SIXTEENTH CONGRESS OF THE REPUBLIC )
OF THE PHILIPPINES )
Second Regular Session )

5302

HOUSE BILL NO_

Introduced by Representative
JESULITO A. MANALO, ANGKLA Party-List

AN ACT MODERNIZING THE PUBLIC LAND TRANSPORTATION INDUSTRY AND CREATING FOR
THIS PURPOSE THE LAND TRANSPORTATION FRANCHISING COMMISSION, APPROPRIATING.
FUNDS THEREFOR AND FOR OTHER PURPOSES.

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

EXPLANATORY NOTE

Public transportation service is relevant in all aspects of society. It plays a vital role in social
development by transporting people, goods and services. Public transportation service affects land
use and development blueprints, creates jobs and triggers economic growth. All of these are important
when considering the benefits of public transportation to Philippine society.

Considering the far-reaching impact of an efficient public transportation system, itis imperative
that the needs of the riding public, as well as goods and services, are sufficiently met. The
transportation of goods, services and the Filipino riding public, whether by taxicab, jeepney, truck, bus
of train, must be of such quality that it can serve as the backbone of economic progress

In 1987, President Corazon C. Aquino, through Executive Order No. 202, created the Land
Transportation Franchising and Regulatory Board (LTFRB) with the primary objective of providing
world-class land transportation services contributing to the over-all development of the country,
improvement of the socio-economic status of its stakeholders, and promotion of the welfare of the
general public.

Today, more than a quarter of a century has passed and our public land transportation industry
is still lagging behind compared to our Asian neighbours. In the meantime, public transportation
continues to require much needed changes to serve the general public. Currently, itis the riding public
that continues to carry the burden of an inefficient transportation system, making it difficult for them to
go to school, go to work and move around to achieve maximum potential. Thus, there is a need to
revisit Executive Order No. 202, as well as the pertinent provisions of Executive Order No. 292, to
achieve the goal that brought the law to its existence.


An efficient, modern and reliable public transportation system should be the primary mode of
movement for each and every Filipino, It should be the transport of choice.

The bill seeks to modernize and strengthen the public land transport system and the
administrative body that manages the same, and ultimately to help the latter accomplish its mission of
ensuring that the commuting public has adequate, safe, convenient, environment-friendly and
dependable public land transportation services charging reasonable rates, through the implementation
of land-based transportation policies, programs, and projects responsive to an investment-led and
demand-driven industry. Transportation policies, programs, and projects that are responsive to an
investment-led and demand-driven industry can be best achieved by increasing the representation of
the private sector and technical experts in public services. Finally, there is a notable absence from the
private sector and technical experts, yet they represent a substantial portion of the population that are
affected by the actions of the LTFRB.

Accordingly, there is a pressing need to review the current adminstrative body, the Land
Transportation and Franchsing Regulatory Board and amend its composition. The expansion of the
agency is necessary to include several departments of the government that have an impact on the
public land transportation system, which is of national importance. This bill aims to enhance the public
land transport industry as a whole so that the industry can properly contribute to the uplifment of the
lives of the riding public.

Moreover, the Philippine Congress, the branch of the Government allowed to grant franchises,
shall now exercise its oversight functions in the issuance and revocation of franchises to ensure that
the administrative body adheres to its mandate.

As the country gears to more economic success, it is imperative that both the public and
private sector work hand in hand in improving public transportation. Diverse representation can help
better understand the needs of the all sectors involved, especially the riding public. There is an
obligation to ensure that there is strong and effective corporate governance. Diversity provides check
and balance and avoids the possibility of having a board comprised of individuals who share the same
experiences and biases. The vision of the Government is to efficiently cater to the needs of the public,
without forfeiting a fair and business-friendly atmosphere that fosters premium service.

