G.R. No. 211772, April 18, 2023
INTEGRATED BAR OF THE PHILIPPINES, PETITIONER, PHILIPPINE COLLEGE OF PHYSICIANS, PHILIPPINE MEDICAL ASSOCIATION, INC., AND PHILIPPINE DENTAL ASSOCIATION, PETITIONERS-IN-INTERVENTION; VS. SECRETARY CESAR V. PURISIMA OF THE DEPARTMENT OF FINANCE AND COMMISSIONER KIM S. JACINTO-HENARES OF THE BUREAU OF INTERNAL REVENUE, RESPONDENTS. [G.R. No. 212178] ASSOCIATION OF SMALL ACCOUNTING PRACTITIONERS IN THE PHILIPPINES, INC., PETITIONER, VS. HON. SECRETARY OF FINANCE CESAR V. PURISIMA AND HON. COMMISSIONER OF INTERNAL REVENUE KIM S. JACINTO-HENARES, RESPONDENTS.

FACTS

The petitioners, Integrated Bar of the Philippines (IBP) and Association of Small Accounting Practitioners in the Philippines, Inc. (ASAPPI), together with petitioners-in-intervention Philippine College of Physicians (PCP), Philippine Medical Association, Inc. (PMAI), and Philippine Dental Association (PDA), assailed the constitutionality of Revenue Regulations (RR) No. 4-2014. The RR was issued by the Secretary of Finance upon the recommendation of the BIR Commissioner. Section 2(1) of the RR required self-employed professionals to submit an affidavit annually indicating their rates, manner of billings, and the factors considered in determining their service fees. Section 2(2) required them to register their official appointment books. The ponencia partially granted the petitions, declaring Sections 2(1) and 2(2) void for having been issued in excess of the DOF’s jurisdiction and permanently enjoined their implementation.

ISSUE

Whether Section 2(1) of RR No. 4-2014, requiring the submission of an affidavit indicating rates, manner of billings, and factors in determining service fees, is a valid exercise of delegated legislative authority.

RULING

No. Section 2(1) of RR No. 4-2014 is unconstitutional. The submission of the required affidavit is outside the scope of the BIR’s delegated legislative authority under the National Internal Revenue Code (NIRC). The power of the BIR Commissioner under Section 5 of the NIRC to obtain information is circumscribed by specific purposes: ascertaining the correctness of a return, making a return, determining tax liability, collecting such liability, or evaluating tax compliance. The information that may be obtained pertains to concluded, taxable transactions. Applying the doctrine of noscitur a sociis, the phrase “any information” in Section 5(B) is delimited by the subsequent enumeration (e.g., costs, volume of production, receipts, sales, gross incomes, financial statements), which relates to factual data from actual business operations. In contrast, the affidavit required under the RR pertains to prospective rates and billing factors before any service is rendered. This information has no bearing on the BIR’s assessment and collection powers, which only arise upon the happening of a taxable event. The requirement is an invalid expansion of the BIR’s statutory authority. Furthermore, the stated purpose of the RR—to monitor fees, aid tax audit, and boost revenue—is vague and provides no intelligible standard, rendering it an undue delegation of legislative power. The concurring opinion also notes that for lawyers, a more reliable source for fee information would be the recommended schedule of fees provided by IBP Chapters under the Code of Professional Responsibility and Accountability.