TITLE VIII

TAX REMEDIES
Chapter 2 Remedies for Collection of Taxes
Sections 205 to 222

Section 205. Remedies for the

Collection of Delinquent Taxes

When Tax is considered

delinquent?
It is unpaid after the lapse of
the last day prescribed by law
for its payment.
An assessment for deficiency
tax has become final and
executor and demandable and
the taxpayer has not paid it
within the period given in the
notice of assessment.

When the government may avail of

the remedy of collection?

The government may avail

of the remedy of collection
when the assessment shall
become final, executor and
demandable.

Remedies of the BIR to

collect delinquent taxes
By

distraint

refers to the remedy whereby

the collection of delinquent taxes is enforced thru
seizure on the personal property, goods, chattels or
effects and other personal property of whatever
character of the taxpayer, including stocks and other
securities, debts, credits, bank accounts and interests
in and rights to personal property.

2 kinds of distraint of personal

property
Constructive distraint
Actual distraint

Remediesdelinquent taxes
By

Levy

By

court actions

Levy is a remedy resorted to by the

Government enforced on the real property belonging
to the delinquent taxpayer to collect delinquent.
for tax remedy
purposes, these are court actions instituted by the
Government to collect internal revenue taxes as
follows:
By filing a civil action for collection of a sum of
money with the proper regular court;
By filing a criminal action against the delinquent
taxpayer with the proper regular court; or
Both simultaneously

When civil remedies for the

collection of delinquent tax
resorted to by the Government?

When a tax is assessed and the assessment becomes final

and unappealable because the taxpayer fails to file an
administrative protest with the CIR within 30 days from
receipt of the Final Assessment Notice;

When a protest against assessment is filed and a decision

of the CIR was rendered but the said decision becomes
final, executory, and demandable for failure of the
taxpayer to appeal the decision to the CTA within 30 days
from receipt of the decision; or

When the protest is not acted upon by the CIR within 180
days from submission of documents and the taxpayer
failed to appeal with the CTA within 30 days from the lapse
of the 18day period.

Necessity of assessment in
case of civil actions
There

should, however, first be an

assessment, except in case of false
or fraudulent return with intent to
evade the tax or of a failure to file a
return.

The

taxpayers failure to appeal to

the CTA in due time makes the
assessment final, executory and
demandable

Why a criminal action

considered as a collection
remedy?
Impose
Order

the penalty;

the payment of taxes

subject of the criminal case as
finally decided by the CIR.

BIR is authorized to collect

estate tax deficiencies by
the summary remedy of levy
upon and sale of real
properties of the decedent
without first securing the
authority of the court sitting
in probate over the
supposed will of the
decedent.

BIR 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

Section 206.
Constructive Distraint
of the Property of a
Taxpayer

When a property of a
taxpayer may be placed
under constructive distraint?
The

taxpayer is retiring from any business

subject to tax; or
The taxpayer is intending to leave the
Philippines; or
The taxpayer is intending to remove his
property from the Philippines; or
The taxpayer is intending to hide or conceal his
property; or
The taxpayer is intending to perform any act
tending to obstruct the proceedings for
collecting the tax due or which may be due from

How to effect constructive

distraint?
By

requiring a taxpayer or any person in 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;

If

the taxpayer or person in possession or control of

the property sought to be placed under constructive
distraint refused to sign the receipt, the revenue
officer shall prepare a list of the property and leave a
copy of such list in the premises where the
properties are located, in the presence of two (2)
witnesses, after which the property shall be deemed
to have been placed under constructive distraint.

Section 207. Summary

Remedies

Actual Distraint of Personal

Property
Who

shall commence the

distraint proceedings?
The Commissioner or his duly
authorized representative, if the
amount involved is in excess of
Php1M; or
The RDO, if the amount involved is
Php1M or less.

How actual distraint of

personal property effected?
Upon

failure of the taxpayer to

pay the delinquent tax at the time
required by law;

Within

10 days from the receipt of

the warrant, a report on the
distraint shall be submitted by the
distraining officer to the RDO and
to the Regional Director.

Remedy of a taxpayer once the

Commissioner or other revenue
officer issue a warrant of
distraint
The taxpayer may request the
Commissioner that the warrant of
distraint be lifted.
The

Commissioner may allow

provided that a bond be posted as
a condition for the cancellation of
the warrant.

Levy of Real Property

What

should the notice of

levy contain?
Name of the taxpayer; and
Amounts of the tax and penalty due
from him.

How is levy effected?

by

writing upon said certificate the description of the

property upon which levy is made.
written notice of the levy shall be mailed to or served upon
the Register of Deeds of 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
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 30 days after the execution of the distraint.
Within 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.
The RD may also be required by the CIR to submit a
consolidated report as often as necessary.

