MARUNONG MASMARUNONG & PINAKAMARUNONG

To: Atty. Pinakamarunong

From: Atty. _________
Date: 15 March 2011
Re: Opinion on the Legality of Bureau of Internal Revenue Revenue
Regulation No. 2-2011 (Rev. Reg. 2-2011)

Issue

Whether Bureau of Internal Revenue Revenue Regulation No. 2-2011

(Rev. Reg. 2-2011) is valid.

Brief Answer

No, it is unconstitutional on due process, equal protection and privacy

grounds.

Statement of Facts

Our client, whose annual income from private business interests is

P 1.2M, wishes to know whether Rev. Reg. 2-2011 is valid.

Discussion

Rev. Reg. 2-2011 Offends Against the Substantive

Due Process Protection of the Constitution

Rev. Reg. 2-2011 requires private citizens to annually disclose

financial information or else pay a range of fine. This compelled
disclosure, undoubtedly a monitoring measure to increase revenue
collection, is an arbitrary and misguided exercise of police power.
Compelling individuals in the public service to periodically disclose
financial information is permissible because they hold offices imbued
with public interest and sustained by public funds, placing them well
within the State’s regulatory power (Morfe v. Mutuc, 22 SCRA 424
[1968]). The absence of this public interest element in the private sector
necessarily narrows government’s regulatory space, rendering broad
police power measures such as Rev. Reg. 2-2011 as violative of
substantive due process protection.
 Rev. Reg. 2-2011 is Violative of the Equal Protection
Clause

Rev. Reg. 2-2011 limits its application to, among others, individual
taxpayers whose total annual income (taxable or exempt) exceeds
P 500,000. This threshold amount lacks any demonstrably reasonable
connection to the measure’s aim of increasing tax collection. Thus, it
unreasonably exempts from the sweep of its coverage (and its punitive
provisions) private individuals earning P 499,000 and below, who,
admittedly, form a substantial part of the pool of taxpayers.

Rev. Reg. 2-2011 Violates the Right to Informational

Privacy

Rev. Reg. 2-2011 compels, under pain of monetary penalty, private

taxpayers under its ambit to disclose, among others, interest and
dividends of passive income (such as bank and other deposits). As rates of
interests and dividends are public knowledge, disclosure of such
information indirectly allows the government to obtain information on the
amount of bank deposits and other savings in violation of Republic Act
No. 1405 (Secrecy of Bank Deposits Act) which the Supreme Court has
determined as protective of informational privacy (Ople v. Torres, 293
SCRA 141, 158 [1998], in relation to footnote 62). Worse, it exposes
private individuals such as our client to needless harm as information of
his financial status, although theoretically extracted by the BIR, could
spill beyond revenue officers and fall into the hands of individuals who
may well be encouraged to commit money driven crimes. This is a real
evil the Supreme Court has recognized as an offshoot of the violation of
the right to informational privacy (Ople v. Torres, supra.).

Recommendation

It is recommended that our client initiate judicial proceeding to strike down

Rev. Reg. 2-2011 as unconstitutional for being violative of the due
process, equal protection, and privacy guarantees. Pending proceedings, it
is advisable to seek an injunctive order to enjoin implementation of Rev.
Reg. 2-2011.