Escheat of Unclaimed Bank Deposits in the Philippines: Procedure and Due Process

When a bank account lies dormant for years, the State may eventually claim it through escheat. But even the government must follow the rules. In Republic v. Court of Appeals and PCIB, the Supreme Court affirmed that strict compliance with procedure—especially publication of notice—is essential in escheat proceedings, and that certiorari cannot substitute for a timely appeal.

The Law on Unclaimed Balances

The escheat of unclaimed bank deposits is governed by Act No. 3936, the Unclaimed Balances Law. Under this law, deposits that remain inactive for ten years or more, with depositors who cannot be located or who have died, may be escheated in favor of the government.

Section 2 of Act No. 3936 requires banks to submit sworn statements to the Treasurer of the Philippines every odd year, listing deposits inactive for ten years or more. Section 3 then directs the Attorney-General to commence escheat proceedings in court. Importantly, the law requires that the summons be served on the bank concerned and that notice of the action be published in a newspaper of general circulation, in such form and for such period as the court may direct.

This publication requirement is not a mere formality. It exists to inform potential claimants—such as heirs of deceased depositors—that the funds are subject to escheat, giving them an opportunity to come forward before ownership passes to the State.

The Case: Republic v. Court of Appeals and PCIB

In 1988, the Republic, through the Solicitor General, filed an escheat complaint against several banks in Davao City, including Philippine Commercial and International Bank (PCIB, now BDO). The complaint sought to escheat deposits inactive for ten years or more, based on statements submitted by the banks.

The Regional Trial Court (RTC) initially questioned whether the complaint sufficiently alleged the banks' compliance with Section 2 of Act No. 3936. After the Republic amended its complaint, the RTC ordered the publication of the notice of action—including the summons, the amended petition, and, crucially, the list of unclaimed balances.

The Republic objected to publishing the list, arguing that Section 3 only required publication of the summons and notice of action, not the detailed list of depositors. The RTC disagreed, explaining that without the list, potential claimants would have no way of knowing whether they had an interest in the case. The court asked: how would heirs of depositors know what the case was about if the list was not published?

When the Republic refused to publish the list and bear the cost, the RTC dismissed the case without prejudice. Instead of appealing within the 15-day reglementary period, the Republic filed a petition for certiorari with the Court of Appeals, alleging grave abuse of discretion. The Court of Appeals dismissed the petition, holding that the proper remedy was an ordinary appeal.

The Supreme Court affirmed. It ruled that the RTC's dismissal order, even if "without prejudice," was a final order because it disposed of the case. The Republic's remedy was to appeal, not to seek certiorari.

Certiorari Is Not a Substitute for Appeal

The Supreme Court reiterated a fundamental principle: certiorari is a remedy of last resort, available only when there is no appeal or other adequate remedy. Its function is to keep inferior tribunals within their jurisdiction—not to correct errors of procedure or mistakes in a judge's findings.

As the Court emphasized, certiorari cannot be used as a substitute for a lost appeal. The Republic's failure to appeal within the reglementary period was fatal to its case. Even the government, when pursuing public interest objectives, must respect procedural deadlines.

Why Publication of the List Matters

The Court also supported the RTC's insistence on publishing the list of unclaimed balances. Publication is integral to due process in escheat proceedings. It ensures that persons who may have an interest in the funds—particularly heirs of deceased depositors—are notified and given a chance to assert their rights before the State takes ownership.

Without publication of the list, the notice requirement would be hollow. Potential claimants might never learn of the proceedings, and the escheat would proceed without affording them due process.

Practical Takeaways

• Procedure binds everyone, including the government. Failure to comply with publication and other procedural requirements can result in dismissal of escheat cases.
• Publication of the list of unclaimed balances is essential for due process. It protects the rights of depositors and their heirs by giving them notice and an opportunity to claim the funds.
• Certiorari cannot replace a missed appeal. A final order, even one dismissing a case without prejudice, must be appealed within the reglementary period. Extraordinary remedies are not available when an ordinary remedy existed but was not used.
• Banks must comply with reporting obligations under the Unclaimed Balances Law, including submitting sworn statements of dormant deposits to the Treasurer.
• Heirs and depositors should monitor dormant accounts. If a deposit has been inactive for ten years or more, prompt action may be needed to prevent escheat.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.