ANTONIO, ZENIAH JOY M.

LAW III-D
BAJAR, RAY J.

SPECIAL PROCEEDINGS: ESCHEAT

I. CONCEPT

Escheat is a proceeding whereby the State, by virtue of its sovereignty, steps in and
claims the real or personal property of a person who dies intestate leaving no heir.

 “proceeding” – a special proceeding commenced by a petition and not by

a complaint (Municipal Council of San Pedro, Laguna, et. al vs Colegio de
San Jose, Inc. et. al, 65 Phil. 318)
 Parties:
1) Solicitor General or his representative in behalf of the State – real
party-in-interest.

2) Intervenor – any person alleging to have a direct right or interest in

the property sought to be escheated may appear and oppose the
petition (RP, et. al vs CA, et. al., GR No. 143483)
3) All interested parties, especially the actual occupants and the
adjacent lot owners shall be personally notified of the proceeding
and given the opportunity to present their valid claim. (BErmundo
vs Intermediate Appellate Court, GR No. L-38622)
4) Under Section 3, Act No. 3936 or the law on forfeiture of dormant
bank deposits, a depository bank should be joined as a respondent
in an action for escheat since a decree of escheat would necessarily
deprive it of the use of such deposits.
 “a person who dies intestate” includes a person who:
1) died without will
2) died testate but his will was not allowed to probate, it is as if he
died intestate.

Once the court acquires jurisdiction to hear the petition for escheat by virtue of the
publication of the petition for escheat, this jurisdiction cannot be converted into one for
the distribution of the properties of the decedents. For the distribution of the estate of
the decedents to be instituted, the proper petitions must be presented and the
proceedings should comply with the requirements of the Rule. Hence, an escheat court
does not have the power to order or proceed with, the distribution of the estate of a
decedent in escheat proceedings and adjudicate the properties to the oppositors. (In re
Anne Fallon Murphy, et al., Municipality of Magallon, Negros Occ. v. Ignatius Henry
Bezore, G.R. No. L-14157, October 26, 1960,109 Phil. 829)

II. PROCEDURE

Jurisdiction and Venue

The petition is filed in the Court of First Instance (now Regional Trial Court) of the
province
1) where the deceased last resided; or
2) in which he had estate, if he resided out of the Philippines.

Order for hearing

If the petition is sufficient in form and in substance, the court, by an order reciting the
purpose of the petition
1) shall fix a date and place for the hearing – shall not be more than 6
months after the entry of the order
2) shall direct that a copy of it be published before the hearing – at least
once a week for 6 successive weeks in some newspaper of general
circulation published in the province.

Hearing and Judgment

Upon satisfactory proof in open court that the person died intestate leaving no heir or
person entitled to the same, and no sufficient cause being shown to the contrary, the
court shall adjudge that the estate, after payment of just debts and charges, shall
escheat, and shall pursuant to law:

 If the deceased resided in the Philippines:

1) assign the personal estate to the municipality or city where
decedent last resided in the Philipppines;
 2) the real estate to the municipalities and cities, respectively, in which
the same is situated.

 If the deceased never resided in the Philippines – the whole estate may be
assigned to the respective municipalities and cities where the same is
located.

The estate shall be for the benefit of public schools, and public charitable institutions
and centers in said municipalities or cities.

The court, at the instance of an interested party, or on its own motion, may order the
establishment of a permanent trust, so that only the income from the property shall be
used.

A judgment of escheat is conclusive upon persons notified by advertisement to all

persons interested. Absolute lack on the part of petitioners of any dishonest intent to
deprive the appellee of any right, or in any way injure him, constitutes due process of
law, proper notice having been observed. (Hamilton v. Brown, 161 US 256.; Cf. Manuela
Grey Alba v. Anacleto De la Cruz, G.R. No. L-5246, September 16, 1910,12 Phil. 49.)

III. RECOVERY OF ESCHEATED PROPERTIES

Prescriptive period

If a devisee, legatee, heir, widow, widower, or other person entitled to such estate
appears and files a claim thereto with the court within 5 years from the date of
judgment,

1) Such person shall have possession of and title to the same; or

2) If sold, the municipality or city shall be accountable to him for the
proceeds.

A claim not made within the said time shall be barred forever.

Rationale of the prescriptive period

The five-year period is not a device capriciously conjured by the State to defraud any
claimant; on the contrary, it is decidedly prescribed to encourage would-be claimants to
be punctilious in asserting their claims, otherwise they may lose them forever in a final
judgment. (Republic vs CA, GR No. 143843, January 31, 2012)

Burden of proof

Where a person comes into an escheat proceeding as a claimant, the burden is on such
intervenor to establish his title to the property and his right to intervene.

