November 23, 2017 | MANILA, PHILIPPINES

Uber and Grab should follow the rules

Grab and Uber, which are referred to as “ride-sharing” companies although seemingly perceived by the government more as transport businesses, have reportedly been each fined P5 million by land transportation regulators for using drivers that lack the necessary government permits.


Doing so violated the terms of Grab’s and Uber’s “accreditation” by the Land Transportation Franchising and Regulatory Board (LTFRB) as Transport Network Companies or TNCs. Meanwhile, erring drivers -- or those driving for Grab and Uber without permit to do so -- have also asked for amnesty.


I personally benefit from “sharing-economy” services like Uber and AirBnB. I have never tried Grab, nor Lyft, nor Wunder, or any other carpooling service. However, I have used AirBnB locally, and have used Uber in Metro Manila, in Cebu, and abroad. And to be honest, I find these services convenient and practical.

But, while I patronize these sharing-economy services, I still wonder how these businesses are seemingly allowed to operate in the grey. I am unclear as to which laws actually apply, and thus govern and regulate, them and others in the so-called “sharing economy.”

And this lack of clarity, in my opinion, appear to allow these companies to offer services to the public subject more to regulators’ “discretion” rather than clear and precise regulations. Should such a situation continue? Should regulators exercise more discretion rather than universally apply strict standards equally to all?

For example, according to LTFRB itself, the penalty for Grab’s and Uber’s recent violation should have been “revocation of accreditation.” But instead, they were just fined. And this, says LTFRB board member and spokesperson Aileen A. Lizada, is due to the fact that shutting down Grab and Uber is detrimental to the riding public.

In other words, LTFRB decided to hold back its punches in light of what it perceived to be the greater good. However, should this now be the “standard” for the exercise of the state’s regulatory functions? Should laws and rules be applied arbitrarily and with more discretion? Justice must no longer be blind? Will this lead to greater or lesser transparency and accountability in public governance?

An LTFRB official told reporters, “If we follow the penalty imposed by [our rules], the penalty is cancellation of accreditation, but we have been very constant in our stand that the LTFRB stakeholders are the riding public, so we will consider the riding public’s concern, because if we penalize by canceling the accreditation, we are penalizing our stakeholders.”

While I agree with the need for Grab and Uber to continue operating, and understand how and why they came about and have become popular transport alternatives, I don’t exactly agree with the LTFRB logic on this. Not that I want Grab and Uber to lose their accreditation. On the contrary, I want them to stay on.

However, it worries me that LTFRB is setting a dangerous precedent by allowing them to get away with what I consider a major transgression with a miniscule fine. Yes, I believe P5 million is just a drop in the bucket for these two firms. They got a slap on the wrist despite also putting the public at great risk for riding with drivers who lacked the necessary permits.

Grab and Uber justified their violation of LTFRB rules by claiming that they let “Transport Network Vehicle Service (TNVS) drivers” operate their cars and use the ride-sharing systems, even if their permits have not been issued, because of the great public demand for transportation.

Grab Philippines country head Brian P. Cu admits to some negligence in the faithful and strict compliance with government rules, but also claims “all was done in the spirit of competition” and “in the spirit of earnings for our Grab partners.”

He also said Grab was “actually quite happy with the [LTFRB] decision” not to cancel the company’s accreditation and to just fine it P5 million. Of course. Why wouldn’t he be? I mean, what’s P5 million compared to closing shop, right?

Even against a suspension, which leads to business losses during the suspension period, the P5 million fine is still the lighter penalty as Grab, and Uber, and their drivers, get to keep all the profits they made from operating illegally.

I cannot understand how can Grab justify breaking the rules in the “spirit of competition” and in the “spirit of earnings?” Yes, without Grab and Uber even temporarily, the public will suffer. But, the Republic will not fall.

LTFRB, in my opinion, should have instead canceled the Grab and Uber accreditation because of the violation. Pending application of all erring drivers should have been tossed out as well. Then, these TNCs and TNVS drivers should have been made to reapply under stricter conditions, without no assurances or guarantees of approval.

Moreover, these TNCs and TNVs should have been made to account for all the profits they made while operating illegally, and they should have been made to either refund these to customers or credit back to customer accounts, or to pay an equivalent fine to the LTFRB, with the fund to be used to improve LTFRB services.

In the case of LTFRB, I understand that it is already swamped with complaints against erring buses, jeepneys, and taxis. And now, it has to deal with issues involving Grab and Uber. Meeting public transport need is the priority, but this should not be at the expense of the law. There should be little to no incentive for breaking rules of violating the law. And, penalty should be hefty enough to deter violation.

Other than the relatively small fine, LTFRB also goes on to say that there is no deadline for Uber and Grab to remove from service those drivers without permits. Huh? Shouldn’t they be removed immediately? They lack permits and should not be operating, no matter what. I mean, what kind of signal is LTFRB sending all other public utility drivers? That it is ok to violate the law?

Moreover, is this not unfair to those who went through the process and expense of getting permits? Or, is this just LTFRB’s way of apologizing to Grab and Uber, and the public, for its failure to process all the driver applications in an efficient and timely manner?

Drivers justify operating illegally by claiming their permits are pending because their “applications were either not processed judiciously by the previous administration or did not make it to the cut-off as a result of the suspension.” In short, their response to bureaucratic lapse is to violate the law? Should this be acceptable? How different is this from extrajudicial killings?

And now the drivers ask for amnesty, like nothing happened, so they can “get the opportunity to start anew and set things straight.” But wait, while they operated illegally, didn’t they profit? Didn’t they make money? Simply put, profit was their incentive or motivation to violate the law, and not public service? Same with Grab and Uber? And now they ask for another chance?

With Grab and Uber now reportedly up for re-accreditation, perhaps LTFRB should review and rethink its processes to avoid a repeat of the present scenario. Like I said, I support Grab and Uber and their drivers, and I support their continued operations. But, there has got to be a better way of making sure that Grab and Uber and their drivers all operate legally and fairly -- and all pay their taxes.

Marvin A. Tort is a former managing editor of BusinessWorld, and a former chairman of the Philippines Press Council.

matort@yahoo.com