ACCOUNT-ON-HOLD RESOLUTION IN THE PHILIPPINES

A comprehensive legal guide for practitioners, compliance officers, and affected depositors

1. Overview

“Account on hold” (sometimes called bank-hold, freeze, closure, or garnishment) refers to a temporary legal or administrative restraint placed on a bank deposit, e-money wallet, securities account, cooperative share capital, or similar asset so that withdrawals, outward transfers, or other dispositions cannot be completed without prior clearance. Philippine law allows such restraints only in circumstances expressly authorized by statute, regulation, or court/administrative order; any other hold is void as an undue impairment of property under Art. III, Sec. 1 of the 1987 Constitution.

2. Primary Legal Bases & Competent Authorities

Source of Power	Instrument	Governing Provisions	Typical Trigger
Courts (RTC, Sandiganbayan, CTA, CA, SC)	Writ of attachment or garnishment; freeze order in civil forfeiture	Rules of Court, Rule 57–59; Rule 65; RA 1379 (Forfeiture); RA 1405 (Secrecy exceptions)	Civil action for recovery of money or property; forfeiture cases
Anti-Money Laundering Council (AMLC)	Ex parte preventive freeze; subsequent Court of Appeals confirmation	RA 9160 (AMLA) §10, §11; AMLC Res. TF-06 et seq.; CA Rule on Summary AMLA Proceedings	Suspicious or covered transaction; money-laundering/terrorism-financing investigation
Anti-Terrorism Council (ATC) / AMLC	Asset preservation order (APO) & asset freezing order (AFO)	RA 11479 (Anti-Terrorism Act 2020) §25, §36; AMLC IRR	Designation or proscription of terrorist individuals/groups
Bureau of Internal Revenue (BIR)	Warrant of garnishment (WG) on bank deposits	NIRC §208; RR No. 12-99; RAMO 1-2001	Delinquent tax assessments, deficiency VAT, estate tax
Bangko Sentral ng Pilipinas (BSP)	Supervisory directives, cease-and-desist, “hold code” implementation	New Central Bank Act (RA 7653, as amended by RA 11211) §25, §37; MORB Sec. X803, X806; BSP Circulars 1108, 1127	AML/KYC deficiency, fraud investigation, consumer dispute
Philippine Deposit Insurance Corporation (PDIC)	Suspension of transactions during bank closure/receivership	PDIC Charter (RA 3591 as amended) §13	Bank closure, payout, liquidation
Commission on Audit (COA)	Notice of garnishment vs. gov’t deposits in private banks	COA Rules on Settlement of Accounts	Final COA decision vs. agency

Other niche grounds include escheat (PD 1524; Act 3936 on unclaimed balances) and probate/guardianship proceedings (Rules of Court 89-96).

3. Typical Categories of Holds

Judicial Garnishment / Attachment – A sheriff serves a writ on the bank; the bank becomes a “garnishee” and must retain the amount or the entire account until the case is resolved or the writ is quashed.
AMLA Preventive Freeze – Ex parte for 20 days; CA may extend up to six (6) months (or longer in terrorism cases). Coverage includes related accounts and fruits thereof.
Terrorism-Related Freeze – Immediate 20-day freeze upon ATC designation; extendable for six (6) months by CA; renewable while designation subsists.
BIR Warrant of Garnishment – Continues “until the tax liability is fully satisfied” (NIRC §208). The bank must remit amounts to BIR within five (5) days from demand.
Regulatory / Internal Bank Hold – Triggered by suspicious transaction reports (STR), know-your-customer (KYC) remediation, account takeover claims, charge-back disputes, or fraud alerts under BSP Circular 706 as amended.
Customer-Requested Hold – Stop-payment order on checks, lost ATM card hold, court-approved compromise holds.
Dormancy & Escheat Holds – After two (2) years of inactivity, banks classify as dormant (BSP Circular 958); after ten (10) years, balances unclaimed may escheat to the National Treasury subject to Act 3936 notice proceedings.

4. Procedure for Imposition

Step	Uniform Requirements (minimum)
Service / Notice	Valid service on bank’s authorized representative or compliance/AML officer; must cite specific legal basis.
Identification	Precise account numbers, deposit type, and amount; “all present and future deposits” clauses disfavored except in AMLA & terrorism freezes.
Bank Compliance	Immediate tagging of “HOLD” in CBS; segregation of funds; filing of STR/CTR if related to ML/TF.
Customer Notification	For AMLA freezes, notice within 24 h after service; for BIR, no statutory notice to taxpayer—taxpayer learns via bank or BIR demand for turnover. Best-practice: bank sends courtesy advice citing statutory confidentiality limits.
Regulator Reporting	Banks report to BSP within 24 h for AML/Terrorism freezes and monthly for garnishments > ₱1 M (MORB X806.3).

5. Remedies & Resolution Pathways

Court-Issued Holds
- Motion to Quash / Lift Writ (Rule 59 §12) on grounds of improper issuance, posting of counterbond, or lack of jurisdiction.
- Petition for certiorari to CA or SC if grave abuse of discretion.
AMLC or ATC Freeze Orders
- Petition to the Court of Appeals under CA-AMLC Rule on Freezing; heard in camera; burden on petitioner to show lawful source/funds not related to ML/TF.
- After forfeiture case is filed (within 6 months for AMLA, 120 days for ATA), defend on merits; freeze dissolves if filing deadline lapses.
BIR Garnishment
- Request for Lifting upon payment in full, approved compromise (NIRC §204), or suspension of collection (RR 13-2001).
- Petition for Review before CTA under Rule 4 within 30 days from receipt of adverse decision, coupled with application for suspension of collection.
Regulatory / Internal Holds
- Bank’s Consumer Assistance & Management System (CAMS): file complaint; 7-15 banking days resolution period (BSP Circular 857).
- BSP Consumer Assistance Mechanism: elevate via BSP-CAM; BSP may direct release if hold lacks basis.
Dormant / Escheated Accounts
- Ocular inspection, petition to reclaim with PDIC/Treasury within 10 years from escheat, supported by proof of ownership.

6. Time Limits & Expiry

Hold Type	Automatic Expiry?	Max Duration (absent extension)
AMLA preventive freeze	Yes	20 days (extendable by CA)
AMLA freeze (extended)	Yes	Up to 6 months; renewable before expiry
ATA freeze	Yes	20 days initial; extendable 6 months; renewable
Court garnishment	No fixed	Until lifted by court or claim satisfied
BIR WG	No fixed	Until liability paid/compromised
Internal fraud/KYC hold	Depends	Bank policy; must be “reasonable” under BSP consumer protection framework
Dormant/escheat	N/A	Escheat after 10 years inactivity

7. Selected Jurisprudence

Case	G.R. No. / Date	Key Doctrine
Republic v. Eugenio	162087, 14 Apr 2009	Bank secrecy yields to forfeiture under RA 1379 when probable cause shown.
Del Rosario v. People	234642, 17 Feb 2021	AMLA freeze orders do not violate due process; 20-day limit constitutional.
Mison v. CoA	245128, 25 Jan 2023	COA may garnish government agency deposits in private banks to satisfy final monetary decision.
Castro-Poncio v. BIR	CTA EB 2070, 08 Nov 2019	BIR WG void when issued during pending protest; collection suspended.
People v. Dizon	235413, 05 Jul 2022	Funds in cooperative share capital subject to AMLA freeze.

8. Compliance Obligations of Financial Institutions

Immediate Implementation – Banks/e-money issuers must restrict all channels (branch, ATM, internet) within minutes of receipt.
Record-Keeping – Preserve account ledger, KYC docs, transaction history for 5 years (AMLA §9-B).
STR/CTR Reporting – If hold arises from suspicious activity, file STR within 5 days.
Turnover and Remittance – For BIR WG, remit garnished amount within 5 days; for AMLA freeze, funds retained pending final forfeiture order.
Confidentiality – Unauthorized disclosure to customer may constitute “tipping-off” (AMLA §9-C).
Consumer Protection – BSP Circular 857 mandates fair handling of complaints and timely release once legal basis ceases.

9. Practical Tips for Affected Depositors & Counsel

Request Official Copy of the hold order and identify issuing authority.
Check Scope – Is it a “full” or “partial” hold? Identify related or future deposits frozen.
Compute Deadlines – Mark 20-day AMLA freeze or CTA filing periods.
Prepare Evidence of Lawful Source – Payroll slips, contracts, inheritance documents.
Engage Early with Issuer’s AML/Legal Unit – They can clarify deficiencies or channel your petition for lifting.
Consider Posting Counter-Bond – For court attachments to release funds urgently.
Screen Adviser – Counsel must understand banking operations and regulatory timelines.

10. Policy Gaps & Reform Directions

Unified Notice Requirement – Current statutes differ; adopting a cross-agency 48-hour depositor notice rule would enhance due process.
Time-Bound BIR Holds – Introducing sunset provisions analogous to AMLA freeze (e.g., automatic review after one year) could curb indefinite restraints.
Digital Wallet Coverage Clarity – Clearer BSP rules on e-money holds versus deposit holds to avoid inconsistent treatment.
Central Register of Active Freezes – A secure portal (similar to PESONet’s Stop-List) to verify and track all outstanding holds may reduce duplicate freezing and compliance errors.

11. Conclusion

An “account on hold” is a potent but constitutionally circumscribed mechanism in Philippine law. Whether imposed by courts, the AMLC, the BIR, or a bank’s own compliance team, it always derives from a specific statutory grant of authority and is bounded by procedural and substantive safeguards. Deposit-holders can successfully secure release—often in weeks rather than months—by promptly identifying the hold’s legal basis, observing critical filing deadlines, and supplying clear evidence that the funds are legitimate or that the underlying liability has been satisfied. On the institutional side, financial entities must balance strict, near-instantaneous implementation with equally diligent review and prompt lifting once the legal cause disappears. Mastery of these requirements not only protects individual property rights but also upholds the integrity of the Philippine financial system in its fight against tax evasion, fraud, money-laundering, and terrorism financing.

Disclaimer: This article is for informational purposes only and does not constitute legal advice. Laws and regulations cited are current as of 15 July 2025. Consult qualified Philippine counsel for specific situations.