Access to justice by all, especially by the less fortunate, is not simply an ideal in our society but an essential in a democracy and the rule of law. Thus, the Philippine Constitution provides that free access to the courts and quasi-judicial bodies and adequate legal assistance shall not be denied to any person by reason of poverty.

In line with the State's policy to guarantee free legal assistance to the poor and ensure that every person who cannot afford the services of counsel is provided with competent and independent counsel, preferably of his/her own choice, Republic Act 9999, or the "Free Legal Assistance Act of 2010," was enacted.

Under Section 5 of RA 9999, lawyers or professional partnerships rendering actual free legal services are entitled to an allowable deduction from the gross income equivalent to the amount that could have been collected for the actual free legal services rendered or 10 percent of the gross income derived from the actual performance of the legal profession, whichever is lower, exclusive of the minimum 60-hour mandatory legal aid services rendered to indigent litigants required under Bar Matter No. 2012 (the Rule on Mandatory Legal Aid Services for Practicing Lawyers) issued by the Supreme Court.

On 8 March 2013, the Bureau of Internal Revenue issued Revenue Memorandum Circular No. 26-2013, specifying that the incentive granted in RA 9999 shall be treated as a "Special Allowable Itemized Deduction."

On 13 September 2022, the BIR issued Revenue Regulation No. 12-2022, prescribing the policies and guidelines for the availment of incentives for rendering free legal services under RA 9999.

RR 12-2022 defines the term "legal services" as "any activity which requires the application of law, legal procedure, knowledge, training and experiences which shall include, among others, legal advice and counsel, and the preparation of instruments and contracts, including appearance before the administrative and quasi-judicial offices, bodies and tribunals handling cases in court, and other similar services as may be defined by the Supreme Court."

To qualify for the incentives, RR 12-2022 requires that the legal services provided be made in favor of indigents or pauper litigants. Section 19 of Rule 141 of the Rules of Court, as amended, defines indigent litigants as "those whose gross income and that of their immediate family do not exceed an amount double the monthly minimum wage of an employee and who does not own real property with a fair market value as stated in the current tax declaration of more than P300,000." RR 12-2022 also requires that the lawyer be a member in good standing of the Philippine Bar as of the date of rendering the legal services.

To avail of the incentives, RR 12-2022 further requires lawyers or professional partnerships to attach the following to their Income Tax Return, or ITR:

a. Certification from the Public Attorney's Office, Department of Justice, or accredited association of the Supreme Court indicating that the legal services to be provided are within the services defined by the Supreme Court; the agencies cannot provide the legal services to be provided by the private counsel; and the legal services were actually undertaken;

b. Accomplished BIR Form No. 1701 (for individual lawyers) or BIR Form No. 1702-EX (for general professional partnership), particularly Schedules 5 and 2, respectively, on "Special Allowable Itemized Deductions"; and

c. Sworn statement of the lawyer or managing partner (in case of a professional partnership) as to the amount that could have been collected for the actual free legal service.

Verily, a lawyer is part of the machinery in the administration of justice. Like the court itself, he/she is an instrument to advance the ends of justice — to represent not only the wealthy but also the impoverished. In this regard, lawyers receive an incidental benefit in the form of a tax deduction for their services while assisting in the proper administration of justice.

For more of Dean Nilo Divina's legal tidbits, please visit www.divinalaw.com. For comments and questions, please send an email to cabdo@divinalaw.com.