Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

FIFTEENTH CONGRESS
First Regular Session

HOUSE BILLNO.__2222

Introduced by HON. GLORIA MACAPAGAL-ARROYO, HON. JUAN MIGUEL M.
ARROYO and HON. DIOSDADO M. ARROYO:

AN ACT SETTING THE DIRECTION OF AND PARAMETERS
FOR THE DEVELOPMENT OF AND REGULATION OF THE TRANSPORTATION
SYSTEM IN THE PHILIPPINES AND FOR OTHER PURPOSES

‘The transportation industry has always been a major comerstone in national development.
An efficient transport system ensures the efficient movement of goods, promotes economic
activity in both urban and rural areas and encourages the flow of investment. An efficient and
high quality transport system not only lowers production cost but more importantly promotes the
access of rural areas to social and economic services.

‘The vision for the Philippine transport system was initially drawn from the declaration of
policy in Executive Order No. 125, as amended by Executive Order No. 125-A, entitled
“Recognizing the Ministry of Transportation and communications, Defining its Powers and
Functions and for other Purposes.” The policy refers to “viable, efficient, fast, safe and
dependable transportation system.” This vision embodies the core values of viability, efficiency,
safety and reliability. However, important considerations such as safety and security,
dependability and environmental sustainability must be incorporated into the policy framework
of an efficient and quality transport system. Underlying all these values is a people-oriented
transportation system that gives primordial importance to the interest of the public.

‘There is a need to clearly lay down a comprehensive transportation policy that takes into
account the varied and complex areas in the transportation industry. Existing policies affect
transportation in different ways. Some poli ‘ies are inadequate, ineffective or obsolete. On the
other hand, there is a policy vacuum in significant areas. A seamless, integrated and efficient
transport system largely remains an unfulfilled hope due to lack of enabling or enforced policies.

A sound transportation policy that explicitly sets and direction and parameters for the
development and regulation of the transportation system is the foundation of an efficient
transportation system. This is the policy gap that this legislative measure seeks to address.

Mie Began 4. “yi

ORIA MACAPAGAL-ARROYO.



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

FIFTEENTH CONGRESS
First Regular Session

2222

HOUSE BILL NO.

Introduced by HON. GLORIA MACAPAGAL-ARROYO, HON. JUAN MIGUEL M.

ARROYO and HON. DIOSDADO M. ARROYO.

AN ACT SETTING THE DIRECTION OF AND PARAMETERS

FOR THE DEVELOPMENT OF AND REGULATION OF THE TRANSPORTATION

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

SECTION 1. Short Title — This Act shall be known as the “Transportation Policy Act of

SYSTEM IN THE PHILIPPINES AND FOR OTHER PURPOSES

ARTICLE I
GENERAL PROVISIONS

the Philippines.”

SEC. 2. Scope and Application. This Act shall apply to all elements of the transportation
system, and all sub-sectors of transportation, including pessengers, shippers, service providers,
investors, agencies and instrumentalities of government and those involved in the movement of

people and goods in the provision of transportation infrastructure, facilities and services.

SEC. 3. Definitions — For Purposes of this Act, the terms hereunder shall mean as

follows:

a.

b.

reo se

Act — refers to this Act, “An Act Setting the Direction of and Parameters
for, the Development of the Transportation System in the Philippines.”
Asset Preservation - the maintenance of existing transport facilities, or
assets and the rehabilitation of damaged transport facilities, or assets in
order to lengthen their usable lives in good condition and reduce the
transport costs of the users of such facilities.

CAAP- shall refer to the Civil Aviation Authority of the Philippines.
Commercial Risks - the obligation to operate and maintain the
transportation facility in accordance with the agreed standards and
conditions, and the losses or damages that may be incurred if the traffic
and revenue projections do not materialize, and/or the standards or
conditions are not met

Completion Risks - the obligation to complete the transportation facility in
accordance with the plans, specifications, and schedule and the losses or
damages that may be incurred should the transportation facility not be
completed in accordance with the plans, specifications and schedule.

