Online and Real-Time Authentication and Verification of Certificates of Cover for Compulsory Third Party Liability (COC-CTPL) and Comprehensive Insurance Policies

February 10, 2010 LTO MEMORANDUM CIRCULAR NO. ACL-2010-1271 TO : All Regional and Assistant Regional Directors, Head LTO IT Project Management Committee, Sectoral/Regional IT Project Management Office, Sectoral/Regional Chief Accountants, Heads of District Offices/Other Officials and Employees Concerned SUBJECT : Online and Real-Time Authentication and Verification of Certificates of Cover for Compulsory Third Party Liability (COC-CTPL) and Comprehensive Insurance Policies By law, jurisdiction over contracts of insurance and insurance companies is reposed upon the Insurance Commission (IC) while the powers and duties to comprehend the assessment and collection of all national internal revenue taxes, fees and charges rest with the Bureau of Internal Revenue (BIR). At the LTO, insurance coverage is a mandatory requirement for registration and, as a government agency, it is imperative that LTO ensures that the insurance coverage is valid and that taxes thereon have been properly paid. In recognition of the foregoing jurisdiction and powers of the IC and BIR, LTO entered into a Memorandum of Agreement (MOA) with these agencies dated January 20, 2010, for the utilization of the IC COC Gateway (ICG) and the Enhanced Certificate of Cover Verification Facility (ECOCVF) for the verification of Certificates of Cover (COCs) and efficient collection of taxes for Compulsory Third Party Liability (COC-CTPL) and Comprehensive Insurance policies relevant provisions of which read as follows: "The ICG shall serve as the sole electronic facility for recording all COCs as proof of coverage under the CTPL and Comprehensive Insurance for motor vehicle registrations. . . ." (1st par., Sec. 1) caCEDA "The ECOCVF shall serve as the sole verification and tax collection facility for all COCs as proof of coverage under CTPL and Comprehensive Insurance for motor vehicle registrations. . . ." (2nd par., Sec. 1) "The IC shall require/mandate accredited insurance companies to submit/file COCs pertaining to CTPL and Comprehensive Insurance policies into the ICG. For this purpose, the IC shall impose administrative sanctions upon insurance companies, their directors/officers/agents, for any willful failure or refusal to comply with or violation of the aforesaid requirement." (2nd par., Sec. 2) "The LTO shall perform, host, manage and maintain the ECOCVF for the subsequent verification of COCs and shall interconnect with the ICG for proper monitoring of collection of taxes, fees, and charges due to the BIR." (3rd par., Sec. 2) Pursuant to the MOA, 1. Effective February 16, 2010, to ensure that the COCs as proof of CTPLs and Comprehensive Insurance coverage are valid according to the requirements of the IC, and the taxes due to the BIR and other government institutions for have been properly paid, only insurance policies recorded through the ICG and verified through ECOCVF shall be accepted as requirements for transactions in the LTO IT System; 2. The ICG and ECOCVF shall replace the prevailing systems specifically the current Certificate of Cover Verification Facility (COCVF) and COCVF System A. Relative hereto, the MOA has been published in full text nationally within the BIR, through Revenue Memorandum Circular No. 7-2010 dated January 20, 2010, copy of which is hereto attached and made integral part of this Circular. For strict compliance. (SGD.) ARTURO C. LOMIBAO Assistant Secretary ATTACHMENT REPUBLIC OF THE PHILIPPINES DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE January 20, 2010 REVENUE MEMORANDUM CIRCULAR NO. 007-10 SUBJECT : Publishing the Full Text of the Memorandum of Agreement between the Bureau of Internal Revenue (BIR), Land Transportation Office (LTO) and Insurance Commission (IC) TO : All Internal Revenue Officers and Others Concerned For the information and guidance of all concerned, quoted hereunder is the full text of the Memorandum of Agreement (MOA) between the Bureau of Internal Revenue (BIR), Land Transportation Office (LTO) and Insurance Commission (IC) signed on January 20, 2010 at the BIR National Training Center Auditorium, BIR, National Office, Diliman, Quezon City. cAaETS "MEMORANDUM OF AGREEMENT TO ESTABLISH INTERCONNECTIVITY/SHARING OF INFORMATION RELATIVE TO THE CERTIFICATE OF COVER (COC) FOR COMPULSORY THIRD PARTY LIABILITY (CTPL) AND COMPREHENSIVE INSURANCE THROUGH CENTRALIZED MONITORING AND RECORDING SYSTEM TO BE KNOWN AS THE IC COC GATEWAY (ICG) AND VERIFICATION SYSTEM TO BE KNOWN AS ENHANCED CERTIFICATE OF COVER VERIFICATION FACILITY (ECOCVF) This Memorandum of Agreement is entered into by and among the following agencies: LAND TRANSPORTATION OFFICE, a government agency under the Department of Transportation and Communications, with office address at East Avenue, Diliman, Quezon City, Philippines, herein represented by Assistant Secretary ARTURO C. LOMIBAO, hereinafter referred to as "LTO"; -and- BUREAU OF INTERNAL REVENUE, a government agency under the Department of Finance, with office address at BIR Road, Diliman, Quezon City, Philippines, herein represented by its Commissioner, JOEL L. TAN-TORRES, hereinafter referred to as "BIR"; -and- INSURANCE COMMISSION, a government agency under the Department of Finance, with office address at 1071 United Nations Avenue, Ermita, Manila, Philippines, herein represented by its Commissioner, EDUARDO T. MALINIS, hereinafter referred to as "IC"; Collectively referred herein as the "Parties". WITNESSETH: That WHEREAS, under Republic Act No. 4136 or the "Land Transportation and Traffic Code" and Executive Order Nos. 1011, 125 & 125-A, the LTO has the authority to enforce land transportation rules and regulations and the promotion of safety and comfort in land travel; DcHSEa WHEREAS, the LTO has developed an integrated facility known as the Enhanced Certificate of Cover Verification Facility (ECOCVF) to include on-line and real-time verification of Certificates of Cover (COCs), and ensure timely and effective collection of all taxes due to the BIR and other government institutions for Compulsory Third Party Liability (CTPL) and Comprehensive Insurance; WHEREAS, under Presidential Decree No. 612, as amended by Presidential Decree No. 1460, or the "Insurance Code," the Insurance Commissioner has the duty to see that all laws relating to insurance, insurance companies and other insurance matters are faithfully executed and may issue rulings, instructions, circulars, orders and decisions as he may deem necessary to secure the enforcement of the provisions of the Insurance Code; WHEREAS, the IC has developed an electronic system known as the IC COC Gateway (ICG) to ensure complete monitoring of all COCs for CTPL and Motor Car Comprehensive Insurance coverage; WHEREAS, under Republic Act No. 8242 or the National Internal Revenue Code of 1997, the BIR has the power and duties to comprehend the assessment and collection of all national internal revenue taxes, fees, and charges, and the enforcement of all forfeitures, penalties, and fines connected therewith and to give effect to and administer the supervisory and police powers conferred to it by the Code or other laws; NOW, THEREFORE, for and in consideration of the foregoing premises, the Parties, through the consent of their respective heads/representatives, hereby agree to establish a system for effective collection of all taxes due to the BIR through the IC COC Gateway (ICG) and Enhanced Certificate of Cover Verification Facility (ECOCVF), as follows: IcHSCT Section 1 Objective The ICG shall serve as the sole electronic facility for recording all COCs as proof of coverage under the CTPL and Comprehensive Insurance for motor vehicle registrations. The system shall provide interconnectivity/sharing of information among the Parties and well-coordinated regulatory activities mandated of them. The ECOCVF shall serve as the sole verification and tax collection facility for all COCs as proof of coverage under CTPL and Comprehensive Insurance for motor vehicle registrations. The facility shall provide interconnectivity/sharing of information among the Parties and well-coordinated regulatory activities mandated of them. Accordingly, the Parties shall use their respective best endeavours to execute and perform all deeds, documents, assurances, acts and things as any of the Parties may reasonably require of the other parties, for the purpose of carrying out the provisions and intent of this Agreement. The Parties shall foster cooperation and an effective working relationship and agree to perform all acts and execute and deliver all documents or instruments required by the peculiar exigencies of the situation or otherwise necessary to fully implement and consummate the transactions, systems and processes contemplated herein. Section 2 Operational Arrangement The IC shall perform, host, manage and maintain the ICG for recording and monitoring process and shall interconnect with the ECOCVF of LTO for the subsequent verification phase. The IC shall require/mandate accredited insurance companies to submit/file COCs pertaining to CTPL and Comprehensive Insurance policies into the ICG. For this purpose, the IC shall impose administrative sanctions upon insurance companies, their directors/officers/agents, for any willful failure or refusal to comply with or violation of the aforesaid requirement. The LTO shall perform, host, manage and maintain the ECOCVF for the subsequent verification of COCs and shall interconnect with the ICG for proper monitoring of collection of taxes, fees, and charges due to the BIR. STIHaE The BIR shall have access to the ICG and ECOCVF to determine COC issuances and the amount of taxes due/paid to the government. The BIR shall also have access to the reports generated from the ICG and ECOCVF for purposes of industry analysis and tracking. Section 3 Effectivity This Memorandum of Agreement shall become effective immediately upon execution of the Parties herein. IN WITNESS WHEREOF, the Parties herein have hereunto affixed their signatures this 20th day of January 2010 at Quezon City, Metro Manila, Philippines. LAND TRANSPORTATION OFFICE By: (SGD.) ARTURO C. LOMIBAO Assistant Secretary BUREAU OF INTERNAL REVENUE By: (SGD.) JOEL L. TAN-TORRES Commissioner of Internal Revenue INSURANCE COMMISSION By: (SGD.) EDUARDO T. MALINIS Commissioner" All internal revenue officials and employees are hereby enjoined to give this Circular as wide a publicity as possible. (SGD.) JOEL L. TAN-TORRES Commissioner of Internal Revenue