In re Estate of Martens appellant any time he heard of her death; he told her to deliver it to him so consider the evidence,

told her to deliver it to him so consider the evidence, the record fails to establish delivery of
or leave it with him, and if she wanted to, to turn it over to appellant. appellant's note during the lifetime of the deceased.
MILLER, J.

Appellant, Mabel Martens Bonk, filed a claim, based on a note for $1,500,
against the administrator of this estate. The claim being denied, a petition
was filed to secure the allowance thereof, to which the administrator filed
answer in the form of a general denial. Various issues were presented by
the evidence. We deem it necessary to consider only one of them, namely,
whether or not the action of the trial court, in denying appellant's claim,
was proper because of the failure to establish that the note was delivered
during the lifetime of the deceased.
Apparently the trial court held that the claim should be denied because
the record failed to establish legal delivery of the note, which formed the
basis of appellant's claim. We hold that there was no error in this decision.
[1] Section 9476 of the Code provides that every contract on a negotiable
instrument is incomplete and revocable until delivery of the instrument
for the purpose of giving effect thereto. This was the common law rule.
In the case of Bell v. Mahin, 69 Iowa 408, 29 N.W. 331, this court
commences its opinion with the following statement:
[4] Appellant did not present to the trial court and does not present to this
court the question involving what rights, if any, she might have had had
she undertaken to file a claim based upon the alleged indebtedness of the
decedent to her independent of the note. Her claim and her petition are
based solely upon the note. At page 8 of appellant's argument, counsel
states: "Under this record, as we view it, there is but one issue to submit
to this court, and that is the sufficiency of the delivery of the note." As
above pointed out, the trial court's decision on that issue was right. The
judgment entered pursuant thereto must be and it is affirmed. —
Affirmed.

At the trial, appellant testified that she is the daughter of the deceased.
She identified Exhibit A as a note in the handwriting of her mother, dated
March 1, 1930, promising to pay appellant $1,500 on December 1, 1930,
signed by the decedent. On the back of the note was the endorsement:
"This money is coming to her for teaching $1,000, and $500. is what the
rest got also. Mother."
The decedent died January 2, 1936. The administrator qualified on March
1, 1936. Appellant testified that, about March 11, 1936, in examining the
contents of her mother's safe, she discovered an envelope on which, in
her mother's handwriting, was the notation: "Please give this to S. Fisher
in case of death. Mabel Martens from Mother"; she delivered the envelope
to said Simon Fisher at his law office shortly after she discovered it;
Fisher opened the envelope, which was sealed, in her presence and in the
presence of the administrator; the note, Exhibit A, was found in the
envelope; her mother had told her that, in case of death, there was a letter
for her, but she knew nothing of any note; she found the envelope after
the administrator had made an examination of the contents of the safe and
had not discovered it; she had loaned her parents $1,000 from time to time
out of money earned teaching school; her brothers and sisters each had
received $500 when they were married; she married subsequent to March
1, 1930, and did not receive her $500.
MITCHELL, C.J., and BLISS, SAGER, STIGER, OLIVER, and HALE,
"The first defense set up by Petty to the note is that it was executed upon
Sunday. It seems to be undisputed that the note was signed on Sunday, JJ., concur.
but it was not intended to be delivered on that day, and was not in fact
delivered until Monday. A promissory note becomes a contract at the time
of its delivery. This contract, then, was made on Monday, and is not
subject to the objection urged that it is a Sunday contract."
[2] Obviously, the note here sued upon could not be made the basis of a
valid claim against the estate unless there was a legal delivery of the same,
during the lifetime of the decedent. Our decisions, relative to analogous
situations, are reviewed in the recent case of Orris v. Whipple, 224 Iowa
1157, 1170, 280 N.W. 617, 623, wherein we state:
"All there is to show delivery in this case is that the deed was prepared
and executed by Miss Aken; that she told others that she wanted the
plaintiffs to have the property, and that she had prepared papers so
providing. She put the deeds in her safety deposit box and retained the
key. We do not think these admitted facts show a legal delivery of the
deed in question."

Simon Fisher testified that he first saw the envelope and the note after the
death of the decedent; he opened the envelope in the presence of the
appellant and the administrator; in 1930 appellant agreed to accept a note
from her mother in satisfaction of $1,500 owed by her father's estate,
which was not paid because of insufficient funds; the decedent told him
she had executed a note in favor of appellant for $1,500, and she would
bring it to the office and leave it with him; later she told him she had
placed it in a box or safe at home and for him to get it and give it to
[3] The position taken by this court in the Orris case is controlling here.
It is not necessary to review the evidence introduced by appellees. We
recognize that this case is not triable de novo; the determination of the
credibility of the witnesses and the weight of the testimony were matters
for the trial court to decide. In re Smith's Estate, 223 Iowa 172, 271 N.W.
888. Our statement of the facts herein is more favorable to appellant than
the record warrants. However, the decisive factor is that, even when we

G.R. No. 111190 June 27, 1995
LORETO D. DE LA VICTORIA, as City Fiscal of Mandaue City
and in his personal capacity as garnishee, petitioner,
vs.
HON. JOSE P. BURGOS, Presiding Judge, RTC, Br. XVII, Cebu
City, and RAUL H. SESBREÑO, respondents.
BELLOSILLO, J.:
RAUL H. SESBREÑO filed a complaint for damages against
Assistant City Fiscals Bienvenido N. Mabanto, Jr., and Dario D.
Rama, Jr., before the Regional Trial Court of Cebu City. After trial
judgment was rendered ordering the defendants to pay
P11,000.00 to the plaintiff, private respondent herein. The decision
having become final and executory, on motion of the latter, the trial
court ordered its execution. This order was questioned by the
defendants before the Court of Appeals. However, on 15 January
1992 a writ of execution was issued.
On 4 February 1992 a notice of garnishment was served on
petitioner Loreto D. de la Victoria as City Fiscal of Mandaue City
where defendant Mabanto, Jr., was then detailed. The notice
directed petitioner not to disburse, transfer, release or convey to
any other person except to the deputy sheriff concerned the salary
checks or other checks, monies, or cash due or belonging to
Mabanto, Jr., under penalty of law. 1 On 10 March 1992 private
respondent filed a motion before the trial court for examination of
the garnishees.
On 25 May 1992 the petition pending before the Court of Appeals
was dismissed. Thus the trial court, finding no more legal obstacle
to act on the motion for examination of the garnishees, directed
petitioner on 4 November 1992 to submit his report showing the
amount of the garnished salaries of Mabanto, Jr., within fifteen (15)
days from receipt 2 taking into consideration the provisions of Sec.
12, pars. (f) and (i), Rule 39 of the Rules of Court.
On 24 November 1992 private respondent filed a motion to require
petitioner to explain why he should not be cited in contempt of court
for failing to comply with the order of 4 November 1992.
On the other hand, on 19 January 1993 petitioner moved to quash
the notice of garnishment claiming that he was not in possession
of any money, funds, credit, property or anything of value
belonging to Mabanto, Jr., except his salary and RATA checks, but
that said checks were not yet properties of Mabanto, Jr., until
delivered to him. He further claimed that, as such, they were still
public funds which could not be subject to garnishment.
On 9 March 1993 the trial court denied both motions and ordered
petitioner to immediately comply with its order of 4 November
1992. 3 It opined that the checks of Mabanto, Jr., had already been
released through petitioner by the Department of Justice duly
signed by the officer concerned. Upon service of the writ of
garnishment, petitioner as custodian of the checks was under
obligation to hold them for the judgment creditor. Petitioner
became a virtual party to, or a forced intervenor in, the case and
the trial court thereby acquired jurisdiction to bind him to its orders
and processes with a view to the complete satisfaction of the
judgment. Additionally, there was no sufficient reason for petitioner
to hold the checks because they were no longer government funds
and presumably delivered to the payee, conformably with the last
sentence of Sec. 16 of the Negotiable Instruments Law.
With regard to the contempt charge, the trial court was not morally
convinced of petitioner's guilt. For, while his explanation suffered
from procedural infirmities nevertheless he took pains in
enlightening the court by sending a written explanation dated 22
July 1992 requesting for the lifting of the notice of garnishment on
the ground that the notice should have been sent to the Finance
Officer of the Department of Justice. Petitioner insists that he had
no authority to segregate a portion of the salary of Mabanto, Jr.
The explanation however was not submitted to the trial court for
action since the stenographic reporter failed to attach it to the
record. 4
On 20 April 1993 the motion for reconsideration was denied. The
trial court explained that it was not the duty of the garnishee to
inquire or judge for himself whether the issuance of the order of
execution, writ of execution and notice of garnishment was
justified. His only duty was to turn over the garnished checks to the
trial court which issued the order of execution. 5
Petitioner raises the following relevant issues: (1) whether a check
still in the hands of the maker or its duly authorized representative
is owned by the payee before physical delivery to the latter: and,
(2) whether the salary check of a government official or employee
funded with public funds can be subject to garnishment.
Petitioner reiterates his position that the salary checks were not
owned by Mabanto, Jr., because they were not yet delivered to
him, and that petitioner as garnishee has no legal obligation to hold
and deliver them to the trial court to be applied to Mabanto, Jr.'s
judgment debt. The thesis of petitioner is that the salary checks still
formed part of public funds and therefore beyond the reach of
garnishment proceedings.
Petitioner has well argued his case.
Garnishment is considered as a species of attachment for reaching
credits belonging to the judgment debtor owing to him from a
stranger to the litigation. 6 Emphasis is laid on the phrase
"belonging to the judgment debtor" since it is the focal point in
resolving the issues raised.
As Assistant City Fiscal, the source of the salary of Mabanto, Jr.,
is public funds. He receives his compensation in the form of checks
from the Department of Justice through petitioner as City Fiscal of
Mandaue City and head of office. Under Sec. 16 of the Negotiable
Instruments Law, every contract on a negotiable instrument is
incomplete and revocable until delivery of the instrument for the
purpose of giving effect thereto. As ordinarily understood, delivery
means the transfer of the possession of the instrument by the
maker or drawer with intent to transfer title to the payee and
recognize him as the holder thereof.7
According to the trial court, the checks of Mabanto, Jr., were
already released by the Department of Justice duly signed by the
officer concerned through petitioner and upon service of the writ of
garnishment by the sheriff petitioner was under obligation to hold
them for the judgment creditor. It recognized the role of petitioner
as custodian of the checks. At the same time however it
considered the checks as no longer government funds and
presumed delivered to the payee based on the last sentence of
Sec. 16 of the Negotiable Instruments Law which states: "And
where the instrument is no longer in the possession of a party
whose signature appears thereon, a valid and intentional delivery
by him is presumed." Yet, the presumption is not conclusive
because the last portion of the provision says "until the contrary is
proved." However this phrase was deleted by the trial court for no
apparent reason. Proof to the contrary is its own finding that the
checks were in the custody of petitioner. Inasmuch as said checks
had not yet been delivered to Mabanto, Jr., they did not belong to
him and still had the character of public funds. In Tiro
v. Hontanosas 8 we ruled that —
The salary check of a government officer or employee such as a
teacher does not belong to him before it is physically delivered to
 him. Until that time the check belongs to the government. Quiason and Kapunan, JJ., concur.
Accordingly, before there is actual delivery of the check, the
payee has no power over it; he cannot assign it without the
consent of the Government.

As a necessary consequence of being public fund, the checks may

not be garnished to satisfy the judgment. 9 The rationale behind
this doctrine is obvious consideration of public policy. The Court
succinctly stated in Commissioner of Public Highways v. San
Diego 10 that —

The functions and public services rendered by the State cannot

be allowed to be paralyzed or disrupted by the diversion of
public funds from their legitimate and specific objects, as
appropriated by law.

In denying petitioner's motion for reconsideration, the trial court

expressed the additional ratiocination that it was not the duty of the
garnishee to inquire or judge for himself whether the issuance of
the order of execution, the writ of execution, and the notice of
garnishment was justified, citing our ruling in Philippine
Commercial Industrial Bank v. Court of Appeals. 11 Our precise
ruling in that case was that "[I]t is not incumbent upon the
garnishee to inquire or to judge for itself whether or not the order
for the advance execution of a judgment is valid." But that is
invoking only the general rule. We have also established therein
the compelling reasons, as exceptions thereto, which were not
taken into account by the trial court, e.g., a defect on the face of
the writ or actual knowledge by the garnishee of lack of entitlement
on the part of the garnisher. It is worth to note that the ruling
referred to the validity of advance execution of judgments, but a
careful scrutiny of that case and similar cases reveals that it was
applicable to a notice of garnishment as well. In the case at bench,
it was incumbent upon petitioner to inquire into the validity of the
notice of garnishment as he had actual knowledge of the non-
entitlement of private respondent to the checks in question.
Consequently, we find no difficulty concluding that the trial court
exceeded its jurisdiction in issuing the notice of garnishment
concerning the salary checks of Mabanto, Jr., in the possession of
petitioner.

WHEREFORE, the petition is GRANTED. The orders of 9 March

1993 and 20 April 1993 of the Regional Trial Court of Cebu City,
Br. 17, subject of the petition are SET ASIDE. The notice of
garnishment served on petitioner dated 3 February 1992 is ordered
DISCHARGED.

SO ORDERED.

[G.R. No. 102784. February 28, 1996]
ROSA LIM, petitioner, vs. COURT OF APPEALS and
PEOPLE OF THE PHILIPPINES, respondents.
SYLLABUS
1. CIVIL LAW; OBLIGATIONS AND CONTRACTS;
CONTRACTS ARE OBLIGATORY IN WHATEVER FORM
ENTERED; PLACE OF SIGNATURE IMMATERIAL;
PARTY BOUND THEREON THE MOMENT SHE
AFFIXED HER SIGNATURE. - Rosa Lims signature
indeed appears on the upper portion of the receipt
immediately below the description of the items taken. We
find that this fact does not have the effect of altering the
terms of the transaction from a contract of agency to sell on
commission basis to a contract of sale. Neither does it
indicate absence or vitiation of consent thereto on the part
of Rosa Lim which would make the contract void or
voidable. The moment she affixed her signature thereon,
petitioner became bound by all the terms stipulated in the
receipt. She, thus, opened herself to all the legal obligations
that may arise from their breach. This is clear from Article
1356 of the New Civil Code which provides: Contracts shall
be obligatory in whatever form they may have been entered
into, provided all the essential requisites for their validity are
present. In the case before us, the parties did not execute
a notarial will but a simple contract of agency to sell on
commission basis, thus making the position of petitioners
signature thereto immaterial.
2. ID.; ID.; CONTRACT OF AGENCY; NO FORMALITIES
REQUIRED. - There are some provisions of the law which
require certain formalities for particular contracts. The first
is when the form is required for the validity of the contract;
the second is when it is required to make the contract
effective as against the third parties such as those
mentioned in Articles 1357 and 1358; and the third is when
the form is required for the purppose of proving the
existence of the contract, such as those provided in the
Statute of Frauds in Article 1403. A contract of agency to
sell on commission basis does not belong to any of these
three categories, hence, it is valid and enforceable in
whatever form it may be entered into.
3. REMEDIAL LAW; EVIDENCE; WEIGHT THEREOF NOT
DETERMINED BY SUPERIORITY IN NUMBERS OF
WITNESSES. - Weight of evidence is not determined
mathematically by the numerical superiority of the
witnesses testifying to a given fact. It depends upon its
practical effect in inducing belief on the part of the judge
trying the case.
4. ID.; ID.; CREDIBILITY; FINDINGS OF THE TRIAL AND
APPELLATE COURTS GENERALLY NOT INTERFERED
WITH ON APPEAL. - In the case at bench, both the trial
court and the Court of Appeals gave weight to the testimony
of Vicky Suarez that she did not authorize Rosa Lim to
return the pieces of jewelry to Nadera. We shall not disturb
this finding of the respondent court. It is well settled that we
should not interfere with the judgment of the trial court in
determining the credibility of witnesses, unless there
appears in the record some fact or circumstances of weight
and influence which has been overlooked or the
significance of which has been misinterpreted. The reason
is that the trial court is in a better position to determine
questions involving credibility having heard the witnesses
and having observed their deportment and manner of
testifying during the trial.
5. CRIMINAL LAW; ESTAFA WITH ABUSE OF
CONFIDENCE; ELEMENTS. - The elements of estafa with
abuse of confidence under this subdivision are as follows:
(1) That money, goods, or other personal property be
received by the offender in trust, or on commission, or for
administration, or under any other obligation involving the
duty to make delivery of, or to return, the same; (2) That
there be misappropriation or conversion of such money or
property by the offender or denial on his part of such
receipt; (3) That such misappropriation or conversion or
denial is to the prejudice of another; and (4) That there is a
demand made by the offended party to the offender (Note:
The 4th element is not necessary when there is evidence of
misappropriation of the goods by the defendant).
6. ID.; ID.; ID.; PRESENT IN CASE AT BAR. All the elements
of estafa under Article 315, Paragraph 1(b) of the Revised
Penal Code, are present in the case at bench. First, the
receipt marked as Exhibit A proves that petitioner Rosa Lim
received the pieces of jewelry in trust from Vicky Suarez to
be sold on commission basis. Second, petitioner
misappropriated or converted the jewelry to her own use;
and, third, such misappropriation obviously caused
damaged and prejudice to the private respondent.
APPEARANCES OF COUNSEL
Zosa & Quijano Law Offices for petitioner.
The Solicitor General for respondents.
DECISION
HERMOSISIMA, JR., J.:
This is a petition to review the Decision of the Court of
Appeals in CA-G.R. CR No. 10290, entitled People v. Rosa Lim,
promulgated on August 30, 1991.
On January 26, 1989, an Information for Estafa was filed
against petitioner Rosa Lim before Branch 92 of the Regional
Trial Court of Quezon City.[1] The Information reads:
That on or about the 8th day of October 1987, in Quezon City,
Philippines and within the jurisdiction of this Honorable Court, the
said accused with intent to gain, with unfaithfulness and/or abuse of
confidence, did, then and there, wilfully, unlawfully and feloniously
defraud one VICTORIA SUAREZ, in the following manner, to wit:
on the date and place aforementioned said accused got and received in
trust from said complainant one (1) ring 3.35 solo worth P169,000.00,
Philippine Currency, with the obligation to sell the same on
commission basis and to turn over the proceeds of the sale to said
complainant or to return said jewelry if unsold, but the said accused
once in possession thereof and far from complying with her
obligation despite repeated demands therefor, misapplied,
misappropriated and converted the same to her own personal use and
benefit, to the damage and prejudice of the said offended party in the
amount aforementioned and in such other amount as may be awarded
under the provisions of the Civil Code.
CONTRARY TO LAW.[2]
After arraignment and trial on the merits, the trial court
rendered judgment, the dispositive portion of which reads:
WHEREFORE, in view of the foregoing, judgment is hereby
rendered:
1. Finding accused Rosa Lim GUILTY beyond reasonable doubt of
the offense of estafa as defined and penalized under Article 315,
paragraph 1(b) of the Revised Penal Code;
2. Sentencing her to suffer the Indeterminate penalty of FOUR (4)
YEARS and TWO (2) MONTHS of prision correccional as
minimum, to TEN (10) YEARS of prision mayor as maximum;
3. Ordering her to return to the offended party Mrs. Victoria Suarez
the ring or its value in the amount of P169,000 without subsidiary
imprisonment in case of insolvency; and
4. To pay costs.[3]
 On appeal, the Court of Appeals affirmed the Judgment of
conviction with the modification that the penalty imposed shall
be six (6) years, eight (8) months and twenty- one (21) days to
