Serving of Warrants of Garnishments Via Email
By: Atty. Euney Marie J. Mata-Perez on October 5,2023.
Recently, the Bureau of Internal Revenue (BIR) issued Revenue Regulations No. 11-2023 (the “Regulation”) dated September 14, 2023, which prescribes the use of electronic mail (e-mail) and electronic signature as additional mode of service of Warrants of Garnishment (WGs). The Regulation provides that, starting October 1, 2023, the Revenue Officers may serve WGs via e-mail to depository banks, thereby initiating the collection process without the need for personal service. Furthermore, the Regulation requires bank head offices and bank branches to provide their official email addresses to the BIR office where they are registered.
In issuing the Regulation, the BIR cited Section 208 in relation to Section 244 of the National Internal Revenue Code of 1997, as amended (the “Tax Code”), regarding the authority of the Commissioner of Internal Revenue (CIR) to enforce collection of delinquent internal revenue tax liabilities. It also took into account Republic Act (RA) No. 8792, or the Electronic Commerce Act of 2000, the Rules on Electronic Evidence, as well as the 2019 Amendments to the 1997 Rules of Civil Procedure, for the use of e-mail and electronic signature as an additional modes of service of WGs.
Allowing service of WGs through e-mail is meant to address the challenges which the BIR has faced in its traditional service of WGs physically or via constructive or substituted means, resulting in a speedy, efficient, and more effective way of determining and collecting the assets of “delinquent taxpayers.”
Section 208 of the Tax Code provides that bank accounts shall be garnished by serving a WG upon the taxpayer and upon the president, manager, treasurer or other responsible officer of the bank. Upon receipt of the WG, the bank is mandated to turn over to the CIR so much of funds in the bank accounts as may be sufficient to satisfy the claim of the government.
The Regulation provides for general policies and guidelines to implement service through e-mail of the WGs, which include the following:
- Specifying who shall be authorized to sign: Regional Director, Assistant Commissioner for Collection Service and Large Taxpayers Services (LTS), and Chief, Large Taxpayers District Offices (LTDOs).
- Specifying how the WGs shall be sent: Using the office e-mail address of the Collection Division concerned to transmit and serve the signed WGs to the bank head offices and branches within the locality of the registered taxpayer simultaneously
- Specifying when service through e-mail is complete: At the time of sending of such e-mail, or, when available, at the time that the electronic notification of service of the WGs is sent, and proof of service is by way of affidavit of service executed by the concerned BIR official or employee who sent the e-mail.
The taxpayer is given a copy of the served WGs through e-mail or to its/his/her registered address only after the concerned bank has acknowledged receipt (also via e-mail) of the BIR’s request to facilitate and act expeditiously on the issued WGs.
There have been many issues with the BIR’s issuance of WGs, and also warrants of distraint and/or levies (WDLs) because, supposedly, they are issued only when the taxpayer is “delinquent.” Generally, a taxpayer is delinquent when its tax payments or obligations have become final and executory and the BIR is already empowered to enforce collection. The Regulation itself mentions that the service of the WGs electronically or via e-mail is a more effective way of determining and collecting the assets of “delinquent taxpayers.”.
However, WGs and WDLs have been issued by the BIR even when the assessments are pending appeal, pursuant to Section 11 of RA No. 1125, which provides that “[n]o appeal taken to the CTA from the decision of the [CIR] or the Commissioner of Customs… shall suspend the payment, levy, distraint and/or sale of any property of the taxpayer for the satisfaction of his tax liability as provided by existing law.” The CTA, though, may suspend collection when it will jeopardize the government’s and/or the taxpayer’s interest.
In this regard, it may be important to note that the Regulation provide that service is deemed completed when the email is “sent.” However, there could be many issues in transmittal which could result in the WGs not being “received” by the relevant bank head offices or branches. Also, the official notice to taxpayer could be delayed since it is only made after the bank shall have acknowledged receipt of the BIR’s request and the affidavit of service is executed.
Undoubtedly, the Regulation may help the BIR in its collection efforts; however, it also raises a number of issues involving due process and may result in oppression to taxpayers. We believe that its provisions should be reviewed and implemented with caution, and with due regard to taxpayer’s rights to due process of law.
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Euney Marie J. Mata-Perez is a CPA-Lawyer and the Managing Partner of Mata-Perez, Tamayo & Francisco (MTF Counsel). She is a corporate, M&A and tax lawyer and has been ranked as one of the top 100 lawyers of the Philippines by Asia Business Law Journal and is the incoming Chair of the Tax Committee of the Management Association of the Philippines. This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. If you have any question or comment regarding this article, you may email the author at info@mtfcounsel.com or visit MTF website at www.mtfcounsel.com