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MIGUEL, Annabelle C.

Legal Writing

An Analysis of the Regulation of Uber and Grab in the Philippines

I. ABSTRACT

It is a given fact that innovations in technology demonstrate the evolution of mankind,


most of which are anchored in providing for a more convenient and easier lifestyle.
However, problems arise when the government’s regulations cannot cope up with
globalization and modernization. There is a worldwide phenomenon regarding the
transformation of the transportation system with the entry of ride-hailing companies
such as Uber and Grab, whether they should be regulated or not, and if so, how they
should be regulated. This paper would focus on the current status of Uber and Grab
in Philippine setting. It would be grounded on the concept that the aforementioned
companies need to be regulated for the benefit of public welfare and safety of the
people as a duty of the government. For purposes of objectivity, this would also
somehow tackle the contention of those in favor of non-regulation of Uber and Grab.
In addition, it would also tackle recommendations of international organizations in
making sure that while regulation is a must there should still be a semblance of
flexibility that would not cripple these companies from operating because this paper
recognize the beneficial impacts it has made with the general public.

II. INTRODUCTION

This new millennia has been a witness on how the advancement of modern
technology played a vital role in changing the life of mankind. States all over the
world, regardless if it is already a developed or a developing country recognizes that
it is one of the major factors that greatly affect socio-economic growthi. Countless
inventions and innovations are made every day in different parts of the globe, and
this created a competitive political environment wherein States would have to keep
up if they want to stay on top of their game. As such, the Philippines is one of those
countries which acknowledge that every major contribution in the advancement in the
field of technology goes hand in hand in boosting its economy as well as making life
a whole lot easier and more convenient for the Filipinos.

Transportation is one of the major problems that every developing country faces. The
Philippines is not an exemption to this, wherein it is further aggravated with the
overpopulation and congestion particularly in metropolitan areas like the National
Capital Region with approximately 12,88 million inhabitants as of 2015ii. The merger
of transportation and communication through the use of the internet and mobile
applications is of great help especially to commuters who wants to avoid the hassle
of getting a ride just to get from one location to another. The introduction of ride
hailing applications has taken the world by storm and became a popular choice to a
lot of people due to the convenience it offers. You no longer have to literally hail cabs
for hours under the pouring rain or the scorching sun, and gone were the days where
you have to race with other commuters during rush hours. Uber and Grab are the
most widely used applications in the country when it comes to availing transportation
services. You just have to register on their application using the internet, type in your
current location and destination, then it would already check for the registered
vehicles for hire near your vicinity, and it would also show your driver and how much
the fare would cost, once confirmed you just have to sit back and relax while waiting
for the driver to arrive.

A. What is Uber and Grab?


Uber and Grab offer ride-hailing services wherein a technological platform is
used, and their mobile application connects driver-partners and ridersiii. Both of
these companies started abroad and have been introduced in the Philippines a
few years back. They have easily become accepted by commuters because for
as long as you have an access to the internet, you can book rides within your
fingertips. They also offer promotional offers where commuters can avail
discounts. In addition, you can also use other payment methods if you do not
have cash at hand, then you can use your credit card. These are some of the
reasons why most commuters prefer Uber and Grab more than the traditional
taxi.

B. Land Transportation Franchising and Regulatory Board (LTFRB)


The Land Transportation Franchising and Regulatory Board (LTFRB) is the
agency formed through the passing of Exec. Order No. 202, series of 1987; it is
under the supervision of the Department of Transportation and Communications
(DOTC), which is tasked to manage the issuance of authority to any entity
(corporate or individual) wishing to take on in public land-based transportation
serviceiv. To put it simply, it is the agency of the government that has the capacity
to regulate the operation of public land public transportation vehicles in the
Philippines.

C. Inter-relationship of Uber, Grab and the Land Transportation Franchising and


Regulatory Board (LTFRB)
The Land Transportation Franchