February 9, 2018

OPERATIONS MEMORANDUM NO. 2018-02-03

TO : All Regional Directors, Revenue District Officers, Internal

Revenue Officers and Others Concerned

RE : Court of Tax Appeals (CTA) Decisions Concerning the

Issuance of Letters of Authority and Memorandum of
Assignment (MOA) in Relation to Section 13 of the National
Internal Revenue Code of 1997 (NIRC), as Amended

Section 235 of the NIRC, as amended, provides that for income tax
purposes, examination and inspection of the books and records shall be
made only once in a taxable year, except in certain cases specifically
mentioned under the aforesaid section of the NIRC. Thus, as a general
policy, only one electronic Letter of Authority (eLA) is issued for each taxable
year or period covering the audit/investigation of all internal revenue tax
liabilities of the taxpayer, except when a specific tax type had been
previously examined (e.g., audit of VAT liabilities under the VAT Audit
Program, audit of VAT arising from claim for tax refund/Tax Credit
Certificate).
In line with the said provision, in the reassignment of cases to another
Revenue Officer (RO) due to transfer to another office, retirement,
resignation, etc., of the original RO handling the case, the Revenue District
Officer (RDO) issues a Memorandum of Assignment (MOA) to the new RO for
the continuation of the audit/investigation. We issue a MOA, using a pre-
numbered accountable form in order to monitor and tract the reassignment
of cases. However, in the recent decisions issued by the Court, there must
be an authority in the form of an LA given to the RO, otherwise the
examination or assessment is void (McDonald's Philippine Realty Corporation
vs. CIR, CTA Case No. 8655; Ithiel Corporation vs. CIR, CTA Case No. 8689;
Strawberry Foods Corporation vs. CIR, CTA Case No. 8569).
In view of the foregoing, the issuance of a MOA for reassignment of
cases in the aforementioned instances shall be discontinued. However,
before the RDO can request for the issuance for the replacement eLA, the
previous eLA must be cancelled by the Regional Director.
In requesting for the eLA replacement, aside from the name of the new
RO/Group Supervisor (GS), the LOA No. of the cancelled eLA shall be
encoded and the appropriate reason (e.g., resignation of the RO, retirement
of the RO, transfer of the RO to another district office) must be selected from
the "List of Reason for LOA replacement" that will be displayed in the
"Electronic Letter of Authority Request Data Entry" screen. The said
information is necessary so that the replacement eLA reassigning the case to
another RO/GS will have a notation at the bottom of the new eLA as follows:
"This is a replacement of Letter of Authority No. _____________
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 dated __________________ for the continuation of audit of herein tax
liabilities for the taxable period from __________________ to
__________________ arising from the reassignment of the case due to
____________________________________."
For your information and guidance.
(SGD.) ARNEL SD. GUBALLA
Deputy Commissioner
Operations Group

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