Denial of Request for Production of Copies of Certain Income Tax Returns in View of Prohibition under Sec. 270 of Tax Co

September 30, 1998 BIR RULING NO. 144-98 144-98 Office of the Ombudsman Fact-Finding and Intelligence Bureau 176 MWSS Building, Arroceros St. Ermita, Manila Attention: Atty . Rodolfo M . Dayrit Graft Investigation Officer III Gentlemen : This refers to Ombudsman Case CPL No. 97-2854, FFIB No. 97-0299 entitled "Tony Saquil versus Tito Nabua," wherein you ordered the Chief or his duly authorized representative, Revenue Information Service System Office Bureau of Internal Revenue on October 8, 1997 to produce and submit the certified true and clear copies of the Income Tax Returns filed by Mr. Tito Nabua, COA, Quezon City which was referred to this Office by Ms. Victoria V. Santos, Chief, Document Processing Division, for ruling. In reply, please be informed that Section 270 of the Tax Code of 1997 (then Sec. 269 of the Tax Code, as amended), provides: "SEC. 270. Unlawful Divulgence of Trade Secrets . Except as provided in Section 71 of this Code and Section 26 of Republic Act Number 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 years, or both." The exception to the foregoing provision is that which pertains to the disposition of income tax return as set forth in Section 71 of the Tax Code of 1997 (then Sec. 64 of the Tax Code, as amended), which makes income tax returns public records and open them to inspection upon order of the President of the Philippines. Section 71 of the Tax Code of 1997, reads: "SEC. 71. Disposition of Income Tax Returns ; Publication of Lists of Taxpayer and Filers . 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 and shall constitute public records and be open to inspection upon order of the President of the Philippines under rules and regulations to be prescribed by the Secretary of Finance, upon recommendation of the Commissioner. "The Commissioner may, in each year cause to be prepared and published in any newspaper the list containing the names and addresses of persons who have filed income tax returns." In Opinion No. 72, Series of 1991, the Secretary of Justice opined that individual tax return 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 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 that we cannot grant the request in view of the prohibition under Section 270 of the Tax Code of 1997 (then Sec. 269 of the Tax Code as amended). dctai Very truly yours, (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue