Cita Borromeo-Garcia

February 20, 2009 BIR RULING [DA-(S270-001) 111-09] DA-387-2000; Sec. 270 & Sec. 71, NIRC; DOJ Opinion No. 72 Cita Borromeo-Garcia Rm 1001 Bayview International Towers 3 Roxas Boulevard Paraaque City Madam : This refers to your letter dated December 11, 2006 requesting this Office for copies of the income tax returns (ITRs) of three (3) taxpayers in connection with a case dealing with claims of backwages and damages. AHCTEa It is represented that your client, Mr. Jose Arnulfo Acedra was indirectly made a party in a case for backwages and damages that was brought against his company, Starcare Health Services Inc., by his former retainers in the medical clinic, namely, Pauline Chua, Rommel Orendain and Jay Bariuad. It is further represented that your client hired the above individuals on retainer basis, for which they were paid as such every month as reflected in their respective withholding tax records. The complainants, however, contend that they were employees and as such they have been receiving monthly salaries. You now come to this Office to secure copies of the ITRs, for the year 2005, of the abovenamed individuals as you believe that these ITRs will prove the true nature of the complainants' employment with your client, whether they were only outside contractors on retainer or whether they were actually his employees. 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." EDIaSH Furthermore, 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. Based on the foregoing, we regret to inform you that the nature of your request does not fall under any of the instances where information in a taxpayers' ITRs may be revealed and as such, this Office is constrained to withhold such information 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