G.R. No. L-34964 - China Banking Corp. vs. Ortega

On December 17, 1968, Vicente G. Acaban filed a complaint in Civil Case No. 75138 of the Court of First Instance of Manila against Bautista Logging Co., Inc., B & B Forest Development Corporation and Marino Bautista for recovery of a sum of money.
The trial court declared the defendants in default for failure to answer and, upon motion, admitted the plaintiff’s evidence. On January 20, 1970, it rendered a judgment by default against them.

To satisfy the judgment, Acaban caused the issuance of a notice of garnishment directed at the bank deposits of B & B Forest Development Corporation with China Banking Corporation. The Deputy Sheriff served the notice on China Bank through its cashier, Tan Kim Liong.
Tan Kim Liong refused to disclose whether B & B had any deposit, invoking Republic Act No. 1405 (the “Bank Secrecy Law”), which classifies all bank deposits as absolutely confidential except in specified cases.

On March 4, 1972, the trial court denied Acaban’s motion to cite Tan Kim Liong for contempt but ordered him to inform the court within five days whether a deposit existed and to hold it intact pending further order.
After a motion for reconsideration was denied on March 27, 1972—with a further directive to comply within ten days or face arrest—China Banking Corporation and Tan Kim Liong filed a petition for certiorari under Rule 65 of the Rules of Court, challenging the orders as violative of RA 1405.

Whether a banking institution may validly refuse to comply with a garnishment order by invoking the confidentiality provisions of RA 1405.
Whether the trial court’s orders requiring disclosure of the existence of a deposit and its retention intact constitute an unlawful “inquiry” or “examination” prohibited by RA 1405.