DOTC-CDA Guidelines on Transport and Telecom Coops

Legal basis, policy, and framework

The declared State policy is to foster the creation and growth of cooperatives as a practical vehicle for promoting self-reliance and harnessing people toward economic development and social justice (preamble).
Republic Act No. 6938 (Cooperative Code of the Philippines) mandates government agencies to ensure technical guidance, financial assistance, and other services enabling cooperatives to become viable and responsive economic enterprises.
Executive Order No. 95, series of 1993 designates the CDA as the lead agency coordinating all government activities with cooperative programs and projects.
Executive Order No. 898, series of 1983 governs the transport cooperative program and the assistance framework for transport cooperatives under DOTC/OTC.
Republic Act No. 6938 requires public service cooperatives, including transportation and telecommunications services, to secure prior favorable endorsement from the appropriate franchising agencies before CDA registration (Art. 97; reflected throughout Section 1 and Section 7).
Republic Act No. 6938 authorizes joint issuance by concerned agencies of rules, regulations, and guidelines to implement provisions on public service cooperatives (Art. 98; reflected in the joint nature of the guidelines).

Key definitions and concepts

A public transport service cooperative is a cooperative registered with the CDA, accredited by the Office of Transportation Cooperatives (OTC), composed of drivers, pilots, airplane or ship crew, investors or owners of vehicles, aircraft or sea vessels, and allied workers of the public transport industry (land, air, or water), pooling skills, savings, and other resources to provide facilities and services for the economic and efficient carriage of passengers and goods ( Section 1).
Transport cooperative terminology in the guidelines means public transport service cooperatives as defined in Section 1.
Registration is the formal acquisition of juridical personality through issuance of a certificate of registration by and under the official seal of the CDA ( Section 1).
Accreditation is approval by the OTC Board of Directors of the organization of transport cooperatives prior to CDA registration, after compliance with DOTC/OTC requirements; accreditation can also cover applications of cooperatives already CDA-registered prior to the issuance of these guidelines ( Section 1).
For transport cooperatives, DOTC/OTC accreditation entitles the cooperative to all assistance, rights, and privileges extended by DOTC/OTC to cooperatives under its jurisdiction pursuant to Executive Order No. 898 ( Section 1).
For telecommunications service cooperatives, accreditation is made by the agency or official designated by the DOTC Secretary ( Section 1).
A telecommunications service cooperative is a CDA-registered, DOTC-accredited organization composed of investors, carrier-operators, and users of facilities and services devoted to transmitting messages, data, or information by electromagnetic transmission, with or without a closed transmission medium, including instrumentalities and services essential to transmission (collection, storage, forwarding, switching, delivery) ( Section 1).
Endorsement is favorable consideration extended by the appropriate franchising agency (LTFRB, MARINA, CAB, or NTC) to a cooperative’s application for registration after the agency is convinced the cooperative’s purpose is legitimate and its organizers satisfy citizenship requirements and other requirements under applicable laws ( Section 1).
Endorsement is expressly not an automatic grant of franchise or certificate of public convenience and necessity, which are separate legal acts extended only after compliance with the Public Service Act ( Section 1).

Organization rules for transport and telecom cooperatives

Any group of persons may organize a transportation service cooperative to engage in public land, water, or air transportation services, with membership composed of investors/operators, drivers, pilots, ship and airplane crews, allied workers, and in appropriate cases, commuters or users ( Section 2).
The CDA and the DOTC (directly or through OTC, LTFRB, LTO, MARINA, CAB, or ATO) shall extend every technical assistance necessary to enable qualified parties to organize cooperatives and have them properly registered ( Section 2).
To augment the OTC’s limited resources, LTO, LTFRB, MARINA, CAB, and ATO shall designate personnel in the regions to assist organizers in preparing applications and the documents required for registration ( Section 2).
Any group of persons may organize a telecommunications service cooperative for telecommunications operations and services for the general public or for members, provided that substantial ownership and management of facilities (to the extent DOTC may determine) is in the hands of or is eventually transferred to the general membership.
The period for transfer of ownership and management in a telecommunications service cooperative is determined by the DOTC ( Section 3).
Technical assistance for telecommunications cooperative organization is extended by OTC, DOTC, NTC, and TELOF ( Section 3).

