TITLE VIIIREMEDIES
CHAPTER IICIVIL
REMEDIES
FOR COLLECTION OF TAXES
SEC.
205. Remedies for the Collection of Delinquent Taxes. - The
civil remedies for the collection of internal revenue taxes, fees or
charges,
and any increment thereto resulting from delinquency shall be:
(a) By
distraint
of goods, chattels, or effects, and other personal property of whatever
character, including stocks and other securities, debts, credits, bank
accounts and interest in and rights to personal property, and by levy
upon
real property and interest in rights to real property; and
(b) By civil
or
criminal action.
Either of these
remedies
or both simultaneously may be pursued in the discretion of the
authorities
charged with the collection of such taxes: Provided, however,
That
the remedies of distraint and levy shall not be availed of where the
amount
of tax involve is not more than One hundred pesos (P100).
The judgment in
the
criminal case shall not only impose the penalty but shall also order
payment
of the taxes subject of the criminal case as finally decided by the
Commissioner.
The Bureau of
Internal
Revenue shall advance the amounts needed to defray costs of collection
by means of civil or criminal action, including the preservation or
transportation
of personal property distrained and the advertisement and sale thereof,
as well as of real property and improvements thereon.
SEC.
206. Constructive Distraint of the Property of a Taxpayer. - To
safeguard the interest of the Government, the Commissioner may place
under
constructive distraint the property of a delinquent taxpayer or any
taxpayer
who, in his opinion, is retiring from any business subject to tax, or
is
intending to leave the Philippines or to remove his property therefrom
or to hide or conceal his property or to perform any act tending to
obstruct
the proceedings for collecting the tax due or which may be due from him.
The constructive distraint
of personal property shall be affected by requiring the taxpayer or any
person having possession or control of such property to sign a receipt
covering the property distrained and obligate himself to preserve the
same
intact and unaltered and not to dispose of the same ;in any manner
whatever,
without the express authority of the Commissioner.cralaw:red
In case the taxpayer
or the person having the possession and control of the property sought
to be placed under constructive distraint refuses or fails to sign the
receipt herein referred to, the revenue officer effecting the
constructive
distraint shall proceed to prepare a list of such property and, in the
presence of two (2) witnessed, leave a copy thereof in the premises
where
the property distrained is located, after which the said property shall
be deemed to have been placed under constructive distraint.
SEC.
207. Summary Remedies. -
(A) Distraint
of Personal Property.
- Upon the failure of the person owing any delinquent tax or delinquent
revenue to pay the same at the time required, the Commissioner or his
duly
authorized representative, if the amount involved is in excess of One
million
pesos (P1,000,000), or the Revenue District Officer, if the amount
involved
is One million pesos (P1,000,000) or less, shall seize and distraint
any
goods, chattels or effects, and the personal property, including stocks
and other securities, debts, credits, bank accounts, and interests in
and
rights to personal property of such persons ;in sufficient quantity to
satisfy the tax, or charge, together with any increment thereto
incident
to delinquency, and the expenses of the distraint and the cost of the
subsequent
sale.cralaw:red
A report on the distraint
shall, within ten (10) days from receipt of the warrant, be submitted
by
the distraining officer to the Revenue District Officer, and to the
Revenue
Regional Director: Provided, That the Commissioner or his duly
authorized
representative shall, subject to rules and regulations promulgated by
the
Secretary of Finance, upon recommendation of the Commissioner, have the
power to lift such order of distraint: Provided, further, That
a
consolidated report by the Revenue Regional Director may be required by
the Commissioner as often as necessary.cralaw:red
(B) Levy
on Real Property.- After the expiration of the time required to pay the delinquent
tax
or delinquent revenue as prescribed in this Section, real property may
be levied upon, before simultaneously or after the distraint of
personal
property belonging to the delinquent. To this end, any internal revenue
officer designated by the Commissioner or his duly authorized
representative
shall prepare a duly authenticated certificate showing the name of the
taxpayer and the amounts of the tax and penalty due from him. Said
certificate
shall operate with the force of a legal execution throughout the
Philippines.cralaw:red
Levy shall be affected
by writing upon said certificate a description of the property upon
which
levy is made. At the same time, written notice of the levy shall be
mailed
to or served upon the Register of Deeds for the province or city where
the property is located and upon the delinquent taxpayer, or if he be
absent
from the Philippines, to his agent or the manager of the business in
respect
to which the liability arose, or if there be none, to the occupant of
the
property in question.cralaw:red
In case the warrant
of levy on real property is not issued before or simultaneously with
the
warrant of distraint on personal property, and the personal property of
the taxpayer is not sufficient to satisfy his tax delinquency, the
Commissioner
or his duly authorized representative shall, within thirty (30) days
after
execution of the distraint, proceed with the levy on the taxpayer's
real
property.cralaw:red
Within ten (10) days
after receipt of the warrant, a report on any levy shall be submitted
by
the levying officer to the Commissioner or his duly authorized
representative:
Provided, however, That a consolidated report by the Revenue
Regional
Director may be required by the Commissioner as often as necessary:
Provided,
further, That the Commissioner or his duly authorized representative,
subject
to rules and regulations promulgated by the Secretary of Finance, upon
recommendation of the Commissioner, shall have the authority to lift
warrants
of levy issued in accordance with the provisions hereof.
SEC.
208. Procedure for Distraint and Garnishment. -
The officer serving the warrant of distraint shall make or cause to be
made an account of the goods, chattels, effects or other personal
property
distrained, a copy of which, signed by himself, shall be left either
with
the owner or person from whose possession such goods, chattels, or
effects
or other personal property were taken, or at the dwelling or place of
business
of such person and with someone of suitable age and discretion, to
which
list shall be added a statement of the sum demanded and note of the
time
and place of sale.cralaw:red
Stocks and other securities
shall be distrained by serving a copy of the warrant of distraint upon
the taxpayer and upon the president, manager, treasurer or other
responsible
officer of the corporation, company or association, which issued the
said
stocks or securities.cralaw:red
Debts and credits shall
be distrained by leaving with the person owing the debts or having in
his
possession or under his control such credits, or with his agent, a copy
of the warrant of distraint. The warrant of distraint shall be
sufficient
authority to the person owning the debts or having in his possession or
under his control any credits belonging to the taxpayer to pay to the
Commissioner
the amount of such debts or credits.cralaw:red
Bank accounts shall
be garnished by serving a warrant of garnishment upon the taxpayer and
upon the president, manager, treasurer or other responsible officer of
the bank. Upon receipt of the warrant of garnishment, the bank shall
tun
over to the Commissioner so much of the bank accounts as may be
sufficient
to satisfy the claim of the Government.
SEC.
209. Sale of Property Distrained and Disposition of Proceeds. -
The Revenue District Officer or his duly authorized representative,
other
than the officer referred to in Section 208 of this Code shall,
according
to rules and regulations prescribed by the Secretary of Finance, upon
recommendation
of the Commissioner, forthwith cause a notification to be exhibited in
not less than two (2) public places in the municipality or city where
the
distraint is made, specifying; the time and place of sale and the
articles
distrained. The time of sale shall not be less than twenty (20) days
after
notice. One place for the posting of such notice shall be at the Office
of the Mayor of the city or municipality in which the property is
distrained.cralaw:red
At the time and place
fixed in such notice, the said revenue officer shall sell the goods,
chattels,
or effects, or other personal property, including stocks and other
securities
so distrained, at public auction, to the highest bidder for cash, or
with
the approval of the Commissioner, through duly licensed commodity or
stock
exchanges.cralaw:red
In the case of Stocks
and other securities, the officer making the sale shall execute a bill
of sale which he shall deliver to the buyer, and a copy thereof
furnished
the corporation, company or association which issued the stocks or
other
securities. Upon receipt of the copy of the bill of sale, the
corporation,
company or association shall make the corresponding entry in its books,
transfer the stocks or other securities sold in the name of the buyer,
and issue, if required to do so, the corresponding certificates of
stock
or other securities.cralaw:red
Any residue over and
above what is required to pay the entire claim, including expenses,
shall
be returned to the owner of the property sold. The expenses chargeable
upon each seizure and sale shall embrace only the actual expenses of
seizure
and preservation of the property pending ;the sale, and no charge shall
be imposed for the services of the local internal revenue officer or
his
deputy.
