FITNESS BY DESIGN v CIR

GR No 177982

FACTS:
The CIR assessed the petitioner for deficiency income taxes. Petitioner protested on the ground that it was
issued beyond the three-year prescriptive period. Respondent issued a warrant of distraint and/or levy
against petitioner drawing petitioner to file a petition for review before the CTA which it reiterated its
defense of priscription. On motion of petitioner in CTA Case No. 7160, a preliminary hearing on the issue
of prescription was conducted during which petitionerÊs former bookkeeper attested that a former
colleague - certified public accountant Leonardo Sablan (Sablan) - illegally took custody of petitionerÊs
accounting records, invoices, and official receipts and turned them over to the BIR. The CTA denied
petitioners Motion for Issuance of Subpoenas and disallowed the submission by petitioner of written
interrogatories to Sablan, who is not a party to the case, and the revenue officers, it finding that the
testimony, documents, and admissions sought are not relevant. The CTA held that there was no need to
issue a subpoena duces tecum to obtain the Affidavit of the Informer as the same formed part of the BIR
records of the case, the production of which had been ordered by it.

ISSUE:
Whether or not the BIR can use the information without the petitioner’s consent

RULING:
Yes. Section 5 of the Tax Code provides: In ascertaining the correctness of any return, or in making a
return when none has been made, or in determining the liability of any person for any internal revenue
tax, or in collecting any such liability, or in evaluating tax compliance, the Commissioner is authorized.
The law thus allows the BIR access to all relevant r material records and data in the person of the
taxpayer, and the BIR can accept documents which cannot be admitted in a judicial proceeding where the
Rules of Court are strictly observed. To require the consent of the taxpayer would defeat the intent of the
law to help the BIR assess and collect the correct amount of taxes. Issuance of subpoena duces tecum for
the production of the documents requested by the petitioner, which documents petitioner claims to be
crucial to its defense, s unnecessary in view of the CTA order for respondent to certify and forward to it
all the records of the case. If the order has not been complied with, the CTA can enforce it by citing
respondent for indirect contempt.