ISOS Issuance of Certified True Copies of Income Tax Returns as Ordered/Requested by the Ombudsman and Other Investigating Offices

August 14, 1997 BIR RULING NO. 091-97 64, 269 000-00 091-97 MEMORANDUM DATE : July 23, 1997 FOR : ACIR, Information Systems Operations Service FROM : The Commissioner SUBJECT : ISOS Issuance of Certified True Copies of Income Tax Returns as Ordered/Requested by the Ombudsman and Other Investigating Offices This refers to your query seeking clarification if your Office is authorized to issue certified true copies of income tax returns (ITRs) filed by individuals and corporations as ordered/requested by the Ombudsman, BIR officials and employees and other investigating offices directly addressed to you without referral/clearance from the Office of the Commissioner or from the Legal Service. In reply, please be informed that Section 269 of the Tax Code, as amended provides as follows: "SEC. 269. Unlawful divulgence of trade secrets . Except as provided in Section 64 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 fined in a sum of not less than Five thousand pesos (P5,000) but not more than Ten thousand pesos (P10,000), or imprisoned for a term of not less than six (6) months but not more than five (5) years, or both." Interpreting the aforequoted Section 269 of the Tax Code, the then Justice Secretary Franklin M. Drilon, in reply to the query posed by the then Commissioner of Internal Revenue Jose U. Ong as to whether or not the disclosure of an individual income tax return to a Senate committee would make him liable under Sec. 269 of the Tax Code, as amended, opined in Opinion No. 72, Series of 1991, that "xxx xxx xxx "The foregoing provision of law imposes penal sanctions upon any BIR official or employee who discloses 'information regarding the business, income, or estate of any taxpayer', knowledge of which was obtained by him in the discharge of his official duties', unless such disclosure comes within the purview of Section 64 of the Tax Code, which reads: "SEC. 64. Disposition of income tax returns; publication of lists of persons filing returns and paying taxes . After the assessment shall have been made, as provided in this Title, the returns, together with any corrections thereof which may have been made by the Commissioner, shall be filed in the office of the Commissioner of Internal Revenue and shall constitute public records and be open inspection as such upon the order of the President of the Philippines under rules and regulations to be prescribed within sixty (60) days from the date of effectivity of this Code by the Secretary of Finance . "The Commissioner of Internal Revenue may in each year cause to be prepared and published in any newspaper and otherwise make available to public inspection upon written request and pursuant to regulations to be prescribed by the Secretary of Finance , lists containing the names and addresses of persons who have filed income tax returns with the amount of income declared and the income tax paid by each. The list of taxpayers for the preceding taxable year in each municipality or city shall be posted at the main entrance of the respective municipal building or city hall." "By the first paragraph of the aforequoted section of law, individual income tax returns 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 at 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 (Sec. 4 of Regulations No. 33; Vera vs. Cusi, Jr. 91 SCRA 153) "Based upon the foregoing, it is believed that there is sufficient basis for your reluctance in complying with the subpoena in question. The above-cited regulations enumerate the instances in which individual income tax returns may be revealed, but disclosure to a Senate Committee is not among those instances. Section 269 requires that to avoid liability thereunder, the disclosure of the information must be in the manner provided by law. This Department has had previous occasion to point out that the compliance of a legislative subpoena is subject to pertinent provisions of existing laws. (Secretary of Justice Opinion No. 68, s. 1988)" (Revenue Memorandum Circular No. 41-91 dated May 8, 1991) (Emphasis supplied). the disclosure to a Senate committee is not among those instances when divulgence of an individual's income tax return may be permitted without being penalized under Sec. 269 of the Tax Code, as amended. In addition to this, Section 11 of Revenue Regulations No. 33, the aforestated existing Regulations relating to inspection of income tax returns, provides as follows: "Sec. 11. Copies of the returns furnished for use in legal proceedings . When it becomes necessary for the Bureau of Internal Revenue to furnish returns or copies thereof for use in legal proceedings , inspection of such returns or copies that necessarily results from such use is permitted. "The original income tax return of an individual, corporation, joint-stock company, partnership, joint account (cuenta en participacion), association, insurance company, or fiduciary, or a copy thereof, may be furnished by the (then Collector) Commissioner of Internal Revenue for use as evidence in litigation in any court, where the Government of the Philippines (Islands) is interested in the result, or for use in the preparation for such litigation, to provincial or city fiscal or any attorney connected with the (then Bureau) Department of Justice designated to handle such matters, upon written request of the (then Attorney) Solicitor General , or an assistant attorney acting on his behalf. When an income tax return or copy thereof is thus furnished, it must be limited in use to the purpose for which it is furnished, and is under no condition to be made public except where publicity necessarily results from such use. In case the original return is necessary, it shall be placed in evidence by the (then Collector) Commissioner or by some other officer or employee of the Bureau of Internal Revenue designated by the (then Collector) Commissioner for that purpose, and after it has been placed in evidence, it shall be returned to the files in the Office of the (then Collector) Commissioner in (then Manila) Quezon City. Neither the original nor a copy of an income tax return, desired for use in litigation in court where the Government of the Philippines (Islands) is not interested in the result and where such use might result in making public the information contained therein, will be furnished, except as otherwise provided in the next succeeding section. cdt "Sec. 12. Inspection of returns to be made in Office of the (then Collector) Commissioner; copies of returns furnished the taxpayer . Except as provided in Sec. 11, returns may be inspected only in the Office of the (then Collector) Commissioner of Internal Revenue (Manila). "A copy of the income tax return may be furnished by the (then Collector) Commissioner to the person who made the return or to his duly constituted attorney, or if the person is deceased, to his executor or administrator; or if the entity is in the hands of a receiver, trustee in bankruptcy, guardian, or similar legal custodian, to the receiver, trustee, guardian, or other similar custodian, upon written application for same accompanied by satisfactory evidence that the applicant comes within this provision. The "person who made the return," as herein used, refers in the case of an individual return, to the individual whose return is desired, and in the case of a return of a corporation, joint-stock company, partnership, joint account (cuenta en participacion), association, insurance company, or fiduciary, to the corporation, joint-stock company, partnership, joint account (cuenta en participacion), association, insurance company, or fiduciary, a copy of whose return is desired. A corporation may also designate, by proper action of its board of directors, the officer or individual to whom a copy of a return made by the corporation may be furnished, and upon sufficient evidence of such action and of the identity of the officer or individual, a copy may be furnished to such person. A copy of a partnership income tax return will be furnished to the partners only in case all the partners joint in the request therefor, it matters not what particular partner or officer of the partnership made the return. If the partnership has been dissolved, the members surviving may be furnished a copy if all the members surviving join in the request." (Emphasis supplied) In this connection, inspection of income tax returns may also be allowed at the instance of other executive departments as provided for under Sec. 10 of RR 33, viz: "Sec. 10. Inspection of returns at the instance of other executive departments . When the head of an executive department (other than the Department of Finance) or of any other bureau or office of the Philippine Government, desires to inspect or to have some other officer or employee of his branch of the service inspect a return in connection with some matter officially before him, the inspection may, in the discretion of the Secretary of Finance, be permitted upon written application to him by the head of such executive department or other Government bureau or offic e. The application must be signed by such head and must show in detail why the inspection is desired, the name and address of the taxpayer who made the return, and the name and official designation of the one it is desired shall inspect the return. When the head of a bureau or office in the Department of Finance, not a part of the Bureau of Internal Revenue, desires to inspect a return in connection with some matter officially before him, other than an income tax matter, the inspection may, in the discretion of the Secretary of Finance, be permitted upon written application to him by the head of such bureau or office, showing in detail why the inspection is desired. The reasons submitted for permission to inspect as provided in this section shall be considered by the Secretary and a decision reached by him whether the reasons are sufficient to permit the inspection (Emphasis supplied) Accordingly, and in line with the aforequoted Opinion No. 72 of the Secretary of Justice, the following investigating offices may be allowed to inspect, make and take a copy of the following returns filed by taxpayers, viz: (1) Officers and employees of the Bureau of Internal Revenue whose official duties requires such inspection; (2) Provincial or city fiscals or any attorney connected with the Department of Justice designated to handle litigation in any court, where the Government of the Philippines is interested in the result upon written request of the Solicitor General, or an assistance attorney acting on his behalf; and (3) Head of an executive department, bureau or office of the Philippine