2. Republic v Fncb

March 24, 2018 | Author: Timothy Wilson | Category: Negotiable Instrument, Cashier's Check, Cheque, Payments, Deposit Account


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Escheat – forfeitureFacts:        Republic of the Philippines filed a complaint for escheat of certain unclaimed bank deposits balances under the provisions of Act No. 3936 against several banks, among them the First National City Bank of New York all the 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 period of 10 years or more. the First National City Bank of New York claims that P100,000.00, which remained dormant for 10 years or more, are subject to escheat however, it has inadvertently included in said report certain items amounting to P18,589.89 which, properly speaking, are not credits or deposits within the contemplation of Act No. 3936. the court a quo rendered judgment holding that cashier's is or manager's checks and demand drafts as those which defendant wants excluded from the complaint come within the purview of Act No. 3936, but not the telegraphic transfer payment which orders are of different category. after a motion to reconsider was filed by defendant, the court a quo changed its view and held that even said demand drafts do not come within the purview of said Act and so amended its decision accordingly. Plaintiff has appealed Issue:    The questions that now arise are: Do demand draft and telegraphic orders come within the meaning of the term "credits" or "deposits" employed in the law? Can their import be considered as a sum credited on the books of the bank to a person who appears to be entitled to it? Do they create a creditor-debtor relationship between drawee and the payee? Held:    Section 1, Act No. 3936, provides: Section 1. "Unclaimed balances" within the meaning of this Act shall include credits or deposits of money, bullion, security or other evidence of indebtedness of any kind, and interest thereon with banks, as hereinafter defined, in favor of any person unheard from for a period of ten years or more. It would appear that the term "unclaimed balances" that are subject to escheat include credits or deposits money, or other evidence of indebtedness of any kind with banks, in favor of any person unheard from for a period of 10 years or more. though insofar as the remitting bank is concerned the contract is executory until the credit is established  WHEREFORE. The same is true with the term "deposits" in banks where the relationship created between the depositor and the bank is that of creditor and debtor  a demand draft is a bill of exchange payable on demand  Considered as a bill of exchange. 2031) does not operate as an assignment of funds in the hands of the drawee who is not liable on the instrument until he accepts it. lawphil. on demand or at a future time therein specified  a bill of exchange within the meaning of our Negotiable Instruments Law (Act No.R. the decision of the trial court is hereby modified in the sense that the items specifically referred to and listed under paragraph 3 of appellee bank's answer representing telegraphic transfer payment orders should be escheated in favor of the Republic of the Philippines. Since it is admitted that the demand drafts herein involved have not been presented either for acceptance or for payment. It is an order upon a third party purporting to drawn upon a deposit of funds  A cashier's check issued on request of a depositor is the substantial equivalent of a certified check A demand draft is not therefore of the same category as a cashier's check which should come within the purview of the law  The case. for it has been held that the latter is a primary obligation of the bank which issues it and constitutes its written promise to pay upon demand. however. No. is different with regard to telegraphic payment order. L-16106 . however. and an order by.  But a demand draft is very different from a cashier's or manager's cheek. an open letter of request from. a draft is said to be. The latter is a bill of exchange payable demand. is not an ordinary draft. contrary to appellant's pretense. the inevitable consequence is that the appellee bank never had any chance of accepting or rejecting them.    A cashier's check issued by a bank. one person on another to pay a sum of money therein mentioned to a third person. It is said that as the transaction is for the establishment of a telegraphic or cable transfer the agreement to remit creates a contractual obligation a has been termed a purchase and sale transaction  The purchaser of a telegraphic transfer upon making payment completes the transaction insofar as he is concerned.  appellee bank never became a debtor of the payee concerned and as such the aforesaid drafts cannot be considered as credits subject to escheat within the meaning of the law.net G. like the former. 3936 against several banks. ET AL. and sundry accounts contained in its report submitted to the Treasurer of the Philippines pursuant to Act No.. it prayed that said items be not included in the claim of plaintiff. But. while it admits that various savings deposits. 3936. 