Flashcards Studio

NovaGen Pharmaceuticals, Inc., a corporation with principal office in Pasay City, receives a Letter of Authority (LOA) dated November 15, 2025 from the Commissioner of Internal Revenue authorizing Revenue Officer Carlos Dizon to examine NovaGen’s books and other pertinent records for calendar years 2021 and 2022, to be conducted at NovaGen’s premises. The LOA (i) authorizes entry and inspection of the books, ledgers, invoices, payroll records, and other pertinent records; (ii) directs NovaGen and its officers to produce the books and records; and (iii) instructs BankNova, the custodian of NovaGen's bank statements and related records, to cooperate and to produce the bank statements for the same period. The LOA lists BankNova as custodian and does not mention other banks. It does not specify the exact number of years beyond 2022 and is served on NovaGen's Chief Financial Officer on November 17, 2025. On November 22, 2025, BankNova refused to release the bank statements, citing Bank Secrecy Law (RA 1405) and asserting that the LOA does not explicitly authorize the bank to disclose the records without a court order. The Revenue Officer contends that the LOA's language “bank statements and related records” is sufficient to include the bank records, and that the LOA is a valid instrument directing bank cooperation.
(a) Identify the controlling doctrine or principle that governs the validity and scope of a Letter of Authority in tax examinations.
(b) Determine, on these facts, whether the LOA covers the requested bank statements and whether BankNova must release them without a court order.
(c) If the LOA is defective for lack of precise scope, explain the remedy for NovaGen and the likely impact on the audit and any resulting assessments.