Bank Garnishment for Unpaid Credit-Card Debt in the Philippines

A comprehensive legal guide as of 16 May 2025

1. Overview

“Garnishment” is a levy on intangible assets—most commonly bank deposits—in order to satisfy an unpaid obligation after (or, in limited cases, before) a court judgment. It is not a separate cause of action; it is a procedural device available to a credit-card issuer (or its assignee) that has sued a cardholder for the collection of money. Credit-card debt is contractual and generally governed by:

Source	Key provisions for debt actions
Civil Code of the Philippines (Arts. 1159–1160, 1305 ff.)	Binding force of contracts, rules on payment & default
Rule 39, Rules of Court	Execution of judgments, including garnishment
Rule 57, Rules of Court	Provisional remedy of pre-judgment attachment (garnishment of deposits before final judgment)
Republic Act (RA) 1405 – Bank Secrecy Law	Deposits are generally confidential except when “subject of litigation” or by court order, allowing garnishment
RA 10870 – Philippine Credit Card Industry Regulation Act (2016)	Consumer-protection rules; does not alter execution procedures, but requires card issuers to exhaust amicable settlement first
RA 8484 – Access Devices Regulation Act (1998)	Criminalizes fraudulent use of cards; mere non-payment remains civil

2. When Can a Creditor Garnish a Bank Account?

After Final Judgment Prerequisites:
- Creditor obtains a final and executory money judgment.
- Court issues a Writ of Execution directing the sheriff to satisfy the judgment “out of the debtor’s property.”
- Sheriff (or process server) serves a Notice of Garnishment on the depositary bank.
Before Final Judgment (Pre-Judgment Attachment) Allowed only on specific statutory grounds under Rule 57, e.g.:
- Debtor is about to dispose of property with intent to defraud creditors (Sec. 1[d]).
- Debtor is a non-resident or temporarily absent (Sec. 1[b]).
- Debtor conceals assets (Sec. 1[e]). Requirements: affidavit showing cause, and an attachment bond equal to the claim to indemnify debtor if attachment is later dissolved.
During Execution Pending Appeal If the court, in its discretion, allows execution even while an appeal is pending (Rule 39, Sec. 2[a]), garnishment may issue; the debtor can seek a supersedeas bond to stay execution.

3. Effect of the Notice of Garnishment on the Bank

In custodia legis: Upon valid service, the deposit (up to the garnished amount) is “frozen” and deemed held by the bank for the court, not the debtor.
Obligations of the Bank:
1. Disclose within five (5) days the exact balance of the debtor.
2. Hold the funds until the sheriff directs turnover or the writ is quashed.
Liability for Non-Compliance: Contempt of court and possible solidary liability for the judgment amount.

Bank Secrecy is not a defense. The Supreme Court has consistently ruled that RA 1405 yields to a duly issued writ of garnishment because the deposit itself is the subject of the litigation (e.g., China Banking Corp. v. Court of Appeals, G.R. 150523, April 2 2007).

4. Rights and Remedies of the Debtor-Cardholder

Remedy	Basis	Practical Notes
Motion to Quash Writ	Rule 57 §13 or Rule 39 §5	Common grounds: (a) improper service, (b) dissolved bond, (c) judgment not yet final.
Claim of Exemptions	Art. 1708 Civil Code (wages), special laws (SSS Act, GSIS Act, Pag-IBIG Charter, RA 7699 etc.)	Pure pension or government retirement benefits, if traceable, are absolutely exempt; once commingled with other funds, courts differ—segregation is essential.
Third-Party Claim	Rule 39 §16	Spouse or co-depositors may assert that funds are not exclusively the debtor’s.
Deposit of Supersedeas Bond	Rule 39 §3	Stays execution on appeal.
Dissolution of Attachment Upon Counter-Bond	Rule 57 §12	Debtor can post a bond equal to the creditor’s claim to lift the garnishment.
Court-Supervised Settlement, Arbitration, or Judicial Dispute Resolution (JDR)	A.M. No. 11-1-6-SC-PHILJA	Often encouraged before execution proceeds.
Insolvency / Rehabilitation under RA 10142	Suspension of Payments or Personal Financial Rehabilitation	Filing triggers a stay order that covers writs of garnishment.

5. What Can and Cannot Be Garnished

Property	Garnishable?	Authority / Reason
Regular savings/current deposits	✔️ Yes	No statutory exemption; bank secrecy exceptions apply.
Time deposits/CDs	✔️ Yes	Same as above; maturity dates immaterial.
Joint “OR” account	✔️ / ⚠️	Only the share attributable to the debtor; bank may require interpleader.
Trust / UITF	✔️ Conditional	If revocable and debtor retains control; irrevocable trusts are usually exempt.
Wages paid through ATM payroll	❌ Largely exempt	Art. 1708-1709 Civil Code; DOLE Dept. Order No. 195-18.
SSS, GSIS, Pag-IBIG, PhilHealth benefits	❌ Exempt	Respective charters expressly prohibit “levy, garnishment, attachment, or execution.”
Retirement benefits under RA 7641 or private plans	❌ Exempt if un-commingled	Commingling with ordinary savings may forfeit exemption unless traceable.
Family Home proceeds	❌ Exempt up to ₱1 million (Art. 160, Family Code as amended by RA 11571)

6. Procedural Flowchart (Post-Judgment)

Final judgment entered →
Creditor files Motion for Issuance of Writ of Execution →
Court issues Writ →
Sheriff identifies debtor’s bank (often via disclosure or discovery) →
Sheriff serves Notice of Garnishment on branch manager and head office →
Bank freezes funds, submits Garnishee’s Return →
Sheriff secures Turnover Order →
Funds remitted to court, then to creditor after sheriff’s costs.

(Pre-judgment attachment follows the same steps starting at Step 3 but with an Attachment Bond and without a final judgment.)

7. Prescriptive Period for Credit-Card Actions

10 years from default if the card agreement is treated as a written contract (Art. 1144 Civil Code).
Some creditors argue 6 years under Art. 1145 (quasi-contracts) where statements serve as invoices; jurisprudence is split.
The prescriptive period is tolled by: (a) partial payment, (b) written acknowledgment, or (c) filing of action.

8. Interest, Penalties, and Attorney’s Fees

Courts routinely reduce “usurious” or undisclosed charges per the doctrine in Spouses Alcaraz v. Court of Appeals (G.R. 109491, April 3 2000).
The 2013 BSP circular capping credit-card interest was lifted in 2023; nonetheless, interest beyond 24-36 % p.a. has been judicially struck down for being “unconscionable.”
Attorney’s fees are recoverable if stipulated but may be slashed if unconscionable, following Art. 1229.

9. Role of the Bangko Sentral ng Pilipinas (BSP)

MORB X193.3 requires banks to honor garnishment orders without prior approval but to file Suspicious Transaction Reports if the writ appears spurious.
Banks must report to BSP quarterly the volume and value of garnishments (Memorandum No. M-2021-003).

10. COVID-19 and Other Relief Legislation

Bayanihan I & II (RA 11469, 11494) granted 30–60-day payment moratoria but did not bar creditors from filing suits or seeking attachment after the grace period.
BSP Memorandum M-2020-017 urged “leniency” yet expressly stated it was non-mandatory regarding execution.

11. Practical Tips for Debtors

Communicate early with the card issuer; restructuring is cheaper than litigation.
Keep wages and pensions in a separate, traceable account—do not commingle.
Check court notices; garnishment can proceed ex parte if you ignore summons.
Consider financial rehabilitation if liabilities are unmanageable.
Engage counsel quickly to file motions within the five-day window after notice of levy.

12. Practical Tips for Creditors

Ensure proper affidavit showing at least one Rule 57 ground for pre-judgment attachment.
Name the correct bank headquarters in the writ; service on a branch only is defective.
Post the required bond; failure is fatal and may lead to quashal.
Monitor prescription; filing suit stops the clock, not mere demand letters.
Observe consumer-protection rules under RA 10870; courts frown on harassment and may award moral damages.

13. Recent Jurisprudence Snapshot (selected)

Case	G.R. No.	Date	Holding (simplified)
Totanes v. China Banking	173024	Feb 11 2015	Bank must freeze only the amount specified in writ; excess remains free.
BPI Family Bank v. CA	157247	Apr 21 2010	Garnishment does not violate RA 1405; confidentiality yields.
Spouses Abundo v. UniBank	222204	Nov 3 2021	Payroll ATM funds traceable to wages are exempt; burden on debtor to prove source.
Citibank v. Tan	244231	Aug 9 2023	36 % p.a. interest reduced to 12 % as “unconscionable”; garnishment limited to recomputed balance.

14. Conclusion

Bank garnishment remains the most potent enforcement tool for unpaid credit-card debt in the Philippines. While card issuers enjoy broad access to a debtor’s deposits once armed with a writ, the Rules of Court and a latticework of statutory exemptions protect wages, pensions, and certain trust assets. Both creditors and debtors benefit from understanding the precise procedural steps—and the narrow windows for objection—because execution in the Philippines is “swift but technical.” Early legal advice, meticulous paperwork, and awareness of exemptions are therefore indispensable on either side of the credit-card litigation divide.

—End of article—

Disclaimer: This article is for informational purposes only and is not a substitute for individualized legal advice. Laws and jurisprudence may change after 16 May 2025. Consult a Philippine lawyer for guidance on specific cases.