Where to file applications; transmittal mechanics

Applications for organization and registration of transport cooperatives may be filed with any CDA unit or OTC, or received in regional/district offices of LTO and LTFRB (public land), MARINA (water), or CAB and ATO (air), including central offices, whichever is convenient ( Section 4).
The receiving unit may conduct preliminary determination of sufficiency of organizational and documentary submissions and compliance with legal requirements ( Section 4).
If substantial requirements are lacking, the receiving unit shall advise what to do consistent with the guidelines and return documents for further compliance ( Section 4).
Preliminary determination at the receiving unit is expressly not construed as part of the CDA evaluation that starts the prescription period under Art. 16 of Republic Act No. 6938 ( Section 4).
When the receiving office/unit is satisfied basic requirements have been more or less complied with, it shall forward the application to OTC with other pertinent documents for evaluation and Board consideration consistent with Art. 97(3) and these guidelines ( Section 4).
If an LTFRB or LTO regional office, MARINA, or CAB is the receiving office, it may include its favorable endorsement among documents forwarded to OTC.
Transmittal may be done by the receiving unit or directly by the applicant ( Section 4).
Applications for organization and registration of telecommunications service cooperatives may be received in TELOF or NTC offices (regional or central), which make the preliminary determination of sufficiency of organizational and documentary submissions ( Section 4).
Once favorably endorsed, telecommunications applications are transmitted to DOTC/OTC for accreditation prior to transmittal to CDA for registration certificate ( Section 4).
The transport/telecom procedures may be followed whenever possible ( Section 4).

OTC pre-registration evaluation and jurisdiction

The OTC shall immediately evaluate documents it receives directly from organizers or from receiving regional/district units for transport or telecommunications cooperatives ( Section 5).
If DOTC/OTC requirements are satisfied per these guidelines and any addendum, or other later circulars, memoranda, or orders, the OTC Board of Directors shall approve the application and transmit documents to the concerned CDA unit with the endorsement of the concerned franchising agency (Section 5).
In the absence of endorsement, the documents are first referred to the concerned franchising agency for favorable endorsement (Section 5).
OTC shall immediately notify the applicant of action taken to enable follow-ups with the concerned agency (Section 5).
Transport cooperatives operating routes traversing more than one region must file organizational documents for registration with the CDA Central Office, which has jurisdiction over registration and other cooperative matters specified in R.A. No. 6938 (Section 6).
Transport cooperatives whose area of operation is confined within one region must file with the nearest CDA office in the region, where the regional unit has original jurisdiction (Section 6).
The same jurisdiction rules apply to telecommunications service cooperatives (Section 6).
Receipt by CDA of the application together with necessary endorsements starts the prescriptive period under Art. 16 of R.A. No. 6938, unless CDA has other reasons to suspend the running of the period (Section 6).

CDA registration requirements and seminars

Only applications for registration that are duly endorsed by the local government unit and the proper franchising agency (LTFRB, MARINA, CAB, or NTC, as the case may be) and accredited by DOTC/OTC shall be acted upon by the CDA (Section 7).
Registration entitlement requires full compliance with Art. 14(4) of R.A. No. 6938 for the applicant or telecom cooperative (Section 7).
The CDA and DOTC shall support newly registered cooperatives technically by extending seminars to enhance their operation as cooperatives and as public transport or telecom service operators (Section 8).
The OTC in particular shall invite agencies/institutions including Philippine National Police Traffic Management Command, Social Security System, Philippine Coast Guard, and Katipunan ng mga Kooperatibang Pansasakyan ng Pilipinas for the conduct of the Cooperative Education and Transport Operation Seminar (Section 8).
Continuing cooperative education is promoted by CDA and OTC ( Section 8).
Transport cooperative trainers from national and regional federations of transport cooperatives and other accredited non-government organizations are encouraged to participate under the principle of subsidiarity (Section 8).
OTC and CDA shall establish programs and projects enabling duly organized transport and telecommunications cooperatives to access other information and resources ensuring viability of operations and related businesses (Section 8).

