BIR Ruling [DA-036-01]

March 14, 2001 BIR RULING [DA-036-01] MEMORANDUM TO : ACIR Alberto A. Pio de Roda Information Systems Operations Service SUBJECT : Legal Opinion re: Memorandum of Agreement (MOA) between BIR and SSS on Linkages Project This refers to your Memorandum dated April 17, 2000 requesting for a legal opinion on the confidentiality of SSS records and reports pursuant to Section 24 (c ) of R.A. 8282, otherwise known as "Social Security Law of 1997", relative to the sharing of information between the SSS and BIR which the two (2) agencies have agreed upon by virtue of a Memorandum of Agreement (MOA) executed on November 15, 1995. Based on the MOA, SSS and BIR, through their representatives, consent to share with each other confidential information of their members/taxpayers as specified in the MOA. The BIR and SSS further warrant to treat any and/or all information shared to it by SSS and BIR pursuant to the MOA with utmost confidentiality and for tax collection validation purposes only. Both BIR and SSS agreed to hold SSS/BIR, its officials and employees free and harmless from any liability of whatsoever nature and kind from the misuse of any and/or all confidential information shared to each other on account of any breach of confidence committed by any employee and/or authorized representative of BIR/SSS. However, Section 24 (c) of R.A. 8282, which took effect on May 24, 1997, provides, viz: "SEC. 24. Employment Records and Reports . xxx xxx xxx "(c) The records and reports duly accomplished and submitted to the SSS by the employee or the employer, as the case may be, shall be kept confidential by the SSS except in compliance with a subpoena duces tecum issued by the Courts, shall not be divulged without the consent of the SSS President or any official of the SSS duly authorized by him, shall be presumed correct as to the data and other matters stated therein, unless the necessary corrections to such records and reports have been properly made by the parties concerned before the right to the benefit being claimed accrues, and shall be made the basis for the adjudication of the claim. xxx xxx xxx" Article 1306 of the New Civil Code provides, the contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy . (Emphasis ours) The provisions of Section 24 (c) of R.A. 8282 which took effect on May 24, 1997, prohibited the divulgence of information obtained by the SSS from the members, employees and their employers except upon compliance with a subpoena duces tecum issued by the Courts, which shall not be divulged without the consent of the SSS President or any official of the SSS duly authorized by him. cCAIaD Notwithstanding the fact that the MOA between SSS and BIR was executed on November 15, 1995, the obligatory character of the MOA was defeated upon the advent of R.A. 8282 on May 24, 1997. Thus, applying Article 1306 of the New Civil Code, R.A. 8282 will be violated if the MOA between SSS and BIR relative to the sharing of information will be continuously implemented. Accordingly, the stipulations agreed upon by SSS and BIR in the said MOA relative to the sharing of information through the use of Information Technology-based solutions are deemed to be not obligatory or compulsory on the part of the SSS as it will be violating Section 24(c) of R.A. 8282. Moreover, Section 270 of the Tax Code of 1997 prohibits any officer or employee of the Bureau of Internal Revenue to divulge to any person or make 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 official duties, shall, upon conviction of 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. Thus, such prohibition barred the BIR to divulge any information about the trade secrets of a taxpayer save in cases provided under Section 71 of the same Code and Section 26 of Republic Act No. 6388. In this wise, it is recommended that a new agreement be entered between BIR and SSS relative to the sharing of information in consonance with the provisions of RA. 8282 and Section 270 of the Tax Code of 1997 adopting the limitations provided by law in the divulgence of confidential information. (SGD.) LILIAN B. HEFTI Deputy Commissioner Legal and Inspection Group