Remedy of a taxpayer once the

Commissioner or other revenue
officer issues the warrant of levy
Taxpayer

may request the

Commissioner that the warrant of
levy shall be lifted. The
Commissioner or his duly
authorized representative may ,
in his discretion, allow the lifting
of the order of levy. He may
however ask for a bond as a
condition for the cancellation of

Rules on the Issuance of

Warrants of Distraint or Levy
Person

to issue the warrants of

distraint/garnishment and/or levy.
Upon the issuance of the CIR or its authorized
representative of the final decision on the disputed
assessment against the taxpayer or upon filing of a
Petition for Review before the CTA in Division or En
Banc of its decision upholding the assessment,
warrants of distraint and garnishment, and/or levy
shall forthwith be immediately issued and served
pursuant to the provisions of RMO39-2007 (prescribes
the issuance of warrants of distraint and garnishment,
and/or levy on disputed assessments finally decided
by the BIR against the taxpayer upheld by the CTA)
and other rules, regulations and issuance of the BIR
when applicable.

How a sheriff should effect a

levy upon real property?
File

with the Register of Deeds a

copy of the order, description of
the property attached and notice
of attachment; and

Leave

with the occupant of the

property copy of the same order,
description and notice.

BIR is authorized to
issue a warrant of
garnishment against
the bank account of a
taxpayer despite the
pendency of the
taxpayers protest.

Section 208.
Procedure for
Distraint and
Garnishment

Procedure for distraint and garnishment of

the different kinds of personal properties
Personal

Properties the distraining officer shall account the

personal property distrained by leaving a copy to the owner,
or at the dwelling or place of business of such person and
with someone of suitable age and discretion;
Stocks and securities these 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.
Debts and credits these shall be distrained by leaving with
the person owing the debts or having in his possession or
under his control such credits, or his agent, a copy of the
warrant of distraint.
Bank accounts these 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

Section 209. Sale of

Property Distrained
and Disposition of
Proceeds.

Requirement of notice
Notification

to be exhibited in not less

than 2 public places in the
municipality or city where the
distraint is made;
Time and place of sale and the articles
distrained specified
The time of sale shall not be less than
20 days after notice to the owner or
possessor of the property and the
publication or posting of such notice.

Rules governing sale at public auction

Sale

shall be made at the time and place fixed in such

notice;
Sale shall be conducted by the said revenue officer at
public auction, to the highest bidder for cash; or
In the case of shares of stock and other securities, sale
shall be conducted by a duly licensed commodity or
stock exchanges with the approval of the Commissioner.
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
preservation of the property pending the sale, and no
charge shall be imposed for the services of the revenue
officer or his deputy;
The officer making the sale shall make a written report of
the proceedings to the CIR within 2 days after the sale.

Section 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.
There shall be no right of
redemption in the case of sale
of personal property, only a
right of pre-emption.

Section 211. Report of

Sale to BIR

Within 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.

Section 212. Purchase

by Government at
Sale Upon Distraint

Not

equal to the amount of the

tax; or

Very

much less than the actual

market value of the articles
offered for sale;

Property

so purchased may be
resold by the Commissioner or his
deputy, and the net proceeds
therefrom shall be remitted to the

Section 213.
Advertisement and
Sale

Advertisement on the sale of

property should be made within
20 days after the levy, and the
same shall be for a period of at
least 30 days.

How the advertisement of sale

of property be effectuated?
Posting

a notice at the main

entrance of the municipal
building or city hall and in a
public and conspicuous place in
the barangay or district in which
the real estate lies;
Publication once a week for three
(3) consecutive weeks in a
newspaper of general circulation
in the municipality or city where

What the advertisement

should contain?
The

amount of tax and penalties due;

Time and place of sale;
Name of the taxpayer against whom
taxes are levied;
Short description of the property to be
sold.
**Right of pre-emption at any time before
the day fixed for the sale, the taxpayer
may discontinue all proceedings by paying
the taxes, penalties and interest.

Section 214.
Redemption of
Property Sold

Period of Redemption
Within

one year from the date of sale.

They shall have the right of paying to

the RDO the amount of the:
Public taxes;
Penalties;
Interest from the date of delinquency to the
date of sale; and
Interest on said purchase price at the rate
of 15% per annum from the date of sale to
the date of redemption.

Effects of redemption of
property sold
Such

payment shall entitle the person

paying to the delivery of the certificate
of sale issued to the purchaser and a
certificate from the said RDO that he
has thus redeemed the property; and
The RDO shall forthwith pay over to the
purchaser the amount by which such
property has thus been redeemed, and
said property thereafter shall be free
from the lien of such taxes and
penalties.

Rights of the owner during the

one-year period of redemption
During

the one-year period of

redemption, 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.

Section 215.
Forfeiture to
Government for Want
of Bidder

When real property may be

forfeited in favor of the
Government?
In case there is no bidder for real
property exposed for sale; or
If

the highest bid is for an

amount insufficient to pay the
taxes, penalties and costs.

When the Revenue Officer shall make a

return of the proceeding of forfeiture?
Within

2 days from the date of

forfeiture
Duty of the Register of Deeds
after the forfeiture proceedings
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.

