Unreported Motorcycle Sales: A Hidden Form of Tax Evasion 🚨

What is Tax Evasion Under the Law?

Tax evasion is a criminal offense under Section 254 of the National Internal Revenue Code (NIRC) of the Philippines, which states:

"Any person who willfully attempts in any manner to evade or defeat any tax imposed under this Code or the payment thereof shall, in addition to other penalties provided by law, upon conviction thereof, be punished by a fine of not less than Five hundred thousand pesos (₱500,000) but not more than Ten million pesos (₱10,000,000) and imprisonment of not less than six (6) years but not more than ten (10) years."

In simple terms, tax evasion happens when a person deliberately avoids paying the correct taxes owed to the government, whether by falsifying records, underreporting income, or failing to report taxable transactions—such as a motorcycle sale.

How Does an Unreported Motorcycle Sale Constitute Tax Evasion?

When a motorcycle is sold, the transaction involves transfer taxes and registration fees that must be paid to the Bureau of Internal Revenue (BIR) and the Land Transportation Office (LTO). If the seller or buyer fails to report the sale and process the proper transfer, the government loses revenue that should have been collected from the transaction.

🚨 Consequences of an Unreported Motorcycle Sale:

The seller remains liable for any violations, crimes, or accidents involving the motorcycle, even if it is already in the possession of a new owner.

The buyer may face legal issues when attempting to register or resell the motorcycle due to missing documents.

The government loses tax revenue, depriving public funds meant for road safety, traffic management, and other public services.

Legal Obligations Under Republic Act No. 11235

Under R.A. 11235 or the “Motorcycle Crime Prevention Act,” every motorcycle owner has a legal duty to:

✔ Register a newly acquired motorcycle with the LTO within five (5) days from acquisition.
✔ Immediately report any sale or transfer of ownership to the LTO.
✔ Ensure that the motorcycle’s registration is updated under the name of the new owner.

📌 Failure to comply with these requirements can lead to serious penalties:
❌ Fine of ₱20,000 to ₱50,000
❌ Imprisonment (Arresto Mayor to Prisión Correccional, under the Revised Penal Code)
❌ Legal liability for unpaid taxes and government fees

Why Notaries Refuse to Notarize Open Deeds of Sale

A Deed of Sale is a legally binding document that transfers ownership of a vehicle. However, notaries will NOT notarize an “open deed of sale”—a document where the buyer's name is left blank—because it facilitates illegal transactions, encourages tax evasion, and violates legal documentation standards.

An open deed of sale leaves the original owner liable and allows the new owner to avoid paying the required taxes and registration fees. Notarizing such documents would make the notary public complicit in a potentially fraudulent transaction.

The Importance of Proper Documentation

To protect yourself from legal and financial risks, always ensure that:
✅ The Deed of Sale is properly filled out, signed, and notarized
✅ The sale is reported to the LTO and BIR immediately
✅ The new owner completes the transfer of ownership within 20 days

🚨 Failing to do so doesn’t just put you at risk—it makes you part of an illegal tax evasion scheme.

Final Reminder: Act Now to Avoid Penalties!

Selling or buying a motorcycle comes with legal responsibilities that must not be ignored. Failing to report the sale is not just an administrative lapse—it’s a form of tax evasion that carries heavy penalties, including imprisonment.

✅ Be a responsible seller. Ensure that all transactions are properly documented.
✅ Be a responsible buyer. Demand a properly notarized Deed of Sale and complete the ownership transfer immediately.
✅ Follow the law. Pay the necessary taxes and registration fees to avoid penalties.

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