G.R. No. 211772

G.R. No. 211772, April 18, 2023,
♦ Decision, Leonen, [J]
♦ Concurring Opinion, Caguioa, [J]
♦ Concurring Opinion, Zalameda, [J]
♦ Concurring Opinion, Singh, [J]
♦ Concurring Opinion, Lazaro-Javier, [J]

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.

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.

The appointment books of professionals, such as lawyers, doctors, accountants, or dentists, contain their clients' names and the date and time of consultation—information over which they reasonably expect privacy. Mandating the registration of appointment books to monitor tax compliance would be an unreasonable State intrusion into their right to privacy.

This Court resolves the consolidated Petitions for Prohibition and Mandamus challenging the constitutionality of Revenue Regulations No. 4-2014, or the Guidelines and Policies for the Monitoring of Service Fees of Professionals. The Integrated Bar of the Philippines and the Association of Small Accounting Practitioners in the Philippines filed the Petitions, with the Philippine College of Physicians, Philippine Medical Association, and Philippine Dental Association as petitioners-in-intervention. The Office of the Solicitor General, as the People's Tribune, joined petitioners' cause.

Petitioners implead then Finance Secretary Cesar V. Purisima (Secretary Purisima) and Commissioner of Internal Revenue Kim S. Jacinto-Henares (Commissioner Jacinto-Henares) as respondents.

Secretary Purisima, upon Commissioner Jacinto-Henares's recommendation, issued Revenue Regulations No. 4-2014 on March 3, 2014. It required all self-employed professionals to: (a) submit to the Bureau of Internal Revenue an affidavit of rates, manner of billing, and the factors that they consider in determining service fees; (b) register with the Bureau their books of account and appointment books containing the names of their clients, and their meeting date and time; and (c) issue a receipt registered with the Bureau showing the 100% discount if no professional fees are charged. Its full text reads:

Revenue Regulations No. 4-2014 took effect on April 5, 2014.1 Three days later, the Integrated Bar of the Philippines, invoking its status as "the official national body of all persons whose names appear in the Roll of Attorneys,"2 assailed the regulation's validity in a Petition for Prohibition and Mandamus3 filed before this Court, docketed as G.R. No. 211772.

The Integrated Bar of the Philippines prays that this Court: (a) issue a temporary restraining order enjoining the implementation of Revenue Regulations No. 4-2014; (b) issue a writ of preliminary injunction enjoining the named respondents from disbursing funds and implementing Revenue Regulations No. 4-2014; (c) declare Revenue Regulations No. 4-2014 unconstitutional; and (d) make the injunction permanent.4

In its April 22, 2014 Resolution, this Court issued a Temporary Restraining Order5 enjoining Secretary Purisima, Commissioner Jacinto-Henares, the Department of Finance, the Bureau of Internal Revenue, and their officers, agents, and employees, from implementing Revenue Regulations No. 4-2014, "but only with respect to lawyers who are herein represented by petitioner Integrated Bar of the Philippines."6 In the same Resolution, Secretary Purisima and Commissioner Jacinto-Henares were required to file their comment on the petition within 10 days from notice.7

On May 8, 2014, the Association of Small Accounting Practitioners in the Philippines, representing certified public accountants, assailed the revenue regulation through a Petition for Prohibition and Mandamus, also praying for injunctive reliefs.8 This was docketed as G.R. No. 212178.

Moving to intervene, with similar reliefs prayed for, are the Philippine College of Physicians,9 the "professional organization of internists";10 the Philippine Medical Association,11 the "umbrella organization of medical organizations and societies in the Philippines";12 and the Philippine Dental Association,13 the duly constituted organization of professional dentists.14

On June 17, 2014, this Court consolidated the Petitions in G.R. Nos. 211772 and 212178.15

Later, this Court granted the Motions to Intervene and issued the same Temporary Restraining Orders prohibiting Revenue Regulations No. 4-2014's implementation as to physicians16 and certified public accountants represented by petitioner organizations.

This Court also granted Secretary Purisima and Commissioner Jacinto-Henares's request for additional time and their prayer to dispense with the filing of separate comments.17 Then, through the Office of the Solicitor General, they filed their Consolidated Comment,18 which was noted in this Court's August 5, 2014 Resolution.19 Petitioner organizations were directed to file a reply.

The Replies of petitioners Integrated Bar of the Philippines,20 Philippine Medical Association,21 Philippine College of Physicians,22 Association of Small Accounting Practitioners in the Philippines,23 and Philippine Dental Association24 were noted in this Court's October 21, 2014,25 November 11, 2014,26 November 25, 2014,27 November 16, 2015,28 and July 26, 201629 Resolutions, respectively.

Considering the allegations and issues that the parties raised, this Court on July 26, 2016 gave due course to the Petitions and Petitions-in-Intervention, and treated the Consolidated Comment as an answer. It required all parties to file their memoranda within 30 days from notice.30

Several motions for extension of time to file memoranda31 were granted.32 Accordingly, petitioners Philippine Medical Association,33 Philippine College of Physicians,34 Integrated Bar of the Philippines,35 Philippine Dental Association,36 Association of Small Accounting Practitioners in the Philippines,37 as well as the Office of the Solicitor General,38 Department of Finance,39 and Commissioner of Internal Revenue40 filed their respective Memoranda. These were noted in this Court's September 27, 2016,41 October 18, 2016,42 November 15, 2016,43 November 22, 2016,44 January 17, 2017,45 March 7, 2017,46 and June 20, 201747 Resolutions1aшphi1.

