G.R. No. L-33115. June 29, 1979.
MISAEL P. VERA, as Commissioner of Internal Revenue, et al., petitioners, vs. HON. VICENTE N. CUSI JR., Judge of the Court of First Instance of Davao and SARMIENTO ENTERPRISES, INC., respondents.

FACTS

In a civil case for collection of a sum of money, a decision was rendered against defendant Chu Tiong. To aid in execution, the judgment creditor sought to examine Chu Tiong’s income and properties. Chu Tiong initially manifested willingness to produce his income tax returns for 1964-1968 and even signed a letter request to the Bureau of Internal Revenue (BIR) authorizing its release to the creditor’s counsel or the court deputy clerk. The local BIR office, however, refused to furnish the copies, first advising that Chu Tiong must personally appear, and later, when Chu Tiong was brought to the office, he repudiated his letter, claiming he was compelled to sign it.
The judgment creditor then applied for and was granted a subpoena duces tecum by the respondent judge, ordering the local BIR to produce the tax returns. The BIR, after consultation with the Commissioner, moved to quash the subpoena, invoking confidentiality provisions of the Tax Code. The respondent judge denied the motion to quash and a subsequent motion for reconsideration.

ISSUE

Whether the respondent judge acted with grave abuse of discretion in issuing the subpoena duces tecum to compel the BIR to produce a taxpayer’s income tax returns in a private civil litigation.

RULING

Yes. The Supreme Court granted the petition, annulling the challenged orders and quashing the subpoena duces tecum. The legal logic is anchored on the statutory regime of confidentiality governing income tax returns. Section 81 of the National Internal Revenue Code designates such returns as public records open to inspection only upon order of the President under rules prescribed by the Secretary of Finance. The implementing rules, specifically Regulations No. 33, strictly limit the instances for their production.
Under Section 11 of these Regulations, the original return may be furnished for use as evidence in court litigation only where the Government is interested in the result, and upon written request of the Solicitor General. The present case is a purely private civil suit for collection; the Government has no interest in its outcome. The exception allowing inspection by the taxpayer himself or his attorney-in-fact (Section 4) is inapplicable because Chu Tiong had withdrawn his consent. His initial written authorization was effectively revoked by his subsequent repudiation. Consequently, the subpoena compelled a disclosure not authorized by law, placing BIR officers at risk of prosecution under Sections 347 and 349 of the Tax Code for unlawful divulgence. The respondent judge thus acted without or in excess of jurisdiction in issuing the compulsory process.