WHEREAS, the Department of Transportation ( œDOTr ) issued Department Order No. 011, series of 2017, otherwise known as the Omnibus Guidelines on the Planning and Identification of Public Road Transportation Services and Franchise Issuance or Omnibus Franchising Guidelines ( œOFG ), which aims to provide a reliable, safe, accessible, environment-friendly, dependable, efficient, and comfortable public road transportation throughout the country;

WHEREAS,   the   Land   Transportation  Franchising   and   Regulatory   Board ( œLTFRB  and/or œBoard ), a sectoral agency of the DOTr, is tasked to implement the OFG;

WHEREAS, Section 5 of Executive Order No. 202 mandates the LTFRB œto prescribe and regulate routes of service, economically viable capacities and zones or areas of operation of public land transportation services provided by motorized vehicles in accordance with the public land transportation development plans and programs approved by the Department of Transportation and Communications   and  œto  formulate,  promulgate,  administer,  implement  and enforce rules and regulations on land transportation public utilities, standards of measurements and/or design, and rules and regulations requiring operators of any public land transportation service to equip, install and provide in their utilities and in their stations such devices, equipment facilities and operating procedures and techniques as may promote safety, protection, comfort and convenience to persons and property in their charges as well as the safety of persons and property within their areas of operations ; and œto perform such other functions and duties as may be provided by law, or as may be necessary, or proper or incidental to the purposes and objectives of this Department Order ;

WHEREAS,  the  following  Implementing  Rules  on  Selection  of  Transport Operators for LGU-Prepared LPTRPs are hereby promulgated:

1.    Developmental  or  New  Routes  -  are  routes  designed  to  serve  new residential, commercial, and other land use developments, with at most 25% overlap in length with existing routes, subject to allowed exceptions.

2.    Existing Routes - are routes which remain in existence as a result of the approved LPTRP.

3.    Local Public Transport Route Plan (LPTRP) - refers to a plan detailing the route network, mode, and required number of units per mode per route for delivering public land transport services. This Plan is prepared by Local Government Units, approved by the Department/LTFRB, and shall serve as the basis of a comprehensive local transport plan.

4.    Rationalized Routes - are existing routes modified by the approved LPTRP.

1.    This  Memorandum  Circular  (MC)  applies  to  existing,  rationalized,  and new/developmental routes identified in the LPTRPs. A separate MC will be issued to cover inter-regional, intra-regional, inter-provincial routes, and other metropolitan areas as identified by the DOTr.

2.    Pursuant to the spirit of consolidation under the OFG, existing operators serving a particular route are to form a single legal entity that will collectively be responsible and accountable for delivery of transport services per route. Towards this end, a single consolidated legal entity with a fleet manager per route is encouraged. Should there be reasonable grounds to allow more than one (1) legal entity in a route, a common fleet manager is required.

3.    For existing and rationalized routes, the existing operators, organized into a legal entity, shall have preference in the franchise processing, subject to franchise requirements and specifications.

1.    Operators in the existing route that consolidate into legal entities are eligible to apply for the franchise and shall be given preference in franchise processing, provided the following documents are submitted:

a.   Certified true copy of the franchise award duly issued by the LTFRB; and

b.   Qualification Documents specified under the Item III (6) hereof.

If all things are equal, existing operators that consolidate into cooperatives shall be given preference pursuant to RA No. 9520 of the œPhilippine Cooperative Code of 2008 .

2.    Excess  member-operators  who  are  not  accommodated  in  the  route ™s rationalization shall be given priority in the nearest underserved or new/developmental routes, provided the following documents are submitted:

a.   Certified true copy of the franchise award duly issued by the LTFRB; and

b.   Qualification Documents specified under the Item III (6) hereof.

The same applies to existing transport operators whose transport network may be affected by the introduction of a new transport mode or service (e.g., new rail line or BRT/LRT).

3.    In case the existing operators in Item III (1) and excess member-operators in Item III; (2) comply with: a) consolidation with a fleet management system; b) OFG-compliant units; and 3) other requirements under the OFG and other related MCs, they may apply for the issuance of a CPC pursuant to existing rules and regulations of the LTFRB.

4.    Otherwise,  the  LTFRB  Office  shall  open  the  selection  to  any  qualified applicant and the selection process shall proceed. The concerned LTFRB Office shall issue a call for applications specifying the following:

a.   Route name;
b.   Route length;
c.   Route code;
d.   Detailed map of the route with designated pick and drop points;
e.   Type of mode and service;
f.    Vehicle technical specifications as prescribed under the OFG;
g.   Vehicle color/branding and any guidelines on advertising, if any;
h.   Operating  conditions  as  provided  for  under  the  OFG  and  related
Memorandum Circulars;
i.    Frequency of service (headway) during peak and off-peak hours;
j.    Number of vehicles required (with allowance for driver breaks, vehicle downtime, maintenance, etc.);
k.   Minimum qualification requirements as stated in Item 6 (c) hereof; and
I.    Authorized fare.

5.    The LTFRB office announcement will indicate the date, time, and venue for a pre-qualification meeting during which interested parties may obtain information on the selection process and ask for clarification of any points. The announcement will also indicate the deadline for the submission of qualification  documents,  including  the  time  and  venue  where  the  same should be submitted.

6.    The applicant shall submit all the Legal, Technical, and Financial Capability Qualification Documents (collectively referred to as œQualification Documents ) provided below:

a.   Legal Qualification - The applicant should provide documentation that it is a:

i.    sole proprietor:

a.  Certified  True  Copies  of  Certificate  of  Registration  with  the Department of Trade and Industry (DTI); or

ii.    Filipino domestic juridical entity with a primary purpose to provide transportation services:

a.  for corporation or partnership, Certified True Copies of Certificate of Registration, Articles and By-laws, and latest General Information Sheet duly issued/received by the Securities and Exchange Commission (SEC);

b. for  cooperative, Certified  True  Copies  of  Certificate  of Registration, Articles and By-laws, latest Cooperative Annual Performance Report duly issued/received by the Cooperative Development  Authority  (CDA),  and  the  Certificate  of Accreditation duly issued by the Office of Transportation Cooperatives (OTC).

b.   Technical Qualification - The Applicant must provide the following:

i.    Schematic  diagram  of  the  vehicle  to  be  supplied  with  seating configuration pursuant to PNS 2126:2017 and other applicable laws and standards for other types of PUVs;

ii.    Notarized  certification  from  the  vehicle  supplier  specifying  the delivery schedule and vehicle specifications, among others, if based in   the   Philippines.  If   based   outside   of   the   Philippines,  the Certification must be authenticated by the concerned Philippine Consulate/Embassy;

iii.    Evidence  of  formal  arrangement  with  Automatic  Fare  Collection (AFC) service provider that will offer inter-operable AFC service that is fully compliant with fare media and related device technical specifications as determined by the LFTRS, in case the Applicant is selected;

iv.  Scale map showing location and area of proposed garage with sufficient parking space for all units plus additional space of at least thirty percent (30%) of the total PUV space requirement for other facilities required; and

v.    Letter of support from property owners/managers regarding access to, or use of, garage site. In case the Applicant is selected, evidence of access to suitable garage (e.g. land ownership papers; lease contract).

c.   Financial Qualifications - The Applicant must present the following:

i.    The   Applicant ™s  capitalization  as   certified  by   the   appropriate government agency. In case of existing operators, the certified true copy of the Applicant ™s net worth with BIR ™s œreceived  stamp of the Applicant ™s most recently submitted Audited Financial Statement;

Letter of support from financial institutions in case the Applicant is selected; and

ii.    Financial  projections  for  the  first  five  (5)  years  of  operations, showing expected ridership, and detailed revenues and costs including financing costs.

7.    A   Pre-Qualification  Committee  (Committee)  shall  be   created  by   the concerned Regional Franchising and Regulatory Office (RFRO) to examine the Qualification Documents within seven (7) days after the Submission Date of Qualification Documents. The Committee may seek clarification from the Applicants on the form and content of their Qualification Documents. The Committee may also make inquiries with any person, government authority, client  organization,  officer,  director,  employee,  or  other  agent  of  any Applicant or Affiliate of any of these entities for the purpose of clarifying any matter included in its Qualification Documents.

8.    All submitted information and any clarifications requested by the Committee shall be assessed against the criteria for qualification as set out above and rated on a œPASS-or-FAIL  basis. The overall rating for the evaluation will be œQUALIFIED   if   each   criterion   is   rated   passed   and   each   required Qualification Document and attachment is completely submitted. The Applicant will be disqualified if any criterion is rated œFAILED  or if any required Qualification Document or attachment is missing.

9.    If  there are two (2) or  more qualified applicants, a  public lottery in  the presence of all concerned parties will determine which Applicant will be processed further.

10. After evaluation of the documents submitted by the Applicant, a Notice of Selection (NOS) shall be issued soon after the determination of the Committee.

11. At least fifty percent (50%) of the allocated units should be available within a maximum period of six (6) months and the remaining units within one (1) year reckoned from the issuance of the NOS. A daily fine/penalty of Five Thousand Pesos (P5,000.00) will be imposed by the LTFRB on operators who fail to comply with this requirement. In cases of delay not attributable to the operators, the LTFRB shall grant an extension of the period to comply after due notice and hearing. Nothing herein shall preclude the operators from enforcing its rights under their contract for delays attributable to the supplier.

12. As the OFG-compliant units are made available, the LTFRB shall issue a Provisional Authority (PA) upon application of the selected operator. Once 100% of the units are made available, the operator may then apply for the issuance of the CPC.

All other issuances inconsistent herewith are deemed modified or superseded accordingly.

This Memorandum Circular shall take effect immediately following its publication in at least one newspaper of general circulation. Let three (3) copies hereof be filed with the UP Law Center pursuant to Presidential Memorandum Circular No.
11, dated 09 October 1992. SO ORDERED.
Quezon City, Philippines, 29 May 2018.

(SGD) ENGR. RONALDO E. CORPUS Board Members

(SGD) ATTY. AILEEN LOURDES A. LIZADA Board Member