BIR Ruling [DA-641-06]

October 27, 2006 BIR RULING [DA-641-06] DA-387-2000; Sec. 270 & Sec. 71, NIRC Maria Elena H. Bautista Chairperson Land Transportation Franchising & Regulatory Board East Avenue Quezon City M a d a m : This refers to your letter dated May 16, 2006 requesting this Office for copies of the financial statements of a taxpayer in connection with his petition before the Land Transportation Franchising & Regulatory Board (LTFRB). It is represented that the LTFRB issued an order dated March 23, 2006 in the case of Paul Padayhag (Super 5 Transport) as regards his 'Petition to Allow Fare Range Scheme' before the former. Under said order, Mr. Padayhag was directed to submit his financial statements for the last five (5) years in support of his petition. The LTFRB now requests this Office to provide it copies of the same to serve as a guide in its decision on the case. 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." IcaHCS 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. The above rule is clear in its intent to protect taxpayers from having their otherwise sensitive and private tax-related information unnecessarily revealed to other parties. In this regard, there is apparently nothing in LTFRB's request that would warrant the BIR's release of information on delinquent taxpayers as such data is considered as confidential and fully within the coverage and protection of Section 270. There is no indication in your request that Mr. Padayhag has failed to comply with the LTFRB's order to submit copies of his financial statements, thereby necessitating the production of such statements within the BIR's possession. In addition, there is no express order from the President of the Philippines directing this Office to produce copies of Mr. Padayhag's financial statements in accordance with Section 71 of the same Tax Code. Accordingly, we regret to inform you that the nature of your request cannot be considered as an exception to the unlawful divulgence rule and as such, this office is constrained to withhold copies of Mr. Padayhag's financial statements pursuant to Section 270 of the same Tax Code. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service