The Provincial Bus Operators Association of the Philippines (PBOAP), ET.AL vs.

DOLE and
LTFRB
G.R. No. 202275, July 17, 2018

FACTS:

To ensure road safety and address the risk-taking behavior of bus drivers as its declared
objective, the Land Transportation Franchising and Regulatory Board (LTFRB) issued
Memorandum Circular No. 2012-001 on January 4, 2012, requiring "all Public Utility Bus (PUB)
operators . . . to secure Labor Standards Compliance Certificates" under pain of revocation of
their existing certificates of public convenience or denial of an application for a new certificate.

Five (5) days later or on January 9, 2012, the DOLE issued Department Order No. 118-12,
elaborating on the part-fixed-part-performance-based compensation system referred to in the
LTFRB Memorandum Circular No. 2012-001. Department Order No. 118-12, among others,
provides for the rule for computing the fixed and the performance-based component of a
public utility bus driver's or conductor's wage.

Meanwhile, on February 27, 2012 and in compliance with Rule III, Section 3 of Department
Order No. 118-12, the National Wages and Productivity Commission issued NWPC Guidelines
No. 1 to serve as Operational Guidelines on Department Order No. 118-12. NWPC Guidelines
No. 1 suggested formulae for computing the fixed-based and the performance-based
components of a bus driver's or conductor's wage.

ISSUE:

WON the provisions of Department Order No. 118-12 and Memorandum Circular No. 2012-001
on the payment of part-fixed-part-performance-based wage allegedly impair the PUB
operators’ obligations under their existing collective bargaining agreements, where they agreed
with their bus drivers and conductors on a commission or boundary basis, violate the
constitutional rights of public utility bus operators to non-impairment of obligation of contracts.

RULING:

NO. There is no violation of the non-impairment clause.

By statutory declaration, labor contracts are impressed with public interest and, therefore,
must yield to the common good. Labor contracts are subject to special laws on wages, working
conditions, hours of labor, and similar subjects. In other words, labor contracts are subject to
the police power of the State.

Department Order No. 118-12 was issued to grant bus drivers and conductors minimum wages
and social welfare benefits. Further, the PUB operators repeatedly admitted that in paying their
bus drivers and conductors, they employ the boundary system or commission basis, payment
schemes which cause drivers to drive recklessly. Not only does Department Order No. 118-12
aim to uplift the economic status of bus drivers and conductors; it also promotes road and
traffic safety.

Further, certificates of public convenience granted to bus operators are subject to amendment.
When certificates of public convenience were granted in 2012, Memorandum Circular No.
2011-004 on the "Revised Terms and Conditions of [Certificates of Public Convenience] and
Providing Penalties for Violations Thereof" was already in place. This Memorandum Circular,
issued before Memorandum Circular No. 2012-001, already required public utility vehicle
operators to comply with labor and social legislations. Franchise holders cannot object to the
reiteration made in Memorandum Circular No. 2012-001.