BIR Ruling

August 21, 1973 MEMORANDUM FOR: Revenue Operations Head (Collection) This refers to your Memorandum dated August 20, 1973 requesting a ruling whether a warrant of distraint and levy issued after the expiration of the six-month period from the date of assessment, as required by Section 318 of the Tax Code, as amended by Republic Act No. 5203, is still valid for the purpose of enforcing the collection of the tax. Said provision reads as follows: "Upon the failure of the person owing any delinquent tax or delinquent revenue to pay the same, at the time required, the Revenue District Officer, if the amount involved does not exceed five thousand pesos; the Revenue Regional Director, if the amount involved is more than five thousand pesos but does not exceed twenty thousand pesos; and the Commissioner of Internal Revenue, if the amount involved exceeds twenty thousand pesos shall seize and distrain not earlier than three months nor later than six months from receipt of demand , any goods, chattels or effects, and the personal property, including stocks and other securities, debts, credits, bank accounts, and interest in any rights to personal property, of such person 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." (Emphasis supplied). The warrant of distraint and levy issued after the six-month period prescribed under the above-quoted provision, is still valid and can be executed to enforce collection of the tax, provided that the prescriptive period for collection prescribed by Section 332(c) has not as yet expired. The foregoing is the stand taken by this Office in the case of "Republic of the Philippines vs. Hon. Wenceslao M. Ortega, Judge of the Court of First Instance of Manila, Branch VIII, and William Li Yao, G.R. No. L-33538, which is still pending decision in the Supreme Court on its merits. In this case, the facts show that the warrants of garnishment issued by this Office were declared null and void by the lower L-33538, which is still pending decision in the Supreme Court on its merits. In this case, the facts show that the warrants of garnishment issued by this Office were declared null and void by the lower court, it appearing that said warrants were issued beyond the six-month period provided for in the above-quoted provision. A motion for reconsideration having been denied this Office elevated the case to the Supreme Court. Thereafter the Supreme Court issued a "Temporary Restraining Order" restraining the lower court from executing, enforcing or implementing its order which declared the warrants null and void and prohibited the Commissioner of Internal Revenue from enforcing the same. As a consequence of this order of the Supreme Court, this Office requested that Department to immediately enforce the warrants of garnishment issued in the said case for collection of the income taxes assessed against the taxpayer, Mr. Li Yao. One reason advance by this Office to support the foregoing stand is that Republic Act No. 5203, amending Section 318 of the Tax Code, did not repeal Section 332(c) thereof, for the former deals exclusively with procedures and has no bearing whatsoever to the prescriptive period. This is clearly evident from the intention of Congress in providing for the period, which is to facilitate and expedite the efficient collection of delinquent taxes. Another reason is that the amendment providing for the six-month period only delineated and decentralized the administrative duties of the Revenue District Officer, Revenue Regional Director, and Commissioner of Internal Revenue and non-compliance therewith does not result in prescription of the government's right to collect taxes by summary remedies. aisadc However, for failure to exercise their duties under the above-quoted provision, the above-named officers are subject to disciplinary action under Section 324-A of the Tax Code, which provides: "SEC. 324-A. Penalty for failure to issue and execute warrant . Any official who fail to issue or execute the warrant of distraint or levy with thirty days after the expiration of the time prescribed in Sections three hundred eighteen and three hundred twenty-four or who is found guilty of abusing the exercise thereof by competent authority shall be automatically dismissed from the service after due notice and hearing. (Inserted by Sec. 3, Republic Act No. 5203.) cdt Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue "TAXPAYERS SHOULD INDICATE THEIR TAN IN ALL COMMUNICATIONS TO THE BIR."