Consolidation of Public Transport Franchises

The circular is anchored on Department Order No. 2017-011 which adopts rules and procedures for planning, identification of public road transportation services, and franchise issuance.
Department Order No. 2017-011 tasks LTFRB to implement the OFG and encourages and requires the consolidation of operators and the establishment of bigger coordinated fleets of PUVs.
Executive Order No. 202 gives the LTFRB power to issue, amend, revise, suspend, or cancel Certificates of Public Convenience (CPCs) or permits for public land transportation services by motorized vehicles, including prescribing their terms and conditions (Section 5(b)).
Executive Order No. 202 also empowers the LTFRB to promulgate rules and regulations governing proceedings before the Board and the Regional Franchising and Regulatory Office (Section 5(i)).

The circular establishes a priority framework for updated franchise issuance by requiring consolidation into a single juridical entity to operate public land transportation services.
The circular encourages transport groups and operators to consolidate ownership and operation to ensure profitability and longevity in public land transport utilities.
The circular aims to provide access to common resources, enable better fleet management, and support efficient franchise records management system through consolidation.

Existing Individual Franchise Holders are franchise holders with valid and subsisting franchises with less than 1/3 of total number of units operating in an authorized route or with less than fifteen (15) units confirmed and registered for the current year or on the immediate preceding registration year with the Land Transportation Office (LTO).
Consolidation is for individual franchise holders that voluntarily apply for cancellation of their individual franchises and conversion under a single juridical entity.
Consolidation results in a single juridical entity (specifically stated as cooperative or corporation) that becomes the holder of the consolidated CPC.

Priority in the issuance of updated franchise is extended to applicants that consolidate into a single juridical entity for the operation of public land transportation services.
Petitions of individual franchise holders that voluntarily applied for cancellation of their individual franchises and conversion under a single juridical entity are accepted and processed by the LTFRB subject to the circular’s rules.

A Petition for Consolidation of CPCs must be filed by the consolidating single juridical entity with the LTFRB.
The petition must indicate the individual Case Nos. of the franchises for consolidation and the route applied for.
The petition is filed with the LTFRB Central Office for inter-regional routes and with the Regional Franchising Regulatory Offices (RFROs) for intra-regional routes, as applicable.
The petitioner must submit the following documents:
- SEC Certificate of Incorporation (for corporations) or CDA Certificate of Registration and OTC Certificate of Accreditation (for cooperatives);
- Management Agreement between the cooperative and its members (for cooperatives);
- Latest Financial Statement;
- Proof of operation of an Off-Street Terminal at both ends of the routes, consistent with item 5.3 of D.O. No. 2017-011;
- Proof of Garage (TCT if owned, or Contract of Lease/Authority to Use with TCT of lessor if leased), with LGU Zoning Clearance;
- OR/CR of the authorized units;
- New Format Operator’s Data Sheet.

The Legal Division issues a Notice of Hearing and sets the case for hearing to determine compliance with:
- jurisdictional requirements,
- citizenship requirements,
- financial requirements,
- garage requirements, and
- proof of public need, if applicable.
The petitioner must present the original copy of the individual CPCs of its constituent franchise holders during the hearing.

If the Board finds merit in the petition, the Board must:
- cancel the existing individual CPCs, and
- grant an updated or consolidated CPC in favor of the consolidated juridical entity.
Single juridical entities holding updated and consolidated CPCs may continue to operate in the previously authorized routes in the interim if there is no LPTRP covering the route or no DOTr transport study, but they remain subject to modification as recommended by DOTr.
The juridical entity must designate the required number of authorized units that will ply an authorized route under the updated CPC.

Existing individual franchise holders in an authorized route must consolidate and file the necessary Petition for Consolidation of their CPCs within one (1) year from the effectivity of Memorandum Circular No. 2018-008.
After the lapse of this period, the LTFRB considers Applications for the Issuance of New CPC filed by single juridical entities on the authorized route of the existing individual franchise holders.

The vehicle types authorized must be in accordance with item 2.2 “Hierarchy and Classification of Public Transportation Modes” and item 5.2 “Modernization of Public Transport Services” of D.O. No. 2017-011.
Single juridical entities with updated and consolidated CPCs must comply with vehicle specification requirements under the OFG.
Single juridical entities must substitute 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.

Single juridical entities with updated CPCs must operate on authorized routes under a fleet management system.
Fleet management is required to:
- remove or minimize risks associated with vehicle investment,
- improve efficiency and productivity,
- reduce overall transportation and staff costs, and
- ensure compliance with public land transportation rules and regulations.

All other issuances or parts thereof that are inconsistent with Memorandum Circular No. 2018-008 are modified, amended, or superseded accordingly.