1957 before the Court of First Instance of Manila a complaint for escheat of certain unclaimed bank deposits balances under the provisions of Act No. the court a quo changed its view and held that even said demand drafts do not come within the purview of said Act and so amended its decision accordingly. Picazo. Office of the Solicitor General for plaintiff-appellant.net .: The Republic of the Philippines filed on September 25. It is alleged that pursuant to Section 2 of said Act defendant banks forwarded to the Treasurer of the Philippines a statement under oath of their respective managing officials of all the 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 period of 10 years or more.589. 1961 REPUBLIC OF THE PHILIPPINES. 3936. In its answer the First National City Bank of New York claims that. Lichauco and Agcaoili for defendant-appellee. Hence. totalling more than P100. are subject to escheat however. plaintiff-appellant. pre-war inactive accounts. defendant-appellee. THE FIRST NATIONAL CITY BANK OF NEW YORK. are not credits or deposits within the contemplation of Act No. vs. Plaintiff has appealed. which remained dormant for 10 years or more. Wherefore.89 which.lawphil. it is prayed that said credits and deposits be escheated to the Republic of the Philippines by ordering defendant banks to deposit them to its credit with the Treasurer of the Philippines. J. BAUTISTA ANGELO. defendants. but not the telegraphic transfer payment which orders are of different category. No. among them the First National City Bank of New York.Republic of the Philippines SUPREME COURT Manila EN BANC G.R. properly speaking. after a motion to reconsider was filed by defendant. it has inadvertently included in said report certain items amounting to P18. the complaint was dismissed with regard to the latter. Consequently.000.00. 3936. L-16106 December 30. PHILIPPINE NATIONAL BANK. After hearing the court a quo rendered judgment holding that cashier's is or manager's checks and demand drafts as those which defendant wants excluded from the complaint come within the purview of Act No. 48 Supp. Act No. Such unclaimed balances. Walsh. 2d. Aylesworth. This is the clear import of Section 127. Coshoctan Nat. Considered as a bill of exchange. 825. and interest thereon with banks. 104 U. to make a promised payment ( In re Ford. 915. a draft is said to be. 2031) does not operate as an assignment of funds in the hands of the drawee who is not liable on the instrument until he accepts it. and is the common term. The questions that now arise are: Do demand draft and telegraphic orders come within the meaning of the term "credits" or "deposits" employed in the law? Can their import be considered as a sum credited on the books of the bank to a person who appears to be entitled to it? Do they create a creditor-debtor relationship between drawee and the payee? The answers to these questions require a digression the legal meaning of said banking terminologies. 65 Phil. 274).W... the term "credit" in its usual meaning is a sum credited on the books of a company to a person who appears to be entitled to it.E. in favor of any person unheard from for a period of 10 years or more. And as correctly stated by the trial court. Civil Code. a bill of exchange within the meaning of our Negotiable Instruments Law (Act No. and an order by. 275). 303. provides: Section 1.Y. Republic State Bank. 271. 62 Phil. bullion. 2d 848.. 309. for all bills of exchange. See also Libby vs. 7 Mass. 124 S.E. 849). As a matter of fact. National Bank. 39 N. 2d 1. 4. 824. On the other hand. vs. et al. 14 F. of America vs. It would appear that the term "unclaimed balances" that are subject to escheat include credits or deposits money. together with the increase and proceeds thereof.S. 42 S. et al. It is the correlative to debt or indebtedness. Prudential Insurance Co. Bank of Republic vs. 100. by reason of property or estates. It presupposes a creditor-debtor relationship. 145 Iowa 185. To begin with.S. in favor of any person unheard from for a period of ten years or more. Barnes vs. City Trust Company. as hereinafter defined. 441. security or other evidence of indebtedness of any kind. we may say that a demand draft is a bill of exchange payable on demand (Arnd vs. 3936. or other evidence of indebtedness of any kind with banks. Treat. Rosenback. on demand or at a future time therein specified (13 Words and Phrases. and may be said to imply ability. 50. Eric vs. 27). a distinguished from that which he owes (Mountain Motor Co. Ward vs. 371). 2d. 61 Atl. 443. Wilson vs. 101. 443). 98. Bank. vs. Gullas vs. 272. 108 S. And the words "draft" and "bill of exchange" are used indiscriminately (Ennis vs. "Unclaimed balances" within the meaning of this Act shall include credits or deposits of money. one person on another to pay a sum of money therein mentioned to a third person. Hinnemann vs.. It says: "A bill of exchange of itself does not operate as an assignment of the funds in the hands of the drawee . Solof. an open letter of request from. the term "draft" is often used. The same is true with the term "deposits" in banks where the relationship created between the depositor and the bank is that of creditor and debtor (Article 1980. 102 N. like the former. Nelson.Y. and that which is due to any person. 101 F. Hopkins. Bechenau. Pacific Coast Biscuit Co. shall be deposited with the Insular Treasure to the credit of the Government of the Philippine Islands to be as the Philippine Legislature may direct. 811. Gopoco Grocery.Section 1. in order that a drawee may be liable on the draft and then become obligated to the payee it is necessary that he first accepts the same. 1347. 70 So. Failure to make such presentment will discharge the drawer from liability or to the extent of the loss caused by the delay (Section 186. Drinkall v. and accepted in advance by the act of issuance. It is in effect a bill of exchange drawn by a bank on itself and accepted in advance by the act of issuance (10 C. Rep.A. is not an ordinary draft. 77 So. 38 Ga. a cashier's check has been clearly characterized in In Re Bank of the United States. 776) and constitutes its written promise to pay upon demand (Steinmetz v. Com. 57 L.available for the payment thereon and the drawee is not liable on the bill unless and until he accepts the same. St. 277 N. 552). for it has been held that the latter is a primary obligation of the bank which issues it and constitutes its written promise to pay upon demand. 96. Ibid. .D.. 715. It is an order upon a third party purporting to drawn upon a deposit of funds.R.Y.W. our law requires that with regard to drafts or bills of exchange there is need that they be presented either for acceptance or for payment within a reasonable time after their issuance or after their last negotiation thereof as the case may be (Section 71. 253. the inevitable consequence is that the appellee bank never had any chance of accepting or rejecting them.R. contrary to appellant's pretense. App. however. A cashier's check.W. as follows: A cashier's check issued by a bank.net The following definitions cited by appellant also confirm this view: A cashier's check is a check of the bank's cashier on his or another bank.L. State. 734). In fact. Thus.lawphil. 201 Ala. The latter is a bill of exchange payable demand. A cashier's check is of a very different character. being merely a bill of exchange drawn by a bank on itself. 42 A. 88 N.E. Act 2031). 241 N. appellee bank never became a debtor of the payee concerned and as such the aforesaid drafts cannot be considered as credits subject to escheat within the meaning of the law." In other words. 341. 59 S.S. 756. v. Tyler County State Bank (Tex.) 277 S. Movious State Bank. 195 Ala..S.D. State v.W. and has the same legal effects as a certificate deposit or a certified check (Walker v. 95 Am. 724. 100.J. is not subject to countermand by the payee after indorsement. Verily. App. 10. who is thereafter a depositor to that amount (Lummus Cotton Gin Co.. 189). Schultz. S. It is the primary obligation of the bank which issues it (Nissenbaum v. A cashier's check issued on request of a depositor is the substantial equivalent of a certified check and the deposit represented by the check passes to the credit of the checkholder. Sellers. 603. But a demand draft is very different from a cashier's or manager's cheek.) Since it is admitted that the demand drafts herein involved have not been presented either for acceptance or for payment. 754. 11 N. 409). 625. Walker. 693. if the payees decide to have their money remain for sometime in the defendant bank. concur. J. the decision of the trial court is hereby modified in the sense that the items specifically referred to and listed under paragraph 3 of appellee bank's answer representing telegraphic transfer payment orders should be escheated in favor of the Republic of the Philippines. though insofar as the remitting bank is concerned the contract is executory until the credit is established (Ibid.. 368).J. it is absurd to say that the drawer banks are still the owners of said telegraphic payment orders. is different with regard to telegraphic payment order. It is said that as the transaction is for the establishment of a telegraphic or cable transfer the agreement to remit creates a contractual obligation a has been termed a purchase and sale transaction (9 C. Hence. The purchaser of a telegraphic transfer upon making payment completes the transaction insofar as he is concerned. can the latter maintain that the ownership of said telegraphic payment orders is now with the drawer bank? The latter was already paid the value of the telegraphic payment orders otherwise it would not have transmitted the same to the defendant bank. In the particular cases under consideration it appears in the books of the defendant bank that the amounts represented by the telegraphic payment orders appear in the names of the respective payees. Reyes. If the latter choose to demand payment of their telegraphic transfers at the time the same was (were) received by the defendant bank. Labrador and Concepcion. there could be no question that this bank would have to pay them.. Padilla.S. Now.L.B." WHEREFORE. Barrera. The Lawphil Project . No costs. took no part.J..A demand draft is not therefore of the same category as a cashier's check which should come within the purview of the law. Paredes. JJ.. C.Arellano Law Foundation . Dizon and De Leon. Bengzon.) We agree with the following comment the Solicitor General: "This is so because the drawer bank was already paid the value of the telegraphic transfer payment order. JJ. however. The case. the question is.
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