Quezon City, 07 May 2010 – The Bureau of Internal Revenue (BIR) issued recently Revenue Memorandum Order No. 42-2010 pointing out the legal provisions in the Tax Code that no Court except the Court of Tax Appeals (CTA) has the authority to prohibit BIR from collecting taxes imposed by the said Tax Code. This prohibition applies to issuance of temporary restraining order (TRO) on all collection activities, service of warrants of distraint and garnishment, levy on final decisions of the BIR on disputed assessments, cases filed before the CTA and the sale of property distrained and garnished.
As specified in Section 218 of the Tax Code, injunctions are not available to restrain collection of taxes and no Court shall have the authority to grant an injunction to stop the collection of taxes.
However, pursuant to Section 11 of RA 1125 as amended, it is only the CTA that has the judicial jurisdiction to suspend the collection of taxes when in its opinion the collection by the BIR may jeopardize the interest of the government or the taxpayer. It then requires taxpayer either to deposit the amount claimed or file a surety bond for not more than double the amount being assessed.
Thus, any TRO issued by Courts other than CTA against the bureau contrary to the said provision should be annulled and cancelled. The BIR can then file an administrative case against erring judges who can be dismissed by the Supreme Court if circumstances so warrant.
It is also specified in the same law as amended by RA 9282, that no appeal taken to the CTA from the decision of the BIR on disputed assessment shall suspend the payment, levy, distraint or sale of any property of the taxpayer, unless the CTA suspends the collection under certain conditions.
Furthermore, the BIR may issue Notice of Tax Lien to safeguard the interest of the government as provided for in Section 219 of the Tax Code and other issuances of the BIR.
Upon issuance of the bureau of its final decision on the disputed assessment against the taxpayer or upon filing of a Petition for Review before the CTA in Division or En Banc of its decision, upholding the assessment, Warrants of Distraint and Garnishment or Levy shall be issued and served as per RMO No. 39-2007 of the BIR when applicable.
To further safeguard the interest of the government, Section 206 of the Tax Code authorizes the BIR to place under constructive distraint the property of a delinquent taxpayer who is retiring from any business subject to tax, intending to leave the Philippines, intending to remove his property therefrom, intending to hide or conceal his property or intending to perform any act tending to obstruct the proceedings for collecting the tax due or which may be due from him.
BIR Commissioner Joel L. Tan-Torres commented, “A number of Regional Trial Court (RTC) judges in Davao and Makati City have recently issued TROs on the collection activities of the BIR. We have duly notified them of the illegality of their action and are preparing the necessary steps to prevent the occurrence of these acts in the future. We are warning all parties, including RTC judges, to desist from doing these illegal acts.”