Alvarez’ bill tells transport operators to get a franchise

Speaker Pantaleon Alvarez and other House leaders have formally filed the bill requiring transport operators to secure a franchise from Congress.

The provision is included in House Bill No. 6776, which would merge the Land Transportation Office (LTO) and the Land Transportation Franchising and Regulatory Board (LTFRB) into a single agency called the Land Transportation Authority (LTA).

The bill will also regulate transport network companies (TNCs), which provide services through phone applications.

This development came five months after Alvarez, during the opening of the 17th Congress’ second session on July 24, called on lawmakers to prioritize the measure imposing the franchise requirement on transport operators so “the public’s interest will always be protected.”

According to HB 6776’s explanatory note, some existing policies “are inadequate, ineffective and are already obsolete” and a “more comprehensive transportation policy needs to take into account the varied and complex areas” of the sector.

Franchise requirement

Under the bill, “no person shall commence or conduct the business of operating public transportation without first obtaining a franchise.”

The LTA, as well as the National Economic and Development Authority (Neda), the Department of the Interior and Local Government (DILG), and key stakeholders, would have to come up with a land transportation study to determine the actual need and demand for public transportation for every route.

The study would serve as the basis for Congress in granting a legislative franchise to transport operators.

In order to be granted a legislative franchise, transport operators should have a minimum capitalization of P10 million for jeepneys, taxis, and similar vehicles, and P30 million for buses.

Existing franchise-holders would be given six months to comply with the paid-up capital requirement. The threshold is meant to “ensure that only those operators with adequate financial capacity are allowed to operate public transport.”

Operators would also have to execute an affidavit that they have an available terminal facility or parking spaces for their vehicles before they can register for a legislative franchise.

Franchise conditions include compliance with constitutional limits on foreign ownership, at least 10 years’ experience in operating and maintaining the units, access to adequate technical and maintenance support, and adequate number of finance and administration personnel whose services cannot be outsourced.

Although legislative franchises cannot be sold or transferred, franchisees may become publicly-listed companies through an initial public offering in the Philippine Stock Exchange (PSE).