BIR Ruling No. 211-15

June 19, 2015 BIR RULING NO. 211-15 Sections 270 & 71 of NIRC; BIR Ruling No. 331-11 Bienvenido S. Reyes Sheriff IV, Regional Trial Court National Capital Judicial Region Branch 87, Quezon City Sir : This refers to your letter dated October 14, 2014 requesting copies of duly audited financial statements of Honey West Apartelle, Ltd. from 2004 up to December 2010 and a copy of the Interim Financial Statements or Books of Accounts as of April 30, 2011 of Ferdinand Dancel Aguinaldo/Honey West Apartelle, Ltd. pursuant to the Writ of Execution dated September 8, 2014 and Order dated September 24, 2014 relative to Civil Case No. Q-07-59815, entitled " Arcita A. Cayabyab, plaintiff vs. Ferdinand D. Aguinaldo ,defendant". It is represented that the said documents are necessary for the computation of the share of the plaintiff in the net income rental. In reply, please be informed that the requested documents contain information regarding the business and/or income of taxpayers which are considered confidential under Section 270 of the 1997 Tax Code, as amended. The pertinent provision reads: "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." It is evident from the above provision that under the "unlawful divulgence" rule, 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. (BIR Ruling No. 331-11 dated September 1, 2011) Section 270 is clear in its intent to protect taxpayers from having their otherwise sensitive and private information unnecessarily revealed to other parties. Thus, in its letter to the Fact Finding and Intelligence Bureau, Office of the Ombudsman, this Office had occasion to rule as follows: "In Opinion No. 72, Series of 1991, the Secretary of Justice opined that individual income tax returns under the first paragraph of the afore-quoted 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." AHCETa Further, it should be noted that both the trial court's decision (dated May 10, 2011) and the Writ of Execution (dated September 8, 2014) clearly directed the defendant, Ferdinand D. Aguinaldo, to produce the above described financial statements. No part of said Decision and Order direct this Office to make such disclosure or submission of the defendant's financial records/statements. Based on the foregoing, we regret to inform you that this Office is constrained to withhold such information pursuant to Section 270 of the same Tax Code as the subject of the request does not fall under any of the instances where confidential information of taxpayers may be revealed. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue