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MRA Updates


Mutual Recognition Agreement   (MRA)  Updates 
by :    Cesar Crisostomo
        Executive Committee Member 





The recent PICPA INTERNATIONAL US 5th Global Convention held in Las Vegas, Nevada generated interesting questions on the subject of obtaining a Mutual Recognition Agreement ( MRA ) between the United States and the Philippines.  For the intellectual consumption of our colleagues in the profession, including those who missed the plenary discussion on this subject, I am reproducing below relevant information plus the current status of our petition.  As one officer quizzically and literally mused, “is our MRA petition suntok sa buwan?” Perhaps this question can best be answered only after reading on, then forming your own opinion.

Philippine Mutual Recognition Agreement  ( MRA ) History: 

On the strength of the Philippine commitment to the World Trade Organization (WTO) liberalizing the system of trade in personal professional services, PICPA INTERNATIONAL US filed a petition in 2003 with the Philippine Department of Foreign Affairs (DFA) requesting for a Memorandum of Reciprocal Agreements (MRA) with the United States.  The basic premise of this petition was that the General Agreement on Trade In Services (GATS) opened the door to practicing public accountancy across international borders for which the Philippines is a signatory.  By voluntarily embracing this commitment, the Philippines was bound to abide with its obligation.  As of this writing, the Philippines has not reneged in its solemn undertaking to other WTO member countries insofar as supplying professional services is concerned.

It will be noted that Filipino CPAs who applied for US professional licenses prior to the cut-off date of October 1, 1980 were granted the privilege to practice as such in the State of California not through reciprocity but by express provision the law as provided for under Section 5082.3 of the California Business and Professions Code. The GATS, in effect, filled the void created after said date not only in California but in all US jurisdictional states including Washington DC, Guam, Puerto Rico and the US Virgin Islands, but this time, by way of reciprocal agreements.  In a letter dated March 22, 2003, the California State Board of Accountancy formally sponsored PICPA INTERNATIONAL US to the US International Qualifications Appraisals Board (US IQAB) for a Mutual Recognition Agreement (MRA) negotiation between the Philippines and the United States.  The US IQAB is the implementing arm authorized by the National Association of State Boards of Accountancy (NASBA) and the American Institute of Certified Public Accountants (AICPA) to enter into reciprocity agreements.  In so many occasions, the US IQAB reiterated its willingness to enter into MRA negotiations with the Philippines yet the latter was adamant to clearly delineate its market access.  The manifestations to negotiate were made both orally and in writing by the former Chairman of the IQAB, Mr. William Treacy.  It could be fairly inferred, therefore, that the display of confidence in the Filipino CPA’s ability and demonstrative competence in all areas of accounting, auditing and taxation was the logical result of the professional privileges granted by the State of California to earlier Filipino CPAs.  Their unwavering assessment was that Filipino education, experience and examination are highly comparable to that of the United States. 

This avowed interest by the US International Qualifications Appraisals Board (US IQAB) to willingly enter into a Mutual Recognition Agreement (MRA) with the Philippines did not come without a catch.  It required the addition of the specific words “Audit and Attestation” to the defined obligation submitted by the Philippines to the World Trade Organization (WTO) as mere Accountancy Services”.  It is submitted that the term accountancy service is susceptible to different interpretations insofar as scope is concerned.  The United Nations, in its Provisional Central Products Classification No. 862 (CPC) enumerated and described accountancy services separately and distinctly from auditing services.  It is, therefore, safe to conclude that “audit and attestation” is not within the purview of the larger term “accountancy services”.  Hence, to avoid ambiguity and to lend clarity to the more popular scope of accountancy services, audit and attestation service was required by the US International Qualifications Appraisals Board (US IQAB) as part and parcel of the Philippine specific commitment.

Mexico, Canada, New Zealand, Hongkong, Australia and Ireland, so far, have been granted reciprocity privileges in the United States.


Steps undertaken by PICPA INTERNATIONAL US

On December 6, 2004, the then Undersecretary for International Economic Relations (OUIER), Mr. Edcel Custodio, issued an invitation to the representatives of the Department of Trade and Industry (DTI), Board of Investments (BOI), interested stakeholders and Mr. Pio Baconga, former President of PICPA Philippines, requesting a meeting to discuss and reach a preliminary consensus on the issues and concerns related to the petition of PICPA INTERNATIONAL US.  Up to this writing, whatever result or consensus reached in that meeting remained unknown to the petitioners.

Having been in limbo for more than ten years, PICPA INTERNATIONAL US wrote the current Executive Secretary, Hon. Paquito Ochoa basically reiterating its original petition with the further view that the granting of a Mutual Recogntion Agreement (MRA) will redound to the benefit of the Filipino CPA.  On January 4, 2012, the office of the executive secretary, through its deputy Mr. Teofilo Pilando, favorably endorsed our petition to the Honorable Secretary of Trade and Industry, Gregory Domingo, subject to existing rules, regulations and policies of the government.  As it turned out, luck has been unkind for the much needed endorsement met a resting place at the Department of Trade & Industry (DTI).  Again, as in the Department of Foreign Affairs (DFA), nothing has been heard of ever since.

Meantime on July 19, 2013 our president, Roland Ditan, managed to secure an Impromptu Dialogue with the DFA Secretary Honorable Albert Del Rosario touching on the subject of our Mutual Recognition Agreement (MRA) request.  A follow up letter was also presented on that same occasion.   Consequently, Mr. Ditan was given the assurance by the Department of Foreign Affairs (DFA) Secretary that he will himself take a look at this issue and will personally respond regarding our request.  As has become customary, our petition met the same fate as before.  A third strike was dealt for the Filipino CPA’s cause.

On August 5, 2013 the Department of Foreign Affairs (DFA) deputy secretary informed our official representative that the Philippines is cognizant of our petition.  He mentioned that a little bit more time is needed as the government is working actively to “liberalize the Philippine economy”.  At first glance, it looked like “Liberalization”, is innocuous but at the same time an open ended term.  I thought it was a graceful exit to the persistent follow-ups and inquiries initiated by us.  For how can one determine whether the Philippine economy has been liberalized or not?  Does it need an official pronouncement from the government or from its arm?


Governing Laws affecting MRS

It appears that “liberalization of the economy”, per the Department of Foreign Affairs (DFA) line, refers to laws existing in Philippine books that hinders or impedes the successful negotiation and implementation of the Mutual Recognition Agreement (MRA).   Because of the nationalistic ideals of the framers of the 1987 Philippine Constitution, it adopted a more rigid and limited view on the practice of profession as follows: “The practice of a profession shall be limited to Filipino citizens SAVE in cases provided by law”.  The saving clause allowed the enactment of laws expressly recognizing the principles of reciprocity.  However, it also provided stringent requirements which negate the real intention and spirit of the law.


  1. Republic Act 9298 also known as the Philippine Accountancy Act of 2004:

While this Act explicitly recognize reciprocity to foreign CPAs, it sets a limitation under Section 28 where the foreigner is required to acquire 3 years of meaningful experience in all areas of public practice including taxation.  I submit, though, that this 3-year requirement can be validly agreed upon in the MRA itself, hence negating the necessity to revise, modify, repeal or amend this specific provision of the Philippine Accountancy Law.

  1. Republic Act 8981 otherwise known as the Professional Regulations Commission Modernization Act of 2000:  This law allows the supply of services exclusively to the following foreign CPA:

    1. A foreign CPA called for consultation or for specific purpose which is essential for the development of the country.
    2. A foreign CPA engaged as professor or lecturer in the fields essential to accountancy education in the Philippines.
    3. A foreign CPA who is an internationally recognized expert whose service is essential for the advancement of accountancy in the Philippines.

As stated elsewhere, the Professional Regulations Commission is in the process of setting guidelines and policy considerations in order to comply with the requirements of the AFAS notwithstanding the identification of the three types of foreign CPAs allowed to practice in the Philippines. These guidelines will ease the requirement and accommodate the practice of professions by foreigners into the Philippines.

  1. Republic Act 5181.  While expressly recognizing reciprocity privileges, the law imposed a condition precedent that required three years of permanent residency in the Philippines.  Assuming beforehand that all other requirements such as examination, registration, moral character, etc. are complied with, a foreign professional is then allowed to practice his/her profession in the Philippines.  Similar to the Philippine Accountancy Act, the three year requirement can be a valid subject of negotiation in the MRA itself thus eliminating the need to amend or repeal this specific provision of the law.


  1. Republic Act 7042 also known as the Foreign Investment Act of 1991 as amended by RA 8179 otherwise known as an Act to Further Liberalize Foreign Investments.  This is the most restrictive from among above-cited laws inasmuch as it enumerates areas of activities reserved strictly to Philippine nationals among which accountancy is one of them.  It holds that the practice of profession is the exclusive domain of Filipino citizens and no foreigner shall be allowed to supply professional services in the Philippines as mandated by the Constitution.  An outright denial of the principles of reciprocity could not be a subject of an MRA negotiation for it will naturally contravene the very tenor of the law. 

However, an act of Congress to repeal Section 8 of this law is not required if only to comply with the Philippine obligations under both GATS and the AFAS.  At any time, a mere Executive Order issued by the President of the Philippines liberalizing the practice of profession as enumerated under the “Negative List A” of the Foreign Investment Act of 1991 as amended will put the Philippines back to the path of trade liberalization.

  1.  The Philippine Labor Code, in Article 40 states that “non-resident aliens may be admitted to the Philippines for the supply of service only after a determination of non-availability of a Filipino who is competent, able and willing to perform the services for which the alien is desired”.  A labor market test (LMT), where an over/under supply of services is determined is a prerequisite for legitimate alien employment in the country.

It should be noted, however, that the DOLE is actively working to liberalize the Labor Code requirements insofar as determination of labor sector market non-availability, labor market test, alien work permits and working visa are concerned. 

The conglomeration of above cited laws worked to hamper the successful implementation of the MRA both in the WTO GATS and the ASEAN AFAS.  These laws, existing as of now, supplied the answer to the nagging question of why, after more than ten years, has no responsible government authority bothered to explain the puzzling silence despite repeated follow-ups re the MRA petition.  The cart was put before the horse so to speak.  Instead of liberalizing the restrictive and prohibitive laws before entering into an international agreement, the Philippines chose to immediately commit itself in the supply of accounting professionals notwithstanding the existence of such laws.  That the Philippines is non-compliant with its obligations under the World Trade Organization (WTO) trade in services is undeniable.  The protectionist laws designed to limit the practice of accountancy to Filipinos alone had to be amended, repealed or modified if it were to be compliant with its international agreements.

The ten long years PICPA INTERNATIONAL US has invested in its pursuit of a Mutual Recognition Agreement (MRA) was not due to trade protectionism but mainly because of the totality of laws operating against such.  The nationalistic approach on the practice of accountancy in particular or on the practice of other professions in general, produced the effect of impeding the progress of an MRA negotiation.  Indeed there was a “Liberalization of the Economy” going on in the Philippines right now.  But it should be remembered that this is the only way to remove the barriers bestowing favor to local professionals. More importantly, the current liberalization process should not go beyond 2015 as envisioned by the AFAS itself.

Liberalization of the Economy

In January 2013, the Philippine Institute for Development Studies, a government owned and controlled corporation, reported that the Professional Regulatory Commission (PRC) and the Department of Labor and Employment (DOLE) are in the process of putting policy measures in place to amend, modify or change the restrictive provisions in the law so as to facilitate Mutual Recognition Agreement (MRA) implementation in the country.  It further reported that great strides have been made or in the process of being made in the liberalization of the practice of profession.  That the Philippines recognizes the MRA a vital component of the national government agenda adds credence to the contention that MRA, not only in ASEAN countries but also internationally, are within reach of every Filipino professional. 

As a matter of fact, on June 21, 2012 the PRC issued Resolution 2012-668 setting the guidelines to be followed in implementing the agreement on trade in services and other international agreements on the practice of foreign professionals in the Philippines.  It further tasked the Philippine Institute of Certified Public Accountants (PICPA) to draft a Philippine Memorandum of Reciprocal Agreements for submission to the ASEAN Secretariat.

Asean Framework of Agreements on Trade In Services (AFAS)

The continuing liberalization process being undertaken in the Philippines was in response to the requirement of the AFAS.  Similar to the General Agreement on Trade in Services (GATS) under the auspices of the WTO, the AFAS adopted and approved trade liberalization in services.  On February 26, 2009 the Philippines signed on the Protocol to implement the 7th package of commitments covering Financial Sector, sub-sector Accountancy Services.  It states that ASEAN member countries commit to the supply of professional services in both financial auditing and accounting review.  This specific commitment was clearly spelled out in the General Framework of Agreements among ASEAN member countries.  It required the successful negotiation and implementation of an MRA among its members through bilateral or multilateral agreements. Henceforth, a negotiated agreement guaranteed no further legal impediment to the successful practice of accountancy by the Filipino CPA in any ASEAN country of his/her choice.

PICPA Philippines, being the legally acknowledged organization of Filipino CPAs since 1947 was tasked by the PRC and PBOA to come up with a draft of a Memorandum of Reciprocal Agreement (MRA).  In October 2012, PICPA Philippines produced the draft that was submitted to the PRC and PBOA for review, input and other considerations. In the same manner, Brunei submitted its draft to the ASEAN member nations in January 2013.  It will be noted that Singapore was the first member country that submitted its Memorandum of Reciprocal Agreement (MRA).   In all these drafts, basic details such as the mechanism of implementation, registration, scope of professional coverage, fees, sanctions, revisions and amendments, among others, are covered.  By the year 2015, the ten ASEAN member countries (Philippines, Brunei Darusalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Singapore, Thailand and Vietnam) will become one regional economic community with the acronym AEC (Asean Economic Community).  At this target date, all member countries must have submitted their final MRA agreement to the AFAS Secretariat.

Modes of Supply of Services and Other Discussions:

As a general matter, AFAS adopts the same four modes of supply as used in GATS:

(1)   Cross-border supply which is the sale of services across the border through internet, e-mails, fax and other digital means where no physical transfer of the professional is made.

(2)   Consumption abroad – where a citizen of one country travels abroad to utilize professional services in another country.

(3)   Commercial presence – where foreign providers enter another country to set up a business catering to professional services.

(4)   Movement of natural persons – where foreign workers travel to provide services in another country.


By the year 2015 or earlier, this Mutual Recognition Agreement (MRA) episode would hopefully end.  As the English poet wrote, “When winter comes, can spring be far behind?”  A ring of truth emanates from this poem.  As spring brings vigor and hope, PICPA INTERNATIONAL US will always strive to reach its goal.  To the question “suntok sa buwan”, I leave it to your considered opinion and discerning wits.   


Cesar F. Crisostomo

Executive Committee Member




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