Republic of the Philippines.
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

EIGHTEENTH CONGRESS
Second Regular Session

House BillNo,__ 7270

Introduced by Representative Ron P. Salo

EXPLANATORY NOTE

Our economy was suddenly put to a halt with the implementation of quarantine
measures on various levels since March 2020. In most instances, business activities
were limited to the manufacture of essential goods and delivery of essential services.
Many had to rely on the government's Social Amelioration Program (SAP) as their
lifeline, including those belonging to the transport sector which included drivers of
Transportation Network Vehicle Services (TNVS), Motorcycle Taxis (MC), and Public.
Utility Vehicles (PUVs).

As the quarantine measures are slowly being relaxed to allow our economy to
recover, and notwithstanding the fact that more public utility vehicles are being given
special permits, the inefficiency of our public transport system became more
apparent as workers had to queue for long hours at the LRT and MRT stations, as
well as in other terminals. Some had to use bicycles as an alternative means of
transportation, while some had to take a Kadi-Lakad, which is the colloquial term for
the luxury car brand Cadillac. Among Filipinos, Kadi-Lakad describes their daily
ordeal of walking for hours just to make it to work.

The public transportation sector will remain to be among those severely hit by
the current health crisis. The long-term viability of the transport sector will require an
overhaul of the inefficient mass transportation system of the country which may be
allowed to operate only at 50% capacity in the coming months or even years.
Without a vaccine or a cure for COVID-19, a reversal of the trend does not seem to
be forthcoming

These challenges that we face in the country's public transportation are
primarily linked to the prevailing boundary system. At present, the government,
through the Land Transportation and Franchising Regulatory Board, issues
franchises to bus and jeepney operators who will service specific routes. The drivers,
in turn pays boundary to the operators. The decision whether a PUV will service the
route is left to the discretion and decision of operators or drivers. Such decision is
heavily influenced by commuter demands, which is understandable as operators or
drivers cannot operate at a loss.

There is a need to revisit this approach as public transport is a primary
responsibility of the State, and thus, should not be left to private operators to decide.

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The importance of the mobility of our people cannot be overstated, and the State
should actively adopt measures that will ensure its full realization.

In this regard, there is a need to adopt a system that addresses the concems of
all stakeholders. The operators and drivers’ primary concern is to have a stable and
sufficient income. The commuters’ primary concern is to have available, reliable,
safe, and efficient public transport. And the Government's primary objective is to
have an efficient and orderly public transportation.

These stakeholders’ concerns and objectives can be addressed by service
contracting or other similar arrangements, which are already being utilized in other
major cities of the world such as London and Singapore. Locally, this arrangement is
already being utilized at the Bonifacio Global City in Taguig City, and by the
Department of Transportation and certain LGUs in transporting healthcare and
essential workers during this pandemic. It is also being utilized by private companies
in shuttling their workers to-and-from their place of work.

Under service contracting, the government will contract-out to operators or
drivers the routes that need to be serviced. It will identify the routes, stops, number
of frequencies, quality of service, and the type and quality of the vehicle to be used,
among others. It will pay the operators or drivers based on the period of operation or
the kilometers traveled, or both, with incentives or penalties linked to performance.
The revenues of operators or drivers will no longer be dependent on the number of
passengers, but rather on the kilometers they serviced or the period they provided
the service.

As we move away from the traditional boundary system, there will certainly be
some resistance among certain groups. However, these changes are not by choice,
but a change that must be adopted in consideration of the prevailing realities. An
efficient mass public transportation should be viewed as the fulfillment of the
government's responsibility of providing the people with the means for mobility.

In the middle of this pandemic, let us look at this proposed legislative measure
as an opportunity to reinvent our public transportation system that addresses the
concerns of all stakeholders. With the livelihood of many at stake, this proposed
measure may be the game changer that may save the day for the hard-pressed
transportation industry.

In view of the foregoing, approval of this bill is earnestly sought.

RON P. SALO
KABAYAN Party List

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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

EIGHTEENTH CONGRESS
Second Regular Session

House Bill No. 7270

Introduced by Representative Ron P. Salo

AN ACT
INSTITUTIONALIZING TRANSPORTATION SERVICE CONTRACTING
AND FOR OTHER PURPOSES

Be it enacted by the Senate and the House of Representatives of the Philippines in
Congress assembled:

SECTION 1. Short Title. - This Act shall be known as the “Transportation
Service Contracting Act’.

SEC. 2. Declaration of Policy. — The State recognizes the important role of
mass public transportation as an enabler of social and economic development.
Consistent with this policy, the State, through the Department of Transportation
(DOT) or the Local Government Units (LGUs), shall contract-out motor vehicles for
transport to address the mobility needs of the commuters and at the same time
ensure the viable operations of the various public utility transportation service
providers.

SEC. 3. Definition of Terms. — As used in this Act, the following terms shall
mean:

a) Contracting Authority — The entity that defines the public transport services
to be provided and that issues the contract.

b) Operator — An operator of a public transport service in possession of a
valid franchise issued by the Land Transportation Franchising and
Regulatory Board (LTFRB)

2

Route — It is the specific path through which public utility vehicles are
expected to travel on a regular basis, defined by origin and destination
points, by streets to be traversed, and by stops or stations along where
passengers may board and alight.

