Collection/Remedies

of the Government
Angulo, Margarette B.
 4 ways of collecting tax

Distraint Levy Criminal Civil

Action Action
 Period to Collect

Years from Years after discovery

Assessment of Falsity, Fraud or
Failure to file
Judgement in Criminal Case

Imposes criminal penalty

Orders payment of tax

 CIR v. Hambrecht
G.R. No. 169225

Hambrecht received a demand for payment of alleged

deficiency income and expanded withholding taxes.
More than 30 days later, Hambrecht filed a protest.
About 8 years later, the protest was denied. CIR made
another demand for payment of taxes

There were no other efforts for collection made by CIR

 CIR v. Hambrecht
G.R. No. 169225

The mere filing of a protest letter which is not

granted does not operate to suspend the running of
the period to collect taxes.

It is evident that the respondent did not conduct a reinvestigation, the protest

having been dismissed on the ground that the assessment has become final
and executory.
 CIR v. Hambrecht
G.R. No. 169225

Any internal revenue tax which has been assessed

within the period of limitation above-prescribed may
be collected by distraint or levy or by a proceeding in
court within three years following the assessment of
the tax.

 CIR v. Hambrecht
G.R. No. 169225

Because the CIR failed to collect during the

prescriptive period, the assessment was directed to be
cancelled and withdrawn
 Republic v. Hizon
GR 130430

Respondent was validly served warrants of

distraint and levy
Court did not proceed with the distraint and levy

8 years later, a complaint was filed for the collection of

tax deficiency. Complaint was not signed by CIR.
 Republic v. Hizon
GR 130430

The NIRC does not allow delegation for filing of

collection of tax deficiency

Our holding, however, is without prejudice to the

disposition of the properties covered by the warrants of
distraint and levy which petitioner served on respondent
since warrants were timely and

regularly instituted.
Distraint of Personal Property
Includes
the tax, or charge, interest and surcharges, and the expenses of
the distraint and the cost of the subsequent sale.

Who issues warrant?

Commissioner Revenue District Officer

More than 1,000,000 Up to 1,000,000

Distraint of Personal Property

may be repeated
As often as necessary until the satisfaction of the tax due
Distraint of Personal Property
How effected
Generally,

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.
Distraint of Personal Property
How effected
Stocks and securities
served 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

Copy of warrant is served to the person owing the debts.
The debtor will then pay the Commissioner the amount of such debts instead off to the
TP
Distraint of Personal Property
How effected
Bank Accounts
a warrant of garnishment is served upon the taxpayer and upon the president, manager,
treasurer or other responsible officer of the bank.

the bank shall turn over to the Commissioner so much of the bank accounts as may be
sufficient to satisfy the claim of the Government.
Sale of Property Distrained
How effected
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.

time of sale shall not be less than twenty (20) days

shall be sold to the highest bidder for cash

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.
Sale of Property Distrained
How effected
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.
Constructive Distraint
Cases when applicable (RR 05-01)
TP applies for retirement of business and has tax assessment pending (equal to or
bigger than net worth of taxpayer)
TP has a habit of leaving PH at least twice a year unless justified
TP is under investigation and has a record of transferring bank deposits or valuable
properties in any foreign country.
TP uses aliases in bank accounts
TP keeps bank deposits and properties under the name of other persons that are not
related to him or has no fiduciary relationship with him
TP's big amount of undeclared income is known to public and BIR through credible
means, and TP has great tendency to conceal his properties. (big amount is more
than 30% of gross sales, receipts, or revenue declared)
BIR receives complaint of undeclared big income
Constructive Distraint
Disallows the owner from disposing or altering of the personal property except with
the express authority of the Commissioner
To safeguard the interest of the government

How done?
"The easy way" "The hard way"

Revenue officer prepares a list of the property

Taxpayer or person with control of property to be distrained.
signs a receipt covering the property Two (2) witnesses sign the list.
distrained. A copy thereof is left in the premises where the
property distrained is located.
Constructive Distraint

Who can conduct?

Commissioner or anyone delegated by the
Commissioner by specific orders
Levy of Real Property

Includes
the tax, or charge, interest and surcharges, and the expenses of
the levy and the cost of the subsequent sale.

May be issued before, simultaneously or after distraint

If issued after distraint

must be made within 30 days
Levy of Real Property

Procedure
1. Representative shall prepare a duly authenticated certificate showing the name of the
taxpayer and the amounts of the tax and penalty due from him
2. Rep writes on certificate a description of the property upon which levy is made.
3. 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 (if he be absent from the Philippines, to his agent or the manager, or the
occupant of the property in question.)
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.

Advertisement and Sale

How effected
1. Notice posted 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
2. 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
3. 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
Advertisement and Sale
How effected
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.
Redemption
How effected
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
Redemption
How effected
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 from the lien of such taxes and penalties.
Redemption
How effected
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.

If being rented, the purchaser still earns the rents up to 1 year from the
date of sale
He may still possess such property until 1 year from the date of sale
Forfeiture
Foreiture
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
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.
cases
Tax Lien
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.
cases
Injunction not Available to
Restrain Collection of Tax

No Injunction
No suspension of collection of tax, except as herein prescribed. – No appeal
taken to the Court shall suspend the payment, levy, distraint, or sale of any
property of the taxpayer for the satisfaction of his tax liability as provided
under existing laws, except as hereinafter prescribed.

EXCEPT by the CTA with prior hearing

Exceptions
(cases)
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