MANILA — The Supreme Court has invalidated a Bureau of Internal Revenue regulation that requires self-employed professionals to submit their rates and register appointment books for tax compliance monitoring.

In a decision of the en banc promulgated on April 18, 2023, portions of Section 2(1) and 2(2) of the BIR’s Revenue Regulation No. 4-2014 or the Guidelines and Policies for the Monitoring of Service Fees of Professionals were declared void for violating the right to privacy of professionals and their clients.

Issued on March 3, 2014, the regulation required all self-employed professionals to submit an affidavit indicating the rates, manner of billing, and the factors that they consider in determining service fees; register their books of account and appointment books containing the names of their clients, their meeting date and time; and issue a BIR-registered receipt showing the 100% discount for pro bono cases, in cases where no professional fees are charged by the professional and paid by the client.

The SC issued a temporary restraining order on April 22, 2014 prohibiting the implementation of the regulation following several petitions filed by professional associations which prayed that the BIR regulation be struck down as unconstitutional.

“The Department of Finance and the Bureau of Internal Revenue, as with their officers, agents, and employees, are permanently enjoined from implementing the unconstitutional provisions,” the court said in the decision penned by Senior Associate Justice Marvic Leonen.

The court said appointment books of professionals such as lawyers, doctors, accountants, dentists, contain their clients' names and the date and time of consultation - information over which they reasonably expect privacy.

Among the professional organizations which filed petitions against the BIR were the Integrated Bar of the Philippines, Association of Small Accounting Practitioners in the Philippines, Philippine College of Physicians, Philippine Medical Association and Philippine Dental Association.

Then DOF secretary Cesar Purisima and BIR Commission Kim Henares, who issued the revenue regulations were the respondents.

“Mandating the registration of appointment books to monitor tax compliance would be an unreasonable State intrusion into their right to privacy,” the SC said.

The court also emphasized that when considered individually, names and appointment dates may seem harmless, but compiling all the times a person consults with a professional could reveal a pattern of behavior.

This pattern could potentially disclose private information or lead to inferences that should have remained confidential.

“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 SC said.

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.

The requirement to issue receipts for pro bono services, which neither raises ethical concerns nor equates to regulating the practice of the legal profession, was also upheld.