SEC.
210. Release of Distrained Property Upon Payment Prior to Sale. - If
at any time prior to the consummation of the sale all proper charges
are
paid to the officer conducting the sale, the goods or effects
distrained
shall be restored to the owner.
SEC.
211. Report of Sale to Bureau of Internal Revenue. -
Within two (2) days after the sale, the officer making the same shall
make
a report of his proceedings in writing to the Commissioner and shall
himself
preserve a copy of such report as an official record.
SEC.
212. Purchase by Government at Sale Upon Distraint. -
When the amount bid for the property under distraint is not equal to
the
amount of the tax or is very much less than the actual market value of
the articles offered for sale, the Commissioner or his deputy may
purchase
the same in behalf of the national Government for the amount of taxes,
penalties and costs due thereon.cralaw:red
Property so purchased
may be resold by the Commissioner or his deputy, subject to the rules
and
regulations prescribed by the Secretary of Finance, the net proceeds
therefrom
shall be remitted to the National Treasury and accounted for as
internal
revenue.
SEC.
213. Advertisement and Sale. - Within
twenty (20) days after levy, the officer conducting the proceedings
shall
proceed to advertise the property or a usable portion thereof as may be
necessary to satisfy the claim and cost of sale; and such advertisement
shall cover a period of a least thirty (30) days. It shall be
effectuated
by posting a notice at the main entrance of the municipal building or
city
hall and in public and conspicuous place in the barrio or district in
which
the real estate lies and ;by publication once a week for three (3)
weeks
in a newspaper of general circulation in the municipality or city where
the property is located. The advertisement shall contain a statement of
the amount of taxes and penalties so due and the time and place of
sale,
the name of the taxpayer against whom taxes are levied, and a short
description
of the property to be sold. At any time before the day fixed for the
sale,
the taxpayer may discontinue all proceedings by paying the taxes,
penalties
and interest. If he does not do so, the sale shall proceed and shall be
held either at the main entrance of the municipal building or city
hall,
or on the premises to be sold, as the officer conducting the
proceedings
shall determine and as the notice of sale shall specify.cralaw:red
Within five (5) days
after the sale, a return by the distraining or levying officer of the
proceedings
shall be entered upon the records of the Revenue Collection Officer,
the
Revenue District officer and the Revenue Regional Director. The Revenue
Collection Officer, in consultation with the Revenue district Officer,
shall then make out and deliver to the purchaser a certificate from his
records, showing the proceedings of the sale, describing the property
sold
stating the name of the purchaser and setting out the exact amount of
all
taxes, penalties and interest: Provided, however, That in case
the
proceeds of the sale exceeds the claim and cost of sale, the excess
shall
be turned over to the owner of the property.cralaw:red
The Revenue Collection
Officer, upon approval by the Revenue District Officer may, out of his
collection, advance an amount sufficient to defray the costs of
collection
by means of the summary remedies provided for in this Code, including
;the
preservation or transportation in case of personal property, and the
advertisement
and subsequent sale, both in cases of personal and real property
including
improvements found on the latter. In his monthly collection reports,
such
advances shall be reflected and supported by receipts.
SEC.
214. Redemption of Property Sold. - Within
one (1) year from the date of sale, the delinquent taxpayer, or any one
for him, shall have the right of paying to the Revenue District Officer
the amount of the public taxes, penalties, and interest thereon from
the
date of delinquency to the date of sale, together with interest on said
purchase price at the rate of fifteen percent (15%) per annum from the
date of purchase to the date of redemption, and such payment shall
entitle
the person paying to the delivery of the certificate issued to the
purchaser
and a certificate from the said Revenue District Officer that he has
thus
redeemed the property, and the Revenue District Officer shall forthwith
pay over to the purchaser the amount by which such property has thus
been
redeemed, and said property thereafter shall be free form the lien of
such
taxes and penalties.cralaw:red
The owner shall not,
however, be deprived of the possession of the said property and shall
be
entitled to the rents and other income thereof until the expiration of
the time allowed for its redemption.
