The WG is issued together with the WDL to distrain personal properties in the possession and control of a third party. The following personal properties of the taxpayer may be garnished:
- Salaries from the employer of the taxpayer;
- Deposits with a bank;
- Stocks and bonds from financial institutions that safe-keep stocks and bonds certificates e.g. the Philippine Stock Exchange (PSE) and the Bureau of the Treasury (BTr);
- Rental income of the taxpayer from the lessee/tenant; and
- Trade and other receivables form customers and other debtors.
Salaries of government employees, however, could not be garnished. The funds in the hands of public officers, although they may be due to government employees, are not liable to the creditors of such employees and still form part and retain their character of public funds which cannot be seized by the process of attachment, garnishment or execution. Furthermore, moneys sought to be garnished, as long as they remain in the hands of the disbursing officer of the government belong to the latter, although the government may be entitled to specific portion thereof.[1]
Failure or refusal of a third party having possession or control of the garnished property to comply with the specific requirements of the WG shall be subject to the following penalties:[2]
- Payment to the government of an amount equal to the value of the property or rights not so surrendered but not exceeding the amount of tax and its increments, together with the cost and interest, if any, from the date of the warrant until actually paid; and
- Fine of not more than Five Thousand Pesos (Php 5,000,00) or suffer imprisonment of not less than six (6) months and one (1) day but not more than two (2) years, or both.
Procedures in the Issuance and Service of the WG
The Revenue Officer/Seizure Agent shall:
- Identify the third person having possession or control over the distrainable property;
- Determine all the possible distrainable tangible/intangible properties in the possession or control of a third person;
- Fill-up BIR Form No. 1302, Warrant of Garnishment (WG) (Annex 300-1.35), in quadruplicate, to be distributed as follows: original and duplicate copy to the corresponding bank or financial institution, triplicate copy to be attached to the docket of the case, and the quadruplicate copy to the issuing office for file;
- Submit the duly accomplished WG to the duly authorized signatory for review, approval and signature;
- Serve the signed WG to the third party in possession or control of the distrained property within ten (10) days of receipt thereof;
5.1. If the WG is received:
5.1.1. Request the authorized officer of the third party to acknowledge receipt of the WG by signing over his printed name and indicate the date of receipt in the acknowledgement portion;
5.1.2. Indicate the date and time of the service of the warrant and sign over his printed name as the serving officer; and
5.1.3. Leave the original and duplicate copies of the WG with the third party and the remaining copies duly acknowledged to be attached to the docket.
5.2. If the WG is not received:
5.2.1. Request two (2) credible witnesses, preferably BIR officers to sign the BIR Form No. 1302; and
5.2.2. Leave the original and duplicate copies of the WG at the premises of the third party.
- Refer the case to the Regional Legal Division/Prosecution Division for appropriate action, if the third party does not respond to the WG;
- Locate other distrainable property, if the third party responds but the concerned taxpayer does not have distrainable property in possession or control of such third party; and
- Conduct the following activities, if the taxpayer has distrainable properties:
8.1. Bank deposits/rentals/salaries/receivables
8.1.1. Prepare and send letter to the bank to be signed by the RDO/Chief, LTDO/ACIR-LTS/ACIR-CS requiring the bank to remit to the BIR the bank deposits of the taxpayer in payment of his tax liabilities;
8.1.2. Prepare and send letter to the tenant/employer/debtor to be signed by the RDO/Chief, LTDO/ACIR-LTS-ACIR-CS notifying that the taxpayer has outstanding tax liability and requiring the said party to release the rentals/salaries/receivables, etc. to the BIR in payment of said unpaid tax liability;
8.1.3. Issue the corresponding BIR payment Form 0605 in the name of the taxpayer upon remittance of deposits/rentals/salaries/receivables, etc. to the BIR; and
8.1.4. Record the case as closed in the GCL, in case the tax liability has been settled in full (Refer to CM 306- Monitoring of ARs/DAs and CM 307-Monitoring Warrant Enforcement).
8.2. Stocks/bonds/securities
8.2.1. Prepare and send a letter to the issuer of the security to be signed by the RDO/Chief, LTDO/ACIR-LTS/ACIR-CS requesting for the transfer of the shares of stock in the name of the BIR;
8.2.2. Sell/Dispose of the shares of stocks immediately (Refer to CM 305.5.- Sale of Distrained Property and Disposition of Proceeds/ CM 307- Monitoring Warrant Enforcement); and
8.2.3. In case of government bonds/securities, the issuer shall be requested to pre-terminate the bonds/securities and remit proceeds thereof to the BTr in the account of the BIR (Refer to CM 109.1 Payment through BTr Direct Crediting-Remittance, Chapter I- Tax Payment System of this Manual).
8.3. Jewelry and other pawned items
8.3.1 Prepare and send letter to be signed by the RDO/Chief, LTDO/ACIR-LTS/ACIR-CS to the pawnshop notifying that the taxpayer has an outstanding tax liability and the BIR has a claim to such properties; and
8.3.2. Sell/Dispose of the jewelry and other awned items immediately (Refer to CM 305.5 Sale of Distrained Property and Disposition of Proceeds/CM 307 Monitoring of Warrant Enforcement).
8.4. Motor vehicle/other registrable personal property
8.4.1. Prepare and send Notice of Encumbrance (Annex 300-1.36) to be signed by the RDO/Chief, LTDO/ACIR-LTS/ACIR-CS to pertinent registry office (e.g. LTO/Maritime Industry Authority (MARINA)/Civil Aeronautics Authority of the Philippines (CAAP)/Intellectual Property Office (IPO) notifying that the taxpayer has pending tax liability and that the BIR has claim to such properties; and
8.4.2. Sell/Dispose of the motor vehicle and other registrable personal property immediately (Refer to CM 304.5 Sale of Distrained Property and Disposition of Proceeds/CM 306 Monitoring of warrant Enforcement).
CM 305.4.1 LIFTING OF THE WARRANT OF GARNISGMENT [Refer to FC 305.4.1]
The Warrant of Garnishment (WG), as a summary remedy, may likewise be cancelled or lifted once the conditions therefor are compiled with by the taxpayer. These conditions, such as the full settlement of the tax liability by the delinquent taxpayer and the sufficiency of the distrainable property/ies, are spelled out in an earlier discussion of CM 305- Collection Summary Remedies of this Chapter.
Procedures in Lifting the WG
The Revenue Officer/Seizure Agent shall:
- Receive the request from taxpayer to lift the WG upon full payment of tax liability or sufficiency of distrainable property or compliance with the conditions for the lifting the said summary remedy;
- Evaluate the request for the lifting of the WG (Refer to CM 305.2.2-Lifting of the NTL/NOL – regarding verification of the compliance of the delinquent taxpayer with the conditions for the lifting of the WG);
- Prepare letter to the taxpayer informing him/her of the denial of his/her request and the reasons thereof, if the request is denied;
- Prepare letter (Annex 300-1.37) for signature of authorized signatory to lift the WG addressed to the President, Manager, Treasurer and/or cashier of the concerned third party. Inform the third party concerned of the reasons for the lifting of the WG;
- Serve the original copy of the notice of the lifting of the WG to the third party concerned and attach one (1) copy thereof to the case docket (Refer to CM 307- Monitoring Warrant Enforcement); and
- Send letter to the taxpayer with the information that the WG has already been lifted.
[1] Supreme Court Decision promulgated on November 28, 1964 in the case of Jose Marta Avendano vs. Hon. Federico C. Alikpala, et al docketed as GR No. L-21189.
[2] Section 277 of the NIRC of 1997, as amended.
