the
Twenty Nine Centavos (₱ 1,019,514.29); alternative, allowed to intervene in the case and their motion considered as an answer-in-
intervention. Respondents argued that they had meritorious grounds to ask reconsideration of
the Decision or, alternatively, to seek intervention in the case. They alleged that the deposit
3. That the defendants be ordered to pay to plaintiffs spouses moral damages in was subject of an ongoing dispute (Civil Case No. Q-91-10719) between them and Rosmil
the amount of ₱ 2,000,000.00; and since 1991, and that they were interested parties to that case.5

4. That the defendants be ordered to pay plaintiffs attorney’s fees in the amount of On 3 November 2008, the RTC issued an Order denying the motion of respondents. The trial
₱ 50,000.00. court explained that the Republic had proven compliance with the requirements of publication
and notice, which served as notice to all those who may be affected and prejudiced by the
Complaint for Escheat. The RTC also found that the motion failed to point out the findings and
Being part and parcel of said complaint, and consistent with their prayer in Civil Case No. Q- conclusions that were not supported by the law or the evidence presented, as required by Rule
91-10719 that "Teresita Mil[l]an be correspondingly ordered to receive the amount of One 37 of the Rules of Court. Finally, it ruled that the alternative prayer to intervene was filed out of
Million Nineteen Thousand Five Hundred Fourteen Pesos and Twenty Nine [Centavos] ("₱ time.
1,019,514.29")["], the Spouses Bakunawa, upon advice of their counsel, retained custody of
RCBC Manager’s Check No. ER 034469 and refrained from canceling or negotiating it.
The CA Ruling

All throughout the proceedings in Civil Case No. Q-91-10719, especially during negotiations for
a possible settlement of the case, Millan was informed that the Manager’s Check was available On 26 November 2009, the CA issued its assailed Decision reversing the 19 May 2008
for her withdrawal, she being the payee. Decision and 3 November 2008 Order of the RTC. According to the appellate court,6 RCBC
failed to prove that the latter had communicated with the purchaser of the Manager’s Check
(Hi-Tri and/or Spouses Bakunawa) or the designated payee (Rosmil) immediately before the
On January 31, 2003, during the pendency of the abovementioned case and without the bank filed its Sworn Statement on the dormant accounts held therein. The CA ruled that the
knowledge of [Hi-Tri and Spouses Bakunawa], x x x RCBC reported the "₱ 1,019,514.29-credit bank’s failure to notify respondents deprived them of an opportunity to intervene in the escheat
existing in favor of Rosmil" to the Bureau of Treasury as among its "unclaimed balances" as of proceedings and to present evidence to substantiate their claim, in violation of their right to due
January 31, 2003. Allegedly, a copy of the Sworn Statement executed by Florentino N. process. Furthermore, the CA pronounced that the Makati City RTC Clerk of Court failed to
Mendoza, Manager and Head of RCBC’s Asset Management, Disbursement & Sundry issue individual notices directed to all persons claiming interest in the unclaimed balances, as
Department ("AMDSD") was posted within the premises of RCBC-Ermita. well as to require them to appear after publication and show cause why the unclaimed
balances should not be deposited with the Treasurer of the Philippines. It explained that the
jurisdictional requirement of individual notice by personal service was distinct from the
On December 14, 2006, x x x Republic, through the [Office of the Solicitor General (OSG)], requirement of notice by publication. Consequently, the CA held that the Decision and Order of
filed with the RTC the action below for Escheat [(Civil Case No. 06-244)]. the RTC were void for want of jurisdiction.

On April 30, 2008, [Spouses Bakunawa] settled amicably their dispute with Rosmil and Millan. Issue
Instead of only the amount of "₱ 1,019,514.29", [Spouses Bakunawa] agreed to pay Rosmil
and Millan the amount of "₱ 3,000,000.00", [which is] inclusive [of] the amount of ["]₱
1,019,514.29". But during negotiations and evidently prior to said settlement, [Manuel After a perusal of the arguments presented by the parties, we cull the main issues as follows:
Bakunawa, through Hi-Tri] inquired from RCBC-Ermita the availability of the ₱ 1,019,514.29
under RCBC Manager’s Check No. ER 034469. [Hi-Tri and Spouses Bakunawa] were however
dismayed when they were informed that the amount was already subject of the escheat I. Whether the Decision and Order of the RTC were void for failure to send
proceedings before the RTC. separate notices to respondents by personal service

On April 17, 2008, [Manuel Bakunawa, through Hi-Tri] wrote x x x RCBC, viz: II. Whether petitioner had the obligation to notify respondents immediately before it
filed its Sworn Statement with the Treasurer

"We understand that the deposit corresponding to the amount of Php 1,019,514.29 stated in
the Manager’s Check is currently the subject of escheat proceedings pending before Branch III. Whether or not the allocated funds may be escheated in favor of the Republic
150 of the Makati Regional Trial Court.

Discussion
Please note that it was our impression that the deposit would be taken from [Hi-Tri’s] RCBC
bank account once an order to debit is issued upon the payee’s presentation of the Manager’s
Check. Since the payee rejected the negotiated Manager’s Check, presentation of the Petitioner bank assails7 the CA judgments insofar as they ruled that notice by personal service
Manager’s Check was never made. upon respondents is a jurisdictional requirement in escheat proceedings. Petitioner contends
that respondents were not the owners of the unclaimed balances and were thus not entitled to
notice from the RTC Clerk of Court. It hinges its claim on the theory that the funds represented

1
by the Manager’s Check were deemed transferred to the credit of the payee or holder upon its A copy of the above sworn statement shall be posted in a conspicuous place in the premises of
issuance. the bank, building and loan association, or trust corporation concerned for at least sixty days
from the date of filing thereof: Provided, That immediately before filing the above sworn
statement, the bank, building and loan association, and trust corporation shall communicate
We quote the pertinent provision of Act No. 3936, as amended, on the rule on service of with the person in whose favor the unclaimed balance stands at his last known place of
processes, to wit: residence or post office address.

