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CM 305.2 - NOTICE OF TAX LIEN (NTL)

Upon issuance of the WDL, the Revenue Officer/Seizure Agent shall immediately proceed in identifying the specific properties and deposit accounts/assets owned by and in the name of the taxpayer which shall be levied, forfeited, seized or garnished in favor of the government.

The amount of the unpaid tax, after the demand has been made, shall be a lien in favor of the Government of the Philippines from the time when the assessment was made until the same is paid, with delinquency increments and all the costs that may accrue in addition thereto upon all properties and rights to properties belonging to the taxpayer. In order to validate the legal claim or charge by the government on the property of the taxpayer, as security for the payment of his tax liability, a Notice of Tax Lien (NTL) shall be filed by the BIR with the Register of Deeds of the city/municipality or province, Municipal/City or the Provincial Assessor’s Office, in case of untitled properties, where the property is located.[1]

CM 305.2.1         PREPRATION AND FILING OF THE NTL [Refer to FC 305.2.1]

Procedures in the Preparation and Filing of the NTL

The Revenue Officer/Seizure Agent shall:

  1. Prepare a written request to the concerned Register of Deeds and/or the Assessor’s Office for information on the taxpayer’s property holdings, for signature by the head of office;
  2. Receive the formal reply from the Register of Deeds and/or the Assessor’s Office

               2.1.        If the taxpayer has real property:

2.1.1.     Secure a certified copy of the Original Certificate of Title (OCT)/Transfer Certificate of Title (TCT)/Condominium Certificate of Title (CCT)/Tax Declaration (TD) for untitled properties, for the purpose of issuance and filing of the appropriate Notice of Tax Lien (NTL);

2.1.2.     Accomplish the NTL form (Annex 300-1.30), correctly specifying the OCT/TCT/CCT/TD number and other pertinent descriptions of the property as appearing on the title or tax declaration, in case of untitled property;

2.1.3.     Forward the duly accomplished NTL to the authorized officer for signature;

2.1.4.     File the signed NTL with the Register of Deeds/Assessor’s Office of the municipality, city or province where the property of the taxpayer is located in order to validate/establish the legal claim or charge of the government on the said property of the taxpayer against any mortgagee, purchaser, or judgement creditor. Make sure that the receiving officer of the Office where the NTL was filed will indicate the date and time of receipt thereof on all copies of the said NTL;

2.1.5.     Have the lien annotated on the OCT/TCT/CCT/TD in favor of the government;

2.1.6.     Secure a certified true copy of the annotated OCT/TCT/CCT/TD and attach the same to the docket of the case;

2.1.7.     Provide the taxpayer with a copy of the NTL and a photocopy of the duly annotated OCT/TCT/CCT/TD. This will serve as information to the taxpayer that the NTL has been registered in the Registry Book of the Register of Deeds/Assessor’s Office where the property of the taxpayer is located, and that the same was likewise annotated at the back of the original copy of their OCT/TCT/CCT/TD;

2.1.8.     If the taxpayer fails to pay the outstanding tax liabilities after receiving the filed NTL, refer to CM 305.8 Levy on Real Property. The Notice of Levy shall be filed with the same Register of Deeds/Assessor’s Office simultaneously or immediately after the filing and registration of the NTL; and

2.1.9.     Attach the remaining copy of the NTL to the docket of the case for records purposes.

               2.2.        If the taxpayer has no real property:

2.2.1.     Secure a certification of “No Property Holdings” from the Municipal City/Provincial Assessor and Municipal/City/Provincial Register of Deeds and attach the same to the case docket;

2.2.2.     Prepare a memorandum to the Regional Legal Division/Prosecution Division for the signature of the Regional Director/ACIR-LTS recommending the appropriate legal action for taxpayers that can be located but with no property holding/s, for their appropriate action;

2.2.3.     Recommend, through a memorandum to the Revenue District Officer/LTDO/LTCED the write-off/cancellation or suspension, of the case in view of the following reasons:

               -              Taxpayer is already dead without distrainable and leviable property;

               -              Taxpayer has ceased its business operations;

-              Taxpayer is over 65 years old, is jobless, not earning any passive income, and without any pending claim on any property or asset such as undivided shares in inheritance, uncollected receivables from whatever source, etc.;

-              Taxpayer is serving life imprisonment without distrainable or leviable property and deriving no income from whatever source;

-              Taxpayer is declared insolvent by the court or is found to be incapable of earning a living upon verification, without distrainable or leviable property.

-              Taxpayer is suffering from lingering illness and not capable of earning a living, without distrainable or leviable property.

-              Taxpayer is an individual and his/her whereabouts is unknown, without distrainable or leviable property.

-              Taxpayer is abroad and there are indications that he/she is not returning to the country, leaving no forwarding address and with no distrainable and leviable property.

-              In case of a corporation which is already dissolved and all subscribed shares of stock have been fully paid, without prejudice from the filing of any criminal charges against the responsible officials of the corporation for non-payment of the tax.

2.2.4.     Fill-up the Fieldman’s Affidavit of Uncollected Taxes (Annexes 300-1.7/1.8) for every case that is recommended for write-off/cancellation or suspension.[2]

2.2.5.     Attach the affidavit to the case docket together with the analysis sheet and prepare the memorandum bearing the appropriate recommendation on the uncollected receivables stating therein the reasons why the same should be written-off/cancelled or suspended; and

2.2.6.     Submit the case docket together with the recommendation to the Regional Director/ACIR, LTS, CIR, as the case may be, for review, evaluation, and approval/disapproval.

The Regional Director/ACIR-LTS shall:

  1. Evaluate the recommendation submitted by the Revenue Officer/Seizure Agent, thru the RDO/LTDO/LTCED, on the institution of legal action against the taxpayer and/or the write-off/cancellation/suspension of the uncollectible accounts;
  2. Approve/Disapprove the recommendations made by the RDO/LTDO/LTCED;
  3. Transmit the docket of the case to the Regional Legal Division/Prosecution Division recommending legal action for taxpayers that can be located but with no property holding/s; and
  4. Forward the case docket bearing on the write-off/cancellation/suspension of the accounts to the appropriate office:

4.1.        If approved for inclusion in suspense file, forward to the Regional Collection Division for safekeeping;

4.2.        If approved for write-off/cancellation, forward to the Office of the Commissioner, for review and approval; and

4.3.        If disapproved, return to the RDO/LTDO/LTCED for continuance of collection enforcement.

The Commissioner shall:

  1. Evaluate the recommendation for write-off/cancellation of the taxpayer’s tax liabilities;
  2. Affix signature on the memorandum bearing on the recommendation for write-off/cancellation of the case:

               2.1.        If approved, return the case docket to the RDO/LTDO/LTED for Issuance of ATCA; and

2.2.        If disapproved, return the docket of the case to the RDO/LTDO/LTCED for continuance of collection enforcement.

CM 305.2.2.        LIFTING OF NTL/NOTICE OF LEVY (NOL) [Refer to FC 305.2.2]

The tax lien may be extinguished under any of the following instances:

  1. Full payment made by the taxpayer of the unpaid tax liabilities, including all the applicable delinquency penalties due thereon;
  2. Approval and full payment of the taxpayer’s offer for compromise settlement or abatement of penalties;
  3. Full or partial cancellation of the original assessment as a result of reinvestigation or reconsideration of the assessment; and the revised assessment, if any, was already paid in full by the taxpayer, and the corresponding ATCA on the cancelled assessment has been issued by the concerned reinvestigating office;
  4. Prescription of the Bureau’s right to assess and/or collect the unpaid tax liabilities under the Statute of Limitations;
  5. The taxpayer has made an escrow account with any commercial bank, in favor of the BIR in the amount not less than his/her/its tax liability, including the increments incident to delinquency, or has filed a surety bond with an accredited surety company for an amount not less than double the amount of his/her/its outstanding tax liability;[3]
  6. Full destruction of the property subject to the lien;
  7. The competent court has issued a final and executory order for the lifting thereof; and
  8. Under other meritorious cases, provided the interest of the government is not jeopardized and upon prior approval of the Commissioner.

However, a tax lien on real property could not be extinguished if the destruction was limited to improvements (buildings, etc.) thereon, and there is still real market value for the land itself. A thorough determination must first be made as to the extent of the destruction and the resulting value that was placed on the property before considering the lifting of the lien.