twenty (20) years in accordance with Article 315, paragraph 1 of
the Revised Penal Code.[4]
Petitioner filed a motion for reconsideration before the
appellate court on September 20, 1991, but the motion was
denied in a Resolution dated November 11, 1991.
In her final bid to exonerate herself, petitioner filed the
instant petition for review alleging the following grounds:
I Suarez the following two pieces of jewelry: one (1) 3.35 carat
THE RESPONDENT COURT VIOLATED THE CONSTITUTION,
THE RULES OF COURT AND THE DECISION OF THIS
HONORABLE COURT IN NOT PASSING UPON THE FIRST
AND THIRD ASSIGNED ERRORS IN PETITIONERS BRIEF;
II
THE RESPONDENT COURT FAILED TO APPLY THE
PRINCIPLE THAT THE PAROL EVIDENCE RULE WAS
WAIVED WHEN THE PRIVATE PROSECUTOR CROSS-
EXAMINED THE PETITIONER AND AURELIA NADERA AND
WHEN COMPLAINANT WAS CROSS-EXAMINED BY THE
COUNSEL FOR THE PETITIONER AS TO THE TRUE NATURE
OF THE AGREEMENT BETWEEN THE PARTIES WHEREIN IT
WAS DISCLOSED THAT THE TRUE AGREEMENT OF THE
PARTIES WAS A SALE OF JEWELRIES AND NOT WHAT WAS
EMBODIED IN THE RECEIPT MARKED AS EXHIBIT A WHICH
WAS RELIED UPON BY THE RESPONDENT COURT IN
AFFIRMING THE JUDGMENT OF CONVICTION AGAINST
HEREIN PETITIONER; and
III
THE RESPONDENT COURT FAILED TO APPLY IN THIS CASE
THE PRINCIPLE ENUNCIATED BY THIS HONORABLE COURT
TO THE EFFECT THAT ACCUSATION IS NOT, ACCORDING
TO THE FUNDAMENTAL LAW, SYNONYMOUS WITH
GUILT: THE PROSECUTION MUST OVERTHROW THE
PRESUMPTION OF INNOCENCE WITH PROOF OF GUILT
BEYOND REASONABLE DOUBT.TO MEET THIS STANDARD,
THERE IS NEED FOR THE MOST CAREFUL SCRUTINY OF
THE TESTIMONY OF THE STATE, BOTH ORAL AND
DOCUMENTARY, INDEPENDENTLY OF WHATEVER
DEFENSE IS OFFERED BY THE ACCUSED. ONLY IF THE
JUDGE BELOW AND THE APPELLATE TRIBUNAL COULD
ARRIVE AT A CONCLUSION THAT THE CRIME HAD BEEN
COMMITTED PRECISELY BY THE PERSON ON TRIAL
UNDER SUCH AN EXACTING TEST SHOULD SENTENCE
THUS REQUIRED THAT EVERY INNOCENCE BE DULY
TAKEN INTO ACCOUNT. THE PROOF AGAINST HIM MUST
SURVIVE THE TEST OF REASON, THE STRONGEST
SUSPICION MUST NOT BE PERMITTED TO SWAY
JUDGMENT. (People v. Austria, 195 SCRA 700)[5]
Herein the pertinent facts as alleged by the prosecution.
On or about October 8, 1987, petitioner Rosa Lim who had
come from Cebu received from private respondent Victoria
diamond ring worth P169,000.00 and one (1) bracelet worth
P170,000.00, to be sold on commission basis.The agreement
was reflected in a receipt marked as Exhibit A[6] for the
prosecution. The transaction took place at the Sir Williams
Apartelle in Timog Avenue, Quezon City, where Rosa Lim was
temporarily billeted.
On December 15, 1987, petitioner returned the bracelet to
Vicky Suarez, but failed to return the diamond ring or to turn over
the proceeds thereof if sold. As a result, private complainant,
aside from making verbal demands, wrote a demand letter [7] to
petitioner asking for the return of said ring or the proceeds of the
sale thereof. In response, petitioner, thru counsel, wrote a
letter[8]to private respondents counsel alleging that Rosa Lim had
returned both ring and bracelet to Vicky Suarez sometime in
September, 1987, for which reason, petitioner had no longer any
liability to Mrs. Suarez insofar as the pieces of jewelry were
concerned. Irked, Vicky Suarez filed a complaint for estafa
under Article 315, par. 1(b) of the Revised Penal Code for
which the petitioner herein stands convicted.
Petitioner has a different version.
Rosa Lim admitted in court that she arrived in Manila from
Cebu sometime in October 1987, together with one Aurelia
Nadera, who introduced petitioner to private respondent, and
that they were lodged at the Williams Apartelle in Timog, Quezon
City. Petitioner denied that the transaction was for her to sell the
two pieces of jewelry on commission basis. She told Mrs. Suarez
that she would consider buying the pieces of jewelry for her own
use and that she would inform the private complainant of such
decision before she goes back to Cebu. Thereafter, the
petitioner took the pieces of jewelry and told Mrs. Suarez to
prepare the necessary paper for me to sign because I was not
yet prepare(d) to buy it.[9] After the document was prepared,
petitioner signed it. To prove that she did not agree to the terms
of the receipt regarding the sale on commission basis, petitioner
insists that she signed the aforesaid document on the upper
portion thereof and not at the bottom where a space is provided
for the signature of the person(s) receiving the jewelry.[10]
On October 12, 1987 before departing for Cebu, petitioner
called up Mrs. Suarez by telephone in order to inform her that
she was no longer interested in the ring and bracelet. Mrs.
Suarez replied that she was busy at the time and so, she
instructed the petitioner to give the pieces of jewelry to Aurelia
Nadera who would in turn give them back to the private
complainant. The petitioner did as she was told and gave the two
pieces of jewelry to Nadera as evidenced by a handwritten
receipt, dated October 12, 1987.[11]
Two issues need to be resolved: First, what was the real
transaction between Rosa Lim and Vicky Suarez - a contract of
agency to sell on commission basis as set out in the receipt or a
sale on credit; and, second, was the subject diamond ring
returned to Mrs. Suarez through Aurelia Nadera?
Petitioner maintains that she cannot be liable for estafa
since she never received the jewelries in trust or on commission
basis from Vicky Suarez. The real agreement between her and
the private respondent was a sale on credit with Mrs. Suarez as
the owner-seller and petitioner as the buyer, as indicated by the
fact that petitioner did not sign on the blank space provided for
the signature of the person receiving the jewelry but at the upper
portion thereof immediately below the description of the items
taken.[12]
The contention is far from meritorious.
The receipt marked as Exhibit A which establishes a
contract of agency to sell on commission basis between Vicky
Suarez and Rosa Lim is herein reproduced in order to come to
a proper perspective:
THIS IS TO CERTIFY, that I received from Vicky
Suarez PINATUTUNAYAN KO na aking tinanggap kay
_______________ the following jewelries:
ang mga alahas na sumusunod:
Description Price
Mga Uri Halaga
1 ring 3.35 dolo P 169,000.00
1 bracelet 170.000.00
total Kabuuan P 339.000.00
in good condition, to be sold in CASH ONLY within . . .days from
date of signing this receipt na nasa mabuting kalagayan upang
ipagbili ng KALIWAAN (ALCONTADO) lamang sa loob ng. . .
araw mula ng ating pagkalagdaan:
if I could not sell, I shall return all the jewelry within the period
mentioned above; if I would be able to sell, I shall immediately
deliver and account the whole proceeds of sale thereof to the owner of
the jewelries at his/her residence; my compensation or commission
shall be the over-price on the value of each jewelry quoted above. I
am prohibited to sell any jewelry on credit or by installment; deposit,
give for safekeeping; lend, pledge or give as security or guaranty
under any circumstance or manner, any jewelry to other person or
persons.
kung hindi ko maipagbili ay isasauli ko ang lahat ng alahas sa loob ng
taning na panahong nakatala sa itaas; kung maipagbili ko naman ay
dagli kong isusulit at ibibigay ang buong pinagbilhan sa may-ari ng
mga alahas sa kanyang bahay tahanan; ang aking gantimpala ay ang
mapapahigit na halaga sa nakatakdang halaga sa itaas ng bawat alahas
HIND I ko ipinahihintulutang ipa-u-u-tang o ibibigay na hulugan ang
alin mang alahas, ilalagak, ipagkakatiwala; ipahihiram; isasangla o
ipananagot kahit sa anong paraan ang alin mang alahas sa ibang mga
tao o tao.
I sign my name this . . . day of. . . 19 . . . at Manila, NILALAGDAAN
ko ang kasunduang ito ngayong ika____ ng dito sa Maynila.
Signature of Persons who
received jewelries (Lagda
ng Tumanggap ng mga
Alahas)
Address: . . . . . . . . . . .
Rosa Lims signature indeed appears on the upper portion
of the receipt immediately below the description of the items
taken. We find that this fact does not have the effect of altering
the terms of the transaction from a contract of agency to sell on
commission basis to a contract of sale. Neither does it indicate
absence or vitiation of consent thereto on the part of Rosa Lim
which would make the contract void or voidable. The moment
she affixed her signature thereon, petitioner became bound by
all the terms stipulated in the receipt. She, thus, opened herself
to all the legal obligations that may arise from their breach. This
is clear from Article 1356 of the New Civil Code which provides:
Contracts shall be obligatory in whatever form they may have been
entered into, provided all the essential requisites for their validity are
present. x x x.
However, there are some provisions of the law which require
certain formalities for particular contracts. The first is when the
form is required for the validity of the contract; the second is
when it is required to make the contract effective as against third
parties such as those mentioned in Articles 1357 and 1358; and
the third is when the form is required for the purpose of proving
the existence of the contract, such as those provided in the
Statute of Frauds in Article 1403.[13] A contract of agency to sell
on commission basis does not belong to any of these three
categories, hence it is valid and enforceable in whatever form it
may be entered into.
Furthermore, there is only one type of legal instrument
where the law strictly prescribes the location of the signature of
the parties thereto. This is in the case of notarial wills found in
Article 805 of the Civil Code, to wit:
Every will, other than a holographic will, must be subscribed at
the end thereof by the testator himself x x x.
The testator or the person requested by him to write his name and the
instrumental witnesses of the will, shall also sign, as aforesaid, each
and every page thereof, except the last, on the left margin x x x.
In the case before us, the parties did not execute a notarial
will but a simple contract of agency to sell on commission basis,
thus making the position of petitioners signature thereto
immaterial.
Petitioner insists, however, that the diamond ring had been
returned to Vicky Suarez through Aurelia Nadera, thus relieving
her of any liability. Rosa Lim testified to this effect on direct
examination by her counsel:
Q: And when she left the jewelries with you, what did
you do thereafter?
A: On October 12, I was bound for Cebu. So I called
up Vicky through telephone and informed her that
I am no longer interested in the bracelet and ring
and that 1 will just return it.
Q: And what was the reply of Vicky Suarez?
A: She told me that she could not come to the apartelle
since she was very busy. So, she asked me if
Aurelia was there and when I informed her that
Aurelia was there, she instructed me to give the
pieces of jewelry to Aurelia who in turn will give it
back to Vicky.
Q: And you gave the two (2) pieces of jewelry to
Aurelia Nadera?
A: Yes, Your Honor.[14]
This was supported by Aurelia Nadera in her direct
examination by petitioners counsel:
Q: Do you know if Rosa Lim in fact returned the
jewelries ?
A: She gave the jewelries to me.
Q: Why did Rosa Lim give the jewelries to you?
A: Rosa Lim called up Vicky Suarez the following
morning and told Vicky Suarez that she was going
home to Cebu and asked if she could give the
jewelries to me.
Q: And when did Rosa Lim give to you the jewelries?
A: Before she left for Cebu.[15]
On rebuttal, these testimonies were belied by Vicky Suarez
herself:
Q: It has been testified to here also by both Aurelia
Nadera and Rosa Lim that you gave authorization
to Rosa Lim to turn over the two (2) pieces of
jewelries mentioned in Exhibit A to Aurelia
Nadera, what can you say about that?
A:. That is not true sir, because at that time Aurelia
Nadera is highly indebted to me in the amount of
P 140,000.00, so if I gave it to Nadera, I will be
exposing myself to a high risk.[16]
The issue as to the return of the ring boils down to one of
credibility. Weight of evidence is not determined mathematically
by the numerical superiority of the witnesses testifying to a given
fact. It depends upon its practical effect in inducing belief on the
part of the judge trying the case.[17] In the case at bench, both
the trial court and the Court of Appeals gave weight to the
testimony of Vicky Suarez that she did not authorize Rosa Lim
to return the pieces of jewelry to Nadera. The respondent court,
in affirming the trial court, said:
x x x This claim (that the ring had been returned to Suarez thru
Nadera) is disconcerting. It contravenes the very terms of Exhibit
A. The instruction by the complaining witness to appellant to deliver
the ring to Aurelia Nadera is vehemently denied by the complaining
witness, who declared that she did not authorize and/or instruct
appellant to do so. And thus, by delivering the ring to Aurelia without
the express authority and consent of the complaining witness,
appellant assumed the right to dispose of the jewelry as if it were
hers, thereby committing conversion, a clear breach of trust,
punishable under Article 315, par. 1(b), Revised Penal Code.
 We shall not disturb this finding of the respondent court. It WHEREFORE, the petition is DENIED and the Decision of
is well settled that we should not interfere with the judgment of the Court of Appeals is hereby AFFIRMED.
the trial court in determining the credibility of witnesses, unless
there appears in the record some fact or circumstance of weight Costs against petitioner.
and influence which has been overlooked or the significance of SO ORDERED.
which has been misinterpreted. The reason is that the trial court
is in a better position to determine questions involving credibility
having heard the witnesses and having observed their
deportment and manner of testifying during the trial.[18]
Article 315, par. 1(b) of the Revised Penal Code provides:

ART. 315. Swindling (estafa). - Any person who shall defraud

another by any of the means mentioned hereinbelow shall be
punished by:

xxx xxx xxx

(b) By misappropriating or converting, to the prejudice of another,

money, goods, or any other personal property received by the
offender in trust or on commission, or for administration, or under
any other obligation involving the duty to make delivery of or to
return the same, even though such obligation be totally or partially
guaranteed by a bond; or by denying having received such money,
goods, or other property.

xxx xxx xxx

The elements of estafa with abuse of confidence under this
subdivision are as follows: (1) That money, goods, or other
personal property be received by the offender in trust, or on
commission, or for administration, or under any other obligation
involving the duty to make delivery of, or to return, the same; (2)
That there be misappropriation or conversion of such money or
property by the offender or denial on his part of such receipt; (3)
That such misappropriation or conversion or denial is to the
prejudice of another; and (4) That there is a demand made by
the offended party to the offender (Note: The 4th element is not
necessary when there is evidence of misappropriation of the
goods by the defendant).[19]
All the elements of estafa under Article 315, Paragraph 1(b)
of the Revised Penal Code, are present in the case at
bench. First, the receipt marked as Exhibit A proves that
petitioner Rosa Lim received the pieces of jewelry in trust from
Vicky Suarez to be sold on commission basis.Second, petitioner
misappropriated or converted the jewelry to her own use; and,
third, such misappropriation obviously caused damage and
prejudice to the private respondent.
 RIZAL COMMERCIAL BANKING G.R. No. 192413by TCT Nos. 324985 and 324986 of the Quezon City
CORPORATION, Register of Deeds, and TCT Nos. 103724, 98827,
Petitioner, Present: 98828 and 98829 of the Marikina Register of Deeds.
These lots were sequestered by the Presidential
CARPIO, J., Chairperson,
Commission on Good Government [(PCGG)].
versus BRION,
PEREZ, Sometime in 1990, a certain Teresita Millan
SERENO, and (Millan), through her representative, Jerry
HI-TRI DEVELOPMENT REYES, JJ. Montemayor, offered to buy said lots for
CORPORATION and LUZ R. BAKUNAWA, ₱6,724,085.71, with the promise that she will take
Respondents. Promulgated: care of clearing whatever preliminary obstacles there
may[]be to effect a completion of the sale. The
June 13, 2012 Spouses Bakunawa gave to Millan the Owners
Copies of said TCTs and in turn, Millan made a
down[]payment of ₱1,019,514.29 for the intended
purchase. However, for one reason or another,
x----------------------------------------------- Millan was not able to clear said obstacles. As a
---x result, the Spouses Bakunawa rescinded the sale and
offered to return to Millan her down[]payment of
DECISION ₱1,019,514.29. However, Millan refused to accept
back the ₱1,019,514.29 down[]payment.
SERENO, J.: Consequently, the Spouses Bakunawa, through their
company, the Hi-Tri Development Corporation (Hi-
Tri) took out on October 28, 1991, a Managers
Before the Court is a Rule 45 Petition for Review on Certiorari Check from RCBC-Ermita in the amount of
filed by petitioner Rizal Commercial Banking Corporation (RCBC) ₱1,019,514.29, payable to Millans company Rosmil
against respondents Hi-Tri Development Corporation (Hi-Tri) and Luz Realty and Development Corporation (Rosmil) c/o
R. Bakunawa (Bakunawa). Petitioner seeks to appeal from the 26 Teresita Millan and used this as one of their basis for
November 2009 Decision and 27 May 2010 Resolution of the Court of a complaint against Millan and Montemayor which
Appeals (CA),[1]which reversed and set aside the 19 May 2008 they filed with the Regional Trial Court of Quezon
Decision and 3 November 2008 Order of the Makati City Regional City, Branch 99, docketed as Civil Case No. Q-91-
Trial Court (RTC) in Civil Case No. 06-244.[2] The case before the 10719 [in 1991], praying that:
RTC involved the Complaint for Escheat filed by the Republic of the
Philippines (Republic) pursuant to Act No. 3936, as amended by 1. That the defendants Teresita
Presidential Decree No. 679 (P.D. 679), against certain deposits, Mil[l]an and Jerry
credits, and unclaimed balances held by the branches of various banks Montemayor may be ordered
in the Philippines. The trial court declared the amounts, subject of the to return to plaintiffs spouses
special proceedings, escheated to the Republic and ordered them the Owners Copies of
deposited with the Treasurer of the Philippines (Treasurer) and credited Transfer Certificates of Title
in favor of the Republic.[3] The assailed RTC judgments included an Nos. 324985, 324986,
unclaimed balance in the amount of ₱1,019,514.29, maintained by 103724, 98827, 98828 and
RCBC in its Ermita Business Center branch. 98829;
2. That the defendant Teresita
We quote the narration of facts of the CA [4]
as follows: Mil[l]an be correspondingly
ordered to receive the amount
of One Million Nineteen
x x x Luz [R.] Bakunawa and her husband Thousand Five Hundred
Manuel, now deceased (Spouses Bakunawa) are Fourteen Pesos and Twenty
registered owners of six (6) parcels of land covered Nine Centavos
(₱1,019,514.29);
3. That the defendants be
ordered to pay to plaintiffs
spouses moral damages in the
amount of ₱2,000,000.00; and
4. That the defendants be
ordered to pay plaintiffs
attorneys fees in the amount
of ₱50,000.00.
Being part and parcel of said complaint, and
consistent with their prayer in Civil Case No. Q-91-
10719 that Teresita Mil[l]an be correspondingly
ordered to receive the amount of One Million
Nineteen Thousand Five Hundred Fourteen Pesos
and Twenty Nine [Centavos] (₱1,019,514.29)[], the
Spouses Bakunawa, upon advice of their counsel,
retained custody of RCBC Managers Check No. ER
034469 and refrained from canceling or negotiating
it.
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 Managers Check was
available for her withdrawal, she being the payee.
On January 31, 2003, during the pendency
of the abovementioned case and without the
knowledge of [Hi-Tri and Spouses Bakunawa], x x x
RCBC reported the ₱1,019,514.29-credit existing in
favor of Rosmil to the Bureau of Treasury as among
its unclaimed balances as of January 31, 2003.
Allegedly, a copy of the Sworn Statement executed
by Florentino N. Mendoza, Manager and Head of
RCBCs Asset Management, Disbursement & Sundry
Department (AMDSD) was posted within the
premises of RCBC-Ermita.
On December 14, 2006, x x x Republic,
through the [Office of the Solicitor General (OSG)],
filed with the RTC the action below for Escheat
[(Civil Case No. 06-244)].
On April 30, 2008, [Spouses Bakunawa]
settled amicably their dispute with Rosmil and
Millan. 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 Bakunawa, through Hi-Tri]
inquired from RCBC-Ermita the availability of the
₱1,019,514.29 under RCBC Managers 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
proceedings before the RTC.
On April 17, 2008, [Manuel Bakunawa,
through Hi-Tri] wrote x x x RCBC, viz:
We understand that the deposit
corresponding to the amount of
Php 1,019,514.29 stated in the
Managers Check is currently the
subject of escheat proceedings
pending before Branch 150 of the
Makati Regional Trial Court.
Please note that it was our
impression that the deposit would
be taken from [Hi-Tris] RCBC
bank account once an order to
debit is issued upon the payees
presentation of the Managers
Check. Since the payee rejected
the negotiated Managers Check,
presentation of the Managers
Check was never made.
Consequently, the deposit that was
supposed to be allocated for the
payment of the Managers 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 demand your
confirmation that the amount of
Php 1,019,514.29 continues to
form part of the funds in the
Corporations RCBC bank
account, since pay-out of said
amount was never ordered. We
wish to point out that if there was
any attempt on the part of RCBC
to consider the amount indicated
in the Managers Check separate
from the Corporations bank
account, RCBC would have issued
a statement to that effect, and
repeatedly reminded the
Corporation 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 and
advising the Corporation that the
deposit would be treated as
dormant.
On April 28, 2008, [Manuel Bakunawa]
sent another letter to x x x RCBC reiterating their
position as above-quoted.
In a letter dated May 19, 2008, x x x RCBC
replied and informed [Hi-Tri and Spouses
Bakunawa] that:
The Banks Ermita BC informed
Hi-Tri and/or its principals
regarding the inclusion of
Managers Check No. ER034469
in the escheat proceedings
docketed as Civil Case No. 06-
244, as well as the status thereof,
between 28 January 2008 and 1
February 2008.
xxx xxx xxx
Contrary to what Hi-Tri hopes for,
the funds covered by the Managers
Check No. ER034469 does not
form part of the Banks own
account. By simple operation of
law, the funds covered by the
managers check in issue became a
deposit/credit susceptible for
inclusion in the escheat case
initiated by the OSG and/or
Bureau of Treasury.
xxx xxx xxx
Granting arguendo that the Bank
was duty-bound to make good the
check, the Banks obligation to do
so prescribed as early as October
2001.
(Emphases, citations, and annotations were omitted.)
The RTC Ruling
The escheat proceedings before the Makati City RTC continued. On 19
May 2008, the trial court rendered its assailed Decision declaring the
deposits, credits, and unclaimed balances subject of Civil Case No. 06-
244 escheated to the Republic. Among those included in the order of
forfeiture was the amount of ₱1,019,514.29 held by RCBC as allocated
funds intended for the payment of the Managers 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. Respondents
claim that they were not able to participate in the trial, as they were not
informed of the ongoing escheat proceedings.
Consequently, respondents filed an Omnibus Motion dated 11
June 2008, seeking the partial reconsideration of the RTC Decision
insofar as it escheated the fund allocated for the payment of the
Managers Check. They asked that they be included as party-defendants
or, in the 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 was subject of an ongoing dispute (Civil Case No. Q-91-10719)
between them and Rosmil since 1991, and that they were interested
parties to that case.[5]
On 3 November 2008, the RTC issued an Order denying the
motion of respondents. The trial 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 conclusions that were not supported
by the law or the evidence presented, as required by Rule 37 of the
Rules of Court. Finally, it ruled that the alternative prayer to intervene
was filed out of time.
The CA Ruling
 On 26 November 2009, the CA issued its assailed Decision
reversing the 19 May 2008 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 Managers Check
(Hi-Tri and/or Spouses Bakunawa) or the designated payee (Rosmil)
immediately before the bank filed its Sworn Statement on the dormant
accounts held therein. The CA ruled that the banks failure to notify
respondents deprived them of an opportunity to intervene in the escheat
proceedings and to present evidence to substantiate their claim, in
violation of their right to due process. Furthermore, the CA pronounced
that the Makati City RTC Clerk of Court failed to issue individual
notices directed to all persons claiming interest in the unclaimed
balances, as 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 requirement of notice by publication. Consequently, the CA held
that the Decision and Order of the RTC were void for want of
jurisdiction.
Issue
After a perusal of the arguments presented by the parties, we cull the
main issues as follows:
I. Whether the Decision and Order of the RTC were void for
failure to send separate notices to respondents by personal
service
II. Whether petitioner had the obligation to notify respondents
immediately before it filed its Sworn Statement with the
Treasurer
III. Whether or not the allocated funds may be escheated in
favor of the Republic
Discussion
Petitioner bank assails[7] the CA judgments insofar as they
ruled that notice by personal service 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 by the Managers
Check were deemed transferred to the credit of the payee or holder
upon its issuance.
We quote the pertinent provision of Act No. 3936, as
amended, on the rule on service of processes, to wit:
Sec. 3. Whenever the Solicitor General shall be
informed of such unclaimed balances, he shall
commence an action or actions in the name of the
People of the Republic of the Philippines in the
Court of First Instance of the province or city where
the bank, building and loan association 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 one action. Service
of process in such action or actions shall be made
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 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 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.
At the time of issuing summons in the action above
provided for, the clerk of court shall also issue a
notice signed by him, 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, 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 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. A copy of said notice
shall be attached to, and published with the copy of,
said summons required to be published as above, and
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. 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. (Emphasis supplied.)
Hence, insofar as banks are concerned, service of processes is
made by delivery of a copy of 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 in the locality where the institution
is situated.[9] A notice about the forthcoming escheat proceedings must
also be issued and published, directing and requiring all persons who
may claim any interest in the unclaimed balances to appear before the
court and show cause why the dormant accounts should not be
deposited with the Treasurer.
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. Escheat proceedings are actions in rem,[10] whereby an
action is brought against the thing itself instead of the person.[11] Thus,
an action may be instituted and carried to judgment without personal
service upon the depositors or other claimants.[12]Jurisdiction is secured
by the power of the court over the res.[13] Consequently, a judgment of
escheat is conclusive upon persons notified by advertisement, as
publication is considered a general and constructive notice to all
persons interested.[14]
Nevertheless, we find sufficient grounds to affirm the CA on
the exclusion of the funds allocated for the payment of the Managers
Check in the escheat proceedings.
Escheat proceedings refer to the judicial process in which the
state, by virtue of its sovereignty, steps in and claims abandoned, left
vacant, or unclaimed property, without there being an 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 the depositor.[16] If after
the proceedings the property remains without a lawful owner interested
to claim it, the property shall be reverted to the state to forestall an open
invitation to self-service by the first comers.[17] However, if interested
parties have come forward and lain claim to the property, the courts
shall determine whether the credit or deposit should pass to the
claimants or be forfeited in favor of the state. [18] We emphasize that
escheat is not a proceeding to penalize depositors for failing to deposit
to or withdraw from their accounts. It is a proceeding whereby the state
compels the surrender to it of unclaimed deposit balances when there
is substantial ground for a belief that they have been abandoned,
forgotten, or without an owner.[19]
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:
Sec. 2. Immediately after the taking effect of this Act
and within the month of January of every odd
year, 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. (Emphasis supplied.)
As seen in the afore-quoted provision, the law sets a detailed
system for notifying depositors of unclaimed balances. This
notification is meant to inform them that their deposit could be
escheated if left unclaimed. Accordingly, before filing a sworn
statement, banks and other similar institutions are under obligation to
communicate with owners of dormant accounts. The purpose of this
initial notice is for a bank to determine whether an inactive account has
indeed been unclaimed, abandoned, forgotten, or left without an owner.
If the depositor simply does not wish to touch the funds in the
meantime, but still asserts ownership and dominion over the dormant
account, then the bank is no longer obligated to include the account in
its sworn statement.[20] It is not the intent of the law to force depositors
into unnecessary litigation and defense of their rights, as the state is
only interested in escheating balances that have been abandoned and
left without an owner.
In case the bank complies with the provisions of the law and
the unclaimed balances are 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 to such bank.[21] Otherwise, should it fail
to comply with the legally outlined procedure to the prejudice of the
depositor, the bank may not raise the defense provided under Section 5
of Act No. 3936, as amended.
Petitioner asserts[22] that the CA committed a reversible error
when it required RCBC to send prior notices to respondents about the
forthcoming escheat proceedings involving the funds allocated for the
payment of the Managers Check. It explains that, pursuant to the law,
only those whose favor such unclaimed balances stand are entitled to
receive notices. Petitioner argues that, since the funds represented by
the Managers Check were deemed transferred to the credit of the payee
upon issuance of the check, the proper party entitled to the notices was
the payee Rosmil and not respondents. Petitioner then contends that, in
any event, it is not liable for failing to send a separate notice to the
payee, because it did not have the address of Rosmil. Petitioner avers
that it was not under any obligation to record the address of the payee
of a Managers Check.
 In contrast, respondents Hi-Tri and Bakunawa allege[23] that
they have a legal interest in the fund allocated for the payment of the
Managers Check. They reason that, since the funds 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 evidenced by their
continued custody of the Managers Check.
An ordinary check refers to a bill of exchange drawn by a
depositor (drawer) on a bank (drawee),[24] requesting the latter to pay a
person named therein (payee) or to the order of the payee or to the
bearer, a named sum of money.[25] The issuance of the check does not
of itself operate as an assignment of any part of the funds in the bank
to the credit of the 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.
There are checks of a special type
called managers or cashiers checks. These are bills of exchange drawn
by the banks manager or cashier, in the name of the bank, against the
bank itself.[28] Typically, a managers or a cashiers check is procured
from the bank by allocating a particular amount of funds to be debited
from the depositors account or by directly paying or depositing to the
bank the value of the check to be drawn. Since the bank issues the
check in its name, with itself as the drawee, the check is deemed
accepted in advance.[29] Ordinarily, the check becomes the primary
obligation of the issuing bank and constitutes its written promise to pay
upon demand.[30]
Nevertheless, the mere issuance of a managers check does
not ipso facto work as an automatic transfer of funds to the account of
the payee. In case the procurer of the managers or cashiers check
retains custody of the instrument, does not tender it to the intended
payee, or fails to make an effective delivery, we find the following
provision on undelivered instruments under the Negotiable
Instruments Law applicable:[31]
Sec. 16. Delivery; when effectual; when
presumed. Every contract on a negotiable
instrument is incomplete and revocable until
delivery of the instrument for the purpose of
giving effect thereto. As between immediate parties
and as regards a remote party other than a holder in respondents retained ownership of the funds. As it is obvious from their
due course, the delivery, in order to be effectual, foregoing actions that they have not abandoned their claim over the
must be made either by or under the authority of fund, we rule that the allocated deposit, subject of the Managers Check,
the party making, drawing, accepting, or should be excluded from the escheat proceedings. We reiterate our
indorsing, as the case may be; and, in such case, the pronouncement that the objective of escheat proceedings is state
delivery may be shown to have been conditional, or forfeiture of unclaimed balances. We further note that there is nothing
for a special purpose only, and not for the purpose of in the records that would show that the OSG appealed the assailed CA
transferring the property in the instrument. But judgments. We take this failure to appeal as an indication of disinterest
where the instrument is in the hands of a holder in in pursuing the escheat proceedings in favor of the Republic.
due course, a valid delivery thereof by all parties
prior to him so as to make them liable to him is
conclusively presumed. And where the instrument is
no longer in the possession of a party whose WHEREFORE the Petition is DENIED. The 26 November
signature appears thereon, a valid and intentional 2009 Decision and 27 May 2010 Resolution of the Court of Appeals in
delivery by him is presumed until the contrary is CA-G.R. SP No. 107261 are hereby AFFIRMED.
proved. (Emphasis supplied.)
Petitioner acknowledges that the Managers 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 Managers Check offered by respondents, the latter retained
custody of the instrument instead of cancelling it. As the Managers
Check neither went to the hands of Rosmil nor was it further negotiated
to other persons, the instrument remained undelivered. Petitioner does
not dispute the fact that respondents retained custody of the
instrument.[33]
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
Managers Check was never negotiated or presented for payment to its
Ermita Branch, and that the allocated fund is still held by the
bank.[34] As a result, the assigned fund is deemed to remain part of the
account of Hi-Tri, which procured the Managers Check. The doctrine
that the deposit represented by a managers check automatically passes
to the payee is inapplicable, because the instrument although accepted
in advance remains undelivered. Hence, respondents should have been
informed that the deposit had been left inactive for more than 10 years,
and that it may be subjected to escheat proceedings if left unclaimed.
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 Managers Check. It is undisputed
that there was no effective delivery of the check, rendering the
instrument incomplete. In addition, we have already settled that