CPA - the Cebu Port Authority.

DBCC - the Development Budget Coordination Committee.

DBM - the Department of Budget and Management.

DOF - the Department of Finance.

DOTC - the Department of Transportation and Communications.

DPWH - the Department of Public Works and Highways.

DTI - the Department of Trade and Industry.



m. Eligible Subsidy - a subsidy that covers the externalities of transportation
in cases where the provision of transport services generates net benefits to
the society that is not recompensed through the prices charged for such
services.

n, Externalities ~ shall refer to situations when the effect of production or
consumption of goods and services imposes costs or benefits on others
which market forces cannot incorporate in the prices charged for the goods
and services being provided.

0. Government Financing Support (GFS) - the contribution of government
for capital cost that shall bridge the financial viability gap of a public-
private partnership project.

LGUs - the Local Government Units.

Life cycle cost analysis — shall refer to looking beyond the initial

construction and considering operating, maintenance and major

rehabilitation needs during the projected life of the facility.

Market Failure - a mismatch of supply and demand and/or occurrence of
side-effects and extra costs to the society that is not reflected in the price

of the service. A market failure may exist when the supply or use of

goods and services by the market is not efficient in the sense that the price

mechanism fails to match demand and supply, and/or the provision of

services generates costs to the society that cannot be intemalized in the

27

price.
s. PPA ~the Philippine Ports Authority.
\. PPP = public-private partnership whereby a private party enters into a

contractual arrangement with the government under Republic Act No.
5967 as amended by Republic Act No. 7718 (BOT Law), or a joint
venture with government under the guidelines for joint ventures issued by
the National Economic Development Authority (NEDA).

u. PSP = private sector participation which includes PPP and other
arrangements whereby private sector resources and/or expertise are
availed of by government for purposes of expanding its financial space or
taking advantage of private sector efficiencies in the delivery of public
services.

v. Public Transportation Service - public service providing transportation
services such as common carriers or similar enterprises whether in land,
rail, water or air.

w. Regulatory Body - an agency or instrumentality of government exercising
quasi-legislative and/or quasi-judicial powers over public transport
services as vested thereto by law or necessarily implied from its express
powers.

x. Right of Way Risk - the obligation to timely provide the right way and the
losses or damages that may be incurred as a consequence of failure to
timely provide the right of way.

ARTICLE It
VISION, OBJECTIVES AND PRINCIPLES

SEC. 4. The Vision for a Transportation System. ‘The national transportation system in

the Philippines shall be safe, efficient, viable, dependable, integrated, environmentally
sustainable and people-oriented.

SEC. 5. Objectives. This Act aims to lay the foundation for better economic governance
in the transport sector. Its specific objectives are to: a) strengthen transport sector planning and
plan implementation by adopting transport policies to serve as boundary conditions; and, b)
establish the structure and methodology for national transport planaing.



SEC. 6. Declaration of Principles. Transportation shall help carry the Philippines on the
road to national development, aligned :o, paved and bounded by policies founded on the
following principles;

a. Democracy: Goods and services shall be made available and accessible to all
in such manner and to such extent as would give people genuine alternatives
and real choices. In decision-making process, the public shall be heard,
consulted and given the opportunity to participate.

b. Market Economy: People and organizations rise to their full potential when
free to pursue their needs and wants and to exercise their will. Under such
conditions, competing, conflicting and complementary interests are most
likely to converge towards meeting the common good. Market forces regulate
economic activities best. Only when the market fails should government
intervene to protect the public interest. °

Subsidiarity: ‘The transport sector should be planned, administered and
managed by the smallest, lowest or least centralized competent authority. ‘The
central authority should perform only those tasks which cannot be performed
effectively at a more immediate or local level.

d. Competition: Competition encourages market players to be the best and the
most efficient, thereby increasing productivity, lowering costs and improving,
service levels. Absence of competition breeds inefficiency, poor quality and
high prices. When monopoly is unavoidable, government should exercise
control over it.