To effect the lifting the NTL or the NOL, the Bureau shall issue a lifting order to the concerned office where the NTL or NOL was previously served indicating therein the reason for the lifting thereof, and requesting the Register of Deeds/Assessor’s Office to cancel the annotation of the NTL/NOL on the pertinent title/tax declaration.

Procedures in Lifting the NTL/NOL

The Revenue Officer shall:

  1. Check compliance with the conditions for the lifting of the NTL/NOL:

1.1.        Check with ITS CBR/TAS to confirm the tax payment or request certification of payment from the Regional Finance Division, if the payment is made through the Revenue Official Receipt (ROR), in case the unpaid tax liability has been fully settled by the taxpayer;

1.2.        Require the taxpayer to pay the approved amount of compromise settlement or the unabated balance of the imposed penalties. Check/confirm actual payment in accordance with the immediately preceding paragraph;

1.3.        Verify if the outstanding tax liabilities of the taxpayer covered by a protested case has already been fully settled. Confirm the closure and payment of the case, in case the same was favorably acted upon by the reinvestigating office and the corresponding report thereon has been finally approved by the duly authorized official;

1.4.        Check the validity/sufficiency of escrow deposits or coverage of surety bond with the bank or bonding company, respectively, in case the taxpayer has made as escrow deposit in favor of the BIR corresponding to the amount of his/her/its tax liability, including the increments incident to delinquency, or filed a surety bond with an accredited surety company for not less than double the amount of his/her/its outstanding tax liability;

1.5.        Secure a copy of the ATCA issued by the Legal Service cancelling the unpaid tax liabilities of the taxpayer on account of prescription of the BIR’s right to assess and/or collect;[4]

1.6.        Secure copy of the approved report of re-investigation/reconsideration, copy of issued ATCA and proof of full payment of the revised assessment, in case the tax liability arose from a tax case that was subjected to re-investigation/ reconsideration. The validation of the submitted proof of payment shall be made with the BIR ITS, in accordance with the procedure under Item 1.1.1 above; and

1.7.        Require the taxpayer to submit an updated appraisal of the property by the Assessor’s Office to determine if the resulting value placed on the property on account of the destruction will no longer satisfy the tax liabilities of the taxpayer, in case of physical destruction of the property subject of the tax lien.

  1. Prepare letter on the Lifting of the Notice of Tax Lien/NOL (Annex 300-1.31) and have it signed by the duly authorized signatory:

2.1.        Address the form letter to the Register of Deeds, or the Assessor’s Office in case the real property is untitled and is only covered by a Tax Declaration, where the Notice of Tax Lien/NOL has been served;

2.2.        Indicate the date of the Notice of Tax Lien/NOL to be lifted, the title number (OCT/TCT/CCT No.) of the property/ies, the name and address of the taxpayer, the total amount of tax liability, kind of tax, period covered, and the Assessment/Demand Number in the lifting order;

2.3.        Inform the Register of Deeds or the Assessor’s Office, as the case may be, of the reason why the lifting of the Notice of Tax Lien/NOL has been requested; and

2.4.        Request the Register of Deeds/Assessor’s Office to cancel the annotation of the NTL/NOL on the pertinent title/tax declaration.

  1. Serve the original copy of the lifting order to the concerned Register of Deeds or Assessor’s Office, and attach one (1) copy thereof to the docket of the case for records purposes; and
  2. Prepare and send a letter to the taxpayer with the information that the Notice of Tax Lien/Levy has already been lifted.

The Register of Deeds and/or the Municipal/City/Provincial Assessor shall, upon receipt of the letter for the lifting of the NTL/NOL from the Commissioner or his duly authorized representative, enter/indicate the date of the lifting order as well as the date and time when the said lifting order was received in the appropriate space provided for in their respective books of original NTL/NOL entry maintained for the purpose.

 

[1] Section 219 of the NIRC of 1997, as amended.

[2] RMO No. 40-87.

[3] Section 11 RA No. 1125, as amended by RA No. 4134, applied to this case by analogy.

[4] RDAO No. 6-2001.