Lex Rex Ph

Escaping Debts through Bank Deposits? | China Bank vs. Ortega

CHINA BANK VS ORTEGA
G.R. No. L-34964 January 31, 1973


THESIS STATEMENT

China Bank refused to comply with a court order garnishing (seize to settle debt) the bank deposit of a judgment debtor invoking that the order does not fall under exceptions of Section 2 Republic Act No. 1405.

FACTS

  • Respondent Vicente Acaban filed a complaint in the court a quo against Bautista Logging Co., Inc., B & B Forest Development Corporation and Marino Bautista for the collection of a sum of money. Defendants failed to answer, and went default. 
  • Plaintiff sought the garnishment of the bank deposit of the defaulted debtors
  • A notice of garnishment was issued by the Deputy Sheriff of the trial court and served on said bank. Cashier Tan Kim invoked RA 1405. Plaintiff filed a motion to cite Tan Kim Liong for contempt
CHINA BANKHON. WENCESLAO ORTEGA, Presiding Judge of the Court of First Instance of Manila, Branch VIII, and VICENTE G. ACABAN
The disclosure of the information required … does not fall within any of the four (4) exceptions enumerated in Section 2 of RA 1405If complied, cashier may be criminally liable under Section 5 and the bank exposed to a possible damage suit by B & B Forest Development Corporation.The law does not satisfy garnishment“To inform the Court … whether or not there is a deposit … to hold the same intact and not allow any withdrawal until further order from this Court.””to comply with the order …otherwise his arrest and confinement will be ordered by the Court.”

RULING of the RTC/CFI

  • March 4, 1972: “to inform the Court … whether or not there is a deposit … to hold the same intact and not allow any withdrawal until further order from this Court.”
  • March 27, 1972: Repeated the above order

ISSUE

  • Does RA 1405 prohibits courts to examine or inquire bank deposits to satisfy judgment for debtors evading payments?

Ponente: MAKALINTAL, J.: 

No. The law only does not prohibit bank deposits to be garnished to insure satisfaction of a judgment. It is hard to conceive that the intent of the Congress behind the law is to enable debtors to escape payment of their debts by converting those assets to cash and deposit them in a bank.

It is sufficiently clear from the foregoing discussion of the conference committee 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 (forbid) its being garnished to insure satisfaction of a judgment.

Trial Court’s Decision AFFIRMED. 


StatCon Lesson: 

It is hard to conceive that it was ever within the intention of Congress to enable debtors to evade payment of their just debts, even if ordered by the Court, through the expedient of converting their assets into cash and depositing the same in a bank.

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