BIR Ruling

July 12, 1973 Continental Bank 434 Rosario St., Binondo, Manila Attention: Ramon A . Espinosa AVP & Head, Legal Dept . Gentlemen : This refers to your letter dated September 18, 1972 informing the Regional Director, Revenue Region No. 7, North Manila, that you cannot comply with the Warrant of Garnishment dated September 8, 1972 served upon you to enforce collection of the 1963 income tax assessments, issued against L. R. Pascual & Sons, Inc., 984 Ilaya St., Tondo, Manila. The reason for your non-compliance is that you cannot disclose or give out any information regarding the provisions of Republic Act No. 1405. acd In reply, I have the honor to inform you that Republic Act No. 1405 prohibits the examination or inquiry into the bank deposits of a taxpayer by any person, government official, bureau or office. This prohibition, however, does not extend to the garnishment of bank deposits of a taxpayer to enforce collection of the tax assessed against him. This stand is supported by the recent decision in the case of China Banking Corporation vs. Ortega, G. R. No. L-34964, January 31, 1973 wherein the Supreme Court ruled as follows: "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 its being garnished to insure satisfaction of a judgment . Indeed there is no real inquiry in such a case, and if the existence of the deposit is disclosed the disclosure is purely incidental to the execution process. 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." (Emphasis ours) In view thereof, you are requested to turn over to the Regional Director, Revenue Region No. 7, North Manila, so much of the bank deposit of the taxpayer as may be sufficient to satisfy the abovementioned tax liability, pursuant to Section 319 of the Tax Code. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue TAN-1601-593-5 "TAXPAYERS SHOULD INDICATE THEIR TAN IN ALL COMMUNICATIONS TO THE BIR."