GR 213860; (July, 2022) (Digest)
G.R. No. 213860 , July 5, 2022
THE PHILIPPINE STOCK EXCHANGE, INC., BANKERS ASSOCIATION OF THE PHILIPPINES, PHILIPPINE ASSOCIATION OF SECURITIES BROKERS AND DEALERS, INC., FUND MANAGERS ASSOCIATION OF THE PHILIPPINES, TRUST OFFICERS ASSOCIATION OF THE PHILIPPINES, AND MARMON HOLDINGS, INC., PETITIONERS, VS. SECRETARY OF FINANCE, COMMISSIONER OF INTERNAL REVENUE, AND CHAIRPERSON OF THE SECURITIES AND EXCHANGE COMMISSION, RESPONDENTS.
FACTS
Petitioners, various financial industry associations and a holding company, assailed the constitutionality of Revenue Regulations No. (RR) 1-2014, Revenue Memorandum Circular No. 5-2014, and SEC Memorandum Circular No. 10-2014 (collectively, the Questioned Regulations). RR 1-2014 amended prior withholding tax rules by mandating that all withholding agents, regardless of the number of employees or payees, must submit their alphabetical list of payees (alphalist) exclusively in digital format, discontinuing the prior option to submit manual lists. The accompanying BIR and SEC circulars provided the technical implementation details. Petitioners argued these regulations were issued with grave abuse of discretion, contending they expanded the law by imposing a purely digital submission requirement not found in the National Internal Revenue Code (NIRC), thereby imposing an additional burden on taxpayers.
ISSUE
The core issue was whether the respondents, in issuing the Questioned Regulations, committed grave abuse of discretion amounting to lack or excess of jurisdiction by mandating the exclusive digital submission of alphalists.
RULING
The Supreme Court DISMISSED the petition. The Court upheld the validity of the Questioned Regulations, finding no grave abuse of discretion in their issuance. The legal logic centered on the valid exercise of subordinate legislative power. The NIRC, specifically Section 57(A)(3), explicitly authorizes the Secretary of Finance, upon the Commissioner’s recommendation, to prescribe the rules and regulations for the submission of the annual information return containing the list of payees. This statutory grant includes the authority to determine the mode or form of submission to ensure efficient tax administration. The shift from optional to mandatory digital filing is a reasonable implementation of this authority, designed to enhance the BIR’s data processing efficiency, improve compliance monitoring, and reduce manual encoding errors. The Court ruled that this change in the manner of compliance is within the scope of the implementing rules and does not substantively amend the law or impose a new tax obligation; it merely updates the procedure for submitting information already required by statute. The regulation is germane to the law’s purpose of effective tax collection and falls within the delegated powers of the administrative agencies.