Legal basis and inter-agency coverage
- Insurance coverage requirements and jurisdiction over insurance companies and insurance contracts are addressed through the powers of the Insurance Commission (IC), while taxes on insurance transactions fall under the Bureau of Internal Revenue (BIR).
- LTO Memorandum Circular No. ACL-2010-1271 implements a Memorandum of Agreement (MOA) entered into between LTO, IC, and BIR dated January 20, 2010.
- The MOA provides for the use of IC COC Gateway (ICG) and the Enhanced Certificate of Cover Verification Facility (ECOCVF) for real-time verification and tax collection coordination.
Policy and purpose for compliance
- The circular requires that COCs used as proof of Compulsory Third Party Liability (CTPL/COC-CTPL) and Comprehensive Insurance are valid according to IC requirements.
- The circular requires that taxes due to the BIR and other government institutions for the insurance coverage have been properly paid.
- The circular establishes that acceptance of insurance policy requirements in LTO transactions must be tied to the IC and BIR verification and monitoring facilities.
Required electronic systems only
- The IC COC Gateway (ICG) serves as the sole electronic facility for recording all COCs as proof of coverage under CTPL and Comprehensive Insurance for motor vehicle registrations.
- The Enhanced Certificate of Cover Verification Facility (ECOCVF) serves 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 IC requires and mandates accredited insurance companies to submit/file COCs pertaining to CTPL and Comprehensive Insurance into the ICG.
- The IC imposes administrative sanctions on insurance companies and their directors/officers/agents for willful failure or refusal to comply with or for violation of the submission/filing requirement into the ICG.
LTO responsibilities in verification
- LTO must perform, host, manage, and maintain the ECOCVF for the subsequent verification of COCs.
- LTO must interconnect with the ICG for proper monitoring of collection of taxes, fees, and charges due to the BIR.
- LTO Memorandum Circular No. ACL-2010-1271 makes the ECOCVF the operational basis for determining whether COCs are accepted for LTO-related processing.
Effect on LTO transactions and systems
- Effective February 16, 2010, only insurance policies that are recorded through the ICG and verified through ECOCVF shall be accepted as requirements for transactions in the LTO IT System.
- The circular treats ICG recording and ECOCVF verification as the condition for validity and tax compliance for LTO acceptance purposes.
- The ICG and ECOCVF replace the prevailing systems, specifically the current Certificate of Cover Verification Facility (COCVF) and COCVF System A.
Publication and compliance direction
- The MOA is published in full text nationally within the BIR, through Revenue Memorandum Circular No. 7-2010 dated January 20, 2010.
- LTO Memorandum Circular No. ACL-2010-1271 directs “For strict compliance.”
- The circular’s operational implementation is anchored on the national publication of the MOA via Revenue Memorandum Circular No. 7-2010 dated January 20, 2010.