SEC.
215. Forfeiture to Government for Want of Bidder. -
In case there is no bidder for real property exposed for sale as herein
above provided or if the highest bid is for an amount insufficient to
pay
the taxes, penalties and costs, the Internal Revenue Officer conducting
the sale shall declare the property forfeited to the Government in
satisfaction
of the claim in question and within two (2) days thereafter, shall make
a return of his proceedings and the forfeiture which shall be spread
upon
the records of his office. It shall be the duty of the Register of
Deeds
concerned, upon registration with his office of any such declaration of
forfeiture, to transfer the title of the property forfeited to the
Government
without the necessity of an order from a competent court.cralaw:red
Within one (1) year
from the date of such forfeiture, the taxpayer, or any one for him may
redeem said property by paying to the Commissioner or the latter's
Revenue
Collection Officer the full amount of the taxes and penalties, together
with interest thereon and the costs of sale, but if the property be not
thus redeemed, the forfeiture shall become absolute.
SEC.
216. Resale of Real Estate Taken for Taxes. -
The Commissioner shall have charge of any real estate obtained by the
Government
of the Philippines in payment or satisfaction of taxes, penalties or
costs
arising under this Code or in compromise or adjustment of any claim
therefore,
and said Commissioner may, upon the giving of not less than twenty (20)
days notice, sell and dispose of the same of public auction or with
prior
approval of the Secretary of Finance, dispose of the same at private
sale.
In either case, the proceeds of the sale shall be deposited with the
National
Treasury, and an accounting of the same shall rendered to the Chairman
of the Commission on Audit.
SEC.
217. Further Distraint or Levy. - The
remedy by distraint of personal property and levy on realty may be
repeated
if necessary until the full amount due, including all expenses, is
collected.
SEC.
218. Injunction not Available to Restrain Collection of Tax. -
No court shall have the authority to grant an injunction to restrain
the
collection of any national internal revenue tax, fee or charge imposed
by this Code.
SEC.
219. Nature and Extent of Tax Lien. -
If any person, corporation, partnership, joint-account (cuentas en
participacion),
association or insurance company liable to pay an internal revenue tax,
neglects or refuses to pay the same after demand, the amount shall be a
lien in favor of the Government of the Philippines from the time when
the
assessment was made by the Commissioner until paid, with interests,
penalties,
and costs that may accrue in addition thereto upon all property and
rights
to property belonging to the taxpayer: Provided, That this lien
shall not be valid against any mortgagee purchaser or judgment creditor
until notice of such lien shall be filed by the Commissioner in the
office
of the Register of Deeds of the province or city where the property of
the taxpayer is situated or located.
SEC.
220. Form and Mode of Proceeding in Actions Arising under this
Code.
- Civil
and criminal actions and proceedings instituted in behalf of the
Government
under the authority of this Code or other law enforced by the Bureau of
Internal Revenue shall be brought in the name of the Government of the
Philippines and shall be conducted by legal officers of the Bureau of
Internal
Revenue but no civil or criminal action for the recovery of taxes or
the
enforcement of any fine, penalty or forfeiture under this Code shall be
filed in court without the approval of the Commissioner.
SEC.
221. Remedy for Enforcement of Statutory Penal Provisions. - The
remedy for enforcement of statutory penalties of all sorts shall be by
criminal or civil action, as the particular situation may require,
subject
to the approval of the Commissioner.
SEC.
222. Exceptions as to Period of Limitation of Assessment and
Collection
of Taxes. -
(a) In the case
of a false or fraudulent return with intent to evade tax or of failure
to file a return, the tax may be assessed, or a proceeding in court for
the collection of such tax may be filed without assessment, at any time
within ten (10) years after the discovery of the falsity, fraud or
omission:
Provided, That in a fraud assessment which has become final and
executory,
the fact of fraud shall be judicially taken cognizance of in the civil
or criminal action for the collection thereof.
(b) If before
the expiration of the time prescribed in Section 203 for the assessment
of the tax, both the Commissioner and the taxpayer have agreed in
writing
to its assessment after such time, the tax may be assessed within the
period
agreed upon. The period so agreed upon may be extended by subsequent
written
agreement made before the expiration of the period previously agreed
upon.
