CM 305.9 - ADVERTISEMENT AND SALE OF SEIZED REAL PROPERTY
Advertisement of Sale of Seized Real Property
Within twenty (20) days after levy, the real property subject of the levy, or a usable portion thereof, as may be necessary, shall be advertised for auction sale to satisfy the tax liability of the delinquent taxpayer and the cost of sale, through a Notice of Sale.
The NOS shall be issued by the Commissioner or his authorized representative and shall contain the following:
- The amount of tax and penalty due, such as basic tax, interest and surcharges (Assessment Notice No. and date). Any compromise penalty that is imposed shall be indicated as a footnote;
- The date, time and place of the sale. In determining the date of sale to be specified in the notice, the thirty (30) day period within which to advertise the sale shall be taken in to consideration;
- The name of the taxpayer against whom the taxes were levied;
- Description of the property to be sold (i.e. TCT/OCT/CCT/TD number. Classification, location and area);
- 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
- A statement that reads “The BIR may reject any or all bids”.
The advertisement shall cover a period of at least thirty (30) days. It shall be effectuated by posting the Notice of Sale together with the guidelines of the auction sale at the main entrance of the municipal building or city hall and in a public and conspicuous place in the barangay or district in which the real estate is physically located as well as the concerned Revenue District Office and by publication once a week for three (3) weeks in a newspaper of general circulation. The NOS may likewise be posted in the BIR website.
Determination of the Minimum Bid of Seized Real Property
In determining the minimum bid in the auction of real property, the following shall be considered:
- The total tax due, including the interest and penalties, plus the expenses of the seizure and sale shall be the minimum bid for the property being sold. However, if the market value of the land is less than the tax due, including increments and expenses of the seizure and sale, the minimum bid should be the fair market value or zonal value of such property, whichever is higher;
- If the lot is small, but the fair market value of which is much higher than the tax liability and expenses of the seizure and sale, and the lot is no longer capable of further sub-division (e.g., in a 100 sq. meter lot), it shall be sold at fair market value or zonal value of such property, whichever is higher, and the excess of the proceeds of the sale (selling price less the tax liability and expenses of the sale) shall be turned over to the delinquent taxpayer, properly receipted; and
- In cases where the real estate’s fair market value is much higher than the total liability, including the increments incident to delinquency and the expenses of the seizure and sale, and the property is capable of further subdivision, prior arrangement shall be made with the delinquent taxpayer to delineate which portion of his land shall be taken for sale. The delineation has to be mentioned in the Notice of Sale as to which portion of the lot is to be sold by auction sale. The Revenue District Officer is not precluded from choosing the portion of the land which can easily be sold.
The Minimum Bid/Floor Price for real properties pursuant to the provisions of Section 6€ of the National Internal Revenue Code of 1997, as amended, shall be the highest among the following:
- The latest FMV as determined by the Commissioner based on the prevailing Department Order bearing on the published Schedules of Zonal Values of Real Properties;
- The FMV shown in the latest tax declaration issued by the provincial, city or municipal assessor;
- The purchase price offered/proposed by the former owner or any interested party by way of negotiated sale of the acquired real property; and
- The corresponding or proportionate amount of deficiency internal revenue taxes, including the delinquency penalties, that were given up by the government as a result of the forfeiture proceedings, including the costs of forfeiture and maintenance of the subject property.
However, the Commissioner or his duly authorized representative, thru the Technical Committee on Real Property Valuation (TCRPV) and under existing rules and regulations, may authorize the reduction of the minimum/ floor price, after taking into consideration the current status/condition of property (i.e. the property is located in area that is always flooded, the property is occupied by resistant informal settlers/squatters, etc.).
Conduct of Auction Sale of Seized Real Property
The auction sale shall be conducted on the date, time and place specified in the Notice of Sale.
Public auction sale of the real property shall be done on a lot for lot basis on an “AS IS WHERE IS BASIS”.
All BIR employees and their relatives up to third degree of consanguinity or affinity are not allowed to bid.
A COA representative shall be invited to attend and witness the auction sale. However, in case the COA representative fails to attend, the auction sale may proceed and shall be considered valid.
The auction sale proceedings may be discontinued when the taxpayer pays the outstanding tax liability, including the increments incident to delinquency, the expenses in the maintenance and preservation of the levied property, and the cost of publication, on or before the day and time fixed for the sale. If the taxpayer settles his tax liability after the Notice of Sale has already been published in the newspaper of general circulation, the cost of the publication shall be refunded by the taxpayer to the BIR. With the settlement of the tax liability, the BIR shall effect the lifting of the NTL/NOL (Refer to CM 305.2.2 Lifting of the NTL/NOL).
If the highest bid is lower than the minimum bid of the government or there is no bidder, the Bids and Awards Committee/Revenue Officer conducting the sale shall declare the property forfeited in favor of the government (Refer to CM 305.10 Forfeiture of Real Property in Favor of Government).
In case there is a winning bidder, a Provisional Certificate of Sale of Real Property shall be issued after the full payment of the bid price has been made by the winning bidder to the BIR.
Whenever possible, immediate payment at the time of sale shall be considered. If it is determined that this option is impracticable under the circumstances (minimum bid amount is too large), other payment options shall be considered subject to prior approval by the Commissioner. However, all payment shall be made in Cash or in Manager’s Check payable to the Commissioner of Internal Revenue.
In case the proceeds from the auction sale exceeds the entire claim for taxes including surcharges and interests plus expenses, the difference or residue shall be returned to the taxpayer. If the taxpayer refuses to accept the same, it shall be deposited to the 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 thank Php300,000.00 in rural areas or 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. The taxpayer shall be notified of this action.
The remedy by distraint of personal property and levy on real property may be repeated if necessary until the full amount of the tax due, including the penalties incident to delinquency that has accrued thereto, and all the expenses of the sale are collected.
In the sale of real property, a one-year redemption period is provided for the taxpayer from the date the Provisional Certificate of Sale of Real Property or the Declaration of Forfeiture of Real Property is registered in the Register of Deeds/Assessor’s Office where the real property is located/registered (Refer to CM 305.11 Redemption/Final Deed to Purchaser).
All acquired/forfeited real properties transferred in the name of the republic of the Philippines, having passed the one-year redemption period from the date of acquisition or forfeiture may be sold thru public or private/negotiated sale. (Refer to Chapter IV-Management of Absolutely Forfeited Assets of the Collection Manual).
Procedures in the Preparation of Notice of Sale and Advertisement of Sale
The Revenue Officer/Seizure Agent shall:
- Prepare a Notice of Sale (NOS) (BIR Form 2803 (Annex 300-1.38) and have it signed by the authorized signatory;
- Notify the taxpayer of the auction sale;
- Canvass at least three (3) publishers of newspaper of general circulation for publication of advertisement of sale, in accordance with existing procurement rules and regulations;
- Prepare a memorandum (Annex 300-1.39) to the Commissioner of Internal Revenue, for national offices case and large taxpayer’s cases, and the Regional Director, for regional office cases, requesting for authority to advertise the sale of the real property and for funding to cover the cost of the advertisement and the estimated expenses of the auction sale. The memorandum shall include the name of the taxpayer, amount of the tax liability, date of auction sale, and the name of the newspaper that will carry the advertisement;
- Secure certificate of availability of funds from the Regional Finance Division/Financial Service;
- Make the necessary arrangements for the advertisements/publication of the NOS once a week for three (3) weeks in a newspaper of general circulation in the province, municipality or city where the property is located, at least thirty (30) days prior to the auction sale;
- Prepare a letter addressed to the city mayor or city administrator informing them of the auction sale together with the notice of sale and guidelines; and
- Post the NOS at the entrance of the provincial/municipal/city hall and in a public and conspicuous place in the barangay or district and the concerned Revenue District Office where the property is located at least thirty (30) days prior to the auction sale.
Preparation for the Auction Sale of Seized Real Property
The Revenue Officer/Seizure Agent shall:
- Determine the minimum bid price based on fair market value as shown in the schedule of values of the Provincial/City/Municipal Assessor and/or BIR zonal value of the property to be sold, whichever is higher;
- Prepare the applicable documents for use in the auction sales such as the Guidelines for the Auction Sale, Application for Bid forms, Abstract of Canvass;
- Request at least two (2) revenue officers to assist in the conduct of the public auction sale;
- Invite a representative from the Commission on Audit (COA) to attend to and witness the conduct of the auction sale; and
- Secure cash advance from the Regional Finance Division/Financial Service in an amount sufficient to defray expenses in the conduct of sale. The cash advance, however, shall be liquidated in accordance with the existing rules and regulations.
Procedures in the Conduct of the Auction Sale of the Seized Real Property
The RDO/LTDO/LTCED shall:
- Start the auction sale by reading the Notice of Sale aloud for everyone present to hear and set the minimum bid of the government;
- Call all the participants or bidders. Call the name of the taxpayer or his/her representative, whether present or not;
- Record the names and addresses of the bidders present as well as the witnesses of the bidding process;
- 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;
- Gather all the bid forms from the participating bidders;
- Post the quoted prices in the Abstract of Canvass (Annex 300-1.42);
- Determine the highest bidder:
7.1. Forfeit the sale in favor of the government, if the highest bid is lower than the minimum bid of the government or there is no interested bidder; and
7.2. Pronounce the highest bidder as the winner, if the highest bid is higher than the minimum bid of the government;
- 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;
- Issue a Provisional Certificate of Sale of Real Property (Annex 300-1.52) after payment to the BIR has been made by the winning bidder. Upon failure of the taxpayer to exercise his right to redemption, an Absolute Deed of Sale shall be given to the winning bidder for him to submit to the Register of Deeds for the transfer of ownership;
- Return to the taxpayer the residue of the proceeds of the sale after deducting the payment for the tax liability, including the increments incident to delinquency, and the expenses for seizure and sale. If the taxpayer refuses to accept the same, it shall be deposited to the court or to the bank under the taxpayer’s name;
- Require winning bidder to present Certificate of Sale to the Register of Deeds for annotation;
- Furnish delinquent taxpayer with copy of the Certificate of Sale;
- Prepare Minutes/Report of a Tax Sale to RDO/LTDO/LTS within two (2) days after the sale (Annex 300-1.45) 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;
- Record the delinquent case as closed and transmit docket to the regional Administrative Division/NO-Records Division for future reference;
- Prepare a Report of Seized Properties Sold Thru Public Auction Sale (Annex 300-1.46) and submit the same not later than the tenth (10th) day of the following month to the Regional Director thru the Regional Collection Division/LTS thru the LTCED for consolidation and submission to the Collection Division/LTS thru the LTCED for consolidation and submission to the Collection Service thru the Collection Enforcement Division not later than fifteenth (15th) day of the following month (Annex 300-1.47); and
- 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; in case of delinquent accounts of large taxpayers, submit to the Large Taxpayers Service (Refer to CM 306- Monitoring of ARs/DAs/CM 307 Monitoring Warrant Enforcement).
 Section 213 of the NIRC of 1997, as amended.
 BP Blg. 129, as amended by Ra No. 7691.