Sec. 3. Whenever the Solicitor General shall be informed of such unclaimed balances, he shall It shall be the duty of the Treasurer of the Philippines to inform the Solicitor General from time
commence an action or actions in the name of the People of the Republic of the Philippines in to time the existence of unclaimed balances held by banks, building and loan associations, and
the Court of First Instance of the province or city where the bank, building and loan association trust corporations. (Emphasis supplied.)
or trust corporation is located, in which shall be joined as parties the bank, building and loan
association or trust corporation and all such creditors or depositors. All or any of such creditors
or depositors or banks, building and loan association or trust corporations may be included in As seen in the afore-quoted provision, the law sets a detailed system for notifying depositors of
one action. Service of process in such action or actions shall be made by delivery of a copy of unclaimed balances. This notification is meant to inform them that their deposit could be
the complaint and summons to the president, cashier, or managing officer of each defendant escheated if left unclaimed. Accordingly, before filing a sworn statement, banks and other
bank, building and loan association or trust corporation and by publication of a copy of such similar institutions are under obligation to communicate with owners of dormant accounts. The
summons in a newspaper of general circulation, either in English, in Filipino, or in a local purpose of this initial notice is for a bank to determine whether an inactive account has indeed
dialect, published in the locality where the bank, building and loan association or trust been unclaimed, abandoned, forgotten, or left without an owner. If the depositor simply does
corporation is situated, if there be any, and in case there is none, in the City of Manila, at such not wish to touch the funds in the meantime, but still asserts ownership and dominion over the
time as the court may order. Upon the trial, the court must hear all parties who have appeared dormant account, then the bank is no longer obligated to include the account in its sworn
therein, and if it be determined that such unclaimed balances in any defendant bank, building statement.20 It is not the intent of the law to force depositors into unnecessary litigation and
and loan association or trust corporation are unclaimed as hereinbefore stated, then the court defense of their rights, as the state is only interested in escheating balances that have been
shall render judgment in favor of the Government of the Republic of the Philippines, declaring abandoned and left without an owner.
that said unclaimed balances have escheated to the Government of the Republic of the
Philippines and commanding said bank, building and loan association or trust corporation to
forthwith deposit the same with the Treasurer of the Philippines to credit of the Government of In case the bank complies with the provisions of the law and the unclaimed balances are
the Republic of the Philippines to be used as the National Assembly may direct. eventually escheated to the Republic, the bank "shall not thereafter be liable to any person for
the same and any action which may be brought by any person against in any bank xxx for
unclaimed balances so deposited xxx shall be defended by the Solicitor General without cost
At the time of issuing summons in the action above provided for, the clerk of court shall also to such bank."21 Otherwise, should it fail to comply with the legally outlined procedure to the
issue a notice signed by him, giving the title and number of said action, and referring to the prejudice of the depositor, the bank may not raise the defense provided under Section 5 of Act
complaint therein, and directed to all persons, other than those named as defendants therein, No. 3936, as amended.
claiming any interest in any unclaimed balance mentioned in said complaint, and requiring
them to appear within sixty days after the publication or first publication, if there are several, of
such summons, and show cause, if they have any, why the unclaimed balances involved in Petitioner asserts22 that the CA committed a reversible error when it required RCBC to send
said action should not be deposited with the Treasurer of the Philippines as in this Act provided prior notices to respondents about the forthcoming escheat proceedings involving the funds
and notifying them that if they do not appear and show cause, the Government of the Republic allocated for the payment of the Manager’s Check. It explains that, pursuant to the law, only
of the Philippines will apply to the court for the relief demanded in the complaint. A copy of said those "whose favor such unclaimed balances stand" are entitled to receive notices. Petitioner
notice shall be attached to, and published with the copy of, said summons required to be argues that, since the funds represented by the Manager’s Check were deemed transferred to
published as above, and at the end of the copy of such notice so published, there shall be a the credit of the payee upon issuance of the check, the proper party entitled to the notices was
statement of the date of publication, or first publication, if there are several, of said summons the payee – Rosmil – and not respondents. Petitioner then contends that, in any event, it is not
and notice. Any person interested may appear in said action and become a party thereto. Upon liable for failing to send a separate notice to the payee, because it did not have the address of
the publication or the completion of the publication, if there are several, of the summons and Rosmil. Petitioner avers that it was not under any obligation to record the address of the payee
notice, and the service of the summons on the defendant banks, building and loan associations of a Manager’s Check.
or trust corporations, the court shall have full and complete jurisdiction in the Republic of the
Philippines over the said unclaimed balances and over the persons having or claiming any
interest in the said unclaimed balances, or any of them, and shall have full and complete In contrast, respondents Hi-Tri and Bakunawa allege23 that they have a legal interest in the
jurisdiction to hear and determine the issues herein, and render the appropriate judgment fund allocated for the payment of the Manager’s Check. They reason that, since the funds
thereon. (Emphasis supplied.) were part of the Compromise Agreement between respondents and Rosmil in a separate civil
case, the approval and eventual execution of the agreement effectively reverted the fund to the
credit of respondents. Respondents further posit that their ownership of the funds was
Hence, insofar as banks are concerned, service of processes is made by delivery of a copy of evidenced by their continued custody of the Manager’s Check.
the complaint and summons upon the president, cashier, or managing officer of the defendant
bank.8 On the other hand, as to depositors or other claimants of the unclaimed balances,
service is made by publication of a copy of the summons in a newspaper of general circulation An ordinary check refers to a bill of exchange drawn by a depositor (drawer) on a bank
in the locality where the institution is situated.9 A notice about the forthcoming escheat (drawee),24 requesting the latter to pay a person named therein (payee) or to the order of the
proceedings must also be issued and published, directing and requiring all persons who may payee or to the bearer, a named sum of money. 25 The issuance of the check does not of itself
claim any interest in the unclaimed balances to appear before the court and show cause why operate as an assignment of any part of the funds in the bank to the credit of the
the dormant accounts should not be deposited with the Treasurer. drawer.26 Here, the bank becomes liable only after it accepts or certifies the check. 27 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.
Accordingly, the CA committed reversible error when it ruled that the issuance of individual
notices upon respondents was a jurisdictional requirement, and that failure to effect personal
service on them rendered the Decision and the Order of the RTC void for want of jurisdiction. There are checks of a special type called manager’s or cashier’s checks. These are bills of
Escheat proceedings are actions in rem,10 whereby an action is brought against the thing itself exchange drawn by the bank’s manager or cashier, in the name of the bank, against the bank
instead of the person.11 Thus, an action may be instituted and carried to judgment without itself.28 Typically, a manager’s or a cashier’s check is procured from the bank by allocating a
personal service upon the depositors or other claimants. 12 Jurisdiction is secured by the power particular amount of funds to be debited from the depositor’s account or by directly paying or
of the court over the res.13 Consequently, a judgment of escheat is conclusive upon persons depositing to the bank the value of the check to be drawn. Since the bank issues the check in
notified by advertisement, as publication is considered a general and constructive notice to all its name, with itself as the drawee, the check is deemed accepted in advance. 29 Ordinarily, the
persons interested.14 check becomes the primary obligation of the issuing bank and constitutes its written promise to
pay upon demand.30

Nevertheless, we find sufficient grounds to affirm the CA on the exclusion of the funds
allocated for the payment of the Manager’s Check in the escheat proceedings. 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,
Escheat proceedings refer to the judicial process in which the state, by virtue of its sovereignty, or fails to make an effective delivery, we find the following provision on undelivered instruments
steps in and claims abandoned, left vacant, or unclaimed property, without there being an under the Negotiable Instruments Law applicable:31
interested person having a legal claim thereto.15 In the case of dormant accounts, the state
inquires into the status, custody, and ownership of the unclaimed balance to determine
whether the inactivity was brought about by the fact of death or absence of or abandonment by Sec. 16. Delivery; when effectual; when presumed. – Every contract on a negotiable
the depositor.16 If after the proceedings the property remains without a lawful owner interested instrument is incomplete and revocable until delivery of the instrument for the purpose of giving
to claim it, the property shall be reverted to the state "to forestall an open invitation to self- effect thereto. As between immediate parties and as regards a remote party other than a
service by the first comers."17 However, if interested parties have come forward and lain claim holder in due course, the delivery, in order to be effectual, must be made either by or under the
to the property, the courts shall determine whether the credit or deposit should pass to the authority of the party making, drawing, accepting, or indorsing, as the case may be; and, in
claimants or be forfeited in favor of the state.18 We emphasize that escheat is not a proceeding such case, the delivery may be shown to have been conditional, or for a special purpose only,
to penalize depositors for failing to deposit to or withdraw from their accounts. It is a and not for the purpose of transferring the property in the instrument. But where the instrument
proceeding whereby the state compels the surrender to it of unclaimed deposit balances when is in the hands of a holder in due course, a valid delivery thereof by all parties prior to him so
there is substantial ground for a belief that they have been abandoned, forgotten, or without an as to make them liable to him is conclusively presumed. And where the instrument is no longer
owner.19 in the possession of a party whose signature appears thereon, a valid and intentional delivery
by him is presumed until the contrary is proved. (Emphasis supplied.)

Act No. 3936, as amended, outlines the proper procedure to be followed by banks and other
similar institutions in filing a sworn statement with the Treasurer concerning dormant accounts: 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. 32 When
Rosmil did not accept the Manager’s Check offered by respondents, the latter retained custody
Sec. 2. Immediately after the taking effect of this Act and within the month of January of every of the instrument instead of cancelling it. As the Manager’s Check neither went to the hands of
odd year, all banks, building and loan associations, and trust corporations shall forward to the Rosmil nor was it further negotiated to other persons, the instrument remained undelivered.
Treasurer of the Philippines a statement, under oath, of their respective managing officers, of Petitioner does not dispute the fact that respondents retained custody of the instrument.33
all 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 preceding ten years or more, arranged in
alphabetical order according to the names of creditors and depositors, and showing: 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
(a) The names and last known place of residence or post office addresses of the that the allocated fund is still held by the bank. 34 As a result, the assigned fund is deemed to
persons in whose favor such unclaimed balances stand; 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.
(b) The amount and the date of the outstanding unclaimed balance and whether Hence, respondents should have been informed that the deposit had been left inactive for
the same is in money or in security, and if the latter, the nature of the same; more than 10 years, and that it may be subjected to escheat proceedings if left
unclaimed.1âwphi1

(c) The date when the person in whose favor the unclaimed balance stands died, if
known, or the date when he made his last deposit or withdrawal; and 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
(d) The interest due on such unclaimed balance, if any, and the amount thereof. 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

2
allocated deposit, subject of the Manager’s Check, should be excluded from the escheat otherwise known as the "Unclaimed Balances Law" acted in excess of and without jurisdiction;
proceedings. We reiterate our pronouncement that the objective of escheat proceedings is consequently thus making the Orders of Sept. 1, 1989 (denying the motion for reconsideration)
state forfeiture of unclaimed balances. We further note that there is nothing in the records that and the Order dated October 31, 1989 dismissing the case, patently null and void.
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. (4) Whether or not the decision of the Honorable Court of Appeals is in accord with law.

The petition is without merit.

WHEREFORE the Petition is DENIED. The 26 November 2009 Decision and 27 May 2010
Resolution of the Court of Appeals in CA-G.R. SP No. 107261 are hereby AFFIRMED. SO The Order of the trial court dismissing the complaint, albeit without prejudice, was a final order
ORDERED. in the sense that it finally disposed of the case. As such, petitioner’s remedy was to file an
ordinary appeal to the Court of Appeals within fifteen (15) days from receipt hereof.

This Court has previously held that an order dismissing a case without prejudice is a final order
[G.R. No. 95533. November 20, 2000.] if no motion for reconsideration or appeal therefrom is timely filed.

REPUBLIC OF THE PHILIPPINES, Petitioner, v. COURT OF APPEALS and PHILIPPINE In Olympia International v. Court of Appeals, 16 we stated thus:
COMMERCIAL AND INTERNATIONAL BANK (Santa Ana Branch Davao City), *
respondents. The dismissal without prejudice of a complaint does not however mean that said dismissal
order was any less final. Such order of dismissal is complete in all details, and though without
DECISION prejudice, nonetheless finally disposed of the matter. It was not merely an interlocutory order
but a final disposition of the complaint.

The law grants an aggrieved party a period of fifteen (15) days from his receipt of the court’s
YNARES-SANTIAGO, J.: decision or order disposing of the action or proceeding to appeal or move to reconsider the
same.

After the lapse of the fifteen-day period, an order becomes final and executory and is beyond
On December 28, 1988, a complaint for escheat 1 was filed by petitioner, Republic of the
the power or jurisdiction of the court which rendered it to further amend or revoke. A final
Philippines, with the Regional Trial Court of Davao City against several banks which had
judgment or order cannot be modified in any respect, even if the modification sought is for the
branches within the jurisdiction of the said court. 2
purpose of correcting an erroneous conclusion by the court which rendered the same.
The complaint alleged that pursuant to Act No. 3936 as amended by P.D. 679, 3 the respective
Hence, the Court of Appeals did not err when it dismissed the petition for certiorari and
managers of the defendant banks submitted to the Treasurer of the Republic of the Philippines
mandamus, on the ground that the proper remedy was to appeal within fifteen (15) days. The
separate statements prepared under oath which listed all deposits and credits held by them in
lapse of the reglementary period was of no moment. A basic requisite for the special civil
favor of depositors or creditors either known to be dead, have not been heard from, or have not
action of certiorari to lie is that there be no appeal nor plain, speedy and adequate remedy in
made deposits or withdrawals for ten years or more since December 31, 1970.
the ordinary course of law. Certiorari is a remedy of last recourse and is a limited form of
review. Its principal function is to keep inferior tribunals within their jurisdiction. It cannot be
The complaint prayed that after due notice to the defendant banks, and after hearing, judgment
used as a substitute for a lost appeal. It is not intended to correct errors of procedure or
be rendered declaring that the deposits, credits and unpaid balances in question be escheated
mistakes in the judge’s findings or conclusions. 17
to petitioner, commanding defendant banks to forthwith deposit the same with the Treasurer of
the Philippines. 4
In a more recent case, this Court held:
On April 12, 1989, the lower court issued an order directing petitioner to show cause why the
. . . Apparently, petitioner resorted to this special civil action because it had failed to take an
complaint should not be dismissed for failure to state a cause of action. According to the order,
appeal within the 15-day reglementary period which expired on June 20, 1997. This, of course,
the complaint contained no allegation that defendant banks have complied with two of the
cannot be done. The special civil action of certiorari cannot be used as a substitute for an
conditions in Section 2 of Act No. 3936, 5 compliance with the requirements being necessary
appeal which petitioner has lost. Nor can it be contended that the only question raised in this
for the complaint to prosper. 6
case is a jurisdictional question. Certiorari lies only where there is no appeal nor any plain,
speedy, and adequate remedy in the ordinary course of law. There is no reason why the
On April 27, 1989, petitioner submitted its manifestation and motion to allow amendment of the
question being raised by petitioner, i.e., whether the appellate court committed a grave abuse
petition to allege compliance with the conditions set forth in Section 2 of Act. No. 3936 as
of discretion in dismissing petitions, could not have been raised by it on appeal. 18
amended by P.D. 679 ("Unclaimed Balances Law"). 7
Admittedly, this Court, in accordance with the liberal spirit pervading the Rules of Court and in
The amended complaint prayed that judgment be rendered ordering that the amount of
the interest of justice, has the discretion to treat a petition for certiorari as having been filed
P97,263.38, deposited with the defendant banks by depositors who are known to be dead or
under Rule 45, especially if filed within the reglementary period for filing a petition for review.
have not made further deposits or withdrawals during the preceding ten years or more be
19 In the case at bar, there is no compelling reason for the Court of Appeals to have treated
escheated in favor of the Republic of the Philippines in accordance with Section 1, Act 3936 as
the petition for certiorari and mandamus as an ordinary appeal. Aside from being filed beyond
amended by P.D. 679.
the fifteen (15) day period, the petition failed to show that the trial court committed grave abuse
of discretion or want or excess of jurisdiction in issuing the assailed Order dismissing the
The trial court found the amendment sufficient and issued an order dated June 7, 1989
complaint. If at all, any mistake therein was an error of judgment or procedure, which is
requiring petitioner to publish a notice in the Mindanao Forum Standard once a week for two
correctible in an ordinary appeal filed in due time.
consecutive weeks, containing the summons, notice to the public, the amended petition
incorporated in the summons and the list of unclaimed balances. The notice was estimated to
The publication of the list of unclaimed balances is intended to safeguard the right of the
occupy 27 pages of the said newspaper at an estimated cost of P50,000.00. 8
depositors, their heirs and successors to due process. 20 This was made clear by the lower
court in its assailed Order, to wit: 21
On July 11, 1989, petitioner submitted a manifestation to the lower court praying that the
publication of the list of the unclaimed balances be dispensed with. Petitioner posited that
Moreover, how would other persons who may have an interest in any of the unclaimed
under Section 3, Act No. 3936, only the following are required to be published: (1) summons to
balances know what this case is all about and whether they have an interest in this case if the
respondent banks; and (2) notice to all persons other than those named defendants therein.
amended complaint and list of unclaimed balances are not published? Such other persons may
Petitioner submitted that to require it to publish the names and list of unclaimed balances
be heirs of the bank depositors named in the list of unclaimed balances.
would only result in additional and unnecessary expense to the government. 9
x       x       x
On August 1, 1989, the trial court issued the following Order:
The fact that the government is in a tight financial situation is not a justification for this Court to
"WHEREFORE, this Court will not dispense with the publication of the list of unclaimed
dispense with the elementary rule of due process.
balances and, unless the plaintiff, through the Office of the Solicitor General, agrees to the
publication thereof as stated in the Order of this Court dated June 7, 1989, and shoulder the
As declared by the trial court in its Order dated August 1, 1989, the dismissal of the petition for
cost thereof as also mentioned in said Order, and manifests its agreement to this Court in
escheat is without prejudice. In other words, the State can refile the said petition,
writing within thirty (30) days from receipt thereof, this case will be DISMISSED WITHOUT
notwithstanding the lapse of time. Prescription of action does not run against the government.
PREJUDICE.
22
SO ORDERED."
WHEREFORE, the petition is DENIED. The decision of the Court of Appeals dated August 14,
1990 is AFFIRMED.
Petitioner filed a motion for reconsideration of the above Order, 10 which was denied by the
lower court for lack of merit. 11
SO ORDERED.
Subsequently, the trial court issued an Order dated October 31, 1989 dismissing Civil Case
No. 19488-89 without prejudice for plaintiff’s failure to agree to the required publication and
shoulder the costs thereof. 12

Petitioner received a copy of the aforesaid Order on November 15, 1989. On January 10,
1990, petitioner filed with the Court of Appeals a petition for mandamus and certiorari, alleging
grave abuse of discretion on the part of respondent judge in ordering the publication of the list
of unclaimed balances. 13 The petition for certiorari and mandamus was dismissed by the
Court of Appeals, on the ground that the proper remedy was ordinary appeal. Thus: 14

It is axiomatic that the extraordinary remedy of certiorari is available only in the absence of a
plain, speedy and adequate remedy like appeal. The order of the respondent court dated
October 31, 1989 dismissing the case is final and appealable (Monares v. CWA Enterprises,
105 Phil. 1333; Vol. 1, Francisco, Rules of Court, at pp. 967-968). No timely appeal having
been taken therefrom, the same became final and executory and this petition for certiorari filed
on January 10, 1989 to review the interlocutory orders issued by the court before the case was
dismissed can no longer be entertained.

WHEREFORE, the petition for certiorari is dismissed for lack of merit.

SO ORDERED.

Aggrieved, petitioner filed an appeal under Rule 45 of the Rules of Court raising the following
issues: 15

(1) Whether or not respondent RTC judge committed grave abuse of discretion tantamount to
lack of jurisdiction in ordering the publication of the list of unclaimed balances listed under
annexes "A" to "P" of the complaint.

(2) Whether or not the remedy of appeal, though available, was the speedy and adequate
remedy.

(3) Whether or not respondent RTC judge in issuing the interlocutory orders dated June 7,
1989 and August 1, 1990 — which are contrary to Sec. 1, Act 3936, as amended by PD 679,

3
 [G.R. No. L-30839. November 28, 1975.]

REPUBLIC OF THE PHILIPPINES, Petitioner, v. COURT OF FIRST INSTANCE OF

MANILA, BRANCH XIII, Hon. JESUS MORFE, Presiding Judge, and REPUBLIC BANK MARTIN, J.:
(only its provincial branches), Respondents..

