Nature and extent of tax lien.
SEC. 315. Nature and extent of tax lien. — Every internal-revenue tax on property or on any business or occupation, and every tax on resources and receipts, and any increment to any of them incident to delinquency, shall constitute a lien superior to all other charges or liens not only on the property itself upon which such tax may be imposed but also upon the property used in any costs that may accrue in addition thereto upon all property and rights to property belonging to the taxpayer business or occupation upon which the tax is imposed and upon all property rights therein.
The estate tax shall be a lien for five years upon the gross estate of the decedent from the date the tax becomes legally due. The lien of the tax on inheritances, legacies, and other acquisitions mortis causa shall be superior to all other liens, mortgages, encumbrances, or real right created thereon subsequent to the death of the predecessor, and shall be enforceable against the property inherited whether in the possession of the delinquent owner or purchaser, but this lien will be extinguished at the end of five years from the date when the tax becomes legally due.
The tax on gifts shall be a lien upon all gifts made during the calendar year, for five years from the time the tax becomes legally due. If the tax is not paid when due the taxpayer (donor or donee) shall be personally liable for such tax to the extent of the value of such gift. Any part of the property comprised in the gift sold by the donee to a bona fide purchaser for an adequate and full consideration in money or money's worth shall be divested of the lien herein imposed and the lien, to the extent of the value of such gift, shall attach to all the property of the taxpayer (donor or donee), including after-acquired property, except any part sold to a bona fide purchaser for an adequate and full consideration in money or money's worth.
If any person, corporation, partnership, joint-account (cuenta en participacion), association, or insurance company liable to pay the income 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 Collector of Internal Revenue until paid, with interest, penalties, and 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 Collector in the office of the register of deeds of the province or city where the property of the taxpayer is situated or located.
Civil remedies for the collection of delinquent taxes.
SEC. 316. Civil 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 or rights to real property; and (b) by judicial action. Either of these remedies or both simultaneously may be pursued in the discretion of the authorities charged with the collection of such taxes.
No exemption shall be allowed against the internal-revenue taxes in any case.
Constructive distraint of the property of a taxpayer.
SEC. 317. Constructive distraint of the property of a taxpayer. — To safeguard the interest of the Government, the Collector of Internal Revenue 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 intends to leave the Philippines, or remove his property therefrom, or hide or conceal his property, or 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 effected 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 in- tact and unaltered and not to dispose of the same in any manner whatever without the express authority of the Collector of Internal Revenue. 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 witnesses 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.
Distraint of personal property.
SEC. 318. Distraint of personal property. — The remedy by distraint shall proceed as follows: Upon the failure of the person owing any delinquent tax or delinquent revenue to pay the same, at the time required, the Collector of Internal Revenue or his deputy may seize and distrain any goods, chattels, or effects, and other personal property, including stocks and other securities, debts, credits, bank accounts, and interest in and 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.
Mode of procedure.
SEC. 319. Mode of procedure. — The officer levying the 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 some one 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. 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.
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 owing the debts or having in his possession or under his control any credits belonging to the taxpayer to pay to the Collector of Internal Revenue the amount of such debts or credits.
Bank accounts shall be distrained by serving a warrant of distraint upon the taxpayer and upon the president manager, treasurer, or other responsible officer of the bank. Upon receipt of the warrant of distraint, the bank shall turn over to the Collector of Internal Revenue so much of the bank accounts as may be sufficient to satisfy the claim of the government.
Sale of property distrained and disposition of proceeds.
SEC. 320. Sale of property distrained and disposition of proceeds. — The officer levying the distraint shall forthwith cause a notification to be exhibited in not less than two 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 days after notice to the owner or possessor of the property as above specified and the publication or posting of such 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. At the time and place fixed in such notice the said 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 Collector of Internal Revenue, through duly licensed produce or stock exchanges. In the case of stocks and other securities, the officer making the sale shall execute a bill of sale which he will 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.
Any residue over and above what is required to pay the entire claim, including expenses, shall be retained to the owner of the property sold. The expenses chargeable upon such seizure and sale shall embrace only the actual expense of seizure and preservation of the property pending the sale, and no charge shall be imposed for the service of the local internal-revenue officer or his deputy.
Release of distrained property upon payment prior to sale.
SEC. 321. 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
SEC. 322. Report of sale to Bureau of Internal Revenue.-Within two days after the sale the officer making the same shall make a report of his proceedings in writing to the Collector of Internal Revenue and shall himself preserve a copy of such report as an official record.
Purchase by Government at sale upon distraint.
SEC. 323. 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 Collector of Internal Revenue or his deputy may purchase the same in behalf of the National Government for the amount of taxes, penalties, and costs due thereon.
