WebClick Tracer

Supreme Court strikes down ‘intrusive BIR rule on doctors’ and lawyers’ appointments

by Eileen Mencias

The Supreme Court has invalidated portions of the Bureau of Internal Revenue’s Revenue Regulation No. 4-2014, (RR 4-2014) which had provoked strong opposition from doctors, lawyers, accountants, and other professionals due to its requirement for them to submit their appointment books and sworn statements of their rates and billing.

The Integrated Bar of the Philippines brought the case to the SC on April 8, 2014, just three days after the issuance of BIR RR No. 4-2014, questioning its validity. It then sought the issuance of a preliminary injunction to stop the implementation of RR No. 4-2014, declare it unconstitutional, and make the injunction permanent.

A month later, the Association of Small Accounting Practitioners of the Philippines, representing certified public accountants, also filed a petition for prohibition and mandamus and prayed for injunctive reliefs.

This was followed by similar petitions from the Philippine College of Physicians, the Philippine Medical Association, and the Philippine Dental Association.

The regulation was issued by then BIR Commissioner Kim Henares during the tenure of then Finance Secretary Cesar Purisima.

In a decision penned by Senior Associate Justice Marvic M.V.F. Leonen and promulgated on April 18, 2024, the Supreme Court said that “the mandatory registration of appointment books is “an unconstitutional intrusion into the fundamental rights of professionals and their patients and clients.”

While the BIR and the Secretary of Finance argued that the petitioners should have first approached the lower courts and adhered to the doctrine of hierarchy of courts, asserting that there were no compelling constitutional issues with BIR RR No. 4-2014, the Supreme Court disagreed.

“This is an alleged invasion of the right to privacy and an incursion into this Court’s power to regulate rules on pleading, practice of law, and procedure in courts, raised by parties who have sufficient standing. These serious constitutional concerns need no factual bases, allowing this Court’s exercise of original jurisdiction. If true, these allegations are grave abuses of discretion by the Department of Finance and the Bureau of Internal Revenue, which this Court ought to fully resolve,” the High Court noted.

The Supreme Court criticized the BIR for exceeding its authority under the Tax Code. “There’s no justification for demanding sworn statements on rates and billing practices. This information is irrelevant, has no basis, and serves no legitimate purpose. It’s an improper use of the BIR’s regulatory power and ultimately unconstitutional.”

“The mere chance that a person’s information may be subject to the State’s prying eyes is an unreasonable intrusion. Considering the risks, this information must not be readily and publicly knowable. That clients and patients may think twice about consulting with professionals, if the government can create a dossier on them based on sensitive information extracted from the appointment book, is more than just an imagined fear,” it said.

Milyonaryo | Latest News