SC nullifies BIR regulation over privacy rights
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MANILA, Philippines — The Supreme Court has invalidated a Bureau of Internal Revenue (BIR) regulation requiring self-employed professionals, like lawyers, doctors, accountants and dentists, to submit their rates and register appointment books for tax compliance monitoring.
In a 51-page decision penned by Senior Associate Justice Marvic Leonen, the high court nullified portions of Section 2(1) and 2(2) of BIR Revenue Regulation (RR) No. 4-2014, or the Guidelines and Policies for the Monitoring of Service Fees of Professionals, for violating the right to privacy of professionals and their clients.
It partially granted the consolidated petitions for prohibition and mandamus filed by the Integrated Bar of the Philippines (IBP) and the Association of Small Accounting Practitioners in the Philippines, with the Philippine College of Physicians, Philippine Medical Association and Philippine Dental Association as petitioners-in-intervention.
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The high tribunal said clients and patients have a “reasonable expectation of privacy” in setting appointments with the professionals.
Article continues after this advertisementCiting the IBP’s statement, the court said that “a battered wife who is deathly afraid of her husband may not want to be known to be consulting a lawyer.”
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“An employee who has a grievance against his superior may not like to be identified seeking the advice of a labor lawyer. A public figure, accused of a serious crime, may prefer to consult a lawyer in secret,” it said.
The court said compiling all the times a person consults with a professional could reveal a “pattern of behavior,” which could possibly lead to inferences that should have remained confidential in the first place.
Permanently prohibited
“It is this pattern of behavior, which can be extracted from the appointment book, that a person has a reasonable expectation of privacy over and which must be protected,” the Supreme Court said.
RR No. 4-2014, issued on March 3, 2014, required self-employed professionals to submit an affidavit indicating the rates, manner of billing, and the factors that they consider in determining service fees; and also register their books of account and appointment books containing the names of their clients, and other information.
It also permanently prohibited the Department of Finance and the BIR from implementing the nullified provisions of RR No. 4-2014.
The high tribunal found that the requirement to submit a schedule of fees exceeded the BIR’s power for being irrelevant in its primary duty of assessment and collection of tax due while the requirement to register appointment books was found to be violative of privacy rights.
The Supreme Court, however, upheld the requirement to register books of accounts for falling within the scope of the BIR’s authority under the Tax Code to monitor the fees charged by professionals in assessing taxable income.
It also affirmed the requirement to issue receipts for pro bono services, which neither raises ethical concerns nor equates to regulating the practice of the legal profession.
