MARIANO CU UNJIENG, GUILLERMO A. CU UNJIENG AND CU UNJIENG E HIJOS, PETITIONERS, VS. JUAN POSADAS, COLLECTOR OF INTERNAL REVENUE, SOTERO RODAS, FIRST ASSISTANT FISCAL OF THE CIT…

This
is a petition for the writ of prohibition presented by Mariano Cu
Unjieng, Guillermo A. Cu Unjieng, and Cu Unjieng e Hijos against Juan
Posadas, Collector of Internal Revenue, Sotero Rodas, First Assistant
Fiscal of the City of Manila, Serafin P. Hilado, Solicitor-General, and
L. S. Goddard, Judge of the Court of First Instance of Manila.

The petition is how submitted upon the answer of the respondents, and
the facts essential to a decision in this court are as follows: A
criminal case (No. 42649) is now being tried in the Court of First
Instance of the City of Manila, before Judge L. S. Goddard, wherein
Mariano Cu Unjieng is the accused. In the course of the trial in said
case the prosecution desired to submit as evidence the income tax
returns of Mariano Cu Unjieng, Guillermo A. Cu Unjieng, and Cu Unjieng
e Hijos for the years 1929, 1980, and 1931. The Solicitor-General, on
August 17, 1933, therefore addressed a letter to the Collector of
Internal Revenue requesting that the income tax returns referred to
should be produced before Judge Goddard in the Court of First Instance
of Manila, on August 18, 1933, there to be used as evidence in the
criminal case mentioned.

Accordingly, on said date, a
representative of the Bureau of Internal Revenue appeared in court with
said returns, and the prosecuting attorney asked leave to present said
witness and to submit said income tax returns as evidence. Counsel for
the defense objected on the ground that the production of said returns
would be in violation of sections 30 and 31 of the Income Tax Law.
After discussion of the matter the court suspended its resolution in
order to give an opportunity to the attorneys for the defendant to
submit the present petition.

The provisions of law pertinent to the discussion are these:

“After
the assessment shall have been made, as provided in this Law, the
returns together with any corrections thereof which may have been made
by the Collector, shall be filed in the Office of the Collector of
Internal Revenue and shall constitute public records and be open to
inspection as such upon the order of the Governor-General under rules
and regulations” to be prescribed by the Secretary of Finance.”
(Subsec. [b], sec. 14, of Income Tax Law, Act No. 2833.)

“Sec. 2716. Unlawful divulgence of trade secrets.—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 or income 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 be fined in a sum not more than two thousand
pesos or be imprisoned for a term of not less than six months nor more
than five years, or both.” (Sec. 2716, Adm. Code, as amended by sec. 30
of Act No. 2833.)

“Sec. 2731. 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 or income 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 not more than two thousand pesos or be imprisoned for a term of not
less than six months nor more than five years, or both.” (Sec. 2731,
Adm. Code, as amended by sec. 31 of Act No. 2833.)

In addition to the foregoing provisions we quote section 11 of the
Regulations (No. 33) relating to inspection of income tax returns,
promulgated by the Secretary of Finance and approved by the
Governor-General on October 13, 1922, as follows:

“SEC. 11. Copies of returns furnished for use in legal proceedings.—When
it becomes necessary for the Bureau of Internal Revenue to furnish
returns or copies thereof for use in legal proceedings, inspection of
such returns or copies that necessarily results from such use is
permitted.

“The original income tax return of an individual, corporation, joint-stock company, partnership, joint account (cuenta en participacion),
association, insurance company, or fiduciary, or a copy thereof, may be
furnished by the Collector of Internal Revenue for use as evidence in
litigation in any court, where the Government of the Philippine Islands
is interested in the result, or for use in the preparation for such
litigation, to provincial or city fiscal or any attorney connected with
the Bureau of Justice designated to handle such matters, upon written
request of the Attorney-General, or an assistant attorney acting on his
behalf. When an income tax return or copy thereof is thus furnished, it
must be limited in use to the purpose for which it is furnished, and is
under no conditions to be made public except where publicity
necessarily results from such use. In case the original return is
necessary, it shall be placed in evidence by the Collector of Internal
Revenue or by some other officer or employee of the Bureau of Internal
Revenue designated by the Collector for that purpose, and after it has
been placed in evidence it shall be returned to the files in the Office
of the Collector in Manila. Neither the original nor a copy of an
income tax return, desired for use in litigation in court where the
Government of the Philippine Islands is not interested in the result
and where such use might result in making public the information
contained therein, will be furnished, except as otherwise provided in
the next succeeding section.” (21 Off. Gaz., 1246.)

A comparison of the Regulations just quoted, of our Department of
Finance, with the Department regulations of the United States Treasury,
promulgated under the Revenue Act prevailing in the United States,
clearly discloses that our regulations governing the inspection of
income tax returns were taken from those of the Treasury Department,
with the sole difference that the federal regulations are not approved
by the President, while our regulations were approved by the
Governor-General.

Again, it is evident that the provisions
of law quoted above place no restriction upon the divulgence of the
information contained in income tax returns when the publication of
such information is made in the manner provided by law. It
results that, when the custodian of income tax returns is lawfully
required to reveal them, he is protected from the penalties expressed
in sections 2716 and 2731 of the Administrative Code. There was no
intention to restrict the use of these documents, when their custodian
is lawfully required to produce them or make their contents known.

In order to define the extent to which the returns are open to
inspection, the Regulations from which we have quoted were prescribed
by our Secretary of Finance with the approval of the Governor-General.
We note that in section 1 of these Regulations it is stated that they
deal only with the inspection of returns, and that other uses
to which returns may be lawfully put, without action by the
Governor-General, are not covered by the Regulations. Upon a narrow
interpretation of this language, it might seem that the Regulations
were intended to cover only such inspections as are made of the returns
in the Bureau of Internal Revenue and that it was not intended to
prescribe the conditions under which the returns, or copies thereof,
may be supplied for use in legal proceedings. But in section 11 of the
Regulations we find provisions dealing precisely with this matter; and
we note that the prerequisites prescribed in section 11 were followed
as a preliminary to the production of the returns in court in the
present case. We consider that the word “inspection”, in subsection (b)
of section 14 of Act No. 2833 is used in an untechnical sense,
sufficiently broad to include the production of the returns in court.

In the second paragraph of section 11 of the Regulations we find it
stated that the original income tax returns, or copies thereof, may be
furnished by the Collector of Internal Revenue for use as evidence in
litigation in any court where the Government of the Philippine Islands
is interested in the result. Stress is laid by the attorneys for the
petitioners on the words “where the Government of the Philippine
Islands is interested in the result”, and it is suggested that the
Government of the Philippine Islands is not interested in the result in
this case. To this contention we are unable to give our assent. The
case now on trial is one prosecuted under and by the authority of the
Government of the Philippine Islands, and although the case is styled
People of the Philippine Islands vs. Mariano Cu Unjieng et al.,
the Government is naturally interested in the Jesuit. A criminal case
is a sort of case in which, above all others, the Government, as
corporate representative of all society, is highly and immediately
interested.

Finally, we observe that the Solicitor-General
in his letter to the Collector of Internal Revenue states that the
Government of the Philippine Islands is interested in the result of the
decision in the case wherein the evidence in question is to be used,
and if we could not take judicial knowledge of that interest, this
certification from the legal representative of the Government might be
taken as a sufficient indication of the fact.

It results
that the income tax returns which have been brought into court under
the circumstances above mentioned are admissible in evidence, provided
they contain matter really pertinent to the issue, or issues, in the
case now pending before the respondent judge. Upon this point his
Honor, as we understand, has not yet been called upon to rule.

In what has been said we pretermit any discussion of the question
whether the writ of prohibition is a remedy that can be used in any
case to prevent a Judge of First Instance from admitting evidence which
one of the litigants believes to be privileged or protected from
disclosure. As was said of the use of the writ of mandamus, in Orient
Insurance Co. vs. Revilla and Teal Motor Co. (54 Phil., 919,
929), this court is loath to interfere in the course of a trial in the
Court of First Instance, as such interference might unduly prolong the
litigation in that court. In the case before us we find nothing which
would justify us in departing from the ordinary criterion.

In conclusion we wish to observe that the federal decisions discussing
matters analogous to that here under consideration are all cases where
appeal had been taken in ordinary course, and the question raised in
the appellate court was whether or not the income tax returns were
properly admitted in evidence. In Corliss vs. U. S. ([1925], 7
Fed. [2nd], 455), it was held that the regulations of the Treasury
Department governing the use of such documents had not been followed,
and the returns used were therefore inadmissible. In Lewy vs.
U. S. ([1928], 29 Fed. [2nd], 462), the tax returns had been obtained
in compliance with the Treasury regulations, and hence were admissible.
In Gibson vs. V. S. ([1929], 31 Fed. [2nd], 19), it was held
that a supplementary income tax return was admissible in evidence when
the regulations of the Treasury Department with reference to the
production of returns had been followed, notwithstanding the fact that
the deputy collector had agreed with the taxpayer that such
supplementary return would not be used against him in any case pending
in court. In all of these cases relief against the use of the returns
was sought in ordinary course of appeal. We may add that the doctrine
of those cases support the conclusion reached above that the income tax
returns involved in this case were properly brought before the court.

The present petition, in our opinion, is not maintainable. and the same
is accordingly dismissed, with costs against the petitioners. So
ordered.

Malcolm, Abad Santos, and Hull, JJ., concur.
Imperial, J., concurs in the result.