BIR Ruling [DA-020-03]

January 27, 2003 BIR RULING [DA-020-03] 270; DA-1-98 Hon. Kate H. Gordon City Mayor Olongapo City M a d a m : This refers to your letter dated November 13, 2002, the pertinent portion of which is quoted as follows: "This pertains to the letter request dated 21 November 2002 of our City Treasurer, MARCELINO D. ANDAWI, to Ms. MARIDUR DEL ROSARIO, Revenue District Officer of RDO No. 19, Subic Bay Free Port Zone (SBFZ), to furnish our office the following information for the period 1994 to 2002, to wit: a. No. of registered locators inside the SBFZ both local and Foreign; b. No. of locators who filed their income tax returns (ITRs) with RDO No. 19 and the corresponding amount withheld/paid; and c. No. of individuals and employees registered and reported by locators inside the SBFZ and the corresponding amount of withholding taxes remitted to RDO No. 19 (including the employees of Subic Bay Metropolitan Authority) "The said request was officially declined by Mr. ANTONIO F. MONTEMAYOR, Director of BIR Revenue Region No. 4, under RDA-RR No. 4 Ruling No. 91-02 dated 28 November 2002, citing Sections 270 and 278 of the Tax Reform Act of 1997 which prohibits the divulgence of information regarding the businesses, income or estate of a particular taxpayer. "It is to be noted that the said provisions of law refer only to the unlawful divulgence of Trade Secrets of a specified taxpayer/s while the City is just requesting for information which might as well pertains to the general performance of BIR RDO No. 19. We wish to emphasize that we are asking only from RDO No. 19 the number of registrants and their collections from these taxpayers not the official listing of the taxpayers and their corresponding/specific taxes paid/withheld. What we want to generate from this report are economic indicators. "In view thereof, may I reiterate that the requested information be immediately furnished our Office in order to aid us in evaluating the City's earning potentials from the locators inside the SBFZ in the interest of public service." Please be informed that Section 270 of the Tax Code of 1997 provides, viz. : "SEC. 270. Unlawful Divulgence of Trade Secrets. Except as provided in Section 71 of this Code and Section 26 of Republic Act Numbered 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 punished by a fine of not less than Fifty thousand pesos (P50,000) but not more than One hundred thousand pesos (P100,000), or suffer imprisonment of not less than two (2) years but not more than five (5) years, or both." (Emphasis supplied) In Opinion No. 72, Series of 1991, the Secretary of Justice opined that individual income tax returns under the first paragraph of the aforequoted Section "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 affected by the information contained in the return. On the other hand, in the case of a corporation, the return shall be open to inspection a) By the officers and employees of the Bureau of Internal Revenue whose official duties require such inspection; and b) Upon satisfactory evidence of identity and official position, by the president, vice-president, secretary, treasurer, or any of the members of the board of directors, or any executive or principal officer of such corporation. ( Sec. 9, RR 33 ) cECTaD Based on the foregoing, we cannot grant the request in view of the prohibition under Section 270 of the Tax Code of 1997. However, insofar as letter a of your request is concerned, the same is hereby granted inasmuch as the same does not violate the said provision. This will, therefore, serve as an authority for Assistant Commissioner, Information Systems and Operation Service to furnish you or your duly authorized representative with the number of registered locators inside the SBFZ both local and foreign upon presentation of your or your authorized representative's identification card/paper. Very truly yours, Commissioner of Internal Revenue By: (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service