CM 305.5 - SALE OF DISTRAINED PERSONAL PROPERTY AND DISPOSITION OF PROCEEDS

CM 305.5 - SALE OF DISTRAINED PERSONAL PROPERTY AND DISPOSITION OF PROCEEDS

The seized and distrained personal property/ies of the taxpayer shall be sold at a public auction in order to satisfy the delinquent tax, together with any increments thereto incident to delinquency, and the expenses of the distrained personal propert/ies and the possible cost of the sale.

Notice of Sale and Advertisement of Sale

A notification or Notice of Sale (NOS) shall be exhibited in not less than two (2) public places in the municipality or city where the distraint is made. 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.

The NOS may be advertised in a newspaper of general circulation. However, such newspaper publication may be dispensed with if the amount to be realized in the auction sale of the distrained personal property will not justify the cost of publication. In lieu thereof, the NOS may be posted in the BIR website.

The NOS shall contain the following:

  1. The amount of tax and penalty due, such as basic tax, interest and surcharges, including the delinquency increments. Any compromise penalty that is imposed shall be indicated as a footnote;
  2. The date, time and place of the sale. In determining the date of sale to be specified in the notice, the twenty (20) days notice to the owner or possessor of the property shall be taken into consideration;
  3. The name of the taxpayer against whom the taxes were levied;
  4. The exact location and short description of the property to be sold;
  5. The terms of payment to include cash or manager’s check which must be indicated in the lower portion of the Notice of Sale; and
  6. A statement the reads “The BIR may reject any or all bids”.

Public auction sale of the distrained personal properties shall be done on a per item basis on an “AS IS WHERE IS BASIS”.

Determination of the Minimum Bis of Personal Property

The minimum bid in the auction sale of personal property shall be the total amount due from the taxpayer including delinquency increments, costs of seizure, preservation and sale the said property or the actual market value/appraised value of the articles offered for sale, whichever is higher.[1]

Conduct of Auction Sale

The auction sale of goods, chattels, effects, or other personal properties, including stocks or other securities shall be at the time and place specified on the NOS, not less than twenty (20) days after notice to the taxpayer or to the person having control or possession of the taxpayer’s personal property, and the posting of such notice. With the approval of the Commissioner, the sale of shares of stocks or other securities may be made through duly licensed commodity or stock exchanges.[2]

At any time before the day fixed for the sale, the distraining officer may discontinue all proceedings when the taxpayer pays the unpaid taxes, delinquency increments, costs of seizure, preservation and all other expenses incurred prior to the auction sale. Otherwise, the sale shall proceed as indicated in the NOS.

All BIR employees and their relatives up to the third degree of consanguinity or affinity are not allowed to bid on the property.

The BIR shall issue a Certificate of Sale of Personal Property to the winning bidder upon full payment of the bid amount or a Bill of Sale if the properties sold are stocks or other securities.

Whenever possible, immediate payment at the time of sale shall be considered. If it is determined that this option cannot be used, consideration shall be given to other payment options. However, all payments shall be made in cash or in Manager’s Check payable to the Commissioner of Internal Revenue.

Any residue over and above of what is required to pay the entire tax liability, including the increments incident to delinquency, and the expenses incurred on the seizure, maintenance/preservation, and the sale of the property shall be returned to the taxpayer. No charge shall be imposed by the Bureau for the services rendered by any of its employees.[3] If the taxpayer refuses to accept the same, it shall be deposited to the court (MTC if the amount is not more than Php300,000.00 in rural areas or Php400,000.00 in Metro Manila, and the RTC, if the amount is more than Php300,000.00 in rural areas Php400,000.00 in Metro Manila – taking into consideration the observance of the proper venue), or to the bank where the taxpayer has a bank deposit or any bank within the vicinity of the taxpayer’s business.[4]

The sale of personal properties is absolute and such property is not subject to redemption by the taxpayer.[5]

The Commissioner, or his duly authorized representative, may purchase the articles offered for sale in the name of the National Government when the amount of bids for the property under distraint are not equal to the amount of tax, including the increments incident to delinquency, and the expenses of the seizure and sale, is very much less than the actual market value/appraised value of the articles for sale.

Personal property so purchased/acquired by the government may be resold by the Commissioner, or his duly authorized representative, subject to the rules and regulations prescribed by the Secretary of Finance.

The net proceeds from the sale of purchased/acquired personal property shall be remitted immediately to the BTr in accordance with the existing rules and policies; and the same shall be accounted for as internal revenue collection.

Procedures in the Preparation of Notice of Sale and Advertisement of Sale of Personal Property

The Revenue Officer/Seizure Agent shall:

  1. Prepare the Notice of Sale (NOS) BIR Form No. 2803- (Annex 300-1.38) and have it signed by the duly authorized signatory;
  2. Post the approved NOS in not less than two (2) public places, one at the Office of the Mayor of the City or Municipality in which the property distraint is located and the other, at any places in the same city or municipality;
  3. Notify the taxpayer of the sale to be made;
  4. Post NOS in the BIR website and/or select a newspaper of general circulation for publication of advertisement, in accordance with existing procurement rules and regulations, if the advertisement of sale if seized property is necessary and/or appropriate;
  5. Prepare a memorandum (Annex 300-1.39) to the Regional Director/ACIR-LTS requesting for authority to advertise sale of distrained property and for funding of expenses related to the sale;
  6. Make the arrangements with the newspaper- publisher of the advertisement;
  7. Secure certificate of availability of funds from the Regional Finance Division/Financial Service; and
  8. Proceed with the publication of the advertisement.

Procedures in the Preparation for the Auction Sale of Personal Property

The Revenue Officer/Seizure Agent shall:

  1. Determine the appraised/market value of property to be sold at the auction sale;
  2. Prepare the necessary documents/forms for use during the auction sale such as the Guidelines on the Auction Sale, Application for Bid forms, Abstract of Canvass;
  3. Request at least two (2) revenue officers to assist in the conduct of the auction sale;
  4. Invite a representative from the Commission on Audit (COA) to attend and witness the conduct of the auction sale; and
  5. Secure cash advance from the Regional Finance division/Financial Service in an amount sufficient to defray expenses in the conduct of auction sale. The cash advance, however, shall be liquidated in accordance with the existing rules and regulations.

Procedures in the Conduct of Auction Sale of Personal Property

The RDO/LTDO/LTCED shall:

  1. Start the auction sale by reading the Notice of Sale aloud for everyone present to hear and set the minimum bid of the government;
  2. Call all the participants or bidders. The name of the taxpayer or his/her representative shall also be called whether present or not;
  3. Record the names and addresses of the bidders present as well as the witnesses of the bidding process;
  4. Distribute the Guidelines for the Auction Sale (Annex 300-1.40) and the Application for Bid Forms (Annex 300-1.41). The Bid Form shall contain the description of the property, name of the taxpayer and the terms of payment. Spaces shall also be provided for the name and address of the bidder, the amount of bid and the mode of payment;
  5. Gather all the Bid Forms from all the participating bidders;
  6. Post the quoted prices of the bidders in the Abstract of Canvass (Annex 300- 1.42);
  7. Determine the highest bidder:

7.1.        Pronounce the highest bidder as the winner, if the highest bid is higher than the minimum bid of the government, and

7.2.        Announce that the property is purchased by the government at sale, if all the bids are lower than the minimum bid of the government, or, if there is no interested bidder (Refer to CM 305.6.- Purchase by Government at Sale);

  1. Accept the payment, in cash or in Manager’s Check payable to the Commissioner of Internal Revenue, from the winning bidder; prepare BIR Form No. 0605 for full payment of tax due; issue ROR corresponding to the amount due;
  2. Issue a Certificate of Sale of Personal Property (Annex 300-1.43) to the winning bidder upon full payment of the bid amount, execute a Bill of Sale (Annex 300-1.44) if the properties sold are stocks or other securities, and deliver to the buyer. The Bill of Sale shall be presented to the corporation, company or association who 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 stocks or other securities;
  3. Return to the taxpayer any residue of the proceeds of the sale, after deducting the expenses of the seizure and sale, over and above what is required to be paid for the entire claim for taxes, surcharges and interest including expenses;
  4. Deposit the residue of the proceeds of the sale to the appropriate court, or to the bank under the taxpayer’s name, if the taxpayer refuses to accept the same; notify the taxpayer of such deposit;
  5. Prepare Minutes/Report of a Tax Sale (Annex 300-1.45) to RDO/LTDO/LTCED within two (2) days after the sale and attach copy of the report to the docket as official record; the report shall recite the actual proceedings of the sale, how it was conducted and all pertinent matters regarding the same;
  6. Record the case as closed and transmit docket to the Regional Administrative Division/NO-Records Division for future reference;
  7. Prepare a Report of Seized Properties Sold Thru Public Auction Sale and submit the same not later than the 10th day of the following month to the Regional Director thru the Regional Collection Division/LTS thru the LTCED (Annex 300-1.46) for consolidation and submission to the Collection Service thru the Collection Enforcement Division (CED) not later thank the fifteenth (15th) day of the following month (Annex 300-1.47) (Refer to CM 307 Monitoring Warrant Enforcement); and
  8. Prepare and submit Monthly GCL and Monthly Update of Delinquent Accounts on the 10th day of the following month to CED copy furnished Regional Collection Division and the Large Taxpayers Service (Refer to CM 306- Monitoring of ARs/DAs/ CM 307 Monitoring Warrant Enforcement).

 

[1] Based on the Handbook on Administrative Summary Remedies of Seizure Agents.

[2] Section 209 of the NIRC of 1997, as amended.

[3] Ibid.

[4] BP Blg. 129, as amended by R.A. No. 7691- Judiciary Reorganization Act of 1980.

[5] RR No. 3-69.

Back to blog