GR L 30381; (August, 1988) (Digest)
G.R. No. L-30381 August 30, 1988
REPUBLIC OF THE PHILIPPINES, petitioner, vs. COURT OF FIRST INSTANCE OF MANILA, BRANCH XIII, HON. JESUS P. MORFE, PRESIDING JUDGE, AND PRES. ROXAS RURAL BANK INC., respondents.
FACTS
The Republic of the Philippines filed a complaint for escheat under Act No. 3936 (the Unclaimed Balances Law) against 31 banks, including Pres. Roxas Rural Bank, before the Court of First Instance (CFI) of Manila. The action sought to claim dormant deposits, including two small accounts held by the rural bank. The Republic argued that a single action in Manila was proper for efficiency and to avoid the expense of multiple publications.
Pres. Roxas Rural Bank, whose principal office is in Roxas, Isabela, moved to dismiss the complaint against it on the ground of improper venue. The bank contended that under Section 3 of Act No. 3936 , escheat proceedings must be commenced in the province where the bank is located. The CFI granted the motion to dismiss and denied the Republic’s motion for reconsideration.
ISSUE
The primary issue is whether the venue for the escheat proceeding against Pres. Roxas Rural Bank was properly laid in the Court of First Instance of Manila.
RULING
The Supreme Court denied the petition and upheld the dismissal. The ruling is anchored on a strict interpretation of the venue provision in the special law governing escheat of unclaimed bank deposits.
First, the Court held that the rural bank is a real party in interest. Contrary to the Republic’s claim that the bank is a mere nominal party, the bank stands to be “injured by the judgment” as escheat would deprive it of the use of the deposits. Section 3 of Act No. 3936 explicitly requires the bank to be joined as a party, confirming its substantive interest. As a real party in interest, the bank had the legal capacity to challenge venue.
Second, and decisively, the Court ruled that venue was improperly laid in Manila. Section 3 of Act No. 3936 mandates that the action “shall” be commenced “in the Court of First Instance of the province where the bank is located.” This provision is specific and mandatory. The Court rejected the Republic’s argument that the last sentence of Section 3—”All or any member of such creditors or depositors or banks, may be included in one action”—authorizes a single nationwide suit. This sentence was interpreted to allow consolidation only for banks located within the same province, not for banks scattered across different provinces. The purpose is to save litigation costs within a province, not to centralize all proceedings in one location.
Finally, the Court ruled that the general venue rules for personal actions under the Rules of Court (specifically, Section 2(b), Rule 4) do not apply. Escheat proceedings are actions in rem, concerning the status of the res (the deposits), which must be filed where the res is located—the province of the bank holding the deposits. Therefore, the CFI of Manila had no jurisdiction over the claim against the rural bank based in Isabela. The dismissal was proper.