A person or entity that wants to operate a vehicle for public transport, carrying passengers or goods for compensation, must obtain a franchise, technically a Certificate of Public Convenience (CPC), from the Land Transportation Franchising and Regulatory Board (LTFRB), which regulates public land transportation. The CPC is the authorization issued for the operation of public land transportation services for hire; it is granted after an application, publication, and hearing, upon a showing that the applicant is a Filipino citizen (or a corporation with the required Filipino ownership), is financially capable, and that the proposed service is necessary and will promote public interest. Certain routes and services are also subject to route measured capacity and modernization rules. Operating a public utility vehicle without a valid franchise, or operating outside the route or terms of the franchise, is what is commonly called colorum operation; it is penalized with heavy fines, the impounding of the vehicle, and possible criminal liability, because unfranchised operators evade the safety, insurance, and accountability requirements imposed on legitimate operators. A doctrine of practical importance to passengers and accident victims is the registered owner rule (and the kabit system's consequence): the registered owner of a public utility vehicle is directly and primarily responsible to the public and to third persons for injuries caused by the operation of the vehicle, regardless of any private arrangement transferring the vehicle or the franchise to another; a person who allows another to operate under their franchise (the kabit system) generally cannot escape liability by pointing to that arrangement, because the public relies on the registration and the franchise. Common carriers are also bound by the extraordinary diligence required of them under the Civil Code, and by the presumption of negligence in case of injury to passengers. So operating a PUV requires an LTFRB franchise, unfranchised colorum operations are heavily penalized, and the registered owner and franchise holder remain liable to the riding public.
A Franchise Is Required
Operating a vehicle for public transport for compensation requires a Certificate of Public Convenience (CPC) from the LTFRB, granted after application, publication, and hearing on citizenship, financial capacity, and public necessity.
Colorum Operations
Operating without a valid franchise, or outside the route or terms, is colorum — penalized with heavy fines, impounding, and possible criminal liability, because unfranchised operators evade safety, insurance, and accountability requirements.
The Registered Owner Rule
The registered owner of a PUV is directly and primarily liable to the public for injuries from its operation, regardless of private arrangements transferring the vehicle or franchise (the kabit system). Common carriers also owe extraordinary diligence and face a presumption of negligence when a passenger is injured.
Practical Takeaways
- A PUV needs an LTFRB franchise (CPC);
- Colorum operation brings fines and impounding;
- The registered owner remains liable to passengers despite side arrangements.
Frequently Asked Questions
What is needed to operate a public utility vehicle? A franchise, technically a Certificate of Public Convenience, from the LTFRB, granted after application, publication, and hearing upon showing citizenship, financial capacity, and that the service is necessary and promotes public interest.
What is a colorum vehicle? One operating as a public utility without a valid franchise, or outside the route or terms of its franchise. Colorum operation is penalized with heavy fines, impounding of the vehicle, and possible criminal liability.
Who is liable if a PUV injures a passenger? The registered owner is directly and primarily responsible to the public and third persons for injuries caused by the vehicle's operation, regardless of any private arrangement transferring the vehicle or franchise to another.
What is the kabit system? An arrangement where a person allows another to operate a vehicle under their franchise. The franchise holder and registered owner generally cannot escape liability by pointing to that arrangement, because the public relies on the registration.
This commentary is for general informational purposes only and does not constitute legal advice. For guidance specific to your situation, please consult a licensed attorney.
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