SYNOPSIS
This is an appeal by certiorari from the orders of the Court of First Instance of Manila, Branch
XIII, in Civil Case No. 73707 entitled, "Republic of the Philippines versus Bank of America, Et
Pursuant to Act 3936, petitioner Republic of the Philippines filed with the respondent Court of Al.," dismissing the complaint for escheat against the provincial branches of respondent
First Instance of Manila a complaint against several banks, including the respondent Bank, for Republic Bank on the ground of improper venue.
escheat unto itself, of all dormant bank deposits. Summons and notice were issued requiring
the defendant banks and all their dormant depositors to file severally their answers within 60 The records reveal that on July 25, 1968, the Republic of the Philippines, the herein petitioner,
days from the first publication of summons with a warning that should the defendant banks and instituted in the Court of First Instance of Manila a complaint for escheat against several banks
their depositors fail to file their answers, petitioners would move for their default and demand in the Philippines, including respondent Republic Bank with principal offices in Manila, and all
the relief prayed for in the complaint. Respondent Bank received the summons and a copy of the depositors or creditors of said banks numbering about 55,000. Respondent Republic Bank
the complaint. The complaint, summons, notice and the list of dormant depositors were and its provincial branches have a total number of about 35,000 depositors or creditors with a
published once a week for three consecutive weeks in an English and Spanish newspaper of total deposits of about P90,000. 1
general circulation in the Philippines. Thereafter petitioner filed with the respondent court a
motion to declare respondent Bank and its dormant depositors in default for failure to answer In its complaint, the petitioner alleged that pursuant to Section 2, Act No. 3936, 2 the defendant
within the time required in the summons. After the respondent Bank and its depositors were banks, including the respondent Bank, forwarded to the Treasurer of the Philippines separate
declared in default, respondent Bank filed with the respondent court a motion to dismiss the sworn statements of their respective managing officers regarding all deposits and credits held
complaint insofar as its provincial branches are concerned on the ground of improper venue by them in favor of such depositors or creditors known to be dead, or who have not been heard
which it claimed should be in the provinces where said branches are located. Respondent from, or who have not made further deposits or withdrawals during the preceding ten years or
court granted respondent bank’s motion. more; that upon receipt of the sworn statements from the defendant banks, including
respondent Republic Bank, the Treasurer of the Philippines caused said sworn statements to
The Supreme Court set the order of dismissal aside and held that: (1) the depositors of the be published in the February 25, March 3 and March 10, 1968 issues of the "Philippines
respondent bank are the real party in interest who can move for the dismissal of the complaint; Herald," an English newspaper, and the "El Debate," a Spanish newspaper, both of general
(2) the lower court erred in dismissing the complaint on the ground of improper venue circulation in the Philippines, pursuant to Section 2 of Act No. 3936; 3 that said deposits or
considering that there has already been an order of default; and (3) by proceeding to the trial of credits have remained unclaimed up to the present time despite the publication of the
the case, respondent bank was deemed to have waived the improper venue. aforementioned sworn statements of the deposits or credits. Petitioner therefore prays that the
respondent Court of First Instance of Manila issue an order directing the Clerk of Court to issue
Order of dismissal set aside and case remanded to lower court for further appropriate the summons required in the action and to publish the same, together with the list (Annex A)
proceedings in accordance with Presidential Decree 679 dated April 2, 1975 amending Act No. attached to the complaint, and the notice required in paragraph 2 of said Section 2 of Act No.
3936. 3936, once a week for three consecutive weeks in the "Philippines Herald" and the "El
Debate." 4

Accordingly, on August 8, 1968, the Clerk of Court of the respondent Court of First Instance of
SYLLABUS
Manila issued the necessary summons and notice requiring the defendant banks, including the
respondent Republic Bank, and all their depositors or creditors appearing in the list (Annex A)
to file severally their answers to the complaint with the Office of the Clerk of Court within sixty
1. ESCHEATS; DORMANT BANK DEPOSITS; ESCHEAT IN FAVOR OF GOVERNMENT (60) days from the first publication of the summons, serving copies thereof upon the petitioner,
PROVIDED FOR IN ACT NO. 3936. — Pursuant to the provisions of Act No. 3936, all credits c/o Office of the Solicitor General, Padre Faura, Manila, with the summons carrying a warning
and deposits held by banks in favor of persons known to be dead or who have not made that should the defendant banks, including the respondent Republic Bank, and their depositors
further deposits or withdrawals for ten or more years preceding every odd year may be or creditors fail to file their answers, the petitioner would move for their default and demand
escheated in favor of the Republic of the Philippines. from the respondent Court of First Instance the relief applied for in the complaint. 5 The notice
issued was addressed to persons, other than those named as defendants, having interest in
2. ID.; ID.; ID.; PUBLICATION OF SUMMONS AND NOTICE IN MANILA IF NO NEWSPAPER the deposits or credits, informing them of the filing of the complaint for escheat in said civil
OF GENERAL CIRCULATION IN LOCALITY OF DEFENDANT BANK. — Act No. 3936 allows case, requiring them to appear within sixty (60) days after the first publication of the summons
publications of the summons and notice in the City of Manila, if, in the locality where the and to show cause why the credits or deposits involved in the said action should not be
defendant bank or banks are situated, there are no publications of at least two newspaper of deposited in the National Treasury, as provided for in Act No. 3936, and notifying them that if
general circulation, one in English and another in Spanish. Thus, where it can hardly be they do not appear and show cause, the petitioner will apply to the court for relief as demanded
disputed that in the provinces where the provincial branches of the respondent Bank are in the complaint. Respondent Republic Bank received the summons and a copy of the
located, there are no newspapers of general circulation published in Spanish, the publication of complaint. Pursuant to the order of the respondent Court of First Instance, the complaint,
the summons and notice in the City of Manila is permissible under Act No. 3936. summons and notice including the list of depositors or creditors (Annex A) with dormant
deposits with the banks were published in the "Philippines Herald", an English newspaper, and
3. ID.; ID.; DORMANT DEPOSITORS, NOT BANKS ARE REAL PARTY IN INTEREST. — In "El Debate," a Spanish newspaper, both of general circulation in the Philippines, in the issues
complaints filed by the Government for the escheat of dormant bank deposits, the dormant of August 25, 1968, September 1, 1968 and September 8, 1968.
depositors or creditors of the respondent banks are the real party in interest inasmuch as what
are being escheated in favor of the Government are their own unclaimed or dormant deposits On November 15, 1968, the petitioner filed with the respondent Court of First Instance a
and not the money of the respondent banks. motion to declare in default some defendant banks, including respondent Republic Bank, and
all their depositors or creditors whose names appear in the list (Annex A) for failure to file
4. DEFAULTS; DEFENDANTS IN DEFAULT LOSES STANDING IN COURT; DISMISSAL OF severally their answers within the period of sixty (60) days from the first publication of the
COMPLAINT ON MOTION OF DEFENDANT IN DEFAULT, ERRONEOUS. — A defendant in summons and notice in the "Philippines Herald" and "El Debate" issues of August 25, 1968,
default loses his standing in court and consequently cannot appear in court, adduce evidence their period for filing their answers having already prescribed on October 24, 1968. 6
and be heard, and is not entitled to notice. The only exception is when the defendant in default
files a motion to set aside the order of default on the grounds provided for in section 3, Rule 18 On November 26, 1968, respondent Court declared in default some defendant banks, including
"in which event he is entitled to notice of all further proceedings regardless of whether the respondent Republic Bank and their respective depositors or creditors for their failure to file
order of default is set aside or not." It is error, therefore, on the part of the lower court if, after their answers on time. 7
declaring defendants in default for failure to file an answer and while said order remains
binding upon the parties so declared, the case is dismissed on the motion of the defendants in On December 10, 1968, respondent Republic Bank filed with the respondent Court of First
default. Instance a motion to dismiss the complaint for escheat insofar as its provincial branches are
concerned on the ground of improper venue which it claimed is in the provinces where said
5. VENUE OF ACTIONS; IMPROPER VENUE; MOTION TO DISMISS FOR IMPROPER branches are located. 8
VENUE SHOULD BE MADE WITHIN PERIOD FOR FILING ANSWER. — Well-settled is the
rule that the motion to dismiss for improper venue should not be entertained unless made On December 20, 1968, the petitioner filed its opposition 9 to the motion to dismiss the
within the period for filing an answer. Hence, it is error for the lower court to dismiss the complaint for escheat contending that respondent Republic Bank is only a nominal party and
complaint for escheat on ground of improper venue insofar as the depositors or creditors of therefore cannot move to dismiss the complaint for escheat, the real party in interest being the
respondent bank’s provincial branches are concerned where said depositors had already been depositors or creditors themselves; that its provincial branches have no direct and separate
declared in default for failure to file their answers on time. personality of their own; that pursuant to Sections 1, 2 and 3 of Act No. 3936, all banks with
dormant deposits or credits of all persons in the Philippines may be included in one single
6. ID.; ID.; VENUE IS PERSONAL PRIVILEGE WHICH MAY BE LOST BY FAILURE TO action, whether these banks are found in one province or in all provinces of the Philippines;
ASSERT IT SEASONABLY. — Venue involves no more no less than a personal privilege that the institution of a complaint by the petitioner in the Court of First Instance of Manila
which may be lost by failure to assert seasonably, by formal submission in a cause, or by impleading the defendant banks, including the respondent Republic Bank and its provincial
submission through conduct. Thus where the circumstances show that the respondent knew branches, is in accordance with the provisions of Act No. 3936; that under Section 3 of said
from the beginning that the venue of the complaint against it has been properly laid and yet it Act, the convenience or inconvenience of the depositors is not really the primary factor to be
proceeded to the trial of the case, the respondent is deemed to have impliedly waived the considered in determining the venue of action in escheat proceedings; that the avowed
improper venue for which it cannot later on appear in court and raise for the first time any purpose of Act No. 3936 is to benefit the government by escheating unto itself dormant bank
question thereon especially when a judgment has already been rendered. deposits, and this purpose will be defeated if escheat proceedings will be instituted in each and
every province where a branch of the bank is located because of huge publication expenses;
7. ID.; ID.; SUPREME COURT NOT INCLINED TO ANNUL PROCEEDINGS HAD IF that Section 2 (b) of Rule 4 of the Revised Rules of Court supplements the provisions of Act
PROCEEDINGS ARE TO BE REPEATED IN COURT OF PROPER VENUE. — The Supreme No. 3936 on venue and gives the Republic of the Philippines the option to file the complaint for
Court is not inclined to annul proceedings regularly had in a lower court although not the escheat in the City of Manila, where its residence is; that in view of Rule 144 of the Revised
proper venue of the action, if the net result would be to have the same proceedings repeated in Rules of Court, which provides that all cases brought after the effectivity of the Rules on
some other courts of similar jurisdiction. Hence where, there can be no doubt that the escheat January 1, 1964 shall be governed by the provisions of the Rules of Court, Section 2 (b) of
proceedings which may be had in the Courts of First Instance in the provinces where the Rule 4, 10 on venue is applicable and available to the petitioner; that Section 3 of Act No. 3936
respondent bank’s branches are situated would exactly be the same as those that may be held cannot be considered as an exception to the provisions of the Rules of Court on venue under
in the Court of First Instance of Manila, the proceedings had in the CFI of Manila should not be Section 5, Rule 4 11 of the said Rules; and that the rule of venue must be liberally construed, it
annulled merely on the ground that the proper venue of the action should have been the being for plaintiff’s or petitioner’s convenience.
provincial Courts of First Instance.
On March 3, 1969, respondent Court of First Instance granted the aforesaid motion to dismiss,
8. APPEALS; PERIOD THEREFOR; APPEAL ON TIME IF FILED WITHIN EXTENDED dated December 10, 1968, filed by respondent Republic Bank and dismissed the complaint
PERIOD. — Respondent Bank’s submission that the order sought to be appealed has already against it. 12
become final and unappealable is not correct. The records show that the order dated June 27,
1969 of the lower court, clarifying and amending its order of March 3, 1969 which dismissed On April 8, 1969, petitioner filed a motion for reconsideration and clarification of the order of
the complaint insofar as the provincial branches are concerned, was received by petitioner on March 3, 1969. Accordingly, on June 27, 1969, the respondent Court of First Instance modified
July 9, 1969 so that it had until August 8, 1969 to file a petition for review or appeal from the the said order, by dismissing the complaint insofar as the provincial branches of respondent
questioned order. On August 12, 1969, however, the Supreme Court granted petitioner an Republic Bank are concerned. 13
extension of fifteen days from August 2 within which to file its petition for review. With the
extension granted the present petition filed on August 12, 1969 is definitely on time. Hence, this petition to annul and set aside the aforementioned orders of March 3, 1969 and
June 27, 1969.
9. ESCHEATS; DORMANT BANK DEPOSITS; PROCEEDINGS NOW GOVERNED BY
PRESIDENTIAL DECREE NO 679 AMENDING ACT NO. 3936. — In view of Presidential The petitioner presses upon the respondent Court the following errors:
Decree No. 679 dated April 2, 1975, amending Act No. 3936, proceedings for the escheat of
dormant bank deposits should be in accordance with said Presidential Decree. 1. In not finding that respondent Republic Bank is not a real party in interest in the escheat
proceedings.