Petitioner Integrated Bar of the Philippines argues that it has legal standing, being "the official national body of all persons whose names appear in the Roll of Attorneys,"48 as its member-lawyers will sustain direct and personal injury under Revenue Regulations No. 4-2014, which penalizes noncompliance. It likewise files this case as a Filipino taxpayer and citizen, on behalf of clients whose rights to privacy will be violated. It also stresses the transcendental importance of the issues here.49

Petitioner Integrated Bar of the Philippines claims that respondents gravely abused their discretion in issuing Revenue Regulations No. 4-2014. It asserts that complying with it violates ethical standards on lawyer-client privilege and other duties of a lawyer. In imposing penalties, it allegedly forces lawyers to violate their code of ethics, which this Court promulgated.50

Specifically, it alleges that the revenue regulation encroaches on this Court's rule-making power to protect and enforce constitutional rights and regulate the legal practice.51 It also avers that the Tax Code does not require professionals to submit an affidavit of fixed service fees and to register their appointment books, making Revenue Regulations No. 4-2014 ultra vires for being outside the scope of the administrative agencies' rule-making power.52

It also claims that the publication of rates is inconsistent with Canon 20 of the Code of Professional Responsibility, which enumerates the factors in imposing fees and makes room for flexibility. It notes that these fees vary per client and were not meant to be standardized.53

Finally, it underscores that the revenue regulation infringes on the lawyers and their clients' right to privacy.54

Similarly, petitioner Philippine College of Physicians assails Revenue Regulations No. 4-2014 as it violates ethical practices and norms on physician-patient confidentiality, altruism, and non-advertisement.55 It posits that the mandated disclosure of patient names and appointments will produce a chilling effect on access to medical care. It points out that its member-physicians treat individuals with leprosy, tuberculosis, and HIV, whose identities the law explicitly prohibits disclosure. It cautions that their names' disclosure would dissuade them from seeking a physician's services, violating the constitutionally guaranteed right to health.56

Like the legal profession, the determination of physician's fees is incapable of absolute estimation. The Philippine Medical Association Code of Ethics forbids physicians from charging doctors and their next of kin, and for other patients, determinants include their capacity to pay for the services.

In addition, petitioner Philippine Medical Association states that the Tax Code does not grant respondents power to monitor rates and require professionals to register their appointment books.58 Petitioners Philippine Dental Association59 and the Association of Small Accounting Practitioners of the Philippines60 raise similar arguments.

Petitioners pray that this Court declare Revenue Regulations No. 4-2014 void and permanently enjoin the Department of Finance and the Bureau of Internal Revenue from implementing it.

Initially, the Office of the Solicitor General filed its Consolidated Comment on behalf of respondents. Later, invoking its mandate to uphold the people's best interests, it changed tune in its Memorandum, now arguing that portions of Revenue Regulations No. 4-2014 are unconstitutional.61 It underscores that requiring "the submission of an affidavit indicating the rates, manner of billing and the factors to consider in determining the 'service fees' and the registration of official appointment books," are invalid exercises of quasi-legislative power.62

With the Office of the Solicitor General taking a different stance, respondents each filed a Memorandum.

Respondent Secretary Purisima63 counters that petitioners failed to show any compelling reason for this Court to entertain the Petitions.64 He stresses that under the Tax Code, the commissioner of internal revenue can examine any book, paper, record, or data relating to a taxpayer, and may summon any person who has its custody to determine tax compliance. It also allegedly empowers the commissioner to promulgate rules to effectively enforce the law and operationalize tax collection.65

He also brands as "imagined fears" petitioners' allegations that the tax measure violates ethical rules of self-employed professionals and that disclosing the names of their patients or clients would raise dangers. He claims that a general invocation of confidentiality conceals the taxable transactions and defeats the government's legitimate claims.66

Respondent Commissioner Jacinto-Henares67 maintains that there is no genuine constitutional issue here.68 She adds that submitting an affidavit of fees to the government is not advertising, which lawyers would have been prohibited from doing.69 She also alleges that the Petitions failed to exhaust administrative remedies, disregarded the principle of hierarchy of courts, and are not the proper vehicles to assail the regulation.70

First, whether petitioners have sufficiently shown that this case is justiciable. Under this are the following issues:

Second, whether respondents gravely abused their discretion in issuing Revenue Regulations No. 4-2014. Subsumed here are the following issues:

Third, whether Revenue Regulations No. 4-2014 violates the right to privacy of the professionals involved and their clients; and

Finally, whether Revenue Regulations No. 4-2014 contravenes professional ethical standards and norms on confidentiality among self-employed professionals.

We partly grant the Petitions and declare portions of Sections 2(1) and 2(2) of Revenue Regulations No. 4-2014 as unconstitutional.

Although not explicit in our laws, the principle of separation of powers is fundamental in our legal system.72 The Constitution has delineated powers among the legislative, executive, and judicial branches of the government. Each enjoys autonomy and supremacy within its sphere,73 with one's official acts being tempered only by the others under the doctrine of checks and balances.74

Among the three branches, the Judiciary serves as the arbiter in allocating constitutional boundaries.75 Article VIII, Section 1 of the Constitution provides:

SECTION 1. The judicial power shall be vested in one Supreme Court and in such lower courts as may be established by law.

Judicial power includes the duty of the courts of justice to settle actual controversies involving rights which are legally demandable and enforceable, and to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the government.

Courts exercise judicial power in settling actual controversies involving legally demandable and enforceable rights, and in determining whether any government branch or instrumentality gravely abused its discretion amounting to a lack or excess of jurisdiction.

Angara v. Electoral Commission76 underscored that when the Judiciary, through the courts, allocates constitutional boundaries, it does not assert supremacy, but simply carries out its constitutional mandate. In its exercise of judicial power in the traditional sense, the Judiciary does not annul the other branches' acts:

The Constitution is a definition of the powers of government. Who is to determine the nature, scope and extent of such powers? The Constitution itself has provided for the instrumentality of the judiciary as the rational way. And when the judiciary mediates to allocate constitutional boundaries, it does not assert any superiority over the other departments; it does not in reality nullify or invalidate an act of the legislature, but only asserts the solemn and sacred obligation assigned to it by the Constitution to determine conflicting claims of authority under the Constitution and to establish for the parties in an actual controversy the rights which that instrument secures and guarantees to them. This is in truth all that is involved in what is termed "judicial supremacy" which properly is the power of judicial review under the Constitution.77

Jurisprudence refers to a latter conception of judicial power, an import of the 1987 Constitution,78 known as the "expanded certiorari jurisdiction."79 Tañada v. Angara80 characterized this as a constitutional duty, and not only a judicial power:

It is an innovation in our political law. As explained by former Chief Justice Roberto Concepcion, the judiciary is the final arbiter on the question of whether or not a branch of government or any of its officials has acted without jurisdiction or in excess of jurisdiction or so capriciously as to constitute an abuse of discretion amounting to excess of jurisdiction. This is not only a judicial power but a duty to pass judgment on matters of this nature.

As this Court has repeatedly and firmly emphasized in many cases, it will not shirk, digress from or abandon its sacred duty and authority to uphold the Constitution in matters that involve grave abuse of discretion brought before it in appropriate cases, committed by any officer, agency, instrumentality or department of the government.81 (Emphasis supplied, citations omitted)

Whether in its traditional or expanded scope, the exercise of judicial power requires the concurrence of these requisites for justiciability:

In exercising its expanded certiorari jurisdiction, this Court requires an existing case or controversy,83 albeit in a simplified manner. When this power is invoked—as in this case—a prima facie showing that the government act being assailed was committed with grave abuse of discretion establishes an actual case or controversy.84

Further, in the recent case of Executive Secretary v. Pilipinas Shell,85 this Court recognized that there is an actual case or controversy when there is "contrariety of legal rights" and the parties established that there is no way to interpret the assailed law, issuance, or governmental act as constitutional. Here, the assailed law is not susceptible to an interpretation by this Court that it may possibly be constitutional. Pilipinas Shell elaborated:

Thus, in asserting contrariety of rights, it is not enough to merely allege an incongruence of rights between the parties. The party availing of the remedy must demonstrate that the statue is so contrary to his or her rights that there is no other interpretation other than that there is a factual breach of rights. There can be no clearly demonstrable contrariety of rights when there are possible ways to interpret the statutory provision, ordinance or a regulation that will save its constitutionality. In other words, the party must clearly demonstrate contrariety of rights by showing that the only possible way to interpret the provision is unconstitutional, that it is the very lis mota of the case, and therefore, ripe for adjudication.86 (Emphasis supplied)

Here, there is an actual case or controversy warranting this Court's exercise of discretion. While Revenue Regulations No. 4-2014 is presumed constitutional, we find a prima facie showing of respondents' grave abuse of discretion. Petitioners raise respondents' serious constitutional violation in mandating the registration of professionals' appointment books, which violates the fundamental right to privacy of professionals and their clients. In addition, they contain what this Court has considered privileged information.

To stress, before us are the representative organizations of professionals whose members, patients, clients' fundamental right to privacy are supposedly violated. They assail a regulation issued by agents of fiscal policy and tax collection who mandate the disclosure of their patients' and clients' names and appointments. The competing rights and the prima facie showing of grave abuse of discretion call for proper adjudication.

Thus, petitioners present an actual case or controversy, which merits this Court's exercise of judicial review.

The Constitution requires parties to show their locus standi when they seek judicial review of an actual case or controversy.87 Having the standing to sue means that the parties stand to benefit if the case is resolved in their favor, or suffer if it is decided against them.88 This is reinforced in Rule 3, Section 2 of the Rules of Court, which states that an action must be prosecuted or defended by a real party in interest:

SECTION 2. Parties in interest. — A real party in interest is the party who stands to be benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit. Unless otherwise authorized by law or these Rules, every action must be prosecuted or defended in the name of the real party in interest.

Falcis III v. Civil Registrar General89 explained how "legal standing ensures that a party is seeking a concrete outcome or relief that may be granted by courts":90

Associations may bring suits representing their members,92 or based on third-party standing established in jurisprudence.93 To do so, however, they must show that they have identifiable members who authorized them to sue on their members' behalf, and that the challenged governmental acts would directly injure them as well.94

Pharmaceutical and Health Care Association of the Philippines v. Secretary of Health95 justified how an association "has the legal personality to represent its members because the results of the case will affect their vital interests."96 This Court said:

The Provincial Bus Operators Association of the Philippines v. Department of Labor and Employment98 saw this Court disallow an association of bus operators from filing the petition on behalf of its members. We found no proof of such authority to sue, such as a board resolution or articles of incorporation—a fact made worse by some members having had their certificates of incorporation revoked. This Court held that it was insufficient to generally invoke representation and direct injury:

Similarly, in the more recent case of Pangilinan v. Cayetano,100 this Court found that the Philippine Coalition for the International Criminal Court had no standing to sue as an organization advocating for human rights. Indeed, it is crucial that "parties bringing the suit are sufficiently and substantially possessed of individual interest and capability" as can readily be seen in their allegations "so that they can properly shape the issues brought before this [C]ourt."101

Here, we find that petitioners and petitioners-in-intervention sufficiently alleged how their members are readily identifiable. They likewise presented their authority to sue on behalf of their member-professionals. The standing of future generations or an unborn population is not being invoked; instead, petitioners, in suing before us, represent identifiable members suffering imminent injury.

As these professionals may be held liable under the assailed regulation, they stand to be directly injured if it will be implemented. Petitioners correctly posited how it is efficient and economical for this Court to entertain their Petitions on their members' behalf, instead of having each self-employed professional going to the courts. This representative suit shows a genuine cause of action, warranting this Court's exercise of its constitutional mandate to protect citizens' rights.

The consolidated Petitions violated the principle of hierarchy of courts. However, petitioners raised important constitutional issues that may be resolved sans a factual determination, warranting this Court's exercise of discretion. Petitioners are, therefore, justified in seeking remedies before this Court.

This Court shares original jurisdiction102 over petitions for certiorari, prohibition, mandamus, quo warranto, and habeas corpus with the regional trial courts103 and the Court of Appeals.104 Because of this, a direct resort to this Court is generally discouraged. The doctrine of hierarchy of courts and its exceptions have already been extensively discussed:

Pemberton v. De Lima106 instructs that a direct invocation of this Court's jurisdiction may only be done "when there are special and important reasons clearly and specifically set out in the petition."107

To recall, respondents submit that petitioners violated the doctrine of hierarchy of courts, and that they should have filed a petition for declaratory relief before the lower courts, since Rule 65 of the Rules of Court does not apply. They state that petitioners availed of the wrong remedy as no compelling constitutional issues exist here that deserve this Court's attention. They point out that the finance secretary has the exclusive original jurisdiction over the review of issuances in the exercise of the Bureau of Internal Revenue's quasi-legislative functions.

"Prohibition is an extraordinary remedy available to compel any tribunal, corporation, board, or person exercising judicial or ministerial functions, to desist from further [proceeding] in an action or matter when the proceedings in such tribunal, corporation, board or person are without or in excess of jurisdiction or with grave abuse of discretion[.]"108

Lihaylihay v. Treasurer of the Philippines109 explained the nature of a writ of mandamus:

Respondents are indeed correct that the extraordinary writs of prohibition and mandamus generally cannot lie against an officer who issued a regulation within their quasi-legislative power.111 Moreover, the finance secretary may review the commissioner of internal revenue's interpretation of tax laws before courts intervention is needed.112 Likewise true, Rule 65 petitions per se are not proper remedies to resolve constitutional issues.

However, the Petitions before this Court do not seek ordinary prayers for the writs of prohibition and mandamus. What petitioners invoke is this Court's power of expanded judicial review under Article VIII, Section 1 of the Constitution. In enforcing this provision, jurisprudence has recognized Rule 65 of the Rules of Court as the apt procedural vehicle,113 availed when the government or any of its instrumentalities allegedly gravely abused its discretion, be it in the exercise of quasi-legislative, quasi-judicial, or ministerial duties.114

Alas, no specific court rule yet governs constitutional cases in the exercise of this Court's expanded certiorari power. This constitutional provision was a response to a reclusive court during the dictatorship, and Rule 65 does not fully operationalize the expansive nature of this judicial power.

In any case, petitioners raised constitutional issues here that may be properly adjudicated. There is an alleged invasion of the right to privacy and an incursion into this Court's power to regulate rules on pleading, practice of law, and procedure in courts, raised by parties who have sufficient standing. These serious constitutional concerns need no factual bases, allowing this Court's exercise of original jurisdiction. If true, these allegations are grave abuses of discretion of the Department of Finance and the Bureau of Internal Revenue, which this Court ought to fully resolve.

Finally, "the doctrines of primary jurisdiction and exhaustion of administrative remedies may only be invoked in matters involving the exercise of quasi-judicial power."115 They do not apply here, where, as respondents argue116 and this Court acknowledges, the assailed revenue regulation was issued in the exercise of the finance secretary's quasi-legislative power.117

Petitioners raised several interesting points on Revenue Regulations No. 4-2014's requirement of submission of affidavits of fees and issuance of receipts for pro bono services.

First, petitioner Integrated Bar of the Philippines contends that requiring lawyers to submit affidavits of their fee structures and to issue receipts for pro bono services add regulations to the practice of law, which respondents have no jurisdiction to do. Respondent Secretary Purisima counters that the regulation does not affect the practice of law, but merely enforces the Bureau of Internal Revenue's primary jurisdiction to determine the amount and the manner of collection of internal revenue taxes.

Article VIII, Section 5(5) of the Constitution places the promulgation of rules on the practice of law within this Court's exclusive domain. "Practice of law" means "any activity, in or out of court, which requires the application of law, legal procedure, knowledge, training and experience."118

A regulation on the practice of law pertains to regulating activities relevant to the dispensation of justice. It concerns a lawyer's actions on the protection and enforcement of rights, which extend beyond court litigation.

Here, the requirements outlined in Revenue Regulations No. 4-2014 are not the activities that may be deemed as practice of law. Mere disclosure of how much a lawyer charges has nothing to do with the orderly administration of justice. Lawyers may charge fees or none at all. Generally, this Court does not interfere in the matter of lawyer's fees, except when deemed unconscionable. Lawyers have sufficient leeway to structure payment arrangements with their clients, and the Bureau of Internal Revenue simply asks that they furnish its office with its considerations. Although, as discussed in the next section, the affidavit is superfluous, and the revenue regulation lacks statutory basis in requiring it.

For the same reasons, respondents did not usurp the supervisory and regulatory powers of the Professional Regulatory Commission over physicians, dentists, and certified public accountants, in issuing Revenue Regulations No. 4-2014.

Second, petitioner Integrated Bar of the Philippines alleges that Revenue Regulations No. 4-2014 reduces the practice of law, the public service aspects of it, into a bargain counter business. It equates submitting an affidavit describing a lawyer's rates to publicizing their practice, which would violate their code of ethics.

Petitioner's concerns are misplaced. An affidavit of fees is not the "unethical advertisement" that violates norms in petitioners' professions.

Law is a profession, not a trade. This Court has, in Ulep v. Legal Clinic,119 found it highly unethical for a lawyer to advertise their talents or skills akin to a merchant that advertises their wares.120 Indeed, producing infomercials and advertisements in traditional and social media, crafted to advertise their talents to the public and packaged as campaigns to solicit cases for personal gain, goes against a lawyer's ethics.

Respondents correctly pointed out that executing a public document does not equate to publicly advertising one's trade. Notarization converts a private document into a public document, rendering it admissible in evidence even without proof of its authenticity.121 By itself, having a lawyer's schedule of fees notarized and submitted to the Bureau of Internal Revenue is not the self-aggrandizing behavior that the Code of Professional Responsibility proscribes.

Third, petitioner Integrated Bar of the Philippines and petitioners-in-intervention assert that the issuance of receipts for pro bono services is baseless. They point out that under the Tax Code, receipts, sales invoices, or commercial invoices for each sale or transfer of merchandise are issued for services worth PHP 100.00 or more not when services are rendered for free.

(A) Issuance. — All persons subject to an internal revenue tax shall, at the point of each sale and transfer of merchandise or for services rendered valued at One hundred pesos (P100) or more, issue duly registered receipts or sales or commercial invoices, showing the date of transaction, quantity, unit cost and description of merchandise or nature of service. (Emphasis supplied)

For entities that may be subject to value-added tax, like self-employed professionals who choose to register under this, their tax base is the gross selling price, or more appropriately, the gross fees that they charge the client. When professionals render services pro bono, this does not mean their services have no value; it means they are offering them at a 100% discount, making the gross selling price zero.

Every pro bono service is taxed at 12%. Since the tax base is the gross selling price, i.e., zero, then the tax due on the service is 12% of zero, which is zero.

Indeed, the value of the services of self-employed professionals varies. In any case, respondents may validly require them to issue receipts for services rendered pro bono to monitor their tax compliance. We note the Bureau of Internal Revenue's manifestation that it was reviewing the assailed revenue regulation in view of the arguments raised in these consolidated Petitions.123

In sum, the directive to submit an affidavit describing payment schedules does not equate to regulating the practice of profession and does not raise serious ethical concerns. Requiring the issuance of receipts is a valid measure that the tax collector may employ to ascertain the correct amount of taxes payable by self-employed professionals.

Although requiring professionals to submit affidavits of rates, manner of billing, and considerations regarding fees neither encroaches this Court's rule-making power nor violates ethical norms, Section 2(1) of Revenue Regulations No. 4-2014 is unconstitutional for going beyond the mandates of the Tax Code.

Petitioners uniformly assail Revenue Regulations No. 4-2014 as an ultra vires act. They stress that the Tax Code did not grant the Bureau of Internal Revenue power to compel professionals to charge and publish a schedule of rates. Respondents counter that they simply complemented existing methods currently employed in determining tax compliance, as provided in the Tax Code.

A valid exercise of subordinate legislation entails that it be germane to the purposes of the law it implements.124 Administrative agencies may fill in the details of laws, as presumably, they have the expertise in enforcing laws and regulations within their functions.125

However, an administrative issuance must not contradict or go beyond, but must conform to the standards that the law prescribed.126

To recall, Section 2(1) of Revenue Regulations No. 4-2014 obligates self-employed professionals to register and annually pay the registration fee, and to "submit an affidavit indicating the rates, manner of billings, and the factors they consider in determining their service fees upon registration."

Further, Section 2(2) mandates self-employed professionals to register their books of account and official appointment books with their clients' names and the date and time of the meeting.

We find that respondents were well within their powers in issuing certain portions of Sections 2(1) and 2(2).

Section 2(1) is valid in that it mandates self-employed professionals, as proper subjects of taxation, to register and pay annual registration fees in the revenue district office that has jurisdiction over them. As stated in Revenue Regulations No. 4-2014, it finds support in Section 236 of the Tax Code, which states:

The registration and payment mandates execute the revenue regulation's objective to "promote transparency and to eradicate tax evasion among self-employed professionals,"127 as they shall be registered taxpayers that will come under the government's regulation.

Likewise, obligating the registration of books of accounts under Section 2(2) simply implements the Tax Code. Respondents include Sections 5 and 244 of the Tax Code as their statutory bases in issuing Revenue Regulations No. 4-2014. They read:

As provided above, the Tax Code empowers the finance secretary to promulgate rules to effectively enforce the Tax Code. The finance secretary may also "examine any book, paper, record, or other data which may be relevant or material to such inquiry"; and to regularly obtain "from any person . . . any information such as . . . costs and volume of production[.]"

Tax collectors may obtain regular information on the production cost from taxable persons through receipts, which issuance is also directed under the assailed regulation. A receipt is, as respondents describe, the written evidence of the value of services and its corresponding tax due after the service is performed. The Tax Code requires that its issuance for services be rendered at a certain value, and that its original be "kept and preserved by the issuer in [the] place of business, for [three years]."

Thus, this Court upholds the validity of Section 2(2) of Revenue Regulations No. 4-2014, insofar as it obligates the registration of books of accounts. It finds justification in the Tax Code, and thus, is within respondents' scope of authority. It is germane to the purpose of the Tax Code, as it guides the agents of tax collection in "monitoring the fees charged by the professionals," in assessing taxable income, and "in conducting tax audit [to] boost revenue collections in such sectors."

However, Revenue Regulations No. 4-2014 went beyond the Tax Code when it compelled self-employed professionals to submit an affidavit of schedule of fees.

As stressed by our esteemed colleagues, Associate Justices Alfredo Benjamin S. Caguioa, Rodil V. Zalameda, Jose Midas P. Marquez, and Maria Filomena D. Singh (Justice Singh), Section 2(1) is void for being issued in excess of respondents' authority. They explain that respondents may obtain information only on concluded transactions, which are the taxable services. Requiring professionals to submit affidavits containing their fee structures and considered factors in assessing fees is irrelevant in respondents' primary duty of assessment and collection of tax due.

The affidavit that the issuance requires may be akin to receipts, which are written evidence of the value of services. However, it is indicative only, and the supposed fee is determined before the service is performed. The affidavit does not bind professionals to the disclosures in their affidavits, and it appears to allow them to ultimately charge higher or lower. It is vague how the affidavit aids the tax collector in ascertaining the payable tax.

Thus, there appears no compelling need for sworn statements of the rates and manner of billing among professionals. It is irrelevant, baseless, and serves no legitimate purpose. This is not a proper exercise of subordinate legislation. This is unconstitutional.

As for lawyers, Canon 20 of the Code of Professional Responsibility lists the factors in determining professional fees, making it superfluous to require it in affidavit form to be submitted to agents of tax collectors.

On April 13, 2023, this Court approved A.M. No. 22-09-01-SC, which revised the Code of Professional Responsibility. Canon III, Section 41 of the Code of Professional Responsibility and Accountability provides:

This Court takes judicial notice that petitioner Integrated Bar of the Philippines, through its Cebu City chapter, has recently published a "Standard Minimum Attorney's Fees Schedule."129 This appears to be an example of the information that the revenue regulation aims to collect, which the Code of Professional Responsibility and Accountability now requires. It notes the following:

As Justice Singh aptly underscores, Canon III, Section 41 of the Code of Professional Responsibility and Accountability will better aid in achieving the transparency sought by the Bureau of Internal Revenue, a noble purpose which this Court very much shares. The information that the Bureau seeks through Revenue Regulations No. 4-2014, as Justice Singh opines, "can be more reliably obtained through a schedule of fees published by impartial actors such as the [Integrated Bar of the Philippines] Chapter."131

The mandatory registration of appointment books under Section 2(2) of Revenue Regulations No. 4-2014 is an unconstitutional intrusion into the fundamental rights of professionals and their patients and clients. It violates privacy rights and the ethical norms in petitioners' professions.

Petitioners uniformly assail Revenue Regulations No. 4-2014 for violating their patients' and clients' privacy rights, and for encroaching on their codes of ethics on confidentiality. Respondents counter that only the client's name and appointment schedule will be disclosed, which are not privileged information. They reason that the nature of the consultation, condition of the client or the patient, and other surrounding circumstances need not be stated; hence, no privacy rights are violated.

Under the Constitution, the privacy of communication and correspondence is inviolable except only when there is a court order, or as the law prescribes when public safety or order requires otherwise.

Jurisprudence has since pointed out that the right to privacy enjoyed in this jurisdiction does not only concern correspondence and communication. Certain fundamental rights create penumbras where corresponding privacy rights lie, otherwise known as "zones of privacy." Morfe v. Mutuc132 introduced these values into our legal regime:

Ople v. Torres134 pointed to specific provisions not only in the Constitution, but also in statutes, that guarantee other facets of the right to privacy:

Enriching this are three strands of the right to privacy, as retired Chief Justice Reynato Puno propounded:136 (1) locational privacy; (2) informational privacy; and (3) decisional privacy. To expound:

Locational privacy, also known as situational privacy, pertains to privacy that is felt in a physical space. It may be violated through an act of trespass or through an unlawful search. Meanwhile, informational privacy refers to one's right to control "the processing—i.e., acquisition, disclosure, and use—of personal information."

Decisional privacy, regarded as the most controversial among the three, refers to one's right "to make certain kinds of fundamental choices with respect to their personal and reproductive autonomy."137 (Citations omitted)

Informational privacy has two aspects: the right not to have private information disclosed, and the right to live freely without surveillance and intrusion. In determining whether or not a matter is entitled to the right to privacy, this Court has laid down a two-fold test. The first is a subjective test, where one claiming the right must have an actual or legitimate expectation of privacy over a certain matter. The second is an objective test, where his or her expectation of privacy must be one society is prepared to accept as objectively reasonable.138 (Citations omitted)

In re Sabio139 laid down the standard in assessing whether the State impermissibly intrudes into these zones of privacy:

Accordingly, this Court shall determine whether in setting appointments with a lawyer, doctor, accountant, dentist, or any other professional, a person may reasonably expect privacy, and if so, whether the government intrusion is unreasonable, violating that expectation.

In arguing that privacy rights are not intruded on, respondents claim to find nothing wrong with the Bureau of Internal Revenue knowing whom the self-employed professional met and when they did so.

In Disini v. Secretary of Justice,141 this Court weighed the right to privacy against government authority to monitor data traffic under the Cybercrime Prevention Act. This Court noted that the law did not permit authorities to look into the contents of the messages and uncover the identities of the sender and the recipient. However, it also acknowledged the reality that "[w]hen seemingly random bits of traffic data are gathered in bulk, pooled together, and analyzed, they reveal patterns of activities which can then be used to create profiles of the persons under surveillance."142 This Court continued:

With enough traffic data, analysts may be able to determine a person's close associations, religious views, political affiliations, even sexual preferences. Such information is likely beyond what the public may expect to be disclosed, and clearly falls within matters protected by the right to privacy.143 (Emphasis supplied)

Clients and patients have a reasonable expectation of privacy when they set appointments with the professionals that petitioners represent here.

A battered wife who is deathly afraid of her husband may not want to be known to be consulting a lawyer. An employee who has a grievance against his superior may not like to be identified seeking the advice of a labor lawyer. A public figure, accused of a serious crime, may prefer to consult a lawyer in secret.144

Similarly, when patients consult with doctors who specialize in specific medical conditions, they can reasonably expect privacy that their identities will not be in some government record. Listing one's name in a book of appointments of a particular specialist, to be submitted to the State, potentially divulges information that need not be publicized.145 An exhaustive list of these conditions is not necessary; anyone consulting a doctor may reasonably expect privacy especially as to their health.

Granted, by themselves, names and appointment dates of patients and clients paint no picture. But as Disini teaches, bundling together all the times a person consults with a professional may illustrate a general pattern of behavior, from which information about a person could be revealed, or inferences from information that should have remained private may be drawn. 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.

Respondents stress that appointment books need to be registered only and are not automatically subject to the prying eyes of the Bureau of Internal Revenue. They add that the registered appointment books may be viewed only when the self-employed professional is suspected of not paying the correct taxes.

Respondents strangely made a case against their own regulation. Nonetheless, the mere chance that a person's information may be subject to the State's prying eyes is an unreasonable intrusion. Considering the risks, this information must not be readily and publicly knowable. That clients and patients may think twice about consulting with professionals, if the government can create a dossier on them based on sensitive information extracted from the appointment book, is more than just an imagined fear.

Mandating a registered appointment book violates the ethical standards146 of petitioners' professions. The nature of their profession requires strict adherence to confidentiality rules. On this score, petitioners' argument on their codes of ethics is well taken.

Attorney-client communication is declared privileged under Rule 130, Section 24(b) of the Revised Rules on Evidence and Rule 138, Section 20(e) of the Revised Rules of Court. They state:

This privilege is reinforced in many other statutes. The Code of Professional Responsibility likewise mandates lawyers to safeguard information divulged to them, borne out of lawyer-client relations:

The Data Privacy Act generally prohibits "the processing of sensitive personal and privileged information."147 This includes "any and all forms of data which under the Rules of Court and other pertinent laws constitute privileged communication."148 Section 13 states:

The Revised Penal Code penalizes a lawyer who reveals any client's secrets learned in their professional capacity:

ARTICLE 209. Betrayal of Trust by an Attorney or Solicitor — Revelation of Secrets. — In addition to the proper administrative action, the penalty of prision correccional in its minimum period, or a fine ranging from 200 to 1,000 pesos, or both, shall be imposed upon any attorney-at-law or solicitor (procurador judicial) who, by any malicious breach of professional duty or inexcusable negligence or ignorance, shall prejudice his client, or reveal any of the secrets of the latter learned by him in his professional capacity.

The same penalty shall be imposed upon an attorney-at-law or solicitor (procurador judicial) who, having undertaken the defense of a client or having received confidential information from said client in a case, shall undertake the defense of the opposing party in the same case, without the consent of his first client.

In Regala v. Sandiganbayan,149 this Court discussed the policy considerations in deeming communication between lawyers and their client as privileged:

Echoing Regala, this Court in Pacana, Jr. v. Pascual-Lopez151 held that the lawyer-client relationship is imbued with trust and confidence of the highest degree:

In the course of a lawyer-client relationship, the lawyer learns all the facts connected with the client's case, including its weak and strong points. Such knowledge must be considered sacred and guarded with care. No opportunity must be given to him to take advantage of his client; for if the confidence is abused, the profession will suffer by the loss thereof. It behooves lawyers not only to keep inviolate the client's confidence, but also to avoid the appearance of treachery and double-dealing for only then can litigants be encouraged to entrust their secrets to their lawyers, which is paramount in the administration of justice.152 (Emphasis supplied)

Regala's significant import on the development of the privilege is its ruling that lawyers may not invoke the attorney-client privilege to refuse disclosing who their clients are.153 This information would only be protected "when the client's name itself has an independent significance, such that disclosure would then reveal client confidences."154 This Court said:

[T]he content of any client communication to a lawyer lies within the privilege if it is relevant to the subject matter of the legal problem on which the client seeks legal assistance. Moreover, where the nature of the attorney-client relationship has been previously disclosed and it is the identity which is intended to be confidential, the identity of the client has been held to be privileged, since such revelation would otherwise result in disclosure of the entire transaction.155 (Emphasis in the original)

"As a matter of public policy, a client's identity should not be shrouded in mystery."156 Generally, "a lawyer may not invoke the privilege and refuse to divulge the name or identity of [their] client."157

However, Regala allows the client's identity to be privileged in exceptional instances: (1) "where a strong probability exists that revealing the client's name would implicate that client in the very activity for which [they] sought the lawyer's advice";158 (2) "[w]here disclosure would open the client to civil liability, [their] identity is privileged";159 and (3) "[w]here the government's lawyers have no case against an attorney's client unless, by revealing the client's name, the said name would furnish the only link that would form the chain of testimony necessary to convict an individual of a crime, the client's name is privileged."160

This Court in Regala acknowledged that there might be attempts to exploit the privilege, where a client takes on an attorney's services specifically to circumvent the law and commit crime.162 But this Court assured that the privilege may not be invoked to shield an unlawful act, as "it is not within the professional character of a lawyer to give advice on the commission of a crime."163 In any case, this Court underscored that it could not risk resolving this issue differently, lest it inadvertently allow the erosion of the uberrimei fidei relationship between a lawyer and their client, which subsists even when the attorney-client relationship is terminated.

Mercado v. Vitriolo164 appeared to temper a general invocation of the lawyer-client privilege. There, this Court laid down factors that highlight the need for a proper appreciation of facts in cases invoking the privilege:

Recently, in Minas v. Doctor, Jr.,166 this Court cautioned that a "mere relation of attorney and client does not raise a presumption of confidentiality."167

Thus, respondents are incorrect in arguing that the client's name is not privileged information. Regala decreed that the client's identity falls within the privilege, in proper cases.

Likewise, patient-physician communication is also deemed privileged under Rule 130 of the Revised Rules on Evidence:

As privileged communication, correspondence between physicians and their patients is likewise protected by the Data Privacy Act.168 Lim v. Court of Appeals169 instructs when this privilege may be invoked:

Gonzales v. Court of Appeals171 ruled that the privilege extends even until death; to rule otherwise would thwart the privilege's purpose and defeat the public policy animating it. "After one has gone to [their] grave, the living are not permitted to impair [their] name and disgrace [their] memory by dragging to light communications and disclosures made under the seal of the statute."172

But the physician-patient privilege is not absolute, and a mode of discovery may be availed of in proper cases to divulge relevant information. In a separate opinion:173

Finally, as Justice Amy C. Lazaro-Javier points out, "The right to privacy encompasses privileged information. But they do not proceed from the same source of responsibility. Privileged information cultivated in the course of professional relationship requires trust and confidence that compels the professional to 'shut up.' For the [Bureau of Internal Revenue] to compel any professional at that, to divulge any information acquired in confidence is to force the professional to violate such trust. And for the purpose of obtaining 'ready evidence' whenever the professional is suspected of violation of tax laws."175

In our jurisdiction, Republic Act No. 9298, or the Philippine Accountancy Act of 2004, requires certified public accountants to treat all working papers, schedules, and memoranda as generally confidential and privileged:

SECTION 29. Ownership of Working Papers. — All working papers, schedules and memoranda made by a certified public accountant and his staff in the course of an examination, including those prepared and submitted by the client, incident to or in the course of an examination, by such certified public accountant, except reports submitted by a certified public accountant to a client shall be treated confidential and privileged and remain the property of such certified public accountant in the absence of a written agreement between the certified public accountant and the client, to the contrary, unless such documents are required to be produced through subpoena issued by any court, tribunal, or government regulatory or administrative body. (Emphasis supplied)

Under the same law, a violation of their ethical rules exposes accountants to suspension or revocation of their license:

SECTION 24. Suspension and Revocation of Certificate of Registration and Professional Identification Card and Cancellation of Special Permit. — The Board shall have the power, upon due notice and hearing, to suspend or revoke the practitioner's certificate of registration and professional identification card or suspend him/her from the practice of his/her profession or cancel his/her special permit for any of the causes or grounds mentioned under Section 23 of this Act or for any unprofessional or unethical conduct, malpractice, violation of any of the provisions of this Act, and its implementing rules and regulations, the Certified Public Accountant's Code of Ethics and the technical and professional standards of practice for certified public accountants.

This Court concedes that if any of these professionals decide that certain aspects of their relationship with their clients ought to be publicized and made transparent, they themselves will, through their organization, draft and publish this in their code of ethics. Until then, this Court upholds the fundamental right to privacy of the professionals, their clients, and their patients.

As demonstrated by law and jurisprudence, the State policy in protecting the people's right to privacy is clear. In mandating the registration of appointment books of self-employed professionals, Revenue Regulations No. 4-2014 is an unconstitutional intrusion into this right.

Sections 2(1) and 2(2) of Revenue Regulation No. 4-2014, insofar as they require the submission of an affidavit indicating the rates, manner of billings and the factors that self-employed professionals consider in their service fees, and the mandatory registration of their appointment books, are declared VOID, being issued in excess of the Department of Finance's jurisdiction.

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.

Gesmundo, C.J., Hernando, Inting, M. Lopez, Gaerlan, Rosario, J. Lopez, Dimaampao, Marquez, and Kho, Jr., JJ., concur.