G.R. No. L-34964 January 31, 1973 The pertinent provisions of Republic Act No.

The pertinent provisions of Republic Act No. 1405 relied upon by the petitioners
CHINA BANKING CORPORATION and TAN KIM LIONG, petitioners-appellants,  reads:
vs.
HON. WENCESLAO ORTEGA, as Presiding Judge of the Court of First Instance of Sec. 2. All deposits of whatever nature with banks or banking institutions in the
Manila, Branch VIII, and VICENTE G. ACABAN, respondents-appellees. Philippines including investments in bonds issued by the Government of the
Sy Santos, Del Rosario and Associates for petitioners-appellants. Philippines, its political subdivisions and its instrumentalities, are hereby considered
Tagalo, Gozar and Associates for respondents-appellees. as of absolutely confidential nature and may not be examined, inquired or looked
into by any person, government official, bureau or office, except upon written
MAKALINTAL, J.: permission of the depositor, or in cases of impeachment, or upon order of a
The only issue in this petition for certiorari to review the orders dated March 4, competent court in cases of bribery or dereliction of duty of public officials, or in
1972 and March 27, 1972, respectively, of the Court of First Instance of Manila in its cases where the money deposited or invested is the subject matter of the litigation.
Civil Case No. 75138, is whether or not a banking institution may validly refuse to
comply with a court process garnishing the bank deposit of a judgment debtor, by Sec 3. It shall be unlawful for any official or employee of a banking institution to
invoking the provisions of Republic Act No. 1405. * disclose to any person other than those mentioned in Section two hereof any
information concerning said deposits.
On December 17, 1968 Vicente Acaban filed a complaint in the court a quo against
Bautista Logging Co., Inc., B & B Forest Development Corporation and Marino Sec. 5. Any violation of this law will subject offender upon conviction, to an
Bautista for the collection of a sum of money. Upon motion of the plaintiff the trial imprisonment of not more than five years or a fine of not more than twenty
court declared the defendants in default for failure to answer within the thousand pesos or both, in the discretion of the court.
reglementary period, and authorized the Branch Clerk of Court and/or Deputy Clerk
to receive the plaintiff's evidence. On January 20, 1970 judgment by default was The petitioners argue that the disclosure of the information required by the court
rendered against the defendants. does not fall within any of the four (4) exceptions enumerated in Section 2, and that
if the questioned orders are complied with Tan Kim Liong may be criminally liable
To satisfy the judgment, the plaintiff sought the garnishment of the bank deposit of under Section 5 and the bank exposed to a possible damage suit by B & B Forest
the defendant B & B Forest Development Corporation with the China Banking Development Corporation. Specifically referring to this case, the position of the
Corporation. Accordingly, a notice of garnishment was issued by the Deputy Sheriff petitioners is that the bank deposit of judgment debtor B & B Forest Development
of the trial court and served on said bank through its cashier, Tan Kim Liong. In Corporation cannot be subject to garnishment to satisfy a final judgment against it
reply, the bank' cashier invited the attention of the Deputy Sheriff to the provisions in view of the aforequoted provisions of law.
of Republic Act No. 1405 which, it was alleged, prohibit the disclosure of any
information relative to bank deposits. Thereupon the plaintiff filed a motion to cite We do not view the situation in that light. The lower court did not order an
Tan Kim Liong for contempt of court. examination of or inquiry into the deposit of B & B Forest Development
Corporation, as contemplated in the law. It merely required Tan Kim Liong to inform
In an order dated March 4, 1972 the trial court denied the plaintiff's motion. the court whether or not the defendant B & B Forest Development Corporation had
However, Tan Kim Liong was ordered "to inform the Court within five days from a deposit in the China Banking Corporation only for purposes of the garnishment
receipt of this order whether or not there is a deposit in the China Banking issued by it, so that the bank would hold the same intact and not allow any
Corporation of defendant B & B Forest Development Corporation, and if there is any withdrawal until further order. It will be noted from the discussion of the
deposit, to hold the same intact and not allow any withdrawal until further order conference committee report on Senate Bill No. 351 and House Bill No. 3977, which
from this Court." Tan Kim Liong moved to reconsider but was turned down by order later became Republic Act 1405, that it was not the intention of the lawmakers to
of March 27, 1972. In the same order he was directed "to comply with the order of place bank deposits beyond the reach of execution to satisfy a final judgment. Thus:
this Court dated March 4, 1972 within ten (10) days from the receipt of copy of this
order, otherwise his arrest and confinement will be ordered by the Court." Resisting Mr. MARCOS. Now, for purposes of the record, I should like the Chairman of the
the two orders, the China Banking Corporation and Tan Kim Liong instituted the Committee on Ways and Means to clarify this further. Suppose an individual has a
instant petition. tax case. He is being held liable by the Bureau of Internal Revenue for, say,
P1,000.00 worth of tax liability, and because of this the deposit of this individual is xxx xxx xxx
attached by the Bureau of Internal Revenue. Mr. MACAPAGAL. But let us suppose that in an ordinary civil action for the recovery
of a sum of money the plaintiff wishes to attach the properties of the defendant to
Mr. RAMOS. The attachment will only apply after the court has pronounced insure the satisfaction of the judgment. Once the judgment is rendered, does the
sentence declaring the liability of such person. But where the primary aim is to gentleman mean that the plaintiff cannot attach the bank deposit of the defendant?