(c) Any
internal
revenue tax which has been assessed within the period of limitation as
prescribed in paragraph (a) hereof may be collected by distraint or
levy
or by a proceeding in court within five (5) years following the
assessment
of the tax.
(d) Any
internal
revenue tax, which has been assessed within the period agreed upon as
provided
in paragraph (b) hereinabove, may be collected by distraint or levy or
by a proceeding in court within the period agreed upon in writing
before
the expiration of the five (5) -year period. The period so agreed upon
may be extended by subsequent written agreements made before the
expiration
of the period previously agreed upon.
(e) Provided,
however, That nothing in the immediately preceding and paragraph
(a)
hereof shall be construed to authorize the examination and
investigation
or inquiry into any tax return filed in accordance with the provisions
of any tax amnesty law or decree.
SEC.
223. Suspension of Running of Statute of Limitations. -
The running of the Statute of Limitations provided in Sections 203 and
222 on the making of assessment and the beginning of distraint or levy
a proceeding in court for collection, in respect of any deficiency,
shall
be suspended for the period during which the Commissioner is prohibited
from making the assessment or beginning distraint or levy or a
proceeding
in court and for sixty (60) days thereafter; when the taxpayer requests
for a reinvestigation which is granted by the Commissioner; when the
taxpayer
cannot be located in the address given by him in the return filed upon
which a tax is being assessed or collected: Provided, that, if
the
taxpayer informs the Commissioner of any change in address, the running
of the Statute of Limitations will not be suspended; when the warrant
of
distraint or levy is duly served upon the taxpayer, his authorized
representative,
or a member of his household with sufficient discretion, and no
property
could be located; and when the taxpayer is out of the Philippines.
SEC.
224. Remedy for Enforcement of Forfeitures. -The
forfeiture of chattels and removable fixtures of any sort shall be
enforced
by the seizure and sale, or destruction, of the specific forfeited
property.
The forfeiture of real property shall be enforced by a judgment of
condemnation
and sale in a legal action or proceeding, civil or criminal, as the
case
may require.
SEC.
225. When Property to be Sold or Destroyed. - Sales
of forfeited chattels and removable fixtures shall be effected, so far
as practicable, in the same manner and under the same conditions as the
public notice and the time and manner of sale as are prescribed for
sales
of personal property distrained for the non-payment of taxes.
Distilled spirits, liquors,
cigars, cigarettes, other manufactured products of tobacco, and all
apparatus
used I or about the illicit production of such articles may, upon
forfeiture,
be destroyed by order of the Commissioner, when the sale of the same
for
consumption or use would be injurious to public health or prejudicial
to
the enforcement of the law.cralaw:red
All other articles subject
to excise tax, which have been manufactured or removed in violation of
this Code, as well as dies for the printing or making of internal
revenue
stamps and labels which are in imitation of or purport to be lawful
stamps,
or labels may, upon forfeiture, be sold or destroyed in the discretion
of the Commissioner.cralaw:red
Forfeited property shall
not be destroyed until at least twenty (20) days after seizure.
SEC.
226. Disposition of funds Recovered in Legal Proceedings or
Obtained
from Forfeitures. - all
judgments and monies recovered and received for taxes, costs,
forfeitures,
fines and penalties shall be paid to the Commissioner or his authorized
deputies as the taxes themselves are required to be paid, and except as
specially provided, shall be accounted for and dealt with the same way.
SEC.
227. Satisfaction of Judgment Recovered Against any Internal
Revenue
Officer. -
When an action is brought against any Internal Revenue officer to
recover
damages by reason of any act done in the performance of official duty,
and the Commissioner is notified of such action in time to make defense
against the same, through the Solicitor General, any judgment, damages
or costs recovered in such action shall be satisfied by the
Commissioner,
upon approval of the Secretary of Finance, or if the same be paid by
the
person used shall be repaid or reimbursed to him.
No such judgment, damages,
or costs shall be paid or reimbursed in behalf of a person who has
acted
negligently or in bad faith, or with willful oppression.