In recent weeks, concerns have surfaced about the alleged misuse of the Letter of Authority (LOA) as a tool for corruption. Responding swiftly, the Commissioner of Internal Revenue (CIR) issued Revenue Memorandum Circular No. 107-2025 on 24 November 2025, ordering a temporary suspension of all field audits and related operations. During this suspension, the creation, printing, signing, and service of any LOA is put on hold, save for a few narrowly defined exceptions.
This move has brought the LOA back into the spotlight, prompting an important question:
What exactly is a Letter of Authority?
A Letter of Authority, or LOA, is essentially the legal passport that allows a BIR revenue officer (RO) to examine a taxpayer’s books of account and other records. It is not just a formality. It is the very document that empowers the officer to verify whether the right amount of tax has been paid. As the Supreme Court clarified in CIR v. Sony Philippines (G.R. No. 178697; November 17, 2010), it is the authority given to the appropriate revenue officer assigned to perform assessment functions. It empowers or enables said revenue officer to examine the books of account and other accounting records of a taxpayer for the purpose of collecting the correct amount of tax.
The foundation of this requirement is simple but crucial: once a taxpayer has filed a return, the power to examine that return belongs exclusively to the CIR or his duly authorized representative. This principle was firmly reiterated in MEDICARD v. CIR (G.R. No. 222743; April 5, 2017). Without such authorization, any examination conducted by an RO is invalid—and any assessment that follows is void. No LOA, no valid audit, no valid assessment.
But what about assessments using best evidence, inventory-taking, or surveillance?
Section 6 of the Tax Code equips the CIR with powerful tools: assessment through the best evidence obtainable, inventory-taking, and surveillance. This has sometimes led to the argument that the issuance of an LOA isn’t always necessary, since the law recognizes various ways to determine deficiency taxes.
However, the Supreme Court drew a clear line in Medicard. These methods—best evidence, inventory-taking, surveillance—are techniques for determining tax liability. They say nothing about who is authorized to conduct the examination. Even if these methods are used, the examination must still be carried out either by the CIR himself or by someone he has formally empowered. In other words, the method may vary, but the requirement for proper authority does not.
Is an LOA required even when no physical books are opened?
Yes. And this is a point the Court underscored unequivocally in Medicard.
Section 6 requires authority before any examination of a taxpayer by an RO can take place. The requirement does not hinge on whether the taxpayer physically hands over books or documents. What matters is whether the taxpayer is being subjected to an examination at all. Even if the assessment is based purely on data already in the government’s possession, an LOA is still necessary, unless, of course, the CIR himself or his authorized representative is conducting the examination.
The bottom line:
An LOA is not a mere administrative formality. It is a legal safeguard—one that protects taxpayers from unauthorized audits and ensures that BIR officers act within the bounds of the law. Whether the examination involves reviewing physical books, relying on third-party data, or using surveillance and other special methods, a valid LOA remains indispensable unless the examination is done directly by the CIR or a duly authorized representative.
With the temporary suspension of field audits, the BIR is taking a pause to address concerns and reinforce the integrity of the audit process. Understanding the role and legal weight of an LOA is essential as the agency recalibrates its mechanisms for accountability, transparency, and proper tax administration.