Request for Assignment of an Investigator-Examiner from the Tax Fraud Division, National Office, this Bureau, or from our Regional Offices to Assist/Coordinate with Economic Intelligence & Investigation Bureau Agents in the Conduct of Investigation of Tax Evasion Cases

October 9, 1997 BIR RULING NO. 108-97 277 269,64 000-00 108-97 Commissioner Servando V. Lara Economic Intelligence & Investigation Bureau Camp General Emilio Aguinaldo Quezon City S i r : This refers to your letter dated August 8, 1997 requesting for the assignment of an Investigator-Examiner from the Tax Fraud Division, National Office, this Bureau, or from our Regional Offices (for provincial cases) to assist/coordinate with your agents in the conduct of investigation of tax evasion cases pursuant to the Mission Orders issued by your Office. LLphil It is represented that two (2) of your agents, Messrs. Bienvenido G. Flores, Special Investigator V, and Jose L. Laurente, Intelligence Officer V, were designated by Secretary Roberto F. de Ocampo, by virtue of the power vested in him under Republic Act No. 251, as Customs and Internal Revenue Officers on May 15, 1995, and they were issued Mission Orders by your Office to investigate tax evasion cases against various subjects with verified derogatory information by virtue of the Economic Intelligence & Investigation Bureau's (EIIB) mandate under Sec. 17 (Pars. 1 to 6), Chapter IV, Title 2, Book IV of the Administrative Code of the Philippines of 1987; that these agents were responsible for the investigation, among other cases, of the tax evasion case against Global Reefer Carriers, Ltd., a resident foreign corporation doing business in the Philippines that resulted in the total assessment of P2,182,636,136.13 in unpaid taxes for 1994 and 1995, which were transmitted to this Bureau for evaluation and reportedly filed with the Department of Justice; that presently, they are working on assigned Mission Orders that require contact with subjects in their provincial bases and that as usual, there is difficulty and resistance encountered by them as regards retrieval of required documents from suspect taxpayers who would, more often than not, give the reasons that only the BIR has the power to investigate tax fraud cases. In reply, please be informed that Section 1 of Republic Act No. 251 provides as follows: "SEC. 1. The Secretary of Finance may designate officers and employees within the Department of Finance who are graduates of law or commerce or who are first grade civil service eligibles to perform special duties relating to the administration of the customs and revenue laws, in connection with which they shall be vested with the authority conferred by law on customs and internal revenue officers." confirming the legality of the act of the Secretary of Finance in specially designating EIIB Agents Bienvenido G. Flores and Jose L. Laurente as Customs and Internal Revenue Officers. However, it should be noted that Section 269 of the Tax Code, as amended, provides, viz: "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 knows in any other manner than may be provided by law, information regarding the business, income or estate of any taxpayer, the secrets, operation, style of 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." 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". Moreover, the Tax Code likewise imposes penalties on anyone who causes an officer of the BIR to disclose or divulge information acquired by him in the discharge of his official duties, viz: "SEC. 277. Procuring unlawful divulgence of trade secrets . Any person who causes or procures an officer or employee of the Bureau of Internal Revenue to divulge any confidential information regarding the business, income, or inheritance of any taxpayer, knowledge of which was acquired by him in the discharge of his official duties, and which it is unlawful for him to reveal, and any person who publishes or prints in any manner whatever, not provided by law, any income, profits, losses or expenditures appearing in any income tax return, shall be fined in a sum of not more than Two Thousand Pesos (P2,000) or imprisoned for a term of not less than six (6) months nor more than five (5) years, or both." We truly recognize the importance of the role played by your Agency in the overall efforts of the government to rid the country of tax evaders. We likewise appreciate the contributions the EIIB, especially under your leadership, has made in improving the collection efforts of the BIR. We also realize that any assistance we could extend in the conduct of your investigation will be beneficial to the government in general and to the BIR in particular. We regret however that we cannot comply with your request for assignment of a BIR examiner/investigator to conduct the investigation of said tax evasion cases with your Special Agents because the aforequoted provisions of law clearly restrict us from doing so. So that the government will not be precluded from pursuing the investigation you have commenced, may we request that all information you have gathered so far which may be indicative that certain taxpayers have committed tax evasion, be forwarded to this Office so that we can initiate appropriate legal action to ensure that errant taxpayers are dealt with accordingly. cdpr Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue