JV Ejercito exposes alleged BIR ‘extortion’ scheme, warns against weaponization of LOA
November 19, 2025
Senate Deputy Majority Leader JV Ejercito sounded the alarm over the alleged “weaponization” of Letters of Authority (LOA) by the Bureau of Internal Revenue (BIR), saying the abusive issuance of LOAs is now being used as a tool for corruption, scaring off investors and undermining confidence in the country’s tax system.
Ejercito made the revelation during the Senate plenary deliberations on the proposed 2026 national budget on Monday, Nov. 17, citing complaints raised by foreign chambers and diplomatic partners.
“Concerns have been raised regarding the excessive issuance of letters of authority or LOAs… the excessive use of LOAs by the BIR has raised serious concerns among domestic and foreign investors,” Ejercito said, quoting discussions with the European Union ambassador and the American and European chambers of commerce.
“If not carefully regulated, [this] may create an atmosphere of uncertainty among businesses and discourage investors who may perceive it as a sign of unpredictability or overreach in tax administration,” he added.
Ejercito stressed that the Philippines’ already low ranking in foreign direct investment (FDI) attractiveness is further affected by these practices, which create “deterrents” for investors who seek stability and fairness in tax enforcement.
Ejercito detailed several alarming reports:
• Issuing LOAs covering taxable years already settled and fully paid
• LOAs that lump multiple taxable years
• A tax assessment of P100 million reduced to P75 million after a “settlement,” with instructions to “fix the receipt”
“These are just some of the instances wherein there is questionable process,” the senator stressed.
The lawmaker from San Juan said the government must strike a balance between enforcing tax laws and maintaining a stable, investor-friendly environment.
Ejercito urged the newly appointed BIR Commissioner Charlie Mendoza to move swiftly to “clean house” and install safeguards to prevent LOA misuse.
“I’m hoping that the agency can guarantee safeguards and internal mechanisms so that any form of corruption—ito pong pag-weaponize sa LOAs—would be prevented in the future,” he said.
“We wish you all the luck… and we hope reforms will be instituted so LOAs will no longer be weaponized for corruption.”
He reiterated that while the Senate supports the campaign for stronger tax monitoring and collection, reforms must ensure fairness, predictability, and transparency to protect investors and uphold public trust.
