BIR Ruling

September 10, 1968 MEMORANDUM FOR: The Chief, Tax Accounts Division This refers to your letter dated August 15, 1968 wherein you posed the following: "1) Does the limitation on the period within which the Commissioner can enforce collection by distraint as prescribed by Section 318 of the Tax Code, as amended by Republic Act No. 5204, apply also to levy on real properties? "2) Section 318 of the Tax Code, as amended by Republic Act No. 5204, directs the Commissioner of Internal Revenue to "seize and distrain not earlier than three months nor later than six months from receipt of demand, any goods, chatels . . ." Does this phrase mean that the warrant of distraint be fully executed, i.e., the personal properties should be sold and disposed of in accordance with Section 320 of the Tax Code, within the period prescribed in Section 318? "3) Does 318 amend pro tanto the period of limitation prescribed in Sections 331 and 332(c)? "4) May we still issue and execute warrants of Distraint for the collection of assessments received by Taxpayers six months before the effectivity of Republic Act No. 5204 or earlier?" In reply, you are informed that: (1) The limitation on the period within which the Commissioner should enforce collection by distraint as prescribed by Section 318 of the Tax Code, as amended by Republic Act No. 5204, does not apply to levy on real properties. (2) The remedy of distraint consist of the seizure and sale of personal properties of the taxpayer. It is this very act of seizure which the amendment enjoins to be done not later than six months from the date of delinquency. A warrant of distraint is purely the authority given by the Commissioner (now including directors and district officers) to an internal revenue officer to effect the seizure and sale. Therefore, when the Commissioner, director, or district officer as the case may be had issued the warrant within the period prescribed, they shall have complied with the requirement of the amendment and, therefore, the obligation to comply rests with the internal revenue officer to whom the warrant was addressed. The warrant is nothing unless executed. The execution consists of the seizure and sale of personal properties belonging to the taxpayer the obligation of locating which then devolving upon the designated internal revenue officer. The obligation to locate, seize, and sell personal properties of the taxpayer starts from receipt by the designated internal revenue officer of the warrant. Of course the location, seizure, and sale may not be accomplished before the lapse of the sixth month, but then no violation is committed provided that positive action was actually taken by the internal revenue officer concerned to that end. If execution was not accomplished within the required period, the proceeding may continue with the 5-year period prescribed by Section 332(c) of the Tax Code. It is of course understood that if the remedy of distraint should fail or appears to be unavailable in view of lack of personal properties of the taxpayer, the levy of real properties of the taxpayer, if any is located, may be availed of immediately. (3) Section 318 does not amend the period of limitation prescribed in Sections 331 and 332(c). (4) Warrants of Distraint for the collection of assessments received by taxpayers six months before the effectivity of Republic Act No. 5204 or earlier may still be issued and executed. adc (SGD.) MISAEL P. VERA Commissioner of Internal Revenue