2. In not finding that venue of action in escheat proceedings has been properly laid in the City
DECISION of Manila, since all the defendants Bank were, where ever they may be found may be included

4
in one single action pursuant to the provisions of Act No. 3936.

3. In not finding that Section 2 (b) of Rule 4 of the Revised Rules of Court on venue of action
likewise covers escheat proceedings instituted by petitioner Republic in the Court of First
Instance of Manila.

Initially, petitioner Republic questions the personality of respondent Republic Bank to move for
the dismissal of the complaint on the ground of improper venue, contending that the "real party
in interest" are the depositors or creditors themselves whose dormant bank accounts are
directly affected by the escheat proceedings. We agree with the petitioner’s contention that the
depositors or creditors of the respondent Republic Bank are the real party in interest who can
move for the dismissal of the complaint for escheat inasmuch as what are being escheated in
favor of the Government are their own unclaimed or dormant deposits and not the money of
the respondent Republic Bank. Of course, it may be contended that the summons and notice
duly served on and received by the depositors or creditors of the provincial branches of
respondent Republic Bank pursuant to Section 3 of Act No. 3936, were published only in
Manila and not in the locality where the branches are located. However, Act No. 3936 allows
publications of the summons and notice in the City of Manila, if, in the locality where the
defendant bank or banks are situated, there are no publications of at least two newspapers of
general circulation, one in English and another in Spanish. It can hardly be disputed that in the
provinces where the provincial branches of the respondent Republic Bank are located, there
are no newspapers of general circulation published in Spanish. Such being the case, the
publication of the subject summons and notice in the City of Manila is permissible under Act
No. 3936. Besides, there is nothing in the records to show that the depositors or creditors of
the provincial branches of respondent Republic Bank have moved for the dismissal of the
complaint for escheat. Likewise, respondent Republic Bank and its depositors or creditors have
filed no answer to the complaint for escheat, despite the order of the lower court of November
18, 1968 requiring the defendant banks, including the respondent Republic Bank and its
depositors or creditors to file their answers to the complaint within fifteen (15) days from receipt
thereof. The very order of the lower court of November 26, 1968 declaring in default all
defendant Banks, including respondent Republic Bank and its depositors or creditors in the
provincial branches, has not even been questioned. Said order of default is explicit in its
terms:jgc:chanrobles.com.ph

"For failure to file the requisite answer to the complaint in the instant case, notwithstanding
notice by publication, all the defendant banks and depositors-creditors listed in Annex A to the
complaint except Security Bank and Trust Co., Philippine National Bank, Bank of the Philippine
Islands, Kaluyagan Rural Bank, Inc., Mr. Ong Ke, Mr. Alfredo Alcala and Mrs. Lydia Ferreol,
are hereby declared in default as prayed for in plaintiff’s motion of November 18, 1968."cralaw
virtua1aw library

Since the foregoing order of default has not been set aside by the respondent Court, it remains
binding upon the parties so declared. 14 A defendant in default loses his standing in court and
consequently cannot appear in court, adduce evidence, and be heard, and is not entitled to
notice. 15 The only exception is when the defendant in default files a motion to set aside the
order of default on the grounds provided for in Section 3, Rule 18 "in which event he is entitled
to notice of all further proceedings regardless of whether the order of default is set aside or
not." 16

The lower court therefore erred in dismissing the complaint for escheat on ground of improper
venue insofar as the depositors or creditors of its provincial branches are concerned,
considering that they had already been declared in default for failure to file their answers on
time. Well-settled is the rule that the motion to dismiss for improper venue should not be
entertained unless made within the period for filing an answer. 17 It is generally irregular to
enter judgment by default while a motion remains pending and undisposed of. 18 This is what
the lower court did in this case. It dismissed petitioner’s complaint as to the provincial
depositors or creditors of respondent Republic Bank although these depositors or creditors had
already been declared in default. It is even worse when it dismissed the complaint after it has
already conducted a series of proceedings in the case, without respondent Republic Bank’s
depositors or creditors moving for the dismissal of the complaint on ground of improper venue.
Moreover, the circumstances show that respondent Republic Bank knew from the beginning
that the venue of the complaint against it has been improperly laid and yet it proceeded to the
trial of the case. By so acting, respondent Republic Bank was deemed to have impliedly
waived the improper venue, for which it cannot later on appear in court and raise for the first
time any question thereon especially when a judgment has already been rendered. 19 Venue
involves no more no less than a personal privilege which may be lost by failure to assert it
seasonably, by formal submission in a cause, or by submission through conduct. 20
Furthermore, the objection of improper venue was not even pleaded, or even if it were
pleaded, is merely a waivable procedural defect which may result from laches as where a party
who had been properly summoned, allowed the proceedings to continue for some time before
moving for the dismissal of the complaint. Moreover, this Court is not inclined to annul
proceedings regularly had in a lower court although not the proper venue of the action, if the
net result would be to have the same proceedings repeated in some other courts of similar
jurisdiction. 21 There can be no doubt that the escheat proceedings which may be had in the
Courts of First Instance in the provinces where the respondent bank’s branches are situated
would exactly be the same as those that may be held in Court of First Instance of Manila.

Respondent Republic Bank submits that this Court has no jurisdiction over this appeal on the
ground that the order of March 3, 1969, insofar as its provincial branches are concerned, had
already become final and unappealable, since the notice of the appeal from said order had
only been made on July 14, 1969, or more than three months after it was received on March
18, 1969. This is not correct. The records show that the order dated June 27, 1969 of the lower
court, clarifying and amending its order of March 3, 1969 which dismissed the complaint
insofar as the provincial branches are concerned, was received by petitioner on July 9, 1969,
so that it had until August 8, 1969 to file a petition for review or appeal from the questioned
order. On August 12, 1969, however, this Court granted petitioner an extension of fifteen (15)
days from August 2, 1969 within which to file its petition for review. With the extension granted
the present petition filed on August 12, 1969 is definitely on time.

IN THE LIGHT OF THE FOREGOING, the order of the lower court on March 3, 1969, as
amended by its order dated June 27, 1969, reinstating petitioner’s complaint against
respondent Republic Bank and its Manila extension or branches is hereby affirmed, while its
amended order dismissing the complaint against respondent Bank’s provincial branches and
its depositors or creditors is reversed and set aside. However, in view of Presidential Decree
No. 679 dated April 2, 1975 amending Act No. 3936, upon which the present petition is based,
the case is hereby remanded to the lower court for further appropriate proceedings in
accordance with said Presidential Decree.

SO ORDERED.

5
 [G.R. No. L-30381. August 30, 1988.] governs escheat proceedings instituted by the Republic in the Court of First Instance of Manila.