determine whether he has a bank deposit in order to bring about a proper Mr. RAMOS. That was the question raised by the gentleman from Pangasinan to
assessment by the Bureau of Internal Revenue, such inquiry is not authorized by which I replied that outside the very purpose of this law it could be reached by
this proposed law. attachment.
Mr. MACAPAGAL. Therefore, in such ordinary civil cases it can be attached?
Mr. MARCOS. But under our rules of procedure and under the Civil Code, the Mr. RAMOS. That is so.
attachment or garnishment of money deposited is allowed. Let us assume, for (Vol. II, Congressional Record, House of Representatives, No. 12, pp. 3839-3840, July
instance, that there is a preliminary attachment which is for garnishment or for 27, 1955).
holding liable all moneys deposited belonging to a certain individual, but such
attachment or garnishment will bring out into the open the value of such deposit. Is It is sufficiently clear from the foregoing discussion of the conference committee
that prohibited by this amendment or by this law? report of the two houses of Congress that the prohibition against examination of or
inquiry into a bank deposit under Republic Act 1405 does not preclude its being
Mr. RAMOS. It is only prohibited to the extent that the inquiry is limited, or rather, garnished to insure satisfaction of a judgment. Indeed there is no real inquiry in
the inquiry is made only for the purpose of satisfying a tax liability already declared such a case, and if the existence of the deposit is disclosed the disclosure is purely
for the protection of the right in favor of the government; but when the object is incidental to the execution process. It is hard to conceive that it was ever within the
merely to inquire whether he has a deposit or not for purposes of taxation, then intention of Congress to enable debtors to evade payment of their just debts, even
this is fully covered by the law. if ordered by the Court, through the expedient of converting their assets into cash
Mr. MARCOS. And it protects the depositor, does it not? and depositing the same in a bank.
Mr. RAMOS. Yes, it protects the depositor.
Mr. MARCOS. The law prohibits a mere investigation into the existence and the WHEREFORE, the orders of the lower court dated March 4 and 27, 1972,
amount of the deposit. respectively, are hereby affirmed, with costs against the petitioners-appellants.
Mr. RAMOS. Into the very nature of such deposit.
Mr. MARCOS. So I come to my original question. Therefore, preliminary
garnishment or attachment of the deposit is not allowed?
Mr. RAMOS. No, without judicial authorization.
Mr. MARCOS. I am glad that is clarified. So that the established rule of procedure as
well as the substantive law on the matter is amended?
Mr. RAMOS. Yes. That is the effect.
Mr. MARCOS. I see. Suppose there has been a decision, definitely establishing the
liability of an individual for taxation purposes and this judgment is sought to be
executed ... in the execution of that judgment, does this bill, or this proposed law, if
approved, allow the investigation or scrutiny of the bank deposit in order to execute
the judgment?
Mr. RAMOS. To satisfy a judgment which has become executory.
Mr. MARCOS. Yes, but, as I said before, suppose the tax liability is P1,000,000 and
the deposit is half a million, will this bill allow scrutiny into the deposit in order that
the judgment may be executed?
Mr. RAMOS. Merely to determine the amount of such money to satisfy that
obligation to the Government, but not to determine whether a deposit has been
made in evasion of taxes.