MANILA, Philippines - Believing that giving out the alphabetical list (alphalist) of their clients to government regulators is unconstitutional and would put them in harm’s way, the securities and banking industries have asked the Supreme Court to stop the Bureau of Internal Revenue (BIR), the Department of Finance (DOF) and the Securities and Exchange Commission (SEC) from enforcing such order contained in Revenue Regulation (RR) 01-14 and RMC 05-14.
In a petition filed before the SC on Thursday – the Bankers Association of the Philippines (BAP), Fund Managers Association of the Philippines (FMAP), Marmon Holdings Inc., Philippine Association of Securities Brokers and Dealers, Inc. (PASBDI), The Philippine Stock Exchange Trust Officers Association of the Philippines (TOAP) – have asked the high court issue a TRO and/or writ of preliminary injunction to enjoin the DOF, BIR and the SEC from implementing the subject regulations.
The petitioners also asked the court to declare RR 01-14 and RMC 05-14 as unconstitutional and/or invalid.
In effect, the petitioners explained that they are in a conundrum because if they comply, they face risk of criminal prosecution under the Data Privacy Act; and if they don’t, they also face risk of criminal prosecution under the Tax Code and the src.
The petitioners explained that subject regulations violate investors’ right to privacy under the Data Privacy Act by requiring the disclosure of sensitive personal information to private parties (i.e. listed companies) without providing for a mechanism that would guarantee the protection of said information.
The regulations also violate investors’ right to privacy under banking laws and regulations by requiring banks to disclose information relating to clients’ properties in their custody. Violation of said laws merit the imposition of criminal penalties such as fines and imprisonment.
They said that the SEC is not authorized to issue circulars implementing or interpreting tax laws or issuances and that the regulations are contrary to the state policy under the src, Tax Code and Data Privacy Act, i.e., the need to provide measures to achieve sustainable economic growth.
Failure to provide the required information will result in failure to comply with the BIR regulations and render petitioners and their clients criminally, civilly and administratively liable under the Tax Code.
“On the other hand, if petitioners comply and disclose the required information, they incur the risk of risk being held criminally liable for violation of the Data Privacy Act,” the petitioners argued.