e. Public Interest: Its promotion and protection are the ultimate ends of
government. The economic costs of hazards to health, properties and
environment are not usually internalized in market prices and therefore,
market forces are unable to foster discipline on hazard-causing entities
Government should therefore strictly regulate these matters of public welfare.

f. Core Busine Full attention to core business fosters efficiency,
thoroughness, and mastery. Lack of focus on one’s mission leads to neglect
of what is essential and important.

g. Objectivity: Decisions on and actions for the public good should be based on
correct facts, principles and reason and not distorted by conflict of interest or
bias.

h. Transparency: The intentions, motivations, decisions, processes and
procedures affecting the people and the market should be open and public. If
deviation from economically viable solution is made on the made of social or
political grounds, the decisions must be specific and transparent, and the
opportunity cost carefully estimated and made publicly known.

i. Fair compensation: ‘The delivery by one to another of something of value
requires an equivalent benefit from the latter who is obliged to give it. This
fair exchange sustains production of goods and services and fosters efficiency.
Prices should reflect the true value of the goods or services delivered, and
should not be distorted by cross-subsidies.

j. Social Equity: ‘The disadvantaged and marginalized need the assistance and
protection of the government to enable them to participate productively in the
economy and to alleviate their living conditions.


ARTICLE IL
ADMINISTRATION

SEC. 7. Responsibilities of the NEDA, DOTC and DPWH. The NEDA, DOTC and
DPWH shall take the necessary measures to implement the policies set forth herein. They shall:

a, Establish, institutionalize, implement and enforce a national transportation
planning methodology that shall apply to and be adopted by the DOTC,
DPWH and all agencies and instrumentalities exercising transportation
development functions;

b. Establish and institutionalize a mechanism for coordination and integration
of agency plans and for ensuring their alignment to, consistency and
compliance with, the national transport vision and objectives of, and policies
in, the Act for this purpose, all government agencies and instrumentalities
exercising transportation functions shall be part of, and be involved and
included in the said mechanism;

¢. Institute capability building and institutional reforms measures that may be
necessary or desirable effectively implement this Act; and,

d, Issue and implement rules and regulations to effect and fill out the
implementation details of this Act.

SEC. 8. Responsibilities of Departments, Agencies and Instrumentalities Exercising
Transportation Development Functions. Departments, agencies and instrumentalities exercising
transportation development functions shall prepare their respective plans and submit them for
review in accordance with the methodology and procedure approved by the NEDA, DOTC and
DPWH and the provisions of this Act. Plans, projects and programs prepared in violation hereof
shall be deemed unauthorized and any expenditure therefor shall be disallowed.

ARTICLE IV
POLICY AREAS

SEC. 9. Areas of Coverage . Consistent with the principles stated in Section 6 hereof,
government presence or intervention in transportation, if any, by virtues of this Act is confined to
the following policy areas:

Resource Generation and Allocation;

Criteria for the Preparation of Agency Plans, Projects and Programs;
Cost Recovery and Subsidies;

Regulation of Passenger Transport Services;

Urban Transport;

Transport Logistics; and,

Governance.

Sm OyeeNe

SEC. 10. Seiting Standards for Administrative Action. The Policies hereunder, being
boundary conditions, shall guide all agencies involved in transportation in the exercise of their
legislative and/or quasi-judicial functions so that rules and regulations promulgated ot
decisions and resolutions rendered by them are within the bounds of existing laws and do not
encroach upon the powers and prerogatives of other branches of government. Moreover, they
shall be the parameters for planning at the agency level whose outputs shall be evaluated and
approved on the basis of their compliance and consistency with such policies.

ARTICLE V
RESOURCE GENERATION AND ALLOCATION

SEC. 11. Review of Transportation Needs. the NEDA, DBM and DOTC shall,
consistent with the Government planning cycle, periodically review the strategic resource needs


of the transport sector for the medium and long term. Specifically, the following shall be
undertaken:

Assess and evaluate the strategic function of the transport sector with regard
to staining the national goals of economic growth, poverty reduction, trade
competitiveness and social equality, and adjust the fiscal allocation of the
transport sector over the medium term on the basis of the results thereof;

b. Allocate resources to the transport modes in accordance with the comparative
advantages, and with due regard to the viability of each mode; and,

c. Ensure that investment in assets is adequately supported by regular
maintenance allocations over the economic life of the asset by taking holistic
view on resource allocations for investments and for maintenance based on
life-cycle cost analysis.

SEC. 12. Resources of National Government for National Facilities Only. Vhe
resources of the national government shall be devoted solely to facilities classified as national.
The DOTC and the respective transport agencies shall establish and maintain a functional
classification system, which shall define, among others, such national facilities.

SEC. 13. Responsibility of LGUs. Consistent with the principle of local autonomy,
LGUs shall have full responsibility for the financing, construction and maintenance of
Municipal and Barangay transport facilities, as defined under the functional
‘stem.

SEC. 14. Technical and Economie Criteria for Resource Allocation. For the allocation
of resources to transport investment projects, the DOTC, NEDA, DBM and DPWH shall
forthwith jointly establish transparent and objective criteria which reflect the most effective and
efficient use of the resources to meet transport needs. The aforesaid criteria shall be determined
in consultation with stakeholders and shall subsume — such economic, social, political and
environmental factors as gender responsiveness, climate change adaptation, disaster management
and traffic safety.

SEC. 15. PPP Promotion and Privatization. Public-private partners
privatization of public transport operations shall be promoted to augment the gov
resources, harness private sector expertise, gain technology transfers and operational eff
and transfer risks that are best placed with the private sector.

ARTICLE VI
CRITERIA FOR THE PREPARATION OF AGENCY PLANS,
PROGRAMS AND PROJECTS

SEC. 16. Alignment with National Thrusts and Priorities. ‘The transport plans,
programs and projects of each agency shall show an appropriate for with the overall national
development goals, objectives, thrusts and priorities. The evaluation of the individual modal
agency plans, programs and projects shall consider the comparative advantages and
interconnectivity of the different transport modes.

SEC. 17. Approved Agency Process for Plans and Program Preparation. Each modal
agency shall abide by the approved agency process for preparing strategic analysis, long-range
plans, medium term plans and annual programs for transportation.

SEC. 18. Feasibility Study and Multi Criteria Analysis. All transport projects proposed
for funding by the government shall be supported by adequate studies that meet the standards set
by NEDA/DOTC/DPWH and fulfill the following criteria:


a. Technical Soundness. They shall meet approved standards for safety to the
users, structural integrity and performance and quality of service. They shall
be supported by appropriate detailed designs including value engineering that
is to be undertaken as a part of the feasibility and engineering studies for

major projects to determine the least-cost or most-effective solutions to
deliver intended project outcome.

b. Economic Feasibility over the lifecycle. All projects shall show an economic
internal rate return (EIR) that is at least equal to the discount rate of NEDA,
or a positive economic net present value (NPV) or a positive economic net
present value over cost (NPV/C), or an economic benefit-cost ratio (BCR)
greater than unity, using the NEDA discount rate.

Operating feasibility. All projects shall have adequate institutional and
management arrangements, including budgets, for eflective use, operation and
maintenance thereof over their economic life. These arrangements shall be
able to sustain the performance and service levels of the projects as designed.

d. Environmental Soundness. This shall be based on the environmental impact
assessment (EIA) undertaken in accordance with the guidelines of the
Department of Environment, particularly for Environmentally Critical Projects
and projects within Environmentally Critical Areas. The Environmental
Impact Assessment (EIA) shall include an assessment of the direct and
indirect impacts of a project on the biophysical and human environment and
ensure that these impacts of a project are addressed by appropriate protection
and mitigation/enhancement measures.

€. Social Acceptability. Social acceptance of transport projects must be sought
through the involvement of stakeholders, especially women, the elderly, the
disabled and displaced persons in the planning, design, implementation,
maintenance and monitoring of projects.

f. Use of Energy-Efficient Transport Technology. Where it is clearly shown to
be economically and financially feasible over the life cycle of the facility,
transport projects shall use energy-efficient transport technology.

ARTICLE VI
COST RECOVERY AND SUBSIDIES

SEC. 19. Compensation. Fees in the transport sector shall as far as practicable be
determined following the compensation principle expressed in such terms as ‘users pay,’
‘polluters pay” and ‘congestors pay.”

SEC. 20. Cost Recovery Net of Eligible Subsidies. Fares and charges for transport
services shall be cost-based and shall recover all costs net of eligible subsidies.

SEC. 21. Grounds to Justify Subsidies. Subsidies shall not be granted by the
Government except when justified on economic, environmental and/or social grounds.
Disadvantaged groups may be eligible for targeted and transparent subsidies based on
government's social policies. Where the Government requires that public services be provided at
fares or charges below cost on social grounds, the Government shall subsidize the public service.

SEC. 22. Avoidance of Cross-subsidies. Cross- subsidies among types and areas of
operations shall be avoided. Any subsidies, when justified and allowed under Section 23 shall be
direct, specific and transparent.


SEC. 23. Fees for Use on Navigational Aids. Fees shall be levied against all vessels
and aircrafis that call on Philippine maritime ports and airports to allow government to recover
the costs for providing, operating and maintaining navigational aids. ‘The fees shall be reviewed
and adjusted periodically to generate sufficient revenues to sustain an adequate level of service
in terms of efficiency, safety and security in compliance with international standards.

ARTICLE VIL
REGULATION OF TRANSPORT SERVICES

SEC. 24. Routes and Areas of Operation, Routes and areas of operation shall be
determined, established and changed by the regulatory bodies concerned based on pre-set
technical and economic standards issued by the DOTC, and upon prior consultation and
coordination with local government units (LGUs) concerned.

SEC. 25. Entry to the Transport Industry. The authority to operate a public land
transport service shall be issued by the regulatory body upon proof by the applicant of
compliance with citizenship requirements, and financial capacity. Public necessity shall be
presumed.

SEC. 26. Regulatory Measures to Address Market Failure and Externalities, Should
the conditions in a route or area of operation in public transport be such that passengers and/or
shippers, by reason of the number of vehicles or operators, are deprived of choices, or the route
or area is evidently congested or can accommodate only few vehicles/craft and operators, or
congestion, traffic disorder or similar externalities therein, persist despite compliance with entry
requirements and enforcement, the regulatory body, to promote or protect the public interest,
may on its own account adopt such measures or arrangements as would give passengers/shippers
choices or effectively address congestion, traffic disorder or externalities, including subjecting
the grant of the privilege to operate in a route or area to public bidding, merger or consolidation
of operators in a route or area or other schemes. All franchises and authorities to operate a
public transport service shall be subject to this policy and may be amended or terminated as a
consequence of the exercise by the regulatory body of the power herein granted, with due regard
to the interests of affected operators.

SEC. 27. Fare/Rate Setting for Land Public Transport Services. Fares for the lowest
class of land public transport services shall, subject to notice and hearing, be determined and set
or adjusted by the regulatory body taking into account capital, operating and maintenance costs
as well as a reasonable return to the operator. Operators are hereby authorized to set their fares
and rates for higher classes of land public transport services. Should there be externalities that
adversely affect the public interest, the regulatory body may, upon due notice to, and hearing of,
the parties-in-interest, intervene and set a range within which fare/rate adjustments by the
operators may be made subject to guidelines set by the regulatory body, or implement such
measures as may be required by the circumstances with due regard to the interests of the
passengers shippers, and the operators. The regulatory body shall require operators to set up @
uniform system of accounts, which shall be one of the bases on establishing fares, rates and
charges.

SEC. 28. Fare/Rate Liberalization and Monitoring of Airline and Shipping Operations.
In order to encourage investments in domestic airline and shipping industry by existing operators
and attract investment from new operators and investors, domestic operators are hereby
authorized to establish their own fares and rates: provided that effective competition is fostered
and public interest is served. The regulatory body shall monitor all domestic airline and shipping
operations and exercise regulatory intervention where it is established after due process that
public interest to be protected and safeguarded. Should there be market failure or externalities
that adversely affect the public interest, the regulatory body may, upon due notice to and hearing
of the parties-in-interest, intervene and set the fare or a fare range within which adjustments may
be made subject to pertinent guidelines, or implement such measures as may be required by the
circumstances with due regard to the interests of the passengers/shippers and the operators.



SEC. 29. Safety, Service and Environmental Standards. The DOTC, its concerned
sectoral offices and attached agencies shall regularly upgrade and update their standards on
safety, level of service, and environmental sustainability in keeping with international standards
and practice, and shall strictly implement and enforce the same.

SEC. 30. Prohibition against Foreign Aircraft and Vessels. No foreign vessels and
aircraft shall be allowed to transport passengers and/or cargo between ports or places within the
Philippine territorial jurisdiction, except when a Special Permit is granted by the regulatory body
because it is warranted by public interest and there are no domestic aircrafts or vessels available
or suitable to provide the needed shipping service.

ARTICLE Vil
URBAN TRANSPORT

SEC. 31. Defining a Hierarchy of Public Transport in Urban Areas. Public
transportation in urban areas provided by the government and/or under PSP arrangements shall
be given priority over priority transportation to ensure accessibility, comfort, convenience,
reliability, safety security and affordability to the majority of urban travelers. The DOTC shall
define a hierarchy of urban public transport services in assigning appropriate modes to various
routes or arrears of operation.

SEC. 32. High capacity high public transport Preferred in urban Areas. Taking into
consideration the criteria for evaluating and selecting transport projects, high capacity public
transport system shall be the preferred mode in high passenger density corridors in order to
maximize the use of travel space by servicing the most number of passengers with the least delay
possible,

SEC. 33. Interconnectivity among Public Transport Modes ~ Interconnectivity among
public modes shall be primarily considered in the development of the urban public transport
system. This may be achieved through the provision of modal interchanged areas where transfer
of passengers from one mode to another will be safe and convenient and vehicle movements will
not disrupt traffic flow on the surrounding roads.

SEC. 34. Low Cost Traffic Engineering and Management Measures Preferred over
High Cost Infrastructure- In addressing problems of waflic congestion in urban roads, priority
shall be given to low cost traffic engineering and management measures over high-cost
infrastructure facilities. However, road infrastructure projects shall be considered where there is
a clear need for an additional infrastructure facility to establish a road hierarchical system and/or
to address road network deficiencies such as major traffic bottleneck and missing links. Traffic

education and enforcement activities shall support traffic engineering and management
measures.

SEC. 35. Transport Demand Management in Urban Areas. In large urban areas where
the transport capacity expansion strategy is no longer sufficient to address widening supply and
demand gap, the DOTC, the regulatory body, or the LGU concemed, as may be appropriate

under existing laws, shall have the authority to apply transport demand management measu
such as traffic restrictions.

SEC. 36. Truck Ban. Carriage of goods is the life-blood of urban economy. Therefore,
any proposal to restrict the movements of truck in urban arrears to ease traffic and reduce traffic
accidents should also take in account its economic impacts. In any case, truck bans shall
preferably not be imposed in national roads and highways. The DOTC and DILG, in consultation

with the stakeholders, are hereby directed to formulate guidelines in the planning and design of
truck bans.


SEC. 37. Promotion of Non-moterized Transport- The provision of non-motorized
transport, such as pedestrian facilities and bicycle ways, where justified and
physically/operationally viable, shall be promoted and such pedestrian facilities, bicycle ways
and non-motorized transport shall be considered integral parts of the transport system.

SEC. 38. Traffic Impact Assessment- All LGUs adopt an integrated approach to land use
and urban transport planning in order to have more effective management growth in urban areas
and to ensure that the capacity of transport facilities and services can accommodate the demand,
Accordingly, LGUs shall require traffic impact assessment for new and significant land use
developments in urban areas.

ARTICLE IX
TRANSPORT LOGISTICS

SEC. 39, Establishment of Seamless Intermodal Logistics Network. The DOVC shall
lead and coordinate with the appropriate agencies of government and the private sector in the
establishment of seamless intermodal transport logistics network to ensure efficient logistics
chains and an umimpeded flow of relief goods, disaster response equipment and basic
commodities during times of emergencies resulting from natural calamities and other disasters.

SEC. 40. Establishment of Single Transport Document and Single Access Point and
One-stop Shop. The DOTC shall and coordinate with the DTI, DOE, Bureau of Customs and
other appropriate government agencies in the establishment of the following:

a) a single transport document for customs, immigrations, quarantine and
security purposes that can be used in all transport modes, thereby facilitating
multimodal freight transport and enhancing the framework offered by
multimodal waybills or manifest; and

b) a single access point and one stop-shop for administrative processes and
procedures in all modes to simplify and decentralize exchanges of freight-
related information and substantially reduce the cost of regulatory

requirements, especially when using Information and Communication
‘Technolog

SEC. 41. Standardizing Handling Characteristics of Intermodal Loading Units. \n
order to facilitate transshipment between modes and reflect technological developmen
standards for intermodal loading units shall be introduced, which aim at decre
costs in handling operations between modes by standardizing certain handling characteristis
intermodal loading units.

SEC. 42. Developing Interfaces between Long Distance Deliveries and Short Distance
Distribution, As transport logistics involve distribution in urban areas, efficient interfaces
between truck deliveries over longer distances and distribution to the final destination over short
distances shall be developed with full consideration of aspects of land use planning,
environmental considerations and traffic management. Where warranted by the logistics chain
characteristics, consolidation/distribution centers such as truck terminal and rail-served inland
container depot (ICD) shall be established outside of metropolitan areas.

ARTICLE X
GOVERNANCE

SEC. 43. Direction-Setting and Technical Regulation by Government. The
government shall provide scope for PSP where such potential exists and shall withdraw from
transport activities and areas where the private sector is strong and competition exists or can
likely emerge. The government shall concentrate on direction-setting, technical regulation and
economic regulation.


SEC. 44. Prohibition against Unsolicited PSO/PPP. Private sector participation (PSP)
in the provision of transport infrastructure shall be pursued as a matter of policy, not only to
enlarge the budget envelope but also to drive sector efficiencies. However, in the selection of
private providers, no unsolicited proposal shall be entertained, except when the project can pay
for itself entirely from user revenues such as in BOO, BOT and similar schemes. Accordingly,
any development based on appropriate feasibility study shall be offered for PSP or PPP through
public bidding, The feasibility study shall be made available to any interested private party. The
feasibility study shall be made available to any interested private party. The planning and
implementation of PSP and PPP projects shall adhere to the following guidelines:

a, The plans, programs and projects of each modal agency shall include those
proposed for PSP or PPP implementation.
b. Projects which are necessary for public service, are economically feasible and
show potentials for direct cost recovery and revenue generation, but may not
attract private financing because the private investment cannot be fully recovered
from revenues at rates will be able or willing to pay, shall be given priority in
allocation of Government Financing Support (GFS) through PPP schemes. The
GPS shall not be recovered from the revenues, but shall be included in the
government budget.
Where a transport project requires a government contribution to bridge the
financial viability gap, the contribution shall be in form of a justifiable share in
the project cost. An existing right of way owned by the government, when
provided by it, shall not form part of its contribution to the project cost.
d. In the allocation of risks between the parties in a PPP contract, competition and
commercial risks shall reside with the private proponent. The rights-of-way risks
shall be assumed by the government.

SEC. 45. Transparency and Accountability Initiatives. ‘The DOTC, DPWH and
other transport agencies of government shall encourage and support transparency and
accountability initiatives of the private sector and civil society in connection with the
planning and implementation of government transport projects.

SEC. 46. Devolution of Low-occupancy Public Transport Services to
Cities/Municipalities. Not later than two (2) years from the effectivity of the Act subject
to the guidelines prescribed by the DOTC, the regulation of the operation and franchising
of the following public transport convevances shall be devolved to cities/municipalities.

a) Intra-city/municipality routes of public utility vehicles with seating capacity of
not more than 15 persons, except when the same merely natural extensions of
lines granted by the LTFRB.

b) Intra-city/municipality routes of vessels, with a seating capacity of not more than
25 persons, except when the same are merely natural extensions of routes granted
by the MARINA.

SEC. 47. Transport Planning and Traffic Management Structure in Cities.
There shall be established in each city a transport planning and traffic management unit
With the following functions:

1. Provide the transportation sector inputs in the preparation of the city’s
comprehensive development plan;

2. Coordinate with the LTFRB/MARINA and the public transport operators
in the development of public transport networks;

3. Regulate the operation of tricycles for hire and other public utilities and
vessels under the city’s jurisdiction; and,

4. Discharge functions mandated by the Local Government Code in the area
of traffic engineering and management.


SEC. 48. Grouping of and Coordination among Metropolitan Area LGU. .GUs
in metropolitan areas with no formal organization similar to Metro Manila, may through
agreements authorized under appropriate ordinances, group themselves and consolidate
or coordinate their efforts, services, and resources for urban transportation concerns or
requirements that transcend individual administrative boundaries.

SEC. 49. DOTC/DPWH Technical Assistance to LGUs. The DOTC and DPWH
shall extend technical assistance to city administrations to enhance their capacities and
capabilities in the areas of transport planning and traffic management.

SEC. 50, Jurisdiction of LTFRB over Rail Transport.

the law, the authority to build and/or operate a rail transport system shall be granted by
the LTFRB upon proof of compliance with citizenship requirements, and technical and
financial capability. The LTFRB shall regulate the construction, operation, and
maintenance of all rail transport systems and shall set and enforee compliance with
standards of safety levels of service, comfort and convenience of the public and
environment sustainability pursuant to international norms. The LTFRB shall approve
fares/rates and their adjustments pursuant to the policies on cost recovery and subsidies
set hereunder.

cept when granted by

SEC. 51. DOTC Initiatives to Separate Regulatory and Operation Functions
and to Eliminate Conflicting Functions. The DOTC shall forthwith initiate action to
reorganize transport bureaucracy or agencies under it or aitached thereto separate
regulatory and operating functions, and eliminate overlapping and conflicting functions.
In pursuance thereof, appropriate restructuring and re-alignment or re-assignment of
functions that may be administratively affected, shall be undertaken. Otherwise, it shall
immediately propose appropriate measures for legislative action to achieve the said
purposes.

SEC. 52. Decentralization of Decision-making. In carrying out their national
mandates, transport agencies shall decentralize making to the extent feasible in order to
become more responsive to transport users and to achieve better coordination at the sub-
national levels of governance.

SEC. 53. Air, Rail, and Maritime Transport Accident Investigation. Until such
time that an independent air, rail and maritime accident investigation body is created by
law, the DOTC shall investigate accidents in the respective transport areas to determine
compliange with safety standards and regulations, enforce accountability and cause the
execution of sanctions under the law and rules against those culpable or responsible.

ARTICLE X
FINAL PROVISIONS

SEC. 54. Separability Clause — Any portion or provisions of this Act that may be
declared unconstitutional or invalid shall not have the effect of nullifying other portions
or pro}

be given e

ns hereof as long as such remaining portions or provisions can still subsist and
fect in their entirety.

C. 55. Repealing Clause.- All laws, ordinances, rules, regulations and other

or parts thereof, which are inconsistent with this Act are hereby repealed or
modified accordingly.

Sec.56. Effectivity Clause.- This Act shall take effect fifteen (15) days from the
date of its publication in at least two (2) newspapers of general circulation.

Approved