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BIR's alphalist rules challenged before SC.

The Philippine Stock Exchange and the Bankers Association of the Philippines yesterday asked the Supreme Court to declare as unconstitutional a revenue regulation requiring withholding agents to submit a list of payees on income payment subject to creditable and final withholding taxes.

The petition is for Certiorari and Prohibition with application for temporary restraining order or writ of preliminary injunction to bar the Finance The petition seeks to declare unconstitutional Revenue Regulation 01-14, Revenue Menorandum Circular 05-14, and SEC Memorandum Circular 10-14 which prohibit the reference to PCD Nominee as the payee of dividend payments made by listed companies.

Petitioners claim that RR 1-2014, RMC 5-2014 and SEC MC 1-2014 violate their right to due process. They pointed out that the requirement for listed companies to disclose the payees of dividends is unreasonable because under the current capital market structure, compliance of listed companies with the subject regulations is dependent on the voluntary and accurate disclosure of third parties.

Failure or refusal of third parties to provide the required information to listed companies will result in listed companies' failure to comply with the regulations and render listed companies criminally, civilly, and administratively liable under the Tax Code and the Securities Regulation Code.

"This constitutes a violation of listed companies' and their officers' constitutional right against deprivation of liberty and property without due process," said the Philippine Stock Exchange.

They also noted that there was no prior notice and hearing involving affected market participants and that the requirement to disclose the payees of dividends is void for being vague.

This is because, in prohibiting listed companies and brokers from naming PCD Nominee as the payee, the regulations effectively compel listed companies and brokers to speculate which should be considered as the payee for purposes of complying with the regulations, again at the risk of incurring administrative and criminal liabilities under the Tax Code and Sections the SRC.

Petitioners also cited that the SEC is not authorized to issue circulars implementing or interpreting tax laws or issuances.

The regulations also violate the Data Privacy Act as it requires broker dealers to disclose sensitive personal information of investors to listed companies - not to government or public authorities - without providing for any mechanism to protect the privacy of such information.


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Title Annotation:Stock Market
Publication:Manila Bulletin
Date:Sep 4, 2014
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