DOJ Opinion No. 042, s. 1997

DOJ OPINION NO. 042 , s. 1997 June 5, 1997 Sr. Deputy Administrator Godofredo S. Sison Social Security System East Avenue, Diliman Quezon City Sir : This has reference to your letter concerning a memorandum of agreement between the Bureau of Internal Revenue (BIR) and the Social Security System (SSS). You state that pursuant to Executive Order (E.O.) No. 53, series of 1993, the BIR and the SSS entered into a Memorandum of Agreement (MOA) "to share with each other certain confidential information"; that some members of the SSS however, "have expressed reservation against sharing of confidential data on the ground that SSS might face lawsuits from irate taxpayers later on"; and that you now request the Secretary of Justice, in his capacity as ex-officio counsel of the SSS, "to render a definitive opinion on the legal aspects and ramifications of the aforesaid MOA and Executive Order". LLjur It is noted that aside from E.O. No. 53, series of 1993, the preambulatory clauses of the agreement indicate that its execution is likewise predicated on other related issuances such as E.O. No. 52, series of 1993 and BIR Revenue Memorandum Order (M.O.) No. 12-95. E.O. No. 53, series 1993, directs all government agencies concerned to provide the BIR "with the necessary information to help increase tax collections" and allow the BIR to utilize the relevant and pertinent information "in tax law enforcement to maximize compliance" (see Title and Whereas Clauses). To make the issuance effective, it expressly mandates the agencies specifically enumerated therein, including government-owned and controlled corporations (GOCCs), to provide the BIR, on a regular basis, as provided for in the implementing regulations, the data indicated under their respective names (see Section 1). It likewise provides that ". . . government-owned and controlled corporations . . . shall, without hesitation, immediately comply with a request of the BIR for information relevant to its mission of effectively implementing the revenue laws" (Section 2). E.O. No. 52 series of 1993 directs the BIR to "require that the TIN [Taxpayer Identification Number] be indicated" in specific documents enumerated therein, to serve as "vital information for tracing a person's taxable transactions under a computerized system of tax administration" which is now being initiated by the BIR (see Title and Whereas Clauses). To enhance the effectiveness of the issuance, it provides that any person who fails to comply with the requirement thereof shall be subject to all the appropriate sanctions provided for in the National Internal Revenue Code (Section 2). BIR M.O. No. 12-95 refers to the "Tax Mapping Operation" Project of the BIR the objective of which is " to bring persons, taxable or exempt, into the arena of taxation . . ."; "to ferret out tax evaders"; and "to enhance [BIR's] data bank in line with [its] computerization program and build a complete taxpayer's profile by line of industry per street, barangay and district". In the implementation thereof, the M.O. lays down the policies, guidelines and procedures to be observed by the Revenue District Officers in their respective area of jurisdiction. But it is noted that M.O. provides for a time frame of four (4) months from the effectivity thereof for the completion of the Tax Mapping Operation Project contemplated therein which project should have been completed by now considering that the M.O. was issued as early as March 27, 1995. Regarding the propriety of subject MOA between the BIR and SSS, the pertinent provisions of both E.O. No. 53, s. 1993 and E.O. No. 52, s. 1993 uniformly provide, as follows: E . O . NO . 53, s, 1993 "SECTION 5. The Department of Finance shall enter into a memorandum of Agreement with the appropriate agency or instrumentality of the National Government and local government units for the purpose of formulating procedures designed to ensure full compliance by those concerned with the requirements of this Executive Order." (emphasis supplied) E . O . No . 52, s . 1993 "SECTION 3. The Department of Finance shall enter into a Memorandum of Agreement with the appropriate agency or instrumentality of the National Government and local government units for the purpose of formulating procedures designed to ensure full compliance by those concerned with the requirements of this Executive Order". (emphasis supplied). Applying the above provisions, the agency tasked in E.O. Nos. 53 and 52, series 1993, to enter into a Memorandum of Agreement with the appropriate agency or instrumentality of the National Government, including local government units, for the purpose of formulating procedures to ensure to full compliance therewith, is the Department of Finance and not the Bureau of Internal Revenue. Moreover, the Secretary of Finance is also the official uniformly designated in the subject executive issuances to promulgate the implementing revenue regulations contemplated therein, upon the recommendation of the Commissioner of Internal Revenue. Thus, while generally there is no legal prohibition among the different government agencies to forge cooperation to facilitate performance of their functions which can be translated into a memorandum of agreement, yet the provisions of E.O. Nos. 53 and 52, series of 1993, provides that the authority to execute the appropriate memorandum of agreement in this particular case rests in the Department of Finance. Therefore, the MOA should have been between the DOF and the SSS. This fact, however, does not preclude the BIR from directly making the necessary request for information from time to time or if the need for it arises and for the SSS to comply with said request, on the basis of Section 2 of E.O. No. 53, series of 1993. As to the terms and conditions of the subject MOA, and only on the assumption that it has been properly executed, the Department of Finance which is the agency tasked to implement the executive issuances under consideration, should then be able to determine whether the terms and conditions of the MOA are in accordance with, and germane to the purpose, of E.O. No. 53 and 52. Concerning the reservation of some SSS members with respect to the sharing of confidential data as purported in the MOA, it is surmised that they are apprehensive on the possible violation of the "confidentiality provision" in the SSS Charter (R.A. No. 1161, as amended) which, insofar as pertinent, reads: "SECTION 24(a). Employment Records and Reports . (a) Each employer shall immediately report to the SSS the names, ages, civil statuses, occupations, salaries and dependents of all his employees who are subject to compulsory coverage: Provided , That if an employee subject to compulsory coverage should die or become sick or disabled or reach the age of sixty without the SSS having previously received any report or written communication about him from his employer shall pay the SSS damages equivalent to the benefits to which said employee would have been entitled had his name been reported on time by the employer to the SSS, except that in case of pension benefits, the employer shall be liable to pay the SSS damages equivalent to five years ' monthly pension, including dependents ' pension : Provided further , That if the contingency occurs with thirty days from the date of employment, the employer shall be relieved of his liability for damages. xxx xxx xxx (c) The records and reports duly accomplished and submitted to the SSS by the employer, as the case may be, shall be kept confidential by the SSS except in compliance with a subpoena duces tecum issued by the Courts, shall not be divulged without the consent of the Administrator or any official of the SSS duly authorized by him , shall be presumed correct as to the date and other matters stated therein, unless the necessary corrections to such records and reports have been properly made by the parties concerned before the right to the benefit being claimed accrues, and shall be made the basis for the adjudication of the claim. If as a result of such adjudication the SSS in good faith pays a monthly pension to a beneficiary who is inferior in right to another beneficiary or with whom another beneficiary is entitled to share, such payments shall discharge the SSS from liability, unless and until such other beneficiary notifies the SSS of his claim prior to the payments . xxx xxx xxx (emphasis supplied) For your guidance only, the above provision mandates that the "records and reports duly accomplished and submitted to the SSS by the employee or employer, as the case may be, shall be kept confidential by the SSS except in compliance with a subpoena duces tecum issued by the Courts, shall not be divulged without the consent of the Administrator or any official of the SSS duly authorized by him". It can be readily noted, however, that the mantle of confidentiality is not absolute in character since the provision nevertheless allows disclosure under specific circumstances, to wit: (1) if disclosure is done through judicial order; and (2) if the disclosure is authorized by the SSS administrator or his duly authorized representative. cdt The reservation of some SSS members against sharing of confidential information for that matter should, therefore, viewed in the light of Section 24(a) of R.A. No. 1161, quoted above. Very truly yours, (SGD.) TEOFISTO T. GUINGONA, JR. Secretary