X

JTO A. MANALO


SIXTEENTH CONGRESS OF THE REPUBLIC )
OF THE PHILIPPINES )
First Regular Session )

HOUSE BILL No__ 5302

Introduced by Representative
JESULITO A. MANALO, ANGKLA Party-List

AN ACT MODERNIZING THE PUBLIC LAND TRANSPORTATION INDUSTRY AND CREATING FOR
THIS PURPOSE THE LAND TRANSPORTATION FRANCHISING COMMISSION, APPROPRIATING
FUNDS THEREFOR 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 “Public Land Transportation Industry
Modernization Act’.

SECTION 2. Declaration of Policy. - The State recognizes the importance of public land transportation
‘as mover and carrier not just of people, but goods and commodities, and the vital role it plays in the
nation’s development. It is thus hereby declared the policy of the State to improve, foster and develop
an efficient public land transport and consequently increase the productivity of the country, to improve
the quality of public land transport conditions and to make it the transport of choice. In so declaring,
the State recognizes the essential part of the private sector and the latter's expertise in addressing the
ever changing needs of the riding public and in coping with the evolving demands of modern living.

SECTION 3. Definition of Terms. - As used in this Act, the following terms shall mean:
(a) Commission — shall mean the Land Transportation Franchising Commission.

(b) Certificate of Public Convenience or CPC - shall mean the license or authority granted
for the operation of public and land transportation utilities and services such as trucks, taxicabs, buses,
jeepneys, trimobiles and other motor vehicles.

© Decision - shall mean the final adjudication issued by the Commission en banc,
through a written Resolution, bearing the concurrence and signature of at least four of its members,
relative to the issuance, amendment, revision, extension, suspension, revocation or cancelation of any
CPC.


(4) DOTC or Department - shall mean the Department of Transportation and
Communications.

(e) E.0. No. 202 — shall mean Executive Order No. 202 promulgated by President
Corazon C. Aquino creating the Land Transportation Franchising and Regulatory Board.

() __E.0. No, 292 - shall mean Executive Order No. 292, known as the “Administrative
Code of 1987" promulgated by President Corazon C. Aquino subsequent to E.0. No. 202.

(@) Public Utility Operator or Operator - shall mean a person or entity that is granted a
CPC as defined under this Act.

SECTION 4. Creation of the Land Transportation Franchising Commission. - There is hereby created
the Land Transportation Franchising Commission, hereinafter referred to as the “Commission”, which is
a government owned and controlled corporation (GOCC), wholly owned by the Republic of the
Philippines. The Commission shall be under the supervision and control of the Department of
Transportation and Communication (DOTC).

SECTION 5. Composition of the Board of Commissioners. - The Commission shall be composed of
a Chairman and eight (8) other members, constituted as follows:

(a) Secretary of the DOTC shall serve as ex-officio Chairman of the Commission.
(b) The other eight (8) members shall be:

(i) Director General of the National Economic Development Authority (NEDA) who.
shall sit as ex-officio member,

(ii) Secretary of the Department of Public Works and Highways (DPWH) who shall
likewise sit as ex-officio member,

(ili) Secretary of the Department of Interior and Local Government (DILG) who
shall likewise sit as ex-officio member,

(iv) Chairman of the Metropolitan Manila Development Authority (MMDA) who shall
likewise sit as ex-officio member; and

(v) the remaining four (4) members shall be appointed for a term of one (1) year
each by the President of the Philippines upon the recommendation of the Governance
Commission for Government-Owned Corporations (Govemance Commission),
pursuant to the provisions of Republic Act (R.A.) No. 10149; Provided, That one (1)
member shall serve as the Executive Director and Chief Executive Officer of the
Commission who shall be elected by the Board of Commissioners from among its ranks
pursuant to R.A. No. 10149, and must be a member of the Philippine Bar and shall


have engaged in the practice of law in the Philippines for at least five (5) years, and is
knowledgeable in the field of transportation law, transport policy or other related fields,;
the remaining three (3) members shall come from nominees to be made by
organizations or associations of Public Uliity Operators which have been in existence
and active for the last five (5) years prior to this Act;

The rank, salary, and privileges of the Executive Director and Chief Executive Officer of the
Commission shall be determined likewise by the Governance Commission, pursuant to the
compensation and position classification system and the provisions of R. A. No, 10149.

The ex-officio members of the Commission may, in their discretion, designate their duly
authorized nominees to sit in the Commission on their behalf as ex-officio members and in
representation of their respective agencies.

Section 6, Executive Director and Chief Executive Officer. - Except as otherwise provided in
this Act, the Executive Director and Chief Executive Officer of the Commission shall be prohibited from
holding any other position with the Commission, other government agencies and private institutions
that may give rise to conflicts of interest.

The Executive Director shall have the following powers and functions:

(a) To sit as Chairman of the Land Transportation Franchising Division created under
Section 10 hereof,

(b) To assist the Commission in the implementation of the National Public Land Transport
Master Plan as described under Section 8 (a) of this Act and the public land transportation
development plans and programs prepared by the Commission and duly approved by the DOTC; and

(c) To implement and enforce of all other policies of the Commission.

SECTION 7. Support Staff. - The Commission and the Executive Director shall be supported by the
Support Divisions created under E.0, No. 202 namely (i) the Technical Evaluation Division, (i) the
Legal Division, (ii) the Management Information Division, (iv) the Administrative Division and (v) the
Finance Division, all under the direct control and supervision of the Executive Director. Any
recommendation from these Support Divisions must be submitted to the Executive Director who shall
indorse the same to the Commission for final approval

The heads of the Support Division are prohibited from holding any other position with the
Commission, other government agencies and private institutions that may give rise to conflicts of
interest.

SECTION 8. Powers and Functions of the Commission. - The Commission shall have the following
powers and functions:


(a) To prepare and develop for the approval of the DOTC, within six (6) months from the
effectivity of this Act, a National Public Land Transport Master Plan, in consultation with the Philippine
National Railways and operators of the Manila Light Rail Transit System, wherein all existing CPCs and
routes shall be accounted for and inventoried, and thereafter forecast the transportation requirements
to properly cater to the needs of the riding public for each succeeding year, which forecast shall be
used as basis for issuance of new CPCs taking into consideration the existing railroad lines and
services;

(b) To formulate, promulgate, administer, implement and enforce rules and regulations on
land transportation public utilities, standards of measurements and/or design, and rules and regulations
requiring operators of any public land transportation service to equip, install and provide in their utilities
and in their stations such devices, equipment facilities and operating procedures and techniques as
may promote safety, protection, comfort and convenience to persons and property in their charges as
well as the safety of persons and property within their areas of operations; Provided, That all these
shall be in conformity with the National Public Land Transport Master Plan issued by the Commission
developed, approved and enforced in accordance with Section 8 (a) of this Act;

() To prescribe the appropriate terms and conditions with respect to the issuance,
amendment, revision, extension, suspension, revocation, or cancelation of CPCs authorizing the
operation of public land transportation services provided by motorized vehicles in accordance with the
National Public Land Transport Master Plan and the public land transportation development plans and
programs prepared by the Commission and duly approved by the DOTC, including therein provisions to
ensure the performance of obligations under the CPCs such as but not limited to the requirement of
surety or cash bonds;

(d) To coordinate and cooperate with other government agencies and entities concerned
with any aspect involving public land transportation services with the end in view of effecting continuing
improvement of such services;

(e) To require operators to furnish audited annual reports of finances and operations as
certified by an independent Certified Public Accountant, with a complete statement of the annual
financial operations, and all other information, which the Commission may require that may be useful
and necessary for its exercise of its regulatory powers. Said reports shall be sworn to by the officer or
functionary of the operator authorized therefor;

() To prescribe and regulate routes of service, economically viable capacities and zones
or areas of operation of public land transportation services provided by motorized vehicles which shall
be in accordance with the National Public Land Transport Master Plan and the public land
transportation development plans and programs prepared by the Commission and duly approved by
the DOTC; Provided, That development plans and programs shall be based on internationally
acceptable technical research and data;

(@) To decide in an en bane Decision, after due notice and hearing, and taking into
consideration the recommendations of the Land Transportation Franchising Division created under


Section 10 of this Act, all cases pending before the Commission relative to the issuance, amendment,
revision, extension, suspension, revocation, or cancelation of CPCs authorizing the operation of public
land transportation services provided by motorized vehicles;

(h)

To suspend prior to hearing, through a majority vote of its members present, any CPC

authorizing the operation of public land transportation services whenever such step shall, in the
judgment of the Commission, be necessary to avoid serious and irreparable damage or inconvenience
to the public or to private interests in accordance with the following procedure:

()

(i) Upon the recommendation of the Land Transportation Franchising Division
created under Section 10 hereof or motu proprio, the Commission shall initially issue
the preventive suspension only against the specific unit under a particular CPC, which
may have caused serious and irreparable damage or inconvenience to the public or to
private interests, for a period not to exceed five (5) calendar days. Such preventive
Suspension may be extended by the Commission to another ten (10) calendar days
only upon the recommendation of the Land Transportation Franchising Division which
recommendation shall be based on an official report from the relevant government
agency stating that there is reasonable ground to extend the period of the aforesaid
preventive suspension; otherwise, the five (5) day preventive suspension shall
automatically be lifted. During the additional ten (10) day period, the operator of the
affected unit shall be allowed to show proof of compliance with any requirement of the
Commission as stated in the order of preventive suspension. Should there be sufficient
proof of compliance, the ten (10) day preventive suspension shall automatically be
lifted.

(ii) Should there be additional official report from the relevant government agency
that there is continuing palpable violation and blatant disregard of the terms and
conditions of the CPC, and the operator of the affected unit fails to show proof of
compliance with said terms and conditions and with the requirements of the
Commission, the preventive suspension in the immediately preceding paragraph may
be extended to a new period of fifteen (15) calendar days.

(ili) In no case however shall any preventive suspension, which has been issued
without prior hearing pursuant to this Section 8 (h) exceed thirty (30) calendar days.
Upon the lapse of thirty (30) calendar days, the preventive suspension shall be
automatically lifted. Subsequent suspensions, if warranted, shall only be made after
due notice and hearing.

To extend the period of preventive suspension pursuant to a fixed system designed by

the Commission in consultation with the private sector, which system shall (i) provide for the
reasonable grounds to extend the period of preventive suspension, and the palpable violations and
blatant disregard of the terms and conditions of a CPC; (ii) define all other just and reasonable
standards, guidelines, classification, regulations, practices, in implementing preventive suspensions;
and (ii) define all just and reasonable standards, guidelines, classification, regulations, practices, in the
cancelation or revocation of a CPC;


i) To determine, prescribe and approve and periodically review and adjust, reasonable
fares, rates and other related charges, relative to the operation of public land transportation services
provided by motorized vehicles;

(K) To fix, impose and collect, and periodically review and adjust, reasonable fees and
other related charges for services rendered;

() To issue preliminary or permanent injunction, whether prohibitory or mandatory, in all
cases in which it has jurisdiction, and in which cases the pertinent provisions of the Rules of Court shall
apply;

(m) To punish for contempt of the Commission, both direct and indirect, in accordance with
the pertinent provisions of, and the penalties prescribed by, the Rules of Court;

(n) To issue subpoena and subpoena duces tecum and summon witnesses to appear in
any proceedings of the Commission, to administer oaths and affirmations;

(0) To motu proprio conduct investigations and hearings of complaints for violation of the
public service laws on land transportation and of the Commission's rules and regulations, orders,
decisions and/or rulings and to impose fines and/or penalties for such violations;

(p) To review motu proprio the decisions/actions of the Regional Franchising and
Regulatory Office as defined in this Act;

(q) To delegate such functions or duties necessary or incidental to the administrative
management and operations to the Franchising Division headed by the Executive Director which shall
be subject to its final review and/or approval, as it may deem proper,

() To promulgate rules and regulations governing proceedings before the Commission,
the Land Transportation Franchising Division and the Regional Franchising and Regulatory Office;
Provided, That in the absence of any applicable provision in the rules and regulations promulgated
pursuant to this paragraph, the pertinent provisions in the Revised Rules of Court of the Philippines
may, in the interest of expeditious justice and whenever practicable and convenient, be applied in a
suppletory character and effect;

(s) To perform such other functions and duties as may be provided by law, or to enter into
contracts, as may be necessary, or proper or incidental to the purposes and objectives of this Act; and

() To have and assume all corporate powers as enumerated under the Batas Pambansa
Bilang 68 and all subsequent amendments thereto, necessary to allow the Commission to carry out its
mandate including all the provisions of this Act; Provided all the provisions of R.A. No. 10149 shall be
made applicable to the Commission; Provided further, all the Rules and Regulations issued by the


Governance Commission shall likewise be made applicable to the Commission, its goveming board,
officers, and employees.

SECTION 9. Decision of the Commission; Appeals and/or Review. - The Commission, in the
exercise of its powers and functions in relation to the issuance, amendment, revision, extension,
suspension, revocation, or cancelation, shall sit and render its Decisions en banc, which Decision shall
bear the concurrence and signature of the majority thereof.

The Decisions, or any other order or resolution of the Commission shall be appealable to the
President of the Philippines within thirty (20) days from receipt of the decision; Provided, That the
President may mofu proprio review any Decision, order or resolution or any other action of the
Commission before the same becomes final.

SECTION 10. Land Transportation Franchising Division. - There is hereby created a Land
Transportation Franchising Division under the Commission. The Franchising Division shall be
composed of the Executive Director appointed in accordance with Section 6 hereof to sit as Chairman,
and two (2) members with the same rank, salary and privileges of a Regional Director. The two (2)
members shall be appointed by the President of the Philippines upon recommendation of the Secretary
of the DOTC; Provided, That one (1) member shall be a holder of a degree in engineering and the
other a holder of degree in economics, finance, management or law and both of them with at least five
(5) years of experience and practice. The two (2) members of the Franchising Division, unless sooner
removed for cause, shall have a maximum term of five (5) years.

The duties and functions of the Franchising Division are provided hereunder:

(a) Relative to the issuance, amendment, revision, extension, suspension, revocation, or
cancelation of CPCs:

(i) To examine, investigate, ascertain facts;

(ii) To receive documentary or testimonial evidence;

(iii) To preside in the investigatory proceedings; and

(iv) To issue recommendatory reports to the Commission as to resolution of the
dispute.

(b) Relative to the extension of the preventive suspension in accordance with Section 8 (h)
of this Act:

(i) To receive and evaluate the information provided by any relevant government
agency claiming that there is reasonable ground to extend the period of the aforesaid
preventive suspension or that there is continuing palpable violation and blatant
disregard of the terms and conditions of the CPC; and

(i) Tissue recommendatory reports thereon to the Commission


(c) To conduct public hearings relative to the determination, prescription, fixing, imposition,
approval, collection and the periodical review and adjustment of fares, fees, rates and other charges as
provided under Section 8;

(@) __ To study the recommendatory reports submitted by the Regional Franchising and
Regulatory Offices defined under Section 11 hereof and thereafter to make its final recommendatory
report for the Commission; and

(@) To conduct investigations and hearings of complaints for violation of the public service
laws on land transportation and of the Commission's rules and regulations, orders, decisions and/or
rulings and to issue recommendatory reports thereon to the Commission for the imposition of fines
and/or penalties and other measures for such violations.

SECTION 11. Regional Franchising and Regulatory Offices. - The Regional Franchising and
Regulatory Offices (RFRO) created in each of the adminstrative regions of the country pursuant to E.O.
No. 202 and E.0. No. 292 shall be preserved. The President of the Philippines shall appoint, based on
the recommendation of the Commission, the heads of the RFRO who shall have the rank, salary and
privileges of a Department Assistant Regional Director. The RFRO shall hear and evaluate any
application/petition for routes, within their respective administrative regions and thereafter to prepare
recommendatory reports to be submitted to the Franchising Division.

SECTION 12. Congressional Oversight Committee. - So as to ensure that the mandate of the
Commission and the objectives of this Act are properly carried out, there is hereby created a
Congressional Oversight Committee to oversee and monitor, in such manner as it may deem
necessary, the actual implementation of this Act, including the progress of the National Public Land
Transport Master Plan and the public land transportation development plans and programs prepared
by the Commission and duly approved by the DOTC. The Congressional Oversight Committee shall
be composed of five (5) members from the Senate and five (5) members from the House of
Representatives. The Committee shall be co-chaired by the chairpersons of the Committee on
Transportation and Committee on Public Services of the House and Senate, respectively. Such
congressional review and oversight shall be undertaken monthly beginning fifteen (15) days after the
effectivity of this Act and thereafter as may be determined by the oversight Committee.

SECTION 13. Implementing Rules and Regulations. - Within thirty (30) days from the effectivity of this
Act, the Commission shall be required to promulgate the implementing rules and regulations of this Act.

SECTION 14. Appropriations —The Secretary of DOTC, through the Land Transportation Franchising
Commission, shall immediately include in its programs the operational requirements provided in this
Act, the initial funding of which shall be charged against the savings or current year's appropriations of
the previous and herein re-organized Land Transportation and Franchising Regulatory Board.
Thereafter, such sums as may be necessary for the continued implementation of this Act shall be
included in the annual General Appropriations Act.


SECTION 15. Transitory Provisions.

(a) All existing and valid CPCs as of the time of the promulgation of this law shall remain
effective. However, all pending applications shall be heard and all subsequent CPCs shall be issued in
accordance with the provisions of this Act, which issuance shall take into account the National Public
Land Transport Master Plan, as developed, approved and enforced in accordance with Section 8 (a) of
this Act, and the public land transportation development plans and programs prepared by the
Commission and duly approved by the DOTC.

(b) All existing circulars, rules and regulations and other issuances by the Land
Transportation and Franchising Regulatory Board shall remain effective until the same are amended or
modified, revoked or superseded by the Commission in compliance with the latter's mandate as
provided in this Act.

(©) Upon effectivity ofthis Act and unti the appointment by the President of the Philippines
of the necessary members andlor officers in accordance with the Act, the following rules shall apply in
the interim:

10) To complete the seven (7) members of the Commission, the NEDA Director
General, the DPWH Secretary and the DILG Secretary shall immediately recommend
to the DOTC Secretary one (1) person each who will serve as acting regular member of
the Commission, and the DOTC Secretary, upon concurrence, shall in turn endorse the
same to the President of the Philippines; Provided, That such individual to be
recommended shall be knowledgeable in the field of transportation law, transport policy
or other related fields;

(ii) the incumbent Executive Director shall serve as Acting Executive Director until
the appointment of his successor, Provided, That except as otherwise provided in this
Act, he shall be prohibited from holding any other position with the Commission, other
government agencies and private institutions that may give rise to conflicts of interest;

(iii) the current members of the Land Transportation and Franchising Regulatory
Board shall hold office as Acting Members of the Land Transportation Franchising
Division, and shall continue to hear and evaluate all pending cases, applications,
investigations and matters brought before the Land Transportation and Franchising
Regulatory Board and thereafter submit recommendatory reports to the Commission in
accordance with the provisions of this Act; and

(iv) the incumbent Regional Directors of the Regional Franchising and Regulatory
Offices shall serve as Acting Regional Directors of their respective offices until the
appointment of their successors.

(@) The heads of the Support Staff shall be required to divest their interests in entities
which may be in conflict with the provisions of this Act pursuant to Section 7 hereof.


SECTION 16. Separabilty Clause. - If, for any reason, any part or provision of this Act is declared
invalid, such declaration shall not affect the other provisions of this Act.

SECTION 17, Repealing Clause. - Except as otherwise provided herein, all provisions of Executive
Order No, 202 and the pertinent provisions of Book IV, Title XV, Chapter 5 of Executive Order No, 292,
and all other laws, decrees, executive orders or rules and regulations inconsistent with this Act are
hereby repealed, amended or modified accordingly.

SECTION 18. Effectivity. - This Act shall take effect after fifteen (15) days following its publication in at
least two (2) newspapers of general circulation

Approved,