92. Republic v.

CFI Manila
GR No. L-30381 | 30 August 1988 | Fernan, J.
APOLINARIO | Topic: Escheat
Doctrine: Escheat proceedings are actions in rem which must be brought in the province or city where the
rem is located.

Facts:
1. Pursuant to Sec. 2 of Act No. 3936 (Unclaimed Balance Law), some 31 banks including Respondent
Pres. Roxas Rural Bank forwarded to the Treasurer of the PH separate statements under oath by
their respective managing officers of all deposits and credits held by such banks in favor, or in the
names of such depositors/creditors who (1) are known to be dead, (2) have not been heard from,
or (3) have not made further deposits or withdrawals for the preceding 10 years or more.
a. In the sworn statement of Roxas Rural Bank, only 2 names appeared––Jesus Ydirin and
Leonora Trumpeta.
2. The Treasurer of the PH then caused the sworn statements to be published in the Philippine Herald, an
English newspaper, and the El Debate, a Spanish newspaper, both of general circulation.
3. Thereafter, the Republic instituted before CFI Manila a complaint for escheat against the 31
banks. They also named as defendants the individual depositors/creditors reported in the sworn
statements.
a. Summons were issued to the banks and the depositors/creditors, requiring them to file severally
their answers within 60 days after the first publication of the summons with notice that should
they fail to do so, the Republic would take judgment against them.
b. The complaint, list of depositors/creditors, summons, and notice were duly published.
4. Respondent Pres. Roxas Rural Bank filed an MTD on the ground of improper venue.
a. CFI granted the MTD.
5. Republic appealed to SC on pure questions of law.

Issue/s and Holding:

1. W/N Pres. Roxas Rural Bank is a real party in interest in the escheat proceedings? – YES.
● Republic: The Bank, being a mere nominal party, cannot file an MTD. The real party in interest are the
depositors/creditors.
○ The purpose of Act 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 where a bank is located because of the publication expense.
○ The convenience or inconvenience of depositors/creditors is not the determining factor of
venue, but that in view of Rule 144 ROC, which provides that all cases brought after the
effectivity of the ROC, Sec. 2(b), Rule 4 on venue is applicable to the case at bar.

● Supreme Court: A real party in interest is the party who would be benefitted or injured by the judgment
of the suit or the party entitled to avail of the suit.
○ There can be no doubt that the Bank falls under this definition for the escheat of the dormant
deposits would necessarily deprive the bank of the use of such deposits. It is in this sense that
the bank stands to be “injured by the judgment of the suit.”
○ This is why Sec. 3, Act No. 3936 provides that:
■ Section 3. Whenever the Attorney General shall be informed of such unclaimed
balances, he 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 the bank and such creditors or depositors. All or
any member of such creditors or depositors or banks, may be included in one action.
○ Indeed, if the bank were not a real party in interest, the legislature would not have provided for
its joining as a party.
○ Moreover, under Sec. 2, Rule 3 ROC, the bank is a real party in interest as its presence is
necessary for a complete determination and settlement of the questions involved therein.
2. W/N the venue of the action has been property laid in CFI Manila? – NO.
● Republic: The last sentence of Sec. 3 of Act 3936 is the authority to say that the venue of the escheat
proceedings was properly laid in CFI Manila. [underlined part above]

● Supreme Court: The phrase “or actions” in Sec. 3 is very significant. It manifests awareness on the
part of the legislature that a single action to cover all banks wherever located in the PH would NOT be
legally feasible in view of the venue prescribed for such action under the same section, i.e. the province
where the bank is located.
○ Hence, the addition of the last sentence means that for escheat of unclaimed bank balances, all
banks located in one and the same province where the CFI concerned is located, may be made
parties in one action.
○ This was clearly intended to save litigation and publication expenses, but not an authority for the
lumping together of all banks wherever situated in one single escheat proceedings.

3. W/N Sec. 2(b), Rule 4 ROC on venue likewise governs escheat proceedings instituted by the
Republic? – NO.
● Sec. 2(b), Rule 4 ROC cannot govern escheat proceedings principally because the said section refers
to personal actions.
○ [DOCTRINE] Escheat proceedings are actions in rem which must be brought in the province or
city where the rem is located. [ITCAB, where the dormant deposits are located]

● SC also noted that while the bank’s MTD was granted, the CFI still declared the other defendants,
Jesus Ydirin and Leonora Trumpeta in default for failure to file their answers.
○ Considering that the complaint states a common cause of action and that the MTD alleged
facts that would warrant dismissal of the complaint even against said co-defendants, SC apply
by analogy Section 4 of Rule 18 of the Rules of Court, thereby decreeing the benefits of the
dismissal of the complaint to extend to Jose Ydirin and Leonora Trumpeta and their successors-
in-interest.

Ruling: Appeal is DENIED.

Relevant Provisions

Rule 4, Sec. 2. Venue of personal actions. — All other actions may be commenced and tried where the
plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the principal defendants
resides, or in the case of a non-resident defendant where he may be found, at the election of the plaintiff.

Rule 18, Section 4

"When a complaint states a common cause of actions against several defendants, some of whom answer, and
the others fail to do so, the court shall try the case against all upon the answers thus filed and render judgment
upon the evidence presented . . ."