REPUBLIC OF THE PHILIPPINES, Petitioner, v. COURT OF FIRST INSTANCE OF It is petitioner’s contention that private respondent bank, being a mere nominal party, could not
MANILA, BRANCH XIII, HON. JESUS P. MORFE, PRESIDING JUDGE, AND PRES. ROXAS file a motion to dismiss on the ground of improper venue, the real party in interest being the
RURAL BANK, INC., Respondents. depositors themselves; that the avowed purpose of Act No. 3936 is to benefit the government
by escheating unto itself dormant bank deposits and that this purpose will be defeated if
escheat proceedings will have to be instituted in each and every province or city where a bank
is located because of the publication expense; that the convenience or inconvenience of the
depositors is not the determining factor as to venue of action, but that in view of Rule 144 of
SYLLABUS the Revised Rules of Court, which provides that all cases brought after the effectivity of the
Rules on January 1, 1964 shall be governed by the provisions of the Rules of Court, Section
1. REMEDIAL LAW; "REAL PARTY IN INTEREST", DEFINED; RESPONDENT BANK FALLS 2(b) of Rule 4 on venue is made applicable and available to the Republic in the instant case.
UNDER THE DEFINITION. — A "real party in interest" has been defined as the party who
would be benefitted or injured by the judgment of the suit or the party entitled to avail of the We find these contentions unmeritorious.
suit. There can be no doubt that private respondent bank falls under this definition for the
escheat of the dormant deposits in favor of the government would necessarily deprive said A "real party in interest" has been defined as the party who would be benefitted or injured by
bank of the use of such deposits. It is in this sense that it stands to be "injured by the judgment the judgment of the suit or the party entitled to avail of the suit. 1 There can be no doubt that
of the suit;" and it is for this reason that Section 3 of Act No. 3936 specifically provides that the private respondent bank falls under this definition for the escheat of the dormant deposits in
bank shall be joined as a party in the action for escheat. If the bank were not a real party in favor of the government would necessarily deprive said bank of the use of such deposits. It is
interest, the legislature would not have provided for its joining as a party in the escheat in this sense that it stands to be "injured by the judgment of the suit;" and it is for this reason
proceedings. Besides, under Section 2, Rule 3 of the Rules of Court, private respondent bank that Section 3 of Act No. 3936 specifically provides that the bank shall be joined as a party in
is a real party in interest as its presence in the action is necessary for a complete the action for escheat, thus:
determination and settlement of the questions involved therein. Private respondent bank being
a real party in interest, it may and can file a motion to dismiss on the ground of improper Section 3. Whenever the Attorney General shall be informed of such unclaimed balances, he
venue. shall commence an action or actions in the name of the People of the Philippines in the Court
of First Instance of the province where the bank is located, in which shall be joined as parties
2. STATUTORY CONSTRUCTION; SECTION 3, ACT NO. 3936; PHRASE "OR ACTIONS" the bank and such creditors or depositors. All or any member of such creditors or depositors or
CONSTRUED; LEGISLATIVE INTENT EXPLAINED. — The first sentence of Section 3 of Act banks, may be included in one action. (Emphasis supplied.).
No. 3936 directs the Attorney General, now Solicitor General, to commence an action or
actions in the name of the People of the Philippines in the Court of First Instance of the Indeed, if the bank were not a real party in interest, the legislature would not have provided for
province where the bank is located. The phrase "or actions" in this section is very significant. It its joining as a party in the escheat proceedings.
manifests awareness on the part of the legislators that a single action to cover all banks
wherever located in the Philippines would not be legally feasible in view of the venue Besides, under Section 2, Rule 3 of the Rules of Court, private respondent bank is a real party
prescribed for such action under the same section, i.e., the province where the bank is located. in interest as its presence in the action is necessary for a complete determination and
Thus, the addition of the last sentence, which the lower court had correctly interpreted to mean settlement of the questions involved therein. Private respondent bank being a real party in
"that for escheat of unclaimed bank balances all banks located in one and the same province interest, it may and can file a motion to dismiss on the ground of improper venue.
where the Court of First Instance concerned is located may be made parties defendants in one
action" was clearly intended to save on litigation and publication expenses, but certainly not as In defense of the second issue raised, petitioner points to the last sentence of Section 3 of Act
authority for the lumping together of all banks wherever found in the Philippines in one single No. 3936 above-quoted as authority for saying that the venue of the escheat proceedings was
escheat proceedings. properly laid in the City of Manila. Petitioner’s reliance on the said sentence is patently
misplaced, the same having been obviously read out of context instead of in relation to the
3. REMEDIAL LAW; JURISDICTION; ESCHEAT PROCEEDINGS NOT GOVERNED BY sentence preceding it.
SECTION 2(b), RULE 4 OF THE REVISED RULES OF COURT. — Section 2(b) of Rule 4 of
the Revised Rules of Court cannot govern escheat proceedings principally because said The first sentence of Section 3 of Act No. 3936 directs the Attorney General, now Solicitor
section refers to personal actions. Escheat proceedings are actions in rem which must be General, to commence an action or actions in the name of the People of the Philippines in the
brought in the province or city where the rem, in this case the dormant deposits, is located. Court of First Instance of the province where the bank is located. The phrase "or actions" in
this section is very significant. It manifests awareness on the part of the legislators that a single
4. ID.; CIVIL ACTIONS; SECTION 4, RULE 18, REVISED RULES OF COURT APPLIED BY action to cover all banks wherever located in the Philippines would not be legally feasible in
ANALOGY TO THE CASE AT BAR. — While private respondent bank’s motion to dismiss was view of the venue prescribed for such action under the same section, i.e., the province where
granted, the trial court in a subsequent order dated November 16, 1968 declared private the bank is located. Thus, the addition of the last sentence, which the lower court had correctly
respondent bank’s depositors and co-defendants Jose Ydirin and Leonora Trumpeta in default interpreted to mean "that for escheat of unclaimed bank balances all banks located in one and
for failure to file their answers. Considering that the complaint in Civil Case No. 73707 states a the same province where the Court of First Instance concerned is located may be made parties
common cause of action against private respondent bank and its depositors-co-defendants, defendants in one action" 2 was clearly intended to save on litigation and publication
and considering further that the motion to dismiss filed by private respondent bank alleged expenses, but certainly not as authority for the lumping together of all banks wherever found in
facts that would warrant dismissal of the complaint against said co-defendants, we apply by the Philippines in one single escheat proceedings.
analogy Section 4 of Rule 18 of the Rules of Court, thereby decreeing the benefits of the
dismissal of the complaint to extend to private respondent bank’s co-defendants Jose Ydirin Anent the third issue raised, suffice it to say that Section 2(b) of Rule 4 of the Revised Rules of
and Leonora Trumpeta and their successors-in-interest. Court cannot govern escheat proceedings principally because said section refers to personal
actions. Escheat proceedings are actions in rem which must be brought in the province or city
where the rem, in this case the dormant deposits, is located.
DECISION We note that while private respondent bank’s motion to dismiss was granted, the trial court in a
subsequent order dated November 16, 1968 declared private respondent bank’s depositors
and co-defendants Jose Ydirin and Leonora Trumpeta in default for failure to file their answers.
Considering that the complaint in Civil Case No. 73707 states a common cause of action
FERNAN, J.:
against private respondent bank and its depositors-co-defendants, and considering further that
the motion to dismiss filed by private respondent bank alleged facts 3 that would warrant
dismissal of the complaint against said co-defendants, we apply by analogy Section 4 of Rule
The instant appeal by certiorari seeks (1) to annul and set aside the Orders dated October 26, 18 of the Rules of Court, 4 thereby decreeing the benefits of the dismissal of the complaint to
1968 and March 1, 1969 of the then Court of First Instance (CFI) of Manila, Branch XIII in Civil extend to private respondent bank’s co-defendants Jose Ydirin and Leonora Trumpeta and
Case No. 73707 entitled "Republic of the Philippines, Plaintiff, versus Bank of America, Et Al., their successors-in-interest.chanrobles.com.ph : virtual law library
Defendants," which orders respectively dismissed herein petitioner’s complaint for escheat as
against private respondent Pres. Roxas Rural Bank for improper venue and denied petitioner’s WHEREFORE, the instant appeal by certiorari is hereby denied. No costs.
motion for reconsideration of such dismissal order; and (2) the reinstatement of the aforesaid
against private Respondent. SO ORDERED.

The antecedents are as follows:

Pursuant to Section 2 of Act No. 3936, otherwise known as the Unclaimed Balance Law, some
31 banks including herein private respondent Pres. Roxas Rural Bank forwarded to the
Treasurer of the Philippines in January of 1968 separate statements under oath by their
respective managing officers of all deposits and credits held by them in favor, or in the names
of such depositors or creditors known to be dead, or who have not been heard from, or who
have not made further deposits or withdrawals during the preceding ten years or more. In the
sworn statement submitted by private respondent Bank, only two (2) names appeared: Jesus
Ydirin with a balance of P126.54 and Leonora Trumpeta with a deposit of P62.91.

Upon receipt of these sworn statements, the Treasurer of the Philippines caused the same to
be published in the February 25, March 3 and March 10, 1968 issues of the "Philippines
Herald", an English newspaper, and the "El Debate", a Spanish newspaper, both of general
circulation in the Philippines.

