Amending rules on AUV/Van Express transport services

Legal basis and modifying effect

The Memorandum Circular is issued pursuant to Department Order 2005-010 entitled “Policy Guidelines on the Exercise of Authority and Functions by the Land Transportation Franchising and Regulatory Board.”
Under Department Order 2005-010, the LTFRB may amend or modify, in whole or in part, existing Department Orders previously issued by the DOTC that govern routes, economically viable capacities, and zones/areas of operation for public land transportation services, consistent with DOTC-approved public land transportation development plans and programs.
The Memorandum Circular modifies/amends DOTC Department Order 2004-52, dated 06 October 2004, which amended Department Order 97-1097 titled “Providing Standard Classification for All Public Transport Conveyances.”
The Memorandum Circular provides that rules and regulations inconsistent with its provisions are repealed and/or modified accordingly.
The Memorandum Circular specifically modifies the inclusion of the AUV/VAN Express Service as a new Public Land Transport Classification under DOTC Department Order 2004-52.

Policy, program framework, and coverage

The conversion program is implemented to establish AUV/Van Express Service as a controlled public land transport classification under LTFRB regulation.
Conversion coverage applies to operators holding subsisting Certificates of Public Convenience (CPCs) that are utilizing Asian Utility Vehicles (AUVs) and Vans, under enumerated service denominations.
The operating policy for converted services requires compliance with the principle of “Terminal to Terminal Only” and “No pick-up (Loading), No drop-off (Unloading)” between route origin and destination.
The operational concept targets commuters by motivating current private vehicle users to shift to public transport using this comparatively convenient mode.

Service technical rules and operating standards

The service type is AUV/Van Express Service.
The Memorandum Circular prescribes seating capacity limits, vehicle attributes, and qualifications by vehicle class:
- AUVs (including Toyota FX, Mitsubishi Adventure, Isuzu Highlander, and similar body types) must seat nine (9) passengers including driver (2 in front, 3 in the middle, and 4 at the back).
- Liftback models are not qualified for conversion, including Toyota Revo, Isuzu Crosswind, and Mitsubishi Adventure model 2004.
- Regular vans (including Kia Besta/Pregio, Toyota Hi Ace, Mitsubishi L-300, Nissan Urvan Shuttle, Mazda E2000, Hyundai Grace, and similar body types) must have a maximum of ten (10) passengers including driver (2 in-front, 2 at the back of the driver, 2 in the middle row, and 4 at the rear seats), and jump-seats must be removed.
- Extended vans (including Nissan Urvan VX and Toyota Hi Ace Commuter) must have twelve (12) passengers including driver (2 in-front, 2 at the back of the driver, 2 at the near middle row, 2 at the far middle, and 4 at the rear seats), and jump-seats must be removed.
- Freight Board (FB) Type Vans (including Mitsubishi L-300 FB, Kia Ceres, and similar body types) must have a maximum of fourteen (14) passengers including driver (2 in-front, 6 per row at the back), and must provide two-point seatbelts and dual air conditioning units (optional in rural areas).
Route rules are mandatory:
- Routes must be fixed route, subject to DOTC-Road Transportation Planning Division (RTPD) recommendation and Board approval.
- Routes shall not directly compete with MRT/LRT, PUB and PUJ routes.
- Routes may have a maximum of 25% direct co-routing with PUB and PUJ routes, subject to exemptions under the Memorandum Circular.
- Operations must be Terminal to Terminal with no loading/unloading between route origin and destination.
Route ceiling distances are prescribed:
- For Metro Manila and adjoining areas, route ceiling is 35 kilometers.
- For Regional and Rural Areas, ceiling is 35 kilometers for intra-regional routes and 75 kilometers for inter-regional routes.
- Exemptions exceeding 75 kilometers are subject to LTFRB Regional Director endorsement/recommendation and Board approval.
- Distances exceeding 140 kilometers are subject to a joint endorsement by DOTC-RTPD/LTFRB TWG and final Board approval.
- The franchise to be issued is subject to Route Rationalization once the Inter-modal Terminal Projects of the Department is completed.
Maximum age requirement applies:
- Units may be allowed only up to thirteen (13) years reckoned from the date of manufacture of unit(s).
Ventilation requirement is set:
- Units must be air-conditioned for urban areas and may have optional air-conditioned ventilation for rural areas, subject to LTFRB-RD recommendation and final Board approval.
Color scheme is required:
- Units must be All White, including bumpers.
Fare is governed by authorization:
- Fare must be based on total route or zonal distance, as regulated and authorized by LTFRB.

Coverage rules for conversion and qualified CPCs

Conversion to the AUV/Van Express Service applies to all operators with subsisting CPCs using AUVs and Vans under these service denominations:
- School Transport Service (except vans)
- Shuttle Service
- Vehicle-for-Hire Service
- Filcab
- Garage Service
- Air-conditioned Public Utility Jeepneys
- Trucks-for-Hire
Late filing is allowed for certain expired CPCs:
- Petitions/applications for late filing of expired CPCs/franchises under the enumerated service denominations may be accepted for CPCs with an expiry date as of 27 May 2004 (MC 2004-016) to present, subject to Board approval.
Conversion schedule is mandatory for Mega-Manila:
- Conversion of inter-regional routes in Mega-Manila (Metro Manila, Bulacan, Pampanga, Rizal, Cavite, Laguna and Quezon*) must be implemented from 01 August 2005 to 30 December 2005.
- The term “Metro Manila”* includes intra-regional routes in Metro Manila (NCR) in the current conversion process.
Conversion schedule for other provinces is governed by a separate issuance:
- Conversion of provincial operations (Intra and Inter-regional routes) in Luzon, Visayas, Mindanao is implemented subject to a separate Memorandum Circular issued by the Board.

Route and operational restrictions

AUV/Van Express operations must follow Terminal to Terminal Only and No pick-up (Loading), No drop-off (Unloading) between route origin and destination.
Route ceiling distance restrictions must be observed:
- AUV/Van Express routes must not be more than the ceiling distances stated in the Memorandum Circular.
- The Board may consider exemptions based on Transport Studies/Survey results conducted by DOTC-Road Transport Planning Division, considering the enumerated conditions.
Exemption conditions include the following:
- No intervening commercial/highly urbanized areas between route ends (an intervening area is defined as a strategic area capable of absorbing transfer of passengers where an adequate supply of public transport services to cater connecting services is assured).
- No alternative transport services exist, or existing services/supply cannot meet passenger demand and, in some cases, the route is abandoned.
- Most sections have limited road space/width capacity discouraging or preventing normal operations.
- Passenger demand between applied routes is not substantial to assure profitable operations.
- The route is inter-provincial in nature, exceeding 15 kilometers but not the maximum of 35 kilometers.
- Absence of an adequate transfer service area between route ends.
For inter-regional and/or provincial routes exceeding 35 kilometers but less than 140 kilometers:
- Safety and maintenance check stop-overs/transfer stations must be provided at the midpoint.
- AUV/Van Express groups, associations and cooperatives are responsible for setting up the check stop-overs and/or transfer stations.
Route identification must follow survey-based rules:
- Route identification is subject to DOTC-RTPD Transport and Passenger Demand Survey.
- Initially, routes must be feeder access to urban centers (CBDs) and terminals of higher modes of transport (MRT/LRT in Metro Manila and PUB in the regions).
- The 25% co-routing scheme with PUB and PUJ is imposed, with Board exemptions for specified conditions:
  - Toll-ways are treated as non-factor for co-routing where all types of PUVs are not allowed to load/unload passengers.
  - Diversion roads are treated as non-factor for co-routing if they have direct lateral competition with PUJs and PUBs, provided traffic capacities are not impaired.
  - A major highway may be exempted from co-routing if higher capacity modes (PUB and mini-buses) cannot meet passenger demand (quantitative) and convenience (qualitative).
Route coding scheme is required for enforcement:
- Alpha-numeric nomenclature must be adopted:
  - A for Inter-Regional Routes
  - B for Intra-Regional Routes
  - Region codes R1 through R13, plus CAR and NCR, as listed:
    - R1 through R8 for Regions 1–8
    - CAR for Region (CAR)
    - NCR for Region NCR
    - R9 through R13 (CARAGA) for Regions 9–13
  - Examples are required for format:
    - B-NCR-01 (Ex. Ayala-Alabang via SLEX)
    - A - R3NCR -01 (Ex. Malolos-Monumento via NLEX)
Operational proximity rule applies:
- Only applicant-operators residing and/or with business address within a 5-kilometer radius from at least one (1) terminal of route ends are given priority to operate in a particular route.
- Operators must not pick-up/drop-off passengers en-route to designated terminals.
- Provincial AUV/Van operations are exempted from the 5-kilometer proximity rule.
Terminal requirements must be met:
- Terminals must be “Off-Street” at route end points with covered passenger waiting areas, loading/unloading bays, and vehicle lay-over areas.
- Amenities must include:
  - Free drinking stations
  - Clean comfort rooms separately for male, female, and persons with disabilities
  - A diaper changing booth/station
- Parking capacity must accommodate at least 33% of the total authorized units terminating at the terminal, computed at 16 square meters per AUV/Van unit.
- Terminals are subject to LTFRB inspection and must comply with local government unit and/or HLURB clearances and other pertinent guidelines.
Terminal access and replacement notice rules are mandatory:
- Applicant-operators must present a Lease Contract and/or certification issued by the terminal manager allowing terminal use.
- If terminal access ends, operators must notify the Board within fifteen (15) days from termination.
- If there is no replacement alternative terminal, the Board must automatically revoke/cancel the issued CPC.
Garage requirements are mandatory:
- Garages must be “Off-Street” and “Off-Side-walks” with ample space to accommodate the number of unit(s) applied for.

Payment, fee schedule, and conversion procedure

LTFRB collects an additional Compromise Conversion Fee:
- The additional fee is PHP 30,000.00 per unit, collected by LTFRB (per Department Order 2004-52), separate from regular fees and charges.
- Payment must be payable within FY 2005.
Payment form is mandated:
- Payment must be in the form of Manager’s/Cashier’s checks payable to LTFRB.
Payment schedules are required options:
- Full payment: PHP 30,000.00 upon filing of application.
- Two partial payment scheme:
  - PHP 15,000.00 upon filing of application
  - PHP 15,000.00 upon release of Decision
- Four partial payment scheme:
  - PHP 7,500.00 upon filing of application
  - PHP 7,500.00 upon appearance during hearing
  - PHP 7,500.00 upon inspection of vehicle
  - PHP 7,500.00 upon release of decision/order.
Administrative procedure for conversion applications is established:
- LTFRB Secretariat must initially inform subsisting CPC holders through mail for the conversion process, including qualified CPC holders identified via the MID list of verified franchises (FVs).
- Pre-qualification letters, application/information forms, and checklist of requirements must be sent via Philpost registered mail.
- Respondents must signify intent to operate in three (3) preferred routes and choose conversion fee payment terms.
- Respondents must call a Secretariat telephone hotline to schedule pick-up by courier service of the document package, including the payment (Manager’s/Cashier’s Check) and duly accomplished application form, plus LTO OR/CR of vehicle and other required documents (xerox copy) from the operator’s residence or business address.
- Central Office-Window 4 functions as the Mail Center (incoming and outgoing) during the processing period.
Pre-screening and notices are required:
- After receipt of payments and application forms, the Secretariat conducts pre-screening for completeness and order of documents.
- If complete, the Secretariat prepares Notices of Hearing and a consolidated list of qualified applicants per route/batch basis.
- The Secretariat prepares Certificate of RMC Availability (CRA) for signature by the LTFRB Chairperson (CHP) and the Board Member for Technical Services (BMTS) based on quota per route determined by DOTC-RTPD transport survey.
- The Cashier issues the Payment Order Slip (POS) at this stage.
Case numbering and technical evaluation steps are required:
- Qualified applicant case folders with signed CRAs are turned over to TED for case number assignment and final evaluation of financial viability and technical/operational feasibility, including attachments and requirements.
- All CPCs/franchises for conversion must be assigned new case numbers, while the old case number must be cited in the decision as a basis for conversion and databanking.
- Converted case numbers in existing dockets/entries must be cancelled/removed and rendered void/nullified by LTFRB MID/Records Officers.
- TED must conduct technical and ocular inspection of terminals within 3 days from submission of applications, then transmit inspection reports to the Board through the Planning Unit.
Hearing and publication requirements are mandatory:
- Prior to hearing, the operator-applicant must pay the Cashier based on POS, and present the Official Receipt to the Hearing Officer for verification.
- Regular hearing procedures must follow proper publication in any newspaper of general circulation.
- After presentation of FOEs and affirmative resolution, decisions are prepared for final Board approval.
Board approval and docketing steps are required:
- Upon Board approval, decisions must be sealed with LTFRB holograms and transmitted to the Docket Section with the case folder.
- After docketing, the case folder is forwarded to MID for encoding and delivery via courier, including for cases with a 4th installment payment to be collected.
Final installation and actual unit inspection are required:
- TED conducts actual unit inspection at the Central Terminal after Board approval of the Conversion Decision.
- Route panel identification markings and decals must be installed at specified locations: upper front windshield, both right and left side body, and top of rear windshield.
- “How’s my Driving” Project text must be included in rear glass decals.
- LTFRB collects the conversion fee installment payment for operators who availed of the 4-Payment Plan.

Annual report evaluation and ranking criteria

Evaluation of applications uses a ranking system applying the following criteria:
- Financial capacity (30%), based on submission of Annual Reports and ITR/Tax Clearances for the past two (2) years:
  - Capital Expenditures-Total Assets Ratio (10%) with a range of 0.1–0.5.
  - Liabilities/Total Assets Ratio (10%) where the least liability is benchmarked, with range stated as reciprocal of 0.1–1.
  - Fiscal Efficiency or Cash Flow Trend (10%) assessed by trend of total assets over at least two years, with range 1–100% and negative trends receiving no points.
- Quality of Service (20%):
  - Safety, comfort, and convenience, including mandatory inspection of units covering regular maintenance schedules and conformity with provisions of the IRR of Land Transportation and Traffic Code (RA 4136).
  - Inspection includes: condition of carpets/matting/seat covers/scent, functional air conditioning, presence of fire extinguisher, emergency light/flashlight, basic tools and first aid kit, and waste disposal unit.
- Law enforcement reports (30%):
  - Reports from PNP-TEG/TMG (10%)
  - Reports from LTO (10%)
  - Reports from MMDA (10%)
  - PNP, LTO, and MMDA must indicate apprehensions/violations and payments made.
- Terminals (10%) subject to the terminal requirement rule (Provision B-8).
- Garage (10%) subject to the garage requirement rule (Provision B-8).
Demerit points apply to non-compliance:
- Demerit points must be deducted for non-compliance with Memorandum Circulars/related rules at (-2 for every MC violated).

Institutional processing unit

A separate LTFRB AUV/Van Express Processing Secretariat is created to facilitate and ensure smooth processing of all AUV/Van Express conversion applications.
The Secretariat is under direct supervision of the Office of the LTFRB Chairperson.
The Secretariat composition includes:
- Head: Office of the LTFRB Chairperson
- Members: TED Rep., MID Rep., Administrative Office Rep., Legal Office Rep., Finance Rep., and Mailing Contractor Rep.
A separate office space must be provided for the Secretariat to serve as the “nerve center.”

Restrictions on transfers, route modifications, and model eligibility

Sale and transfer restrictions apply:
- Applications for Sale and Transfer of CPCs are not allowed within five (5) years from the date of approval.
- Perfected sale and transfer beyond the five (5) years period is treated as proof of non-financial capability, and the operator may not be considered for future franchise grant for the same mode.
Dropping and substitution is allowed under model-life condition:
- Applications for Dropping and Substitution of Units are allowed if newer models are used as substitutes with a life span of five (5) remaining years before phase-out.
Route modification is restricted during CPC term:
- Applications/petitions for Modification of Routes are not allowed within the effectivity period of the CPC (5 years).
Qualified year-model conversion eligibility is required:
- Only AUV/Van Express units reaching the thirteen (13) year-old maximum age maturity within the 5-year term of CPCs are allowed.
- Reckoning 2010 as the maturity date, only unit models from 1998 to present are allowed for conversion.

Sub-classification, markings, and required decals

The Memorandum Circular establishes Seaport Taxi as a sub-classification dedicated to serving passengers at seaports nationwide using metered taxis with AUVs.
A separate Memorandum Circular must be issued to cover operational details for Seaport Taxi.
Security markings and decals are mandatory for all AUV/Van Express units:
- Units must be issued a Route Panel Identification Marking with security features (including bar code) specifying actual route description located inside the upper front windshield and both right and left side body.
- The “How’s my Driving” Project text must be included in rear glass decals.
The conversion fee covers security markings and decals:
- Payment for security markings and decals is included in the Thirty Thousand Pesos (P30,000.00) conversion fee.

Effects, annexes, and transitory implementation rules

An Annex “A” is part of the conversion implementation, covering a list of routes determined by DOTC-RTPD with corresponding distance and Route Measured Capacity.
Conversion proceeds under route distance and capacity determinations used for quotas and evaluation ranking.
The Memorandum Circular states that the opening of AUV/Van Express services under the modified classification adopts the enumerated rules and guidelines, replacing inconsistent regulations governing AUV/VAN Express conversion and operations.