Legal basis and referenced programs
- The guidelines implement national government support for the Public Utility Vehicle Modernization Program (PUVMP).
- The Order is issued pursuant to Department Order No. 11, Series of 2017 (Omnibus Guidelines on the Planning and Identification of Public Road Transportation Services and Franchise Issuance).
- The Order relies on financing and cooperation arrangements under Executive Order (EO) No. 058, Series of 2017 of the Land Bank of the Philippines, dated April 26, 2017, and a Memorandum of Understanding signed on April 30, 2017 between LandBank and DOTr.
- The Order also relies on a Memorandum of Understanding signed on September 11, 2017 between Development Bank of the Philippines (DBP) and DOTr.
- The Order is tied to Republic Act No. 10964, specifically the F.Y. 2018 General Appropriations Act (GAA) through Special Provisions for Budgetary Support for Government Corporations (BSGC) for Land Bank and DBP.
Scope, coverage, and implementing agencies
- The Order provides guidelines for the availment of national government subsidy to cover the equity required for purchasing new PUV units under the financing programs of DBP and Land Bank.
- The Order establishes eligibility criteria and sets terms and conditions governing the equity subsidy.
- The Order primarily guides implementation by DOTr, LTFRB, Land Transportation Office (LTO), and the Office of Transportation Cooperatives (OTC).
- The Order also guides the Department of Finance (DOF) and the Department of Budget and Management (DBM), and government financial institutions, insofar as activities relating to the PUVMP financing component are concerned.
- The Order governs processes connected with financing programs formulated and approved by DBP and LandBank upon consultation with DOTr and LTFRB.
Principles governing processing and awards
- The Order requires implementation consistent with inclusivity, transparency, and fairness.
- Inclusivity requires preference for absorbing existing PUV operators into the PUVMP and providing support for a smooth transition to the new public transportation system.
- Transparency requires open and transparent processing and awarding of subsidy applications.
- Fairness requires the use of objective criteria to guide implementing agencies in determining eligibility for the subsidy.
Defined terms
- Equity Subsidy means the amount provided by the national government to PUV Operators, used for the required equity in applying for loans under DBP or Land Bank, and treated as incentive support for modernizing the operator’s PUV fleet.
- Claimant Transport Operator means a transport operator duly registered as a legal entity who underwent the process prescribed by LTFRB for claiming the Equity Subsidy.
- New or Developmental Route means routes serving new residential, commercial, and other land use developments pursuant to item 2.4 of Department Order No. 2017-011 or the Omnibus Franchising Guidelines (OFG).
- Notice of Selection means a primarily document issued by LTFRB to the selected applicant after evaluation and/or review of qualification documents submitted for the franchise application.
Equity subsidy rules: access, funding, and charge
- The equity subsidy is deemed incentive support for the Claimant Transport Operator in modernizing the PUV fleet, and the amount must be used to satisfy the required equity for loans under DBP and LandBank.
- Equity subsidy access is through the respective financing programs and schemes of DBP and Land Bank, guided by prevailing issuances and the prescribed process of LTFRB and DOTr for implementing the PUVMP.
- Budget allocated for the equity subsidy under the GAA is housed under BSGC—Others in the respective accounts of DBP and Land Bank.
- The allocated budget must be set up as a separate fund, with transactions thereon separately recorded and maintained in the books of DBP and Land Bank.
- Implementation of the GAA special provisions and the release of funds are guided by this Department Order.
- The equity subsidy is chargeable only upon approval of the Claimant Transport Operator’s loan application with the respective banks, based on the eligibility and terms and conditions under this Department Order and existing policies, rules, and regulations of DBP and Land Bank.
- Equity subsidy availing is limited to loans applied to acquire new PUV units and is subject to availability of allotted funds for the budget cycle.
Eligibility, Notice of Selection, and franchise consequences
- Existing PUV operators with valid franchises are eligible when the operator’s franchise is validated using the Master List of PUV operators with valid and current franchises prepared by LTFRB.
- Operators applying for new or developmental routes are eligible when their eligibility depends on the approval of their application for new or developmental routes by LTFRB.
- The Claimant Transport Operator is deemed eligible for the Equity Subsidy upon presentation of the Notice of Selection issued by LTFRB to the bank.
- The Notice of Selection is obtained after due evaluation by LTFRB and includes at least: (a) name of the operator, (b) approved route, and (c) approved number of units and the type of PUV to ply the route.
- Availment of the equity subsidy fixes the equity subsidy amount at Eighty Thousand Pesos (PHP 80,000.00) per unit for eligible existing operators and operators applying for new or developmental routes.
- Availment of the equity subsidy causes cancellation of the existing franchise and the issuance of a new or consolidated franchise upon compliance with Department Order No. 2017-011 or the OFG, LTFRB MC Nos. 2018-006, 2018-008, and 2018-013, and other pertinent laws, rules, and regulations as determined by LTFRB.
- Availment automatically causes the dropping of old PUJ units and requires substitution with units compliant with the requirements of the OFG.
- PUJ units dropped and substituted by virtue of this Department Order must be surrendered for scrapping, as may be further provided under rules and regulations to be promulgated by DOTr, LTFRB, and LTO, in coordination with other implementing agencies.
Limitations on use and transferability
- The equity subsidy is not transferable, not convertible to cash, and not withdrawable.
- The equity subsidy must be used only for purposes prescribed under the PUVMP and this Department Order.
- The equity subsidy can only be availed through DBP and Land Bank and must be charged against the prescribed and approved equity requirement for the loan applied to acquire new PUV units.
- Charging is subject to availability of allotted funds for the budget cycle.
Related issuance links and modification rule
- The guidelines are connected to LTFRB Memorandum Circular (MC) No. 2018-006 (Guidelines for the PUV Modernization Program’s Initial Implementation).
- The guidelines are connected to LTFRB MC No. 2018-008 (Consolidation of Franchise Holders in Compliance with DOTr Department Order No. 2017-11).
- The guidelines are connected to LTFRB MC No. 2018-13 (Implementing Guidelines for the Acceptance of new Certificate of Public Convenience (CPC) under the Initial Implementation of the PUVMP).
- All other issuances inconsistent with the Department Order are modified or superseded accordingly.
Effectivity and publication
- The Department Order takes effect immediately following its publication in the UP Law Center.
- The signature authority is Arthur P. Tugade, Secretary.