&

Transportation Service Contract — Refers to a contract whereby an
operator is engaged to provide transportation service by the contracting

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authority, with payments based on the period of operation or the
kilometers traveled, or both.

e) Transportation Service Contractor - The operator engaged by the
contracting authority under a transportation service contract.

SEC. 4. Responsibility of the National Government. - The National
Government, through the Department of Transportation (DOTT), shall be primarily
responsible in providing sufficient transportation services to everyone travelling
across regions, provinces, or cities of the country.

SEC. 5. Responsibilities of the Local Government Units (LGUs). - In
addition to the responsibilities of the provincial, municipal, and city governments,
including the barangays as provided under Sections 384, 440, 448, and 459 of R.A.
7160 or the Local Government Code of the Philippines, such provincial, municipal or
city governments, or barangays, are mandated under this Act to ensure that there is
sufficient transportation service within their territorial jurisdiction, through
transportation service contracting or other similar means that will serve the mobility
needs of their constituents.

SEC. 6. Contracting Authorities.

a) Department of Transportation (DOTr) — The DOTr shall serve as the
contracting authority for public transport operations in bus routes
(designated as trunk routes) in the National Capital Region (NCR), Metro
Cebu, other metropolitan areas, or in inter-cities or inter-provinces.

b) Local Government Units (LGUs) - The provincial governments shall serve
as the contracting authorities of public transport operations within the
province, and its component municipalities, while the city governments of
highly urbanized cities shall serve as contracting authorities of public
transport operations within the city.

SEC. 7. Performance Standards, Contracts and Policies. - The Land
Transportation and Franchising Regulatory Board (LTFRB) shall come up with
performance standards that shall guide the parties in their service contracts. It shall
develop standard service contracts that may be adopted by the LGUs and shall
assist the LGUs in entering into the same.

Consistent with this provision, the LTFRB shall recommend policies for
approval of the DOTr on the following:

a) The minimum requirements, parameters or standards that must be
complied with by every Transportation Service Contractor.

b) The routes that must be maintained and new routes to be opened with
regard to inter-region, inter-province, inter-city mobility.

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¢) Circulars, memorandum, and orders that will promote the efficient
operations of Transportation Service Contractors.

d) Circulars, memorandum, and orders that will promote the seamless
integration of land transportation services across the country.

e) Circulars, memorandum and orders that will promote a safe, secure,
reliable, affordable, cost-effective, environmentally sustainable, and
people-oriented land transport that ensures improved quality of life of the
people.

SEC. 8. Fare Rate. — The fare rates shall be determined by the Contracting
Parties based on the period of operation or the kilometers traveled, or both. Such
fare rate shall consider the parameters established by the LTFRB which shall include
the cost of fuel, cost of maintenance, decent living wage of the drivers, and
reasonable return on investment for the operators, among others.

SEC. 9. Fare Collection. — The transportation service contractors shall adopt
automated and contactless pay options across all service contract operated
whenever feasible, otherwise, the fare shall be collected through any other
practicable manner that may be prescribed by the DOTr or the LGUs. The fare
collected shall accrue to the funds of the Contracting Authority to be used in ensuring
the sustainability and in improving the efficiency of the system.

SEC. 10. Routes. - The DOTr and the LGUs shall rationalize the routes,
giving priorities to existing bus and jeepney routes.

SEC. 11. Priorities in the Service Contracting. — In the first five (5) years of
the implementation of this Act, bus and jeepney operators who have valid franchises
shall be prioritized in servicing the routes where they have the franchise, provided
that they meet the minimum service standards set by LTFRB and the Contracting
Authority.

SEC. 12. Insurance. - The Insurance Commission shall guide the
Contracting Authorities in providing insurance to the commuters as provided under
R.A. 10607 or the Insurance Code.

SEC. 13. Appropriation.—The amount necessary to carry out the provisions
of this Act shall be charged against the current year's appropriations of the DOTr and
the respective LGUs. Thereafter, the amount necessary for the continued
implementation of this Act by the DOTr shall be included in the annual General
Appropriations Act, and by the LGUs in their respective annual appropriations.

SEC. 14. Exemption from Procurement Act. - The Service Contracts
entered by the Contracting Authorities shall be exempt from the provisions of R.A
9184 or the Government Procurement Act. The Contracting Authorities, however,
shall adopt measures to ensure that the best service and at the best price are
procured.

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SEC. 15. Separability Clause. - If any provision or portion of this Act is
declared unconstitutional, the remainder of this Act or any provision not thereby
affected shall remain in full force and effect.

SEC. 16. Repealing Clause. - All laws, decrees, executive orders,
ordinances, rules, regulations, or other issuances, or parts thereof which are
inconsistent with any of the provisions of this Act are hereby repealed, amended,
and/or modified accordingly.

SEC. 17. Implementing Rules and Regulations. - The Department of
Transportation and the Department of the Interior and Local Government, in
consultation with the Land Transportation Franchising and Regulatory Board,
League of Provinces of the Philippines, League of Cities of the Philippines, League
of Municipalities in the Philippines and the Insurance Commission shall issue the
Implementing Rules and Regulations (IRR) within sixty (60) days from the effectivity
of this Act.

SEC. 18. Effectivity. — This Act shall take effect fifteen (15) days after its
publication in the Official Gazette or in two (2) newspapers of general circulation.

Approved.

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