Does LTO’s ‘no registration, no travel’ policy make sense?

Last 30 March 2015, the Land Transportation Office (LTO) issued Memorandum Circular No. AVT-2015-1930 enforcing a policy on “no registration, no travel” of four-wheeled motor vehicles pursuant to Joint Administrative Order No. 2014-01, which stipulates the revised schedule of fines and penalties for violations of laws, rules and regulations governing land transportation.

Under the memorandum circular, the owner of the unregistered vehicle will be fined P10,000.00. The driver of the same vehicle will be charged a separate P1,000.00.

If the car owner or driver will be able to present proof that the vehicle is duly registered, i.e., Current Official Receipt (OR), and Certificate of Registration (CR), or its photocopy, a P5,000-fine will be charged for failure to attach the authorized motor vehicle license plates (see Section II of the Joint Administrative Order No. 2014-01).

However, fines and penalties are not applicable for motor vehicles purchased in the past seven days. The timeframe supposedly reflects the improved processing time upon implementation of the Administrative Order No. AVT-2014-24.

Owners of such vehicles, upon being flagged down, shall present the following:

1. Sales Invoice of the Motor Vehicle, the same being dated within seven (7) days prior to the date of apprehension;
2. Certificate of Cover (COC) of Third Party Liability (TPL) Insurance, the same being dated on or after the issuance of the above Sales Invoice; and
3. Certificate of Stock Reported (CSR) as issued by this Office, the same dated on or prior to the issuance of the above Sales Invoice.

If a motor vehicle has been unregistered for more than 37 days, it will be impounded and released only upon registration and payment of appropriate fines and penalties.

LTO’s arguments

The LTO points out that the implementation of the rule is consistent with Section 5 of Republic Act of 4136 or the “Land Transportation and Traffic Code,” which stipulates that all motor vehicles and other vehicles must be registered before use on or upon any public highway of the Philippines. Section 18 of the five decade-old law, likewise, provides for the display of number plates.

The same rule is supposed to be implemented even as far back as the last months of 2013 upon enacting the “Motor Vehicle License Plates Standardization Program” through Memorandum Circular No. VPT-2013-1772. This was suspended, however, due to the inability of the LTO to issue license plates.

According to the LTO, processing time has reportedly been now reduced to seven days from the previous three to four weeks. Said to have solved previous problems in plate production and the registration process, the rule was re-implemented by LTO. They stressed that they have already addressed the backlog of license plates, particularly with previously issued ORs/CRs.

What critics are saying

After being held up for several times, the LTO policy finally took effect on the first day of April. However, it received protests from new motor vehicle owners, dealers as well as from the MMDA chair himself who even called the policy “unconstitutional and un-Christian.”

What critics of the new LTO policy point out is that the LTO processing time actually takes much more than 7 days to get a new plate. LTO claims that processing has been “typically” reduced to seven days, but this summary measure is a mere average, i.e., it does not account for the variation in processing times that new car owners face if they decide to register the vehicles on their own.

In many discussion groups in social media, we noticed that hardly anyone has gotten their plates in seven days as claimed by LTO. New cars, when released to the buyer, are typically registered a few days after they are released, since dealers have been registering vehicles in bulk, and also have their own “internal” processing of papers (i.e. preparation of manager’s checks to LTO) before documents are submitted to the LTO. 

Delays in the issuance of license plates by the LTO have always been cited for non-compliance with the rule. Car dealers have suggested that insufficient manpower in the LTO unnecessarily slows down the process of issuing available plates. Various groups have called for a moratorium of the LTO policy considering the above glitches in the existing system.

Senator Alan Peter Cayetano, in a press release, said that a 30-day moratorium is needed to give ample time for “the private contractor to produce new plates, the LTO to address the backlog and car dealers to immediately claim the car plates of the buyers.” The Senate Majority Leader has even threatened to block the budget of the LTO if it does not declare a moratorium on the policy. 

Questions for dealers, LTO

While the policy is binding by law, compliance is clearly constrained by the existing system.

The LTO policy fines or charges the driver/owner of the unregistered motor vehicle, particularly the newly purchased, even if the fault is actually beyond his/her control. New car owners wonder why they have to pay for these fines if the accountability for delays are on the part of dealers, and/or the LTO.

Car owners put the responsibility solely on the LTO and the dealers. After all, wouldn’t car owners want to have their plates available since they have already paid for the service? An accountability framework should reward good practices, and punish not so good ones. But here, owners, who paid for the car and the processing of the car, including the consumption taxes, are being asked to pay a fine when a delay in the plates are not their responsibility. 

Shouldn’t the dealers instead pay the fine if it can be shown that they are the main bottleneck, or someone at LTO or the Department of Transportation and Communications be held to resign if plates are not released as per the claimed “typical” processing time?

One also wonders why car owners have to pay a Third Party Liability (TPL) insurance fee at LTO to “speed up” processing at LTO, if owners already pay for full insurance coverage (typically bundled with car purchase costs)? Isn’t TPL part of full coverage?

Why does LTO staff prefer to have TPL paid? And if car owners pay for TPL at LTO, this is normally much cheaper than if they pay for TPL at the dealers.

So dealers and the LTO do have a lot to answer for. Alas, there is very little that car owners can do other than to complain in social media, with leaders in the executive having deaf ears to the issue.

Motor vehicle sales on the rise 

An examination of the demand for motor vehicles suggests an increasing trend in car sales (Table 1).

This increase is riding on increasing per capita GDP, a rising middle class, continuous remittance flows from overseas Filipinos, as well as competitive financing schemes available for the purchase of new vehicles.

Table 1. Sales of Motor Vehicles among selected ASEAN countries, 2011-2014, Jan-Feb 2015

Country	Unit				Growth Rate			Unit		Growth Rate
	2011	2012	2013	2014	2011-12	2012-13	2013-14	Jan-Feb 2014	Jan-Feb 2015
Brunei	14,555	18,634	18,642	18,114	28.0	0.0	-2.8	2,852	2,717	-4.7
Indonesia	894,164	1,116,212	1,229,901	1,208,019	24.8	10.2	-1.8	215,433	206,019	-4.4
Malaysia	600,123	627,753	655,793	666,465	4.6	4.5	1.6	100,991	101,320	0.3
Philippines	141,616	156,654	181,738	234,747	10.6	16.0	29.2	32,506	35,521	9.3
Singapore	39,570	37,247	34,111	47,443	-5.9	-8.4	39.1	5,726	7,516	31.3
Thailand	794,081	1,436,335	1,330,672	881,832	80.9	-7.4	-33.7	140,188	131,401	-6.3
Vietnam	109,660	80,453	98,649	133,588	-26.6	22.6	35.4	14,866	22,028	48.2

Source: ASEAN Automotive Federation

Based on the industry report, the Philippine automotive industry recorded sales of 62,882 units in the first quarter of 2015, up by 22 percent from almost 52,000 units during the same period last year.

Considering that government is pushing an industrial plan based on automotive manufacturing, the LTO and the DOTC will need to ask what exactly it is doing regarding the growth in car sales.

I will not be surprised, if car sales start slowing this second quarter given the disincentive for purchasing new vehicles.

With the expectation that more and more Filipinos will be buying vehicles in the country, the LTO should be improving its distribution system.

However, consider some LTO-related statistics we gathered from 2011 to 2013. 

Table 2. LTO-related Statistics, 2011-2013

	2011	2012	2013	2011-12	2012-13
MV Registered	7,138,942	7,463,393	7,690,038	4.5	3.0
MV Registration Transactions Handled	11,630,141	11,857,064	12,016,316	2.0	1.3
License and Permit Issued	4,493,587	4,553,272	4,825,584	1.3	6.0
License and Permits Cases Handled	6,360,064	6,458,452	6,808,158	1.5	5.4
Plates Manufactured
MV Plates	286,620	221,448	232,934	-22.7	5.2
MC/Trailer Plates	1,103,780	598,930	926,571	-45.7	54.7

Source: Land Transportation Office Annual Report

Constraints and bottlenecks are said to have been already identified and addressed, whether in the number of human resources at LTO or in the whole registration process.

There are, however, clearly other actors in the car registration process beyond the LTO that play crucial roles in being able to release the car plates. These include the contractor that manufactures the license plates, as well as the dealers who are expected by the buyers to handle everything from registration to the delivery of license plates. 

Case study

One of the authors of this article also has his own story to tell about this entire process.

He purchased a new vehicle at Mitsubishi Alabang last 10 April (after the LTO policy pushed through). Getting the vehicle released was already an ordeal with the Mitsubishi Alabang sales agent asking him to come at 11 am, and making him wait up to 5 pm just to get the COC for the TPL. 

The sales agent, Ms. Sheryl Dalusong said that they would be taking a day or two to register at LTO, but Mitsubishi Alabang only registered the vehicle at LTO NCR office on April 22, more than 7 days after he had paid for everything! 

The plates were released by Mitsubish Makati from LTO another two weeks later, after constant follow up communication with Mitsubishi Alabang. The OR/CR though is dated April 30.  

The LTO as well as Transportation Secretary Abaya claim that the problem is with the dealers who don’t register promptly. There may be more to it than the dealers though. 

We certainly would not recommend purchasing a vehicle from Mitsubishi Alabang, especially from Ms. Dalusong, given the kind of treatment of clients by this dealer, and by the sales agent, in particular. If one looks at the ORCR, it may seem as though LTO can indeed release plates within 7 days, but one wonders if the ORCR is released together with the plates. One has to study the whole process of car registration, and exact timelines. 

The LTO however should not penalize car owners, but rather car dealers based on documents that show the date of purchase of car owners and the actual date of registration at LTO. If dealers registered at LTO on a certain date, the LTO could develop a system on its website posting information if car plates are ready for pick-up at LTO by merely entering the conduction sticker, make of the car, among other information. 

But such systems are not in place at the LTO. One wonders whether you get what you pay for whether at Mitsubishi or at LTO. 

There are clearly kinks and quirks in the LTO registration system (both on the dealer side and at the LTO). Thus this LTO policy deserves re-inspection – by the executive and by the legislature. Let whoever is accountable be made accountable. 

Spare the car owners, though, who have already paid their fair share of taxes, and whose only fault is adding to the traffic in the country. But isn’t traffic also more of a management issue? Do the DOTC and its bureaus recognize that they may be contributing to the growing public disenchantment over the executive? – Rappler.com