Government in connection with some matter officially before him. It must be emphasized, however, that with regard to the requests by officers and employees of the Bureau of Internal Revenue for inspection of income tax returns of taxpayers, the same shall be allowed only to the officers and employees of the Bureau of Internal Revenue whose official duties require such inspection . In other words, the said ITRs cannot be divulged or disclosed to all and sundry Bureau officials and employees, but only to those whose official duties require such inspection . These authorized Bureau officials and employees shall, aside from being allowed to inspect the ITRs of the questioned taxpayers, also be permitted to make and take a copy thereof or a memorandum or data contained therein. (Sec. 13, RR 33) At this juncture, it may be worthwhile to specifically identify in this Memorandum the persons who may be legally permitted to inspect, make and take a copy of the income tax returns of certain taxpayers, viz: (A) In the case of individuals . The return of an individual shall be open to inspection as follows: (1) By the officers and employees of the Bureau of Internal Revenue whose official duties require such inspection; (2) by the person who made the return, or by his duly constituted attorney-in-fact; (3) by the administrator, executor, or trustee of the taxpayer's estate, or by the duly constituted attorney-in-fact of such administrator, executor, or trustee, where the maker of the return has died; and (4) in the discretion of the (then Collector) Commissioner of Internal Revenue, by one of the heirs at law or next of kin of such deceased person upon showing that he has a material interest which will be affected by information contained in the return. (Sec. 4, RR 33) (B) In the case of joint returns . A joint return of a husband and wife shall be open to inspection: (1) By the officers and employees of the Bureau of Internal Revenue whose official duties require such inspection; and (2) by either spouse for whom the return was made (or his or her duly constituted attorney-in-fact or legal representative), upon satisfactory evidence of such relationship being furnished (Sec. 5, RR 33). (C) In the case of return of partnerships . The return of a partnership whether general or limited shall be open to inspection (1) By the officers and employees of the Bureau of Internal Revenue whose official duties require such inspection; and (2) in the case of general co-partnerships, by any managing partner, if manager are provided for by the members, or, if there are no managing partners, by any member of such partnership (or his duly constituted attorney-in-fact of legal representative) during any part of the time covered by the return upon satisfactory evidence of such fact being furnished; and in the case of limited partnerships, by the general members of the same during any part of the time covered by the return upon satisfactory evidence of such fact being submitted. (Sec. 6, RR 33) (D) In the case of return of an estate . The return of an estate shall be open to inspection (1) By the officers and employees of the Bureau of Internal Revenue, whose official duties require such inspection; (2) by the administrator, executor, or trustee of such estate, or by his duly constituted attorney-in-fact; and (3) by one of the heirs at law or next of kin of the deceased person whose estate is being administered upon a showing of a material interest which will be affected by the information contained in the return. (Sec. 7, RR 33) (E) In the case of return of a trust . The return of a trust upon which a tax has been determined shall be open to inspection (1) By the officers and employees of the Bureau of Internal Revenue whose official duties require such inspection; (2) by the trustee or trustees, or the duly constituted attorney-in-fact of such trustee or trustees; and (3) by any individual (or his duly constituted attorney-in-fact or legal representative) who was a beneficiary under such trust during any part of the time covered by the return, upon satisfactory evidence of such fact being furnished. (Sec. 8, RR 33) (F) In the case of return of a corporation . The return of a corporation shall be open to inspection (a) By the officers and employees of the Bureau of Internal Revenue whose official duties require such inspection; (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) In view of all the foregoing, it could be gleaned that the Ombudsman and other investigating offices other than those stated above, even in compliance with Subpoena Duces Tecum, are prohibited under Sec. 269 of the National Internal Revenue Code, as amended, to inspect, make and take a copy of the income tax returns of taxpayers because Regulations No. 33, clearly enumerates the instances when income tax returns may be revealed, but disclosure to the Ombudsman and to other investigating offices not included therein are not among those instances. Accordingly, and in order to prevent any indiscretionary disclosure of the income tax returns of individuals and all other taxpayers, all requests for the inspection and/or examination and issuance of a copy of thereof should be coursed through the Law Division of the National Office for proper determination and appropriate action. For your guidance and all those concerned. Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue