UNCLAIMED BALANCES LAW (Act No.

3936, as amended)

A. Definition

“Unclaimed Balances” shall include credits, deposits of money, bullion,

security or other evidence of indebtedness of any kind, and interest thereon
with banks, buildings and loans associations, and trust corporations, in favor
of any person known to be dead or who has not made further deposits or
withdrawals during the preceding ten (10) years or more (Sec. 1, UBL).

B. Requirements

1. There is credit or deposit of money, or other evidence of indebtedness of

any kind with banks;
2. Such credit, deposit or evidence of indebtedness has a balance;
3. The balance has been unclaimed for a period of 10 years or more;
4. Notice should be given to the depositor;
5. After due notice to the depositor, a sworn statement with the Treasurer
should be filed stating the list of depositors with unclaimed balances;
6. There must be a publication of a list of unclaimed balances (Section 2);
7. The escheat proceedings is commenced (Section 2); and
8. Escheat proceedings should be filed by the State through the Solicitor
General (Section 3).

Notice requirement before filing a case

Notice should be given to the depositors before the filing of the sworn
statement.

This notification is meant to inform them that their deposit could be

escheated in 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. 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 (Rizal Commercial Banking Corp. v. Hi-
Tri Development Corp., 672 SCRA 514, 13 June 2012).

The depositor of an unclaimed dormant deposit account considered for

escheating is required to be notified at least 60 days before the filing by the
bank of the sworn statement to the Treasurer of the Philippines under Sec. 2
of the UBL.

Also, individual notifications are required to be sent to the depositor-client’s

“last known postal address/email address/contact number” either through

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postal or registered mail, courier delivery, electronic mail, text messages,
telephone calls or other alternative modes of communication as elected by
the client (Item 7.5(b) of Appendix 112 of the MORB, as amended).

Deposits that have become dormant for a period of 10 years may be

escheated in favor of the government.

Dormant account is defined as:

(1) Current or checking accounts showing no deposit or withdrawalfor a
period of one (1) year.
(2) Savings account showing no deposit or withdrawal for a period of two
(2) years. (Item 7.a of Appendix 112 of MORB, as amended by BSP
Circular No. 928, Series of 2016)

Publication of a list of unclaimed balances

The publication of the LIST of unclaimed balance is essential before

the deposit to the Treasurer of the Republic of the Philippines. The
publication of the list of unclaimed balances is intended to safeguard the
right of the depositors, their heirs and successors to due process. The fact
that the government is in a tight financial situation is not a justification to
dispense the elementary rule of due process (Republic v. CA, 345 SCRA 63
[2000]).

“Escheat proceeding”

- refers to the process of depositing unclaimed balances to the

Treasurer

- refers 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.

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 or
abandonment by the depositor.

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.”

However, if interested parties have come forward and laid claim to the
property, the court shall determine whether the credit or deposit should pass
to the claimants or be forfeited in favor of the State.

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 Escheat is not a proceeding to penalize depositors for failing to deposit
or withdraw from their accounts. 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 any bank
for unclaimed balances so deposited shall be defended by the Solicitor
General without cost to such bank (RCBC v. Hi-Tri Devt. Corp., 672 SCRA
514, 13 June 2012).

Who can file a motion to dismiss the complaint for escheat?

1. The depositors or creditors of the bank can move for the dismissal of
the complaint for escheat inasmuch as what are being escheated in favor of
the Government are their own unclaimed or dormant deposits and not the
money of the Republic Bank (Republic v. CFI, G.R. No. L-30839, November
28, 1975).

2. The depositary bank can move for the dismissal of the complaint for the
escheat of the dormant deposits in favor of the government would
necessarily deprive said bank of the use of such deposits (Republic v. CFI of
Manila, G.R. No. L-30381, August 30, 1988).