Thereafter, or on July 25, 1968, the Republic of the Philippines instituted before the CFI of
Manila a complaint for escheat against the aforesaid 31 banks, including herein
private Respondent. Likewise named defendants therein were the individual depositors and/or
creditors reported in the sworn statements and listed in Annex "A" of the complaint.
Summonses were accordingly issued to defendant banks and the creditors/depositors
requiring them to file severally their answers to the complaint within 60 days after the first
publication of the summons with notice that should they fail to file their answers, plaintiff would
take judgment against them by default. The aforesaid complaint, list of depositors-creditors
(Annex "A" of the complaint), summons and notice were duly published in the August 25,
September 1, and September 8, 1968 issues of the "Philippines Herald" and "El
Debate."cralaw virtua1aw library

On October 5, 1968, private respondent Bank filed before the CFI a motion to dismiss the
complaint as against it on the ground of improper venue. Opposed by the petitioner, the motion
to dismiss was granted in the first assailed Order. Its motion for reconsideration of said
dismissal order having been denied in the second assailed order, petitioner interposed instant
appeal on pure questions of law, to wit:

a. Whether or not Pres. Roxas Rural Bank is a real party in interest in the escheat proceedings
or in Civil Case No. 73707 of the Court of First Instance of Manila.

b. Whether or not venue of action in Civil Case No. 73707 has been properly laid in the City of
Manila, since all defendant banks, wherever they may be found, could be included in one
single action, pursuant to the provisions of Act No. 3936.

c. Whether or not Section 2(b), Rule 4 of the Revised Rules of Court on venue, likewise,

6
 G.R. No. L-47757             April 7, 1942 the balance to the survivor upon the death of one of them. The trial court said that the Civil
Code "contains no provisions sanctioning such an agreement" We think it is covered by article
1790 of the Civil Code, which provides as follows:
ANA RIVERA, plaintiff-appellant,
vs.
PEOPLES BANK AND TRUST CO., defendant-appellee. ART. 1790. By an aleatory contract one of the parties binds himself, or both
MINNIE STEPHENSON, in her capacity as administratix of the intestate estate of EDGAR reciprocally bind themselves, to give or to do something as an equivalent for that
Stephenson, intervenor-appellee. which the other party is to give or do in case of the occurrence of an event which
is uncertain or will happen at an indeterminate time.

OZAETA, J.:
(See also article 1255.)

The question raised in this appeal is the validity of the survivorship agreement made by and
between Edgar Stephenson, now deceased, and Ana Rivera, appellant herein, which read as The case of Macam vs. Gatmaitan (decided March 11, 1937), 36 Off. Gaz., 2175, is in point.
follows: Two friends Juana Gatmaitan and Leonarda Macam, who had lived together for some time,
agreed in writing that the house of strong materials which they bought with the money
belonging to Leonarda Macam and the Buick automobile and certain furniture which belonged
SURVIVORSHIP AGREEMENT to Juana Gatmaitan shall belong to the survivor upon the death of one of them and that "this
agreement shall be equivalent to a transfer of the rights of the one who dies first and shall be
kept by the survivor." After the death of Leonarda Macam, her executrix assailed that
Know All Men by These Presents: document on the ground that with respect to the house the same constituted a donation mortis
causa by Leonarda Macam in favor of Juana Gatmaitan. In affirming the judgment of the trial
court absolving the defendants from the complaint this Court, speaking through Chief Justice
That we hereby agree with each other and with the PEOPLES BANK AND TRUST Avaceña, said:
COMPANY, Manila, Philippine Islands (hereinafter called the Bank), that all
moneys now or hereafter deposited by us or either of us with the Bank in our
savings account shall be deposited in and received by the Bank with the This court is of the opinion that Exhibit C is an aleatory contract whereby,
understanding and upon the condition that said money be deposited without according to article 1790 of the civil Code, one of the parties or both reciprocally
consideration of its previous ownership, and that said money and all interest bind themselves to give or do something as an equivalent for that which the other
thereon, if any there be, shall be the property of both of us joint tenants, and shall party is to give or do in case of the occurrence of an event which is uncertain or
be payable to and collectible by either of us during our joint lives, and after the will happen at an indeterminate time. As already stated, Leonarda was the owner
death of one of us shall belong to and be the sole property of the survivor, and of the house and Juana of the Buick automobile and most of the furniture. By
shall be payable to and collectible by such survivor. virtue of Exhibit C, Juana would become the owner of the house in case Leonarda
died first, and Leonarda would become the owner of the automobile and the
furniture if Juana were to die first. In this manner Leonarda and Juana reciprocally
And we further covenant and agree with each other and the Bank, its successors assigned their respective property to one another conditioned upon who might die
or assigns, that the receipt or check of either of us during our joint lives, or the first, the time of death determining the event upon which the acquisition of such
receipt or check of the survivor, for any payment made from this account, and right by the one or the other depended. This contract, as any other contract, is
shall be valid and sufficient and discharge to the Bank for such payment. binding upon the parties thereto. Inasmuch as Leonarda had died before Juana,
the latter thereupon acquired the ownership of the house, in the same manner as
Leonarda would have acquired the ownership of the automobile of the furniture if
The Bank is hereby authorized to accept and deposit to this account all checks
Juana had died first. (36 Off. Gaz., 2176.)
made payable to either or both of us, when endorsed by either or both of us or one
for the other.
Furthermore, "it is well established that a bank account may be so created that two persons
shall be joint owners thereof during their mutual lives, and the survivor take the whole on the
This is a joint and several agreement and is binding upon each of us, our heirs,
death of the other. The right to make such joint deposits has generally been held not to be
executors, administrators, and assigns.
done with by statutes abolishing joint tenancy and survivorship generally as they existed at
common law." (7 Am. Jur., 299.)
In witness whereof we have signed our names here to this 17th day of October,
1931.
But although the survivorship agreement is per se not contrary to law, its operation or effect
may be violative of the law. For instance, if it be shown in a given case that such agreement is
a mere cloak to hide an inofficious donation, to transfer property in fraud of creditors, or to
(Sgd.) EDGAR STEPHENSON defeat the legitime of a forced heir, it may be assailed and annulled upon such grounds. No
(Sgd.) Ana Rivera such vice has been imputed and established against the agreement involved in the case.
Address: 799 Sta. Mesa, Manila

The agreement appealed from is reversed and another judgment will be entered in favor of the
plaintiff ordering the defendant bank to pay to her the sum of P701.43, with legal interest
        Witness: thereon from the date of the complaint, and the costs in both instances. So ordered.
        (Sgd.) FRED W. BOHLER
        (Sgd.) Y. E. Cox
        S. A. #4146

Ana Rivera was employed by Edgar Stephenson as housekeeper from the year 1920 until his
death on June 8, 1939. On December 24, Stephenson opened an account in his name with the
defendant Peoples Bank by depositing therein the sum of P1,000. On October 17, 1931, when
there was a balance of P2,072 in said account, the survivorship agreement in question was
executed and the said account was transferred to the name of "Edgar Stephenson and/or Ana
Rivera." At the time of Stephenson's death Ana Rivera held the deposit book, and there was a
balance in said account of P701. 43, which Ana Rivera claimed but which the bank refused to
pay to her upon advice of its attorneys who gave the opinion that the survivorship agreement
was of doubtful validity. Thereupon Ana Rivera instituted the present action against the bank,
and Minnie Stephenson, administratix of the estate of the deceased, intervened and claimed
the amount for the estate, alleging that the money deposited in said account was and is the
exclusive property of the deceased.

The trial court held that the agreement in question, viewed from its effect during the lives of the
parties, was a mere power of attorney authorizing Ana Rivera to withdraw the deposit, which
power terminated upon the death of the principal, Edgar Stephenson; but that, viewed from its
effect after the death of either of the parties, the agreement was a donation mortis causa with
reference to the balance remaining at the death of one of them, which, not having been
executed with the formalities of a testamentary disposition as required by article 620 of the
Civil Code, was of no legal effect.

The defendant bank did not appear in this Court. Counsel for the intervenor-appellee in his
brief contends that the survivorship agreement was a donation mortis causa from Stephenson
to Ana Rivera of the bank account in question and that, since it was not executed with the
formalities of a will, it can have no legal effect.

We find no basis for the conclusion that the survivorship agreement was a mere power of
attorney from Stephenson to Ana Rivera, or that it is a gift mortis causa of the bank account in
question from him to her. Such conclusion is evidently predicated on the assumption that
Stephenson was the exclusive owner of the funds deposited in the bank, which assumption
was in turn based on the facts (1) that the account was originally opened in the name of
Stephenson alone and (2) that Ana Rivera "served only as housemaid of the deceased." But it
not infrequently happens that a person deposits money in the bank in the name of another; and
in the instant case it also appears that Ana Rivera served her master for about nineteen years
without actually receiving her salary from him. The fact that subsequently Stephenson
transferred the account to the name of himself and/or Ana Rivera and executed with the latter
the survivorship agreement in question although there was no relation of kinship between them
but only that of master and servant, nullifies the assumption that Stephenson was the exclusive
owner of the bank account. In the absence, then, of clear proof of the contrary, we must give
full faith and credit to the certificate of deposit, which recites in effect that the funds in question
belonged to Edgar Stephenson and Ana Rivera; that they were joint owners thereof; and that
either of them could withdraw any part or the whole of said account during the lifetime of both,
and the balance, if any, upon the death of either, belonged to the survivor.

