Case Summary (G.R. No. L-34964)
Petitioner
China Banking Corporation and its cashier, Tan Kim Liong, who received service of a garnishment notice and declined to disclose or act on information about the judgment debtor’s deposit on the ground that RA 1405 prohibits disclosure or inquiry into bank deposits.
Respondent
Vicente G. Acaban, judgment creditor who obtained a default judgment against the defendants (including B & B Forest Development Corporation) and sought garnishment of the judgment debtor’s bank deposit to satisfy the judgment; Hon. Wenceslao Ortega as the trial court judge who issued the challenged orders.
Key Dates
Complaint filed: December 17, 1968. Default judgment rendered: January 20, 1970. Trial court orders challenged: March 4, 1972 and March 27, 1972. Decision date of the Supreme Court: January 31, 1973.
Applicable Constitution
Applicable constitution for purposes of situating the decision: the 1973 Philippine Constitution (based on the decision date in January 1973).
Applicable Law
Republic Act No. 1405 (statutory text summarized in the record): declares all bank deposits confidential and generally prohibits examination or inquiry into deposits except (1) upon written permission of the depositor, (2) in cases of impeachment, (3) upon order of a competent court in cases of bribery or dereliction of duty of public officials, or (4) in cases where the money deposited is the subject matter of the litigation; Sec. 3 makes it unlawful for bank officials to disclose information concerning deposits; Sec. 5 prescribes penalties for violation.
Procedural History
Plaintiff obtained a default judgment against the defendants. To satisfy the judgment, the plaintiff caused a garnishment notice to be served on China Banking Corp. through its cashier, Tan Kim Liong. The cashier, invoking RA 1405, objected to disclosure of deposit information. The plaintiff moved to cite the cashier for contempt. The trial court denied the contempt motion but ordered the cashier to inform the court whether the judgment debtor had deposits and, if so, to hold them intact (March 4, 1972). A motion for reconsideration by the cashier was denied (March 27, 1972) with a directive to comply or face arrest. The bank and cashier petitioned the Supreme Court for certiorari to annul those orders.
Issue Presented
Whether a banking institution may validly refuse to comply with a court process garnishing the bank deposit of a judgment debtor by invoking the confidentiality provisions of RA 1405.
Court’s Analysis
The Supreme Court examined the scope and legislative history of RA 1405. The Court found that the trial court’s orders did not command an examination into the nature or particulars of the deposit as contemplated by the statute but only required the cashier to report whether the judgment debtor had deposits and to preserve any such deposits pending execution. The Court relied on the conference committee discussions (recorded in the legislative history) to interpret the statute’s purpose: RA 1405 was not intended to place deposits beyond the reach of lawful execution to satisfy final judgments. The legislative history, as quoted by the Court, clarifies that the statute prohibits mere investigation into the existence or character of deposits except where authorized, but does not prevent garnishment or seizure pursuant to judicial authorization to satisfy an executory judgment. The Court regarded disclosure of the existence of a deposit in the specific context of a garnishment as incidental to the execution process rather than an unlawful inquiry or disclosure under RA 1405. The Court emphasized the implausibility that Congress intended to enable debtors to evade court-ordered satisfaction of debts by converting assets into bank deposits.
Holding and Disposition
The Supreme Court affirmed the trial court’s orders dated March 4 and March 27, 1972, directing
...continue readingCase Syllabus (G.R. No. L-34964)
Citation and Procedural Posture
- Reported at 151 Phil. 451, G.R. No. L-34964, decided January 31, 1973.
- Petition for certiorari filed in the Supreme Court to review two orders of the Court of First Instance of Manila in Civil Case No. 75138 dated March 4, 1972 and March 27, 1972.
- Petitioners-appellants: China Banking Corporation and Tan Kim Liong (cashier of the bank).
- Respondents-appellees: Hon. Wenceslao Ortega (Presiding Judge, Court of First Instance of Manila, Branch VIII) and Vicente G. Acaban (judgment creditor).
Statement of Facts
- On December 17, 1968 Vicente G. Acaban filed a complaint in the Court of First Instance of Manila against Bautista Logging Co., Inc., B & B Forest Development Corporation, and Marino Bautista for the collection of a sum of money.
- The trial court, upon plaintiff's motion, declared the defendants in default for failure to answer within the reglementary period and authorized the Branch Clerk of Court and/or Deputy Clerk to receive the plaintiff's evidence.
- A judgment by default was rendered on January 20, 1970 against the defendants.
- To satisfy the judgment, plaintiff sought garnishment of the bank deposit of defendant B & B Forest Development Corporation at China Banking Corporation.
- A notice of garnishment was issued by the Deputy Sheriff of the trial court and served on China Banking Corporation through its cashier, Tan Kim Liong.
- In response, the bank’s cashier invoked Republic Act No. 1405, alleging that the law prohibits disclosure of any information relative to bank deposits.
- Plaintiff filed a motion to cite Tan Kim Liong for contempt of court for noncompliance with the garnishment notice.
- By order dated March 4, 1972, the trial court denied plaintiff’s contempt motion but ordered Tan Kim Liong to inform the court within five days whether B & B Forest Development Corporation had a deposit in China Banking Corporation and, if so, to hold the deposit intact and prevent withdrawals until further order.
- Tan Kim Liong moved for reconsideration, which was denied by order dated March 27, 1972; that order further directed compliance with the March 4, 1972 order within ten days or face arrest and confinement.
- China Banking Corporation and Tan Kim Liong filed the instant petition to review and annul the two orders of the lower court.
Central Issue Presented
- Whether a banking institution may validly refuse to comply with a court process garnishing the bank deposit of a judgment debtor by invoking the confidentiality provisions of Republic Act No. 1405.
Statutory Provisions Invoked (Republic Act No. 1405) [as quoted in the source]
- Section 2:
- "All deposits of whatever nature with banks or banking institutions in the Philippines including investments in bonds issued by the Government of the Philippines, its political subdivisions and its instrumentalities, are hereby considered 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 permission of the depositor, or in cases of impeachment, or upon order of a competent court in cases of bribery or dereliction of duty of public officials, or in cases where the money deposited or invested is the subject matter of the litigation."
- Section 3:
- "It shall be unlawful for any official or employee of a banking institution to disclose to any person other than those mentioned in Section two hereof any information concerning said deposits."
- Section 5:
- "Any violation of this law will subject offender upon conviction, to