IV. OTHER ACTIONS FOR ESCHEAT

Until otherwise provided by law, actions for reversion or escheat of properties alienated
in violation of the Constitution or any statute shall be governed by this rule, except that
the action shall be instituted in the province where the land lies in whole or in part.

Escheat proceedings do not apply where a land unconstitutionally acquired by an alien

was subsequently transferred to a Filipino Citizen as in the case of succession. (Republic
v. Registry of Deeds of Roxas City, Elizabeth Lee and Pacita Yu-Lee, GR No. 158230)

RA 3936 as amended by PD 679 or otherwise known as the REVISED

UNCLAIMED BALANCES ACT.

I. CONCEPT

“Unclaimed balances”, include credits or deposits of money, bullion, security or

other evidence of indebtedness of any kind, and interest thereon with banks, buildings
and loan associations, and trust corporations, as hereinafter defined, in favor of any
person known to be dead or who has not made further deposits or withdrawals during
the preceding ten years or more. Such unclaimed balances, together with the increase
and proceeds thereof, shall be deposited with the Treasurer of the Philippines to the
credit of the Government of the Republic of the Philippines to be used as the National
Assembly may direct.

All banks, building and loan associations, and trust corporations shall forward to
the Treasurer of the Philippines a statement, under oath, of their respective managing
officers, of 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:
(a) The names and last known place of residence or post office addresses of the
persons in whose favor such unclaimed balances stand;
(b) The amount and the date of the outstanding unclaimed balance and whether
the same is in money or in security, and if the latter, the nature of the same;
(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
(d) The interest due on such unclaimed balance, if any, and the amount thereof.

A copy of the above sworn statement shall be posted in a conspicuous place in the premises of
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
with the person in whose favor the unclaimed balance stands at his last known place of
residence or post office address.

It shall be the duty of the Treasurer of the Philippines to inform the Solicitor General from time
to time the existence of unclaimed balances held by banks, building and loan associations, and
trust corporations.
II. PROCEDURE

Parties:

1. Commenced by the Solicitor General in the name of the People of the Republic of
the Philippines.
2. the bank, building and loan association or trust corporation and all such creditors
or depositors.

Jurisdiction and Venue

Whenever the Solicitor General shall be informed of such unclaimed balances, he shall
commence an action or actions in the Court of First Instance (Regional Trial Court) of the
province or city where the bank, building and loan association or trust corporation is located.

Service of process in such action

1. by delivery of a copy of the complaint and summons to the president,

cashier, or managing officer of each defendant bank, building and loan
association or trust corporation; AND
 Attached in the summons is a notice issued and signed by the clerk of court
giving the title and number of said action, and referring to the complaint therein, and
directed to all persons, other than those named as defendants therein, claiming any
interest in any unclaimed balance mentioned in said complaint. At the end of the copy
of such notice so published, there shall be a statement of the date of publication, or first
publication, if there are several, of said summons and notice. Any person interested may
appear in said action and become a party thereto.

2. by publication of a copy of such summons in a newspaper of general

circulation, either in English, in Filipino, or in a local dialect, published in
the locality where the bank, building and loan association or trust
corporation is situated, if there be any, and in case there is none, in the
City of Manila, at such time as the court may order.

Upon the publication or the completion of the publication, if there are several, of
the summons and notice, and the service of the summons on the defendant banks,
building and loan associations 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 jurisdiction to hear and determine the
issues herein, and render the appropriate judgment thereon.

Hearing and Judgment

All persons directed in the notice issued by the Clerk of Court are required to
appear within 60 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 said action should not be deposited with the Treasurer of the Philippines as in this Act
provided and notifying them that if they do not appear and show cause, the
Government of the Republic of the Philippines will apply to the court for the relief
demanded in the complaint.

Upon the trial, the court must hear all parties who have appeared therein, and if it
be determined that such unclaimed balances in any defendant bank, building and loan
association or trust corporation are unclaimed as hereinbefore stated, then the court
shall render judgment in favor of the Government of the Republic of the Philippines,
declaring 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 the Republic of the Philippines to be used as the National
Assembly may direct.

If the president, cashier or managing officer of the bank, building and loan
association, or trust corporation neglects or refuses to make and file the sworn
statement required by this action, such bank, building and loan association, or trust
corporation shall pay to the Government the sum of five hundred pesos a month for
each month or fraction thereof during which such default shall continue.

Any bank, building and loan association or trust corporation which shall make
any deposit with the Treasurer of the Philippines in conformity with the provisions of
this Act 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, building and loan association, or
trust corporation for unclaimed balances so deposited with the Treasurer of the
Philippines shall be defended by the Solicitor General without cost to such bank,
building and loan association or trust corporation.