Is the survivorship agreement valid? Prima facie, we think it is valid. It is an aleatory contract

supported by law a lawful consideration — the mutual agreement of the joint depositors
permitting either of them to withdraw the whole deposit during their lifetime, and transferring

7
 G.R. No. 82027 March 29, 1990 question although there was no relation of kinship between them but
only that of master and servant, nullifies the assumption that
Stephenson was the exclusive owner of the bank account. In the
ROMARICO G. VITUG, petitioner, absence, then, of clear proof to the contrary, we must give full faith
vs. and credit to the certificate of deposit which recites in effect that the
THE HONORABLE COURT OF APPEALS and ROWENA FAUSTINO- funds in question belonged to Edgar Stephenson and Ana Rivera;
CORONA, respondents. that they were joint (and several) owners thereof; and that either of
them could withdraw any part or the whole of said account during the
lifetime of both, and the balance, if any, upon the death of either,
SARMIENTO, J.: belonged to the survivor. 17

This case is a chapter in an earlier suit decided by this Court 1 involving the probate of the two xxx xxx xxx
wills of the late Dolores Luchangco Vitug, who died in New York, U. S.A., on November 10,
1980, naming private respondent Rowena Faustino-Corona executrix. In our said decision, we
upheld the appointment of Nenita Alonte as co-special administrator of Mrs. Vitug's estate with In Macam v. Gatmaitan, 18 it was held:
her (Mrs. Vitug's) widower, petitioner Romarico G. Vitug, pending probate.

xxx xxx xxx

On January 13, 1985, Romarico G. Vitug filed a motion asking for authority from the probate
court to sell certain shares of stock and real properties belonging to the estate to cover
allegedly his advances to the estate in the sum of P667,731.66, plus interests, which he This Court is of the opinion that Exhibit C is an aleatory contract
claimed were personal funds. As found by the Court of Appeals, 2 the alleged advances whereby, according to article 1790 of the Civil Code, one of the
consisted of P58,147.40 spent for the payment of estate tax, P518,834.27 as deficiency estate parties or both reciprocally bind themselves to give or do something
tax, and P90,749.99 as "increment thereto." 3 According to Mr. Vitug, he withdrew the sums of as an equivalent for that which the other party is to give or do in case
P518,834.27 and P90,749.99 from savings account No. 35342-038 of the Bank of America, of the occurrence of an event which is uncertain or will happen at an
Makati, Metro Manila. indeterminate time. As already stated, Leonarda was the owner of the
house and Juana of the Buick automobile and most of the furniture.
By virtue of Exhibit C, Juana would become the owner of the house in
On April 12, 1985, Rowena Corona opposed the motion to sell on the ground that the same case Leonarda died first, and Leonarda would become the owner of
funds withdrawn from savings account No. 35342-038 were conjugal partnership properties the automobile and the furniture if Juana were to die first. In this
and part of the estate, and hence, there was allegedly no ground for reimbursement. She also manner Leonarda and Juana reciprocally assigned their respective
sought his ouster for failure to include the sums in question for inventory and for "concealment property to one another conditioned upon who might die first, the time
of funds belonging to the estate." 4 of death determining the event upon which the acquisition of such
right by the one or the other depended. This contract, as any other
contract, is binding upon the parties thereto. Inasmuch as Leonarda
Vitug insists that the said funds are his exclusive property having acquired the same through a had died before Juana, the latter thereupon acquired the ownership of
survivorship agreement executed with his late wife and the bank on June 19, 1970. The the house, in the same manner as Leonarda would have acquired the
agreement provides: ownership of the automobile and of the furniture if Juana had died
first. 19
We hereby agree with each other and with the BANK OF AMERICAN
NATIONAL TRUST AND SAVINGS ASSOCIATION (hereinafter xxx xxx xxx
referred to as the BANK), that all money now or hereafter deposited
by us or any or either of us with the BANK in our joint savings current
account shall be the property of all or both of us and shall be payable There is no showing that the funds exclusively belonged to one party, and hence it must be
to and collectible or withdrawable by either or any of us during our presumed to be conjugal, having been acquired during the existence of the marita. relations. 20
lifetime, and after the death of either or any of us shall belong to and
be the sole property of the survivor or survivors, and shall be payable
to and collectible or withdrawable by such survivor or survivors. Neither is the survivorship agreement a donation inter vivos, for obvious reasons, because it
was to take effect after the death of one party. Secondly, it is not a donation between the
spouses because it involved no conveyance of a spouse's own properties to the other.
We further agree with each other and the BANK that the receipt or
check of either, any or all of us during our lifetime, or the receipt or
check of the survivor or survivors, for any payment or withdrawal It is also our opinion that the agreement involves no modification petition of the conjugal
made for our above-mentioned account shall be valid and sufficient partnership, as held by the Court of Appeals, 21 by "mere stipulation" 22 and that it is no
release and discharge of the BANK for such payment or withdrawal. 5 "cloak" 23 to circumvent the law on conjugal property relations. Certainly, the spouses are not
prohibited by law to invest conjugal property, say, by way of a joint and several bank account,
more commonly denominated in banking parlance as an "and/or" account. In the case at bar,
The trial courts 6 upheld the validity of this agreement and granted "the motion to sell some of when the spouses Vitug opened savings account No. 35342-038, they merely put what
the estate of Dolores L. Vitug, the proceeds of which shall be used to pay the personal funds of rightfully belonged to them in a money-making venture. They did not dispose of it in favor of
Romarico Vitug in the total sum of P667,731.66 ... ." 7 the other, which would have arguably been sanctionable as a prohibited donation. And since
the funds were conjugal, it can not be said that one spouse could have pressured the other in
placing his or her deposits in the money pool.
On the other hand, the Court of Appeals, in the petition for certiorari filed by the herein private
respondent, held that the above-quoted survivorship agreement constitutes a
conveyance mortis causa which "did not comply with the formalities of a valid will as prescribed The validity of the contract seems debatable by reason of its "survivor-take-all" feature, but in
by Article 805 of the Civil Code," 8 and secondly, assuming that it is a mere donation inter reality, that contract imposed a mere obligation with a term, the term being death. Such
vivos, it is a prohibited donation under the provisions of Article 133 of the Civil Code. 9 agreements are permitted by the Civil Code. 24

The dispositive portion of the decision of the Court of Appeals states: Under Article 2010 of the Code:

WHEREFORE, the order of respondent Judge dated November 26, ART. 2010. By an aleatory contract, one of the parties or both
1985 (Annex II, petition) is hereby set aside insofar as it granted reciprocally bind themselves to give or to do something in
private respondent's motion to sell certain properties of the estate of consideration of what the other shall give or do upon the happening of
Dolores L. Vitug for reimbursement of his alleged advances to the an event which is uncertain, or which is to occur at an indeterminate
estate, but the same order is sustained in all other respects. In time.
addition, respondent Judge is directed to include provisionally the
deposits in Savings Account No. 35342-038 with the Bank of
America, Makati, in the inventory of actual properties possessed by Under the aforequoted provision, the fulfillment of an aleatory contract depends on either the
the spouses at the time of the decedent's death. With costs against happening of an event which is (1) "uncertain," (2) "which is to occur at an indeterminate time."
private respondent. 10 A survivorship agreement, the sale of a sweepstake ticket, a transaction stipulating on the
value of currency, and insurance have been held to fall under the first category, while a
contract for life annuity or pension under Article 2021, et sequentia, has been categorized
In his petition, Vitug, the surviving spouse, assails the appellate court's ruling on the strength of under the second. 25 In either case, the element of risk is present. In the case at bar, the risk
our decisions in Rivera v. People's Bank and Trust Co. 11 and Macam v. Gatmaitan 12 in which was the death of one party and survivorship of the other.
we sustained the validity of "survivorship agreements" and considering them as aleatory
contracts. 13
However, as we have warned:

The petition is meritorious.

xxx xxx xxx

The conveyance in question is not, first of all, one of mortis causa, which should be embodied
in a will. A will has been defined as "a personal, solemn, revocable and free act by which a But although the survivorship agreement is per se not contrary to law
capacitated person disposes of his property and rights and declares or complies with duties to its operation or effect may be violative of the law. For instance, if it be
take effect after his death." 14 In other words, the bequest or device must pertain to the shown in a given case that such agreement is a mere cloak to hide an
testator. 15 In this case, the monies subject of savings account No. 35342-038 were in the inofficious donation, to transfer property in fraud of creditors, or to
nature of conjugal funds In the case relied on, Rivera v. People's Bank and Trust Co.,  16 we defeat the legitime of a forced heir, it may be assailed and annulled
rejected claims that a survivorship agreement purports to deliver one party's separate upon such grounds. No such vice has been imputed and established
properties in favor of the other, but simply, their joint holdings: against the agreement involved in this case. 26

xxx xxx xxx xxx xxx xxx

... Such conclusion is evidently predicated on the assumption that There is no demonstration here that the survivorship agreement had been executed for such
Stephenson was the exclusive owner of the funds-deposited in the unlawful purposes, or, as held by the respondent court, in order to frustrate our laws on wills,
bank, which assumption was in turn based on the facts (1) that the donations, and conjugal partnership.
account was originally opened in the name of Stephenson alone and
(2) that Ana Rivera "served only as housemaid of the deceased." But
it not infrequently happens that a person deposits money in the bank The conclusion is accordingly unavoidable that Mrs. Vitug having predeceased her husband,
in the name of another; and in the instant case it also appears that the latter has acquired upon her death a vested right over the amounts under savings account
Ana Rivera served her master for about nineteen years without No. 35342-038 of the Bank of America. Insofar as the respondent court ordered their inclusion
actually receiving her salary from him. The fact that subsequently in the inventory of assets left by Mrs. Vitug, we hold that the court was in error. Being the
Stephenson transferred the account to the name of himself and/or separate property of petitioner, it forms no more part of the estate of the deceased.
Ana Rivera and executed with the latter the survivorship agreement in

8
WHEREFORE, the decision of the respondent appellate court, dated June 29, 1987, and its
resolution, dated February 9, 1988, are SET ASIDE. No costs. SO ORDERED.