Period of redemption
Within

one year from date of such

forfeiture, the taxpayer, or any one
for him, may redeem said real
property by paying to the
Commissioner or latters RCO the
following:
The full amount of the taxes and
penalties;
Interest due on the taxes and penalties;
and
Costs of sale

Effect when property is not

redeemed by the taxpayer
If

the property subject of the forfeiture is

not redeemed, the forfeiture shall become
absolute.
A Declaration of Absolute Forfeiture should
be prepared and registered with the
Register of Deeds and simultaneously a
request be made to transfer the title of the
property from the name of the taxpayer to
the Republic of the Philippines. It shall be
accomplished and duly registered with the
Register of Deeds of the place where the
property is located

Section 216. Resale

of Real Estate Taken
for Taxes

After

the registration of the

Deeds of Declaration of Absolute
Forfeiture of Real Property or
even after securing of title over
the same in favor of the Republic
of the Philippines, the same
property may still be disposed of
either at public or at private sale.

Procedure for the resale of

absolutely forfeited properties
Having

passed the one-year redemption

period shall be converted into cash from the
date of acquisition or forfeiture;
The sale of acquired/forfeited properties shall
be by sealed bids in a public auction;
Publication of Notice of Sale once a week for 2
consecutive weeks in a newspaper of general
circulation in the Philippines;
Minimum Bid Price/Floor Price shall be the
latest fair market value as determined by the
Commissioner or the FMV shown in the latest
Tax Declaration, whichever is higher;

Procedure for the resale of

absolutely forfeited properties
Anyone

could bid, (except foreign nationals,

corporate or otherwise) and those qualified under
existing laws, rules and regulations, including
employees of the BIR;
Bidders shall be required to post a bond in cash
or managers check in an amount representing
10% of the minimum bid price at least one day
before the scheduled public auction;
The winning bidder shall pay the full amount of
his bid cash or managers check within 2 days
after receipt of notice of award;
All taxes and expenses relative to the issuance of
title shall be borne by the winning bidder;

Procedure for the resale of

absolutely forfeited properties
The

winning bidder shall be responsible at his

own expense for the ejectment of squatters
and/or occupants, if any, of the auctioned
property;
Negotiated or private sale shall be resorted to as
a consequence of failed public bidding for 2
consecutive times;
Negotiated or private sale shall in all cases be
approved by the Secretary of Finance;
Public auction sale shall be approved by the
Commissioner or his authorized representative;
The Government reserves the right to reject or
cancel any or all bids.

Section 217. Further

Distraint or Levy

The remedy by distraint of

personal property and levy on
realty maybe repeated if
necessary until the full amount
due, including all expenses, is
collected.

Section 218.
Injunction not
Available to Restrain
Collection

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.
Rationale of Section 218
Taxes being the lifeblood of the
government should be collected promptly.
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 the NIRC.

Except:

Court of Tax Appeals. CTA shall have the

authority to grant an injunction to restrain the
collection of any national internal revenue tax, fee
or charge imposed by the TAX CODE.

When:
There

is an appeal to the CTA from a decision of the

CIR;
In the opinion of the CTA, the collection may
jeopardize the interest of the Government and/or
the taxpayer;
The taxpayer may be required to deposit the
amount claimed or to file a surety bond for not
more than double the amount with the Court.

Section 219. Nature

and Extent of Tax Lien

Tax Lien
Tax

lien denotes a legal claim or

charge on property, whether real or
personal, as security for the payment of
some debt or obligation.
Lien attaches from time of assessment
(not only from service of Warrant of
Distraint or Lien) until paid
Lien on real property is not valid against
mortgagee, purchaser, or judgment
creditor until it is filed with Register of
Deeds (Sec. 219, NIRC)

Collection remedies of the Government

in a case where the estate had already
been distributed to the heirs

Sue

all the heirs and collect from

each of them the amount of tax
proportionate to the inheritance
received;
By virtue of the lien created
under Section 219, sue only one
heir and subject the property he
received from the estate to the
payment of the estate tax.

Section 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

They

shall be conducted by legal officers of the

Bureau of Internal Revenue

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.

Who has the obligation to determine

the existence of tax fraud for the
imposition of criminal penalties?
The

determination of the
existence of a tax fraud for the
imposition of the criminal
penalties rests solely upon the
Judiciary Branch of the
Government where the RTC has
exclusive original jurisdiction.

Jurisdiction of the Courts

Civil
Cases

Criminal
Cases

Principal Amount of
Taxes (exclusive of
charges and
penalties)

Court

Tax Court of Tax Appeals

Php1M and above

RTC, MeTC, MTC, as the Less than Php1M

case may be
Tax Court of Tax Appeals

Php1M and above

RTC, MeTC, MTC, as the Less than Php1M or if no

case may be
specified amount claimed

What should be imposed in the

judgment in a criminal case?
The

judgment in the criminal

case shall not only impose the
penalty but shall also order the
payment of taxes subject of the
criminal case as finally decided
by the CIR.

Section 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.

End of Report