G.R. No. 213860 , July 5, 2022
THE PHILIPPINE STOCK EXCHANGE, INC., ET AL. VS. SECRETARY OF FINANCE, ET AL.

FACTS

The Secretary of Finance issued Revenue Regulations No. 1-2014, amending prior rules on final withholding taxes for dividends. The regulation mandated withholding agents, like listed corporations, to submit an “alphalist” containing detailed payee information, including names, addresses, and Tax Identification Numbers (TINs), for dividends paid. A core dispute arose from the structure of the Philippine capital market, which operates on a scripless trading system for efficiency. In this system, the PCD Nominee Corporation acts as the registered shareholder and intermediary between listed companies and the individual beneficial owners (investors). Historically, listed companies reported the PCD Nominee as the payee on the alphalist. The new regulation was interpreted as requiring listed companies to disclose the personal information of the ultimate individual investors, not just the nominee.

ISSUE

The primary issue, within the context of the separate concurring opinion, is whether Revenue Regulations No. 1-2014, in mandating the collection and submission of the personal information of individual investors by listed companies, violates the Data Privacy Act of 2012 and the constitutional right to privacy.

RULING

Justice Leonen, in his Separate Concurring Opinion, concurred with the main decision declaring the regulation void but provided a distinct legal foundation focused on privacy rights and administrative procedure. He ruled that the regulation constitutes an invalid administrative issuance for failing to comply with the requirements for quasi-legislative rules. Such rules that directly impact the public require prior notice, hearing, and publication to be valid, which were not satisfactorily demonstrated here. More critically, the opinion held that the regulation infringes upon the constitutional right to privacy and the Data Privacy Act. The state’s power to collect information is not absolute; it must be necessary for the performance of a constitutionally or statutorily mandated function. The opinion found the blanket and detailed collection of investors’ personal data for tax administration purposes to be overly broad and not narrowly tailored. The existing system, where taxes are withheld and remitted via the PCD Nominee, already ensures tax collection without unnecessarily exposing individual investors’ data. Therefore, the state’s objective could be achieved through less intrusive means, making the regulation’s data collection requirement disproportionate and violative of privacy rights.