DEC.

1, 2014

NR # 3667

Committee on Ways and Means to probe

unconstitutional BIR & DOF regulations
A lawmaker has called on the House Committee on Ways and Means to conduct an
inquiry into the judicial setback of regulations issued by the Bureau of Internal Revenue
(BIR) and the Department of Finance (DOF) outside the authority given them by the
National Internal Revenue Code (NIRC), as amended, which may lead to capital flight and
bear crippling effects on the economy.
Rep. Sharon S. Garin (Party-list, AAMBIS-OWA) sought the inquiry through
House Resolution 1645, saying that since 2010, the Supreme Court has successively
issued Temporary Restraining Order (TRO) on the BIR and DOF for their issuance of
regulations in the implementation of tax laws. The SC ruled such issuances have
constitutional infirmities.
Taxation is inherently legislative in character. As clearly interpreted by the SC,
the rule-making power should be within the scope of the statutory authority granted by the
legislature to the BIR. The BIR may not make rules and regulations which are inconsistent
with the provisions of the Constitution or a statute, particularly the statute it is
administering or which created it, or which are in derogation of, or defeat the purpose of a
statute, Garin, a lawyer, said.
She said instead of effectively implementing the tax laws, the BIR through such
issuances has been causing chilling effect on taxpayers, stockholders and investors, which
could cripple the economy and trigger capital flight.
According to Garin, the rule-making power of the BIR Commissioner, who has
recommendatory power to the DOF Secretary, emanates from Section 244 of the NIRC, as
amended.
Such power is for the promulgation of needful rules and regulations for the
effective implementation of the NIRC provisions, said Garin, a Vice Chairperson of the
Committee on Ways and Means.
But since 2010, the SC issued TRO on several regulations issued by the BIR and
DOF because of constitutional infirmities. One of these is Revenue Regulations (RR) No.
4-2014 dated March 3, 2014, prescribing for the guidelines and policies for the monitoring
of service fees of professionals. The BIR was stopped from implementing this because
such issuance was not within the scope of its rule-making power under Sec. 244 of the
NIRC, as amended, according to Garin.

Secondly, Garin cited BIRs RR No. 1-2014 dated December 17, 2013, mandating
for the submission of alphabetical list of employees/payees, which was likewise impeded
because of alleged violation of the policies of due process, the Tax Code, Securities
Regulation Code and the Data Privacy Act.
Thirdly, Garin said BIRs Revenue Memorandum Circular (RMC) No. 65-2012
dated October 31, 2012, clarifying the taxability of association dues, membership fees and
other assessments/charges collected by condominium corporations suffered the same
judicial setback issued by the Makati Regional Trial Court on ground that the BIR failed
to conduct public hearings before the new tax imposition was promulgated.
The lawmaker said these same issues were raised in the issuance of RR No. 2-2014
and RMC No. 9-2014, prescribing for the new BIR forms which require supplemental
information on individual and corporate income taxpayers.
The House did not hesitate to call for an inquiry of such issuances, and requested
the BIR to stop the enforcement thereof on ground of violations of the right to privacy,
Tax Code, Bank Secrecy Law, lack of proper publication and consultation, and
administrative infeasibility thereof, said Garin.
She said other recent BIR actions which endured TRO from the SC are: the
requirement to post P3.2 billion cash bond or P4.9 billion surety bond of Rep. Emmanuel
D. Pacquiao (Lone District, Sarangani) and his wife Jinkee in connection with the P3.2
billion tax evasion case filed against them; the SCs denial of the BIR motion for
reconsideration to give a copy of the Statement of Assets, Liabilities and Ne Worth
(SALN) of justices of the high tribunal, the Court of Appeals and the Court of Tax
Appeals. (30) rbb