Property so purchased may be resold by the Collector of Internal Revenue or his deputy, subject to the regulations of the Department of Finance, the net proceeds to be covered into the National Treasury and accounted for as internal revenue.
Levy on real estate.
SEC. 324. Levy on real estate. — 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 Collector of Internal Revenue 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. Levy shall be effected 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 delinquent 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 such, to the occupant of the property in question.
Advertisement and sale.
SEC. 325. Advertisement and sale. — Within twenty days after levy the officer conducting the proceedings shall proceed to advertise the property or so much thereof as may be necessary to satisfy the claim and costs of sale; and such advertisement shall cover a period of at least thirty days. It shall be effectuated by posting a notice at the main entrance of the municipal building or city hall and in a public and conspicuous place in the barrio or district in which the real estate lies, and by publication once a week for three weeks in a newspaper of general circulation published in the municipality or city where the property is located, if there be such newspaper. 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 the 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.
Within five days after the sale a return of the proceedings shall be entered upon the records of the provincial or city treasurer; and the provincial or city treasurer 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 public taxes, penalties, and interest.
Redemption of property sold.
SEC. 326. Redemption of property sold. — Within one year from the date of sale the delinquent taxpayer, or any one for him, shall have the right of paying to the provincial or city treasurer 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 per centum 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 treasurer that he has redeemed the property, and the treasurer 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.
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.
Final deed to purchaser.
SEC. 327. Final deed to purchaser. — In case the taxpayer shall not redeem the property as above provided, the provincial or city treasurer shall, as grantor, execute a deed conveying to the purchaser so much of the property as has been sold, free from all liens of any kind whatsoever, and the deed shall succinctly recite all the proceedings upon which the validity of the sale depends.
SEC. 328. Forfeiture to Government for want of bidder.-In case there is no bidder for real property exposed for sale as hereinabove provided or if the highest bid is for an amount insufficient to pay the taxes, penalties, and costs, the provincial or city treasurer shall declare the property forfeited to the Government in satisfaction of the claim in question and within two days thereafter shall make a return of his proceedings and the forfeiture, which shall be spread upon the records of his office.
Within ore year from the date of such forfeiture the taxpayer, or any one for him, may redeem said property by paying to the provincial or city treasurer 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.
Resale of real estate taken for taxes.
SEC. 329. Resale of real estate taken for taxes. — The Collector of Internal Revenue 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 therefor; and said Collector may upon the giving of not less than twenty days' notice sell and dispose or the same at public auction, or, with the prior approval of the Department Head, may dispose of the same at private sale. In either case the proceeds of the sale shall be deposited in the National Treasury, and an account of the same shall be rendered to the Auditor General.
Further distraint or levy.
SEC. 330. Further distraint or levy. — The remedy by distraint of personal property and levy on real property may be repeated if necessary until the full amount due, including all expenses, is collected.
Period of limitation upon assessment and collection.
SEC. 331. Period of limitation upon assessment and collection. — Except as provided in the succeeding section, internal-revenue taxes shall be assessed within five years after the return was filed, and no proceeding in court without assessment for the collection of such taxes shall be begun after the expiration of such period. For the purposes of this section a return filed before the last day prescribed by law for the filing thereof shall be considered as filed on such last day: Provided, That this limitation shall not apply to cases already investigated prior to the approval of this Code.
Exceptions as to period of limitation of assessment and collection of taxes.
SEC. 332. 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 a failure to file a return, the tax may be assessed, or a proceeding in court for the collection of such tax may be begun without assessment, at any time within ten years after the discovery of the falsity, fraud or omission
(b) Where before the expiration of the time prescribed in the preceding section for the assessment of the tax, both the Collector of Internal Revenue and the taxpayer have consented in writing to its assessment after such time, the tax may be assessed at any time prior to the expiration of the period agreed upon. The period so agreed upon may be extended by subsequent agreements in writing made before the expiration of the period previously agreed upon.
(c) Where the assessment of any internal-revenue tax has been made within the period of limitation above prescribed such tax may be collected by distraint or levy or by a proceeding in court, but only if begun (1) within five years after the assessment of the tax, or (2) prior to the expiration of any period for collection agreed upon in writing by the Collector of Internal Revenue and the taxpayer before the expiration of such five-year period. The period so agreed upon may be extended by subsequent agreements in writing made before the expiration of the period previously agreed upon.
Suspension of running of statute.
SEC. 333. Suspension of running of statute. — The running of the statute of limitations provided in section 331 or 332 on the making of assessments and the beginning of distraint or levy or a proceeding in court for collection, in respect of any deficiency, shall be suspended for the period during which the Collector of Internal Revenue is prohibited from making the assessment or beginning distraint or levy or a proceeding in court, and for sixty days thereafter.
Source: Official Gazette of the Republic of the Philippines — Philippine laws are public documents (works of the government).