Liaison Committee powers and changes

A five-member Liaison Committee is created with two (2) representatives from DOTC/OTC, two (2) from CDA, and a fifth member designated by each national federation among cooperatives in different transportation/telecommunications sectors ( Section 9).
The fifth member sits only when federation or its member-cooperatives have concerns on the agenda ( Section 9).
The committee convenes upon the instance of DOTC/OTC, CDA, or the concerned federation ( Section 9).
The committee has a chairman/presiding officer and a secretary elected by and from among themselves; chairmanship may be rotated as the committee desires ( Section 9).
The committee oversees implementation of the joint guidelines and may recommend changes, but changes are not effective unless agreed upon by the parties and promulgated through joint circulars (Section 9).
The committee keeps records of pertinent memoranda, orders, circulars, and other issuances of CDA, DOTC, OTC, LTO, LTFRB, CAB, ATO, MARINA, TELOF, and NTC, and those agencies shall furnish the committee copies regularly ( Section 9).
The committee may assist CDA and DOTC/OTC in resolving other issues affecting operation of transportation and telecommunications cooperatives ( Section 9).

Transitory coverage and guideline effectivity

Transportation cooperatives directly registered with CDA prior to issuance of these guidelines may apply for DOTC/OTC accreditation to qualify for technical assistance and become beneficiaries of DOTC/OTC financial and developmental programs and projects (Section 10).
Multi-purpose cooperatives and other types intending to operate public transport services must apply for OTC accreditation and submit requirements, including amendment of Articles of Cooperation, to qualify as public transport service cooperatives under Chapter XII of R.A. No. 6938 (Section 10).
The guidelines take effect fifteen (15) days from filing with the U.P. Law Center under Presidential Memorandum Circular No. 11 dated 9 October 1992 (Section 11(a)).
The guidelines remain in force unless amended or superseded, and nullification of any portion does not extend to provisions not specifically or expressly affected (Section 11(b)).
No party may unilaterally rescind or revoke the guidelines without consent of the other party (Section 11(c)).

Annex A: OTC organizational requirements (transport)

Applicants organizing transport cooperatives intending passenger and cargo services must comply with organizational requirements consistent with Art. 97(3) of R.A. No. 6938 and OTC Administrative Order No. 85-001, approved pursuant to Executive Order No. 898, series of 1983, in addition to requirements under Arts. 6, 10, 11, and 14 of R.A. No. 6938 (Annex I.A).
Membership must be open to operators/investors, drivers, allied workers (such as conductors, dispatchers, mechanics, and the like), and in appropriate cases, users or commuters (Annex I.A.1.1).
Investors/operators preferably must not have more than five (5) units individually owned whose franchise and management shall be transferred/shared with the cooperative; if an operator-member acquires more than five (5) units during membership, the person ceases to be a regular member and is deemed an associate or preferred member under Art. 27 of R.A. No. 6938 and OTC Adm. Order No. 85-001 (Annex I.A.1.1).
Where viability requires allied services or businesses related to transport operations patronized by member-operators and drivers, a minimum of fifty (50) members is required upon organization, at least fifteen (15) of whom must be licensed drivers, whose representation in the board of directors together with allied workers must not be less than thirty per cent (30%) of the total number of directors at any time.
For shuttle and trucking services, fewer driver-members are allowed at a ratio of two drivers/mechanics to every vehicle owned/operated (Annex I.A.1.2).
Multi-purpose or agricultural cooperatives intending regular passenger and/or cargo services as a subsidiary must amend Articles of Cooperation to provide and reflect such services in their names and then comply with the foregoing requirements consistent with Chapter XII of R.A. No. 6938 (Annex I.A.1.3).
A transport cooperative must meet vehicle requirements based on ownership, type of service, and mode of vehicles:
- For regular passenger conveyance (jeepney, taxi, tricycle), minimum operating units depend on circumstances:
  - At least twenty-five (25) units ready for operation if individually owned by operator/investors as members, under a management agreement whereby the franchise is jointly held by the cooperative and the individual/beneficial owners (Annex I.A.2.1).
  - A lesser number of units is allowed at OTC Board discretion if areas are too remote and passenger demand requires fewer units, as certified by the LTFRB or DOTC office concerned (Annex I.A.2.1).
  - For taxi service acquired through importation, there must be convincing proof the cooperative can acquire within six (6) months from registration, and there must be a clear legal possibility that importation is allowed by the government (Annex I.A.2.1).
  - OTC may allow organization with fewer units provided it is not less than five (5) units for taxi and jeepney and ten (10) in the case of tricycle, with units titled and legally owned in the name solely of the cooperative and immediately available for operation (Annex I.A.2.1).
  - For bus service, the minimum number of units is ten (10) whether individually owned by operator-members or titled and owned in the name of the cooperative (Annex I.A.2.1).
- For truck hauling services:
  - Minimum of one (1) unit if owned by the cooperative in its name; five (5) units if individually owned by operator-members (Annex I.A.2.2).
- For shuttle services:
  - Minimum of two (2) jeepneys, vans, or minibuses cooperatively owned for members’ primary use; one (1) if the cooperative owns and operates a regular sized bus for shuttle service (Annex I.A.2.3).
- For dual jeepney service (passenger and cargo):
  - Minimum of five (5) jeepneys cooperatively owned (Annex I.A.2.4).
Initial paid-up capital requirements for share capital contributions from members (without prejudice to later LTFRB requirements):
- For a cooperative operating jeep, taxi, bus, or trucking services: PHP 25,000.00 (Annex I.A.3.1).
- For a cooperative engaging in tricycle service: PHP 10,000.00 (Annex I.A.3.2).
Documentary requirements for organizing applicants:
- Submit an application to organize with a simple feasibility study containing:
  - proposed name of cooperative;
  - proposed type of service;
  - intended area of operation with route map and LTFRB certification that the route is open;
  - list of members with classification;
  - number of units and xerox copies of OR/CR;
  - capital structure;
  - allied services/business to be operated/undertaken (Annex I.B.1).
- Documents required under R.A. No. 6938 must be duly accomplished and included in the application to organize “as much as possible” (Annex I.B.2).

Annex B: Cooperative education seminar framework

Within a reasonable period after OTC Board approval/accreditation of the application, the OTC coordinates with concerned agencies and accredited trainor groups for the conduct of the Cooperative Education and Transport Operations Seminar for members of the new cooperative (Annex II).
The seminar syllabus covers topics with corresponding hours and resource persons:
- Overview of the TSC Program: 5 hours; resource person OTC/TC Trainor.
- Salient provisions of R.A. Nos. 6938/6939: 1.0 hour; resource person CDA/OTC/TC Trainor.
- Concepts and principles of cooperatives: 1.0 hour; resource person CDA/OTC/TC Trainor.
- Essential provisions of R.A. 4136: 1.5 hours; resource person LTO/PNP TMC.
- Franchising rules and regulations: 1.5 hours; resource person LTFRB.
- OTC Adm. Order No. 85-001: 1.5 hours; resource person OTC.
- SSS Applicable Rules: 1.0 hour; resource person SSS/Trainor.
Named witnesses include DANTE M. LANTIN (Chairman, LTFRB), MANUEL F. BRUAN (Assistant Secretary, LTO), SILVESTRE M. PASCUAL (Executive Director, CAB), PACIFICO VILLARUEL, JR. (CAB Administrator, MARINA), PANFILO VILLARUEL, JR. (as shown among signatories), SIMEON L. KINTANAR (Assistant Secretary, ATO), PACIFICO F. MAGHACOT, JR. (Assistant Secretary, ATO), and MOISES S. TOLENTINO, JR. (Officer-in-Charge, Office of Transportation Cooperatives), and PACIENCIO M. BALBON, JR. (CAB Administrator, MARINA) in the witness listings shown.