• Both are summary administrative enforcement remedies and cannot be availed of where the amount of tax involved is not more than P100.
• Distraint is enforced on personal property of the taxpayer while levy is enforced on real property.
• In distraint, forfeiture by the government is not provided, while in levy, forfeiture is authorized.
• The taxpayer is not given the right of redemption with respect to distrained personal property, while such right is granted in case of real property levied upon and sold, or forfeited, to the government.
• Levy may be made before, simultaneously or after distraint. Actual v. constructive distraint
• Actual distraint is resorted to when delinquency in the payment sets in, that is, when at the time required for payment, a person fails to pay his tax obligation. It consists of actual seizure and distraint of personal property of the taxpayer.
• In constructive distraint, no actual delinquency is necessary before it may be resorted to. It may be availed of in the following instances: a) Taxpayer is retiring from business subject to tax; b) He intends to leave the Philippines; c) He removes his property therefrom; d) He hides or conceals his property; or e) He performs any act tending to obstruct the proceedings for collecting the tax due or which may be due from him. In addition, constructive distraint may also be resorted to when the taxpayer is already delinquent.
• Constructive distraint is a preventive remedy whose aim is to forestall a possible dissipation of the taxpayer’s asset when delinquency takes place.
• There are different procedures in enforcing actual and constructive distraint. How to effect constructive distraint?
• It shall be effected by requiring the taxpayer or any person having possession or control of such property to sign a receipt covering the property distrained and obligate himself to preserve the same intact and unaltered and not to dispose of the same in any manner whatever without the express authority of
• If the taxpayer or any other person refuses or fails to sign the receipt, the revenue officer effecting the constructive distraint shall proceed to prepare a list of such property and, in the presence of two witnesses, leave a copy thereof in the premises where the property distrained is located, after which the said property shall be deemed to have been placed under constructive distraint.
Procedure for actual distraint
1. Commencement of distraint proceedings 2. Service of warrant of distraint
3. Notice of sale of distrained property 4. Sale of property distrained
Manner of serving warrant of distraint
1. Goods, chattels, effects or other personal property
The officer serving the warrant of distraint shall make or cause to be made an account of the goods, chattels, effects or other personal property distrained, signed by himself, which includes a statement of the sum demanded and note of the time and place of the sale.
A copy shall be left either with the owner or person from whose possession such goods, chattels, or effects or other personal property were taken, or at the dwelling of business of such person and with someone of suitable age and discretion.
2. Stocks and other securities
Stocks and other securities shall be distrained by serving a copy of the warrant of distraint upon the taxpayer and upon the president, manager, treasurer or other responsible officer of the corporation, company or association, which issued the said stocks or securities.
3. Debts and credits
The warrant of distraint shall be sufficient authority to the person owing the debts or having in his possession or under his control any credits belonging to the taxpayer to pay to the Commissioner the amount of such debts or credits.
4. Bank accounts
Bank accounts shall be garnished by serving a warrant of garnishment upon the taxpayer and upon the president, manager, treasurer or other responsible officer of the bank.
Upon receipt of the warrant of garnishment, the bank shall turn over to the Commissioner so much of the bank accounts as may be sufficient to satisfy the claim of the Government.
Purchase by government at sale upon distraint
• The Commissioner or his deputy may purchase the property distrained in behalf of the National Government when:
1. the amount bid for the property under distraint is not equal to the amount of the tax; or
2. the amount is very much less than the actual market value of the articles offered for sale.
• Property so purchased may be resold by the Commissioner or his deputy. Procedure on levy of real property
1. Service of warrant of levy 2. Advertisement of the sale
3. Public sale of the property under levy or forfeiture of the property to the government for want of bidder
4. Redemption of property or consolidation of ownership and title in the purchaser
• Internal revenue officer shall prepare a duly authenticated certificate showing the name of the taxpayer and the amount of the tax and penalty due from him.
• Such certificate shall operate with the force of a legal execution throughout the Philippines.
• Levy shall be effected by writing upon said certificate a description of the property upon which levy is made. At the same time, written notice of the levy shall be mailed to or served upon the Register of Deeds of the province or city where the property is located and upon the delinquent taxpayer, or if he is absent from the Philippines, to his agent or manager, or to the occupant of the property in question.
Advertisement of sale
• Posting a notice of sale at least 30 days at the main entrance of the municipal or city hall and in a public and conspicuous place in the city or municipality where the property is located
• Publication once a week for three weeks in a newspaper of general circulation in the municipality or city where the property is located
Redemption of real property sold
• Delinquent taxpayer have the right to redeem the real property sold by him or any one for him within one (1) year from the date of sale.
• Taxpayer must pay the amount of public taxes, penalties, and interest from the date of delinquency to the date of sale, together with interest on said purchase price at the rate of 15% per annum from the date of purchase to the date of redemption.
• The owner shall not, however, be deprived of the possession of the said property and shall be entitled to the rents and other income thereof until the expiration of the time allowed for its redemption.
Forfeiture to government for want of bidder in sale of real property
• Internal revenue officer conducting the sale of real property levied shall declare the property forfeited to the Government in satisfaction of the claim
1. there is no bidder for real property exposed for sale; or
2. the highest bid is for an amount insufficient to pay the taxes, penalties and costs.
Resale of real estate taken for taxes
• The Commissioner shall have charge of any real estate obtained by the Government in payment or satisfaction of taxes, penalties or costs arising under the NIRC or in compromise or adjustment of any claim thereof.
• The Commissioner may, upon giving not less than 20 days notice, sell and dispose of the said property at public auction or, with the prior approval of the Secretary of Finance, dispose of the same at private sale.