Attorney-client privilege and the BIR


On February 22, 2018, the Bureau of Internal Revenue (BIR) issued Revenue Memorandum Circular (RMC) No. 12-2018 which effectively grants the Commissioner of Internal Revenue (CIR) the power to compel lawyers to divulge information of their clients as taxpayers. This issuance caused ripples in the legal profession and imperiled the attorney-client privilege, a long and well-established feature in our legal system.

When a person is compelled by circumstances to litigate or avail of any legal remedy to protect or enforce his or her rights, he or she ordinarily engages a lawyer who, with years of legal education and training, should be knowledgeable about the law and legal procedure and able to give proper legal advice.

A lawyer, however, can’t properly advise a client if the latter doesn’t fully disclose all material facts to the former. A client must have full faith, trust and confidence that all the information he reveals to the lawyer will not prejudice or harm him.

Hence, subject only to some specific exceptions, lawyers are prohibited by Canon 21 of the Code of Professional Responsibility to reveal the confidences and secrets of his clients. Such obligation subsists even after the attorney-client relationship is terminated. Rule 130 of the Rules of Court also protects an attorney from being examined as to any communication, secured from, or advice given to a client, for it’s a privileged communication. As mentioned, this attorney-client privilege is well established in our system of justice.

Under Section 5 of the Tax Code, the CIR is empowered to obtain information from any person other than the person whose internal revenue tax liability is subject to audit or investigation. Using this provision as basis, RMCNo. 12-2018 provides that the privileged communication of attorney-client can’t be used to defeat the purpose and objective of the Commissioner’s power to obtain information because the privilege should not apply when the disclosure by the lawyer is required by law or when it is made in contemplation of a crime or perpetration of fraud which, according to BIR, covers any attempt to evade or defeat tax.

The BIR also invoked the lifeblood theory which provides that taxes are the lifeblood of our nation and so its collection should be actively pursued without unnecessary impediment.

The Integrated Bar of the Philippines (“IBP”), the official organization of all Philippine lawyers, recently issued a statement expressing the organization’s firm stand against the said BIR issuance. Described by IBP as “the proverbial last nail on the coffin of the legal profession,” RMC 12-2018 is believed to likely result in “placing the entire legal profession in peril of being rendered obsolete, and the defense of the accused will be reduced to mere lip service.”

Therefore, according to the IBP, the inviolability of the attorney-client privilege communication should prevail as it is “a linchpin of any legal system that values the guarantees of democracy, fair play, and the rule of law.”

We all should be reminded of the public policy and interest involved in protecting the attorney-client privilege. The privilege is meant to encourage the client to make full disclosure to his attorney and to place unrestricted confidence in him in matters affecting his rights or obligations. The privilege founded on the grounds of public policy proceeds on the premise that benefits derived from there justify the risk that unjust decisions may sometimes result from the suppression of relevant evidence. A contrary rule will discourage the client from reposing his trust and confidence to an attorney which is detrimental to the administration of justice. (Coquia, Jorge R., Attorney and Client Privileged Communication, 262 SCRA 194).

We maintain that lawyers should enjoy the full confidence of their clients so they can effectively exercise the obligations of an administrator of justice, and defend them both at the administrative (the BIR) or judicial (the Courts) levels, as may be necessary. We therefore expect that the validity of the RMC will be challenged at the proper time and forum. When that time comes, the Courts should uphold the inviolability of the attorney-client privilege rule as much as it should uphold the collective duty of the Bench and of the Bar in administering justice and promoting public confidence in them.

Florian G. Salcedo is a Junior Associate of Mata-Perez, Tamayo & Francisco (MTF Counsel). He is an active member of MTF Counsel’s corporate, labor, litigation and immigration practice. The contents of the above article are intended for general information purposes only and do not constitute legal advice. If you have any question or comment regarding this article, you may email the author at or visit MTF Counsel’s website at

The post Attorney-client privilege and the BIR appeared first on The Manila Times Online.