Reyes-Sullano Law Office

February 13, 2007 BIR RULING [DA-088-07] DA-387-2000; Sec. 27 (D) (5) and Sec. 270, NIRC Reyes-Sullano Law Office 26 M. Calo-Del Pilar St. Butuan city Attention: Atty. Minerva R. Sullano Gentlemen : This refers to your letter dated November 15, 2006, requesting this Office for certified true copies of the Capital Gains Tax Return (CGTR) and other BIR filled-up forms relative to the transfer of a certain property in favor of Alfonso Yao. It is represented that your client, Mrs. Amelia Tolentino Mendoza, is a stockholder of Fit & Sons Industries (Fit & Sons, for brevity), a corporation that owns a parcel of land located at Luz Village, Butuan City. It is further represented that the said property was fraudulently transferred by Fit & Sons, to Alfonso Yao on March 5, 1972, as evidenced by the absence of a filed copy of the Deed of Absolute Sale between these parties in the Butuan Registry and that Atty. Dante C.M. Tirol, the one who notarized said Deed, was not a Notary Public at the time of transfer. In addition, you were informed that no capital gains tax was paid on the abovementioned transfer, so Fit & Sons authorized a member of its Board of Directors, George T. de Jesus, to secure the necessary documents that would serve as evidence of this non-payment with the Revenue District Office (RDO) No. 103 in Butuan City. Apparently, RDO 103, through a letter dated September 27, 2006, denied Mr. de Jesus's request, stating that the disclosure of such information would be regarded as unlawful divulgence under Section 270 of the Tax Code of 1997. In this regard, you now ask this Office to confirm your opinion that disclosure of the CGTR and other BIR-filled documents evidencing the transfer of the abovementioned property of Fit & Sons to Alfonso Yao is necessary to determine the validity of such transfer; that the said documents are considered public records and as such, should be made available to your client; that the documents you are requesting should not be regarded as confidential, considering that these documents are necessary for a case you plan to file to recover Fit & Son's property; and that the granting of this request would assist the BIR in its campaign to collect revenue for the Government. In reply, please be informed that Section 270 of the Tax Code of 1997, as amended by Republic Act (RA) No. 9337, states the unlawful divulgence rule with regards to the treatment of information by BIR officials and employees. The said Section provides that: "Sec. 270. Unlawful Divulgence of Trade Secrets. Except as provided in Section 71 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 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." It is evident from the above provision that BIR personnel cannot divulge information gained from taxpayers concerning the latter's business, income, or estate as well as the secrets, operation, style or work, or apparatus of any manufacturer or producer, or confidential information regarding the business of any taxpayer. Any documents containing these types of information in the BIR's possession are not considered as public documents but are in fact treated as confidential, in accordance with Section 270 of the same Tax Code. TaDSHC There are two kinds of information that are protected by Section 270 of the Tax Code: 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 a BIR officer or employee in the discharge of his/her official duties. Thus, information does not need to be ostensibly confidential for the same to come under the protection of Section 270. As long as such information in the BIR's possession is relevant to a taxpayer's business, income, or estate, it will certainly be subject to the unlawful divulgence rule under Section 270 and this includes the CGTR and other documents relative to the transfer of Fit & Son's property. Accordingly, this Office hereby affirms the decision of RDO 103 denying your request for certified copies of the CGTR as well as other BIR filled-up forms relative to the transfer of Fit & Sons' property to Alfonso Yao, in accordance with Section 270 of the same Tax Code. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service