BIR Ruling [DA-019-97]

January 14, 1997 BIR RULING [DA-019-97] MEMORANDUM TO: The Regional Director Revenue Region No. 14 Tacloban City This refers to the Subpoena Duces Tecum issued by the Fact Finding and Intelligence Bureau under the Office of the Ombudsman requesting for certified xerox copies of the income tax returns for the year 1989 and 1990 of Mr. Simon C. Rabonar and Pasar Corporation Lide with address at Lide Staff Housing, Isabel, Leyte in connection with Case No. OMB-0-92-0651 entitled "Concerned Citizen vs. Officers of the Philippines Associated Smelting and Refining Corporation (PASAR) and BIR Examiners." In connection therewith, please be informed that Section 269 of the Tax Code, as amended, provides as follows: "Sec. 269. Unlawful divulgence of trade secrets . Except as provided in Section 74 (now 64) of this Code and Section 26 of Republic Act No. 6388, any officer or employee of the Bureau of Internal Revenue who divulges to any person or makes known in any other manner than may be provided by law information regarding the business, income , or estate of any taxpayer, the secrets, operation, style or work, or apparatus of any manufacturer or producer, or confidential information regarding the business of any taxpayer, knowledge of which was acquired by him in the discharge of his official duties, shall upon conviction for each act or omission, be fined in a sum of not less than five thousand pesos but not more than ten thousand pesos, or imprisoned for a term of not less than six months but not more than five years, or both." Interpreting the aforequoted section of the Tax Code, the Secretary of Justice opined in Opinion No. 72, Series of 1991, that "xxx xxx xxx "The foregoing provision of law imposes penal sanctions upon any BIR official or employee who discloses "information regarding the business, income, or estate of any taxpayer", "knowledge of which was obtained by him in the discharge of his official duties", unless such disclosures comes within the purview of Section 64 of the Tax Code, which reads: "Sec. 64. Disposition of Income Tax Returns; publication of lists of persons filing returns and paying taxes . After the assessment shall have been made, as provided in this Title, the returns together with any corrections thereof which may have been made by the Commissioner, shall be filed in the office of the Commissioner of Internal Revenue and shall constitute public records and be open to inspection as such upon the order of the President of the Philippines under rules and regulations to be prescribed within sixty days from the date of the effectivity of this Code by the Secretary of Finance. "The Commissioner of Internal Revenue may in each year cause to be prepared and published in any newspaper and otherwise make available to public inspection upon written request and pursuant to regulations to be prescribed by the Secretary of Finance, lists containing the names and addresses of persons who have filed income tax returns with the amount of income declared and the income tax paid by each. The list of taxpayers for the preceding taxable year in each municipality or city shall be posted at the main entrance of the respective municipal building or city hall." "By the first paragraph of the aforequoted section of law, individual income tax return "shall constitute public records and be open to inspection as such upon the order of the President of the Philippines under rules and regulations to be prescribed . . . by the Secretary of Finance". The existing rules on inspection of such returns provide that such inspection is allowed only to (a) BIR officials and employees whose official duties require such inspection; (b) the person who made the return, or his duly constituted attorney in fact; (c) the administrator, executor, or trustee of the taxpayer's estate or the duly constituted attorney-in-fact of such administrator, executor, or trustee, where the maker of the return has died; and (d) in the discretion of the Commissioner of Internal Revenue, one of the heirs of law or next of kin of such deceased person upon showing that he has a material interest which will be effected by the information contained in the return. (See Section 4 of Regulations No. 33 cited in de Leon, The National Internal Revenue Code Annotated, 1989 Ed., pp. 501-502; See also Vera vs. Cusi, Jr., 91 SCRA 153). "xxx xxx xxx." Thus, it was held therein that a BIR official or employee who discloses to a Senate Committee an individual income tax return even in compliance with its Subpoena Duces Tecum is liable under Section 269 of the National Internal Revenue Code, as amended, because Regulations No. 33 enumerated the instances which individual income tax returns may be revealed, but disclosure to a Senate Committee is not among those instances. Accordingly, and in line with the said Opinion No. 72 of the Secretary of Justice, you should deny the request of the Fact-Finding and Intelligence Bureau of the ombudsman to produce the income tax returns for the year 1989-1990 of Mr. Simon C. Rabonar and Pasar Corporation Lide, respectively because of the penal sanction imposed under the aforequoted Section of the Tax Code, as amended. cdta LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue