WHEREAS,  on  19  June  2017,  the  Department  of  Transportation  (DOTr) issued   Department   Order   No.  2017-011   (Re:  Omnibus   Guidelines   on  the Planning and Identification of Public Road Transportation Services and Franchise Issuance)  adopting  the rules and procedures  for the issuance  of franchises  for public transport routes and services.

WHEREAS, as a basic policy declared under DO No. 2017-011, the Land Transportation  Franchising  and Regulatory  Board  (LTFRB)  is tasked  to implement DO No. 2017-011 and to encourage and require the consolidation of operators and the establishment of bigger coordinated fleets of PUVs.

WHEREAS,  Section  5(b) of Executive  Order No. 202 provides  that among the powers and functions of the LTFRB is “to issue, amend, revise, suspend or cancel Certificates of Public Convenience or permits authorizing the operation of

public  land  transportation   services  provided  by  motorized   vehicles,  and  to prescribe the appropriate terms and conditions therefor.”

WHEREAS, Section 5(i) of Executive Order No. 202 provides that among the powers  and  functions  of  the  LTFRB  is  “to  promulgate  rules  and  regulations governing proceedings before the Board and the Regional Franchising and Regulatory Office.”

WHEREAS, the LTFRB encourages individual franchise holders to group themselves together and operate their units under a single juridical entity to gain access   to   common   resources,   better   fleet   management   system,   efficient collection and ensure a more effective franchise records management system.

WHEREAS, realizing the advantage and benefits to be derived from industry consolidation,   various   transport   groups   and   operators   have   signified   their willingness to consolidate ownership and operation to ensure profitability and longevity in the operation of public land transportation utilities.

NOW THEREFORE, consistent with the full implementation of DO No. 2017-
011 and pursuant to the LTFRB’s mandate under DO No. 2017-011 to encourage and require the consolidation of operators and the establishment of bigger coordinated  fleets of PUVs and pursuant  to Section  5 (b) and (i) of Executive Order No. 202, the Board hereby adopts the following rules and procedure on the issuance of franchises for the operation of public land transportation services:

1. Priority in the issuance of updated franchise shall be extended to applicants who shall consolidate into a single juridical entity for the operation of public land transportation services. Petitions of individual franchise holders who voluntarily  applied  for cancellation  of their individual  franchises  and conversion  under  a  single  juridical  entity  (i.e.  cooperative  or  corporation) shall be accepted and processed by the LTFRB subject to the rules and regulations herein prescribed.
   
   For purposes of this provision, “Existing Individual Franchise  Holders” shall refer to franchise holders with valid and subsisting franchises with less than 1/3 of total number of units operating in a an authorized  route or less than fifteen (15) units that are confirmed and registered for the current year or on the  immediate  preceding  registration  year  with  the  Land  Transportation Office (LTO).
   
   
2. Existing  individual  franchise  holders who form a single juridical  entity shall file  a  Petition  for  Consolidation  of  CPCs  with  the  LTFRB  indicating  the individual Case Nos. of the franchises for consolidation and the route applied for. The Petition  for Consolidation  of CPCs  shall  be filed  with  the LTFRB Central Office for inter-regional routes or its Regional Franchising Regulatory Offices (RFROs) for intra-regional routes, as the case may be, subject to the rules and regulations prescribed by the Board.
   
   
3. The Petitioner shall submit the following documents:

   3.1 SEC Certificate  of Incorporation  (for corporations)  / CDA  Certificate  of Registration and OTC Certificate of Accreditation (for cooperatives);
   
   3.2 Management   Agreement  between  cooperative  and  its  members  (for cooperatives);
   
   3.3 Latest Financial Statement;
   
   3.4 Proof  of Operation  of “Off-Street”  Terminal  at both  ends  of the routes consistent with item 5.3 of D.O. No. 2017-01;
   
   3.5 Proof of Garage (TCT if owned, Contract of Lease/ Authority to Use with
   TCT of Lessor if leased) with LGU Zoning Clearance;
   
   3.6 OR/CR of the authorized units
   
   3.7 New Format Operator's Data Sheet
   
   The  Legal  Division  shall  issue  a  Notice  of  Hearing  and  set  the  case  for hearing  to  determine  compliance  with  jurisdictional,  citizenship,  financial, garage requirements  and proof of public need, if applicable.  The Petitioner shall also present the original copy of the individual CPCs of its constituent franchise holders.
   
   Upon  finding  merit  in  the  Petition,  the  Board  shall  cancel  the  existing individual CPCs and grant an updated or consolidated CPC in favor of the consolidated juridical entity.
   

4. Single juridical entities who are holders of updated and consolidated  CPCs shall continue to operate in the interim in the previously authorized routes in the absence of the LPTRP covering the route or the DOTr transport study, but shall be subject to modification as recommended by the DOTr.
   
   The juridical entity shall designate  the required number of authorized  units which shall ply an authorized route under its updated CPC.
   
   
5. Existing  individual  franchise  holders  in  an  authorized  route  shall  have  a period of one (1) year from the effectivity of this MC to consolidate  and file the necessary Petition for Consolidation of their CPCs. After the lapse of said period, the LTFRB shall consider the Applications  for the Issuance  of New CPC filed by single juridical entities on the authorized route of the existing individual franchise holders.
   
   
6. Vehicle  Specifications  -  The  vehicle  types  to  be  authorized  shall  be  in accordance  with  item  2.2  “Hierarchy  and  Classification  of  Public Transportation Modes” and 5.2 “Modernization  of Public Transport Services” of D.O. No. 2017-011.
   
   Single juridical entities who are holders of updated and consolidated  CPCs shall undertake to comply with the vehicle specification  requirements  under the OFG and substitute their old units with OFG compliant units installed with OFG-mandated devices within three (3) months from issuance of the Decision/Order consolidating their individual franchises.
   
   Likewise, single juridical entities with updated CPCs shall operate in the authorized routes under a fleet management  system to remove or minimize the  risks  associated  with  vehicle  investment,  to improve  efficiency, productivity  and reduce  their  overall  transportation  and staff costs,  and to ensure compliance with public land transportation rules and regulations.

All  other   issuances   or  parts   thereof   inconsistent   herewith   are  hereby modified, amended, or superseded accordingly.

This   Memorandum   Circular   shall   take   effect   immediately   following   its publication in a newspaper of general circulation and the filing of three (3) copies hereof with the UP Law Center pursuant  to Presidential  Memorandum  Circular No. 11, dated 09 October 1992.

SO ORDERED.
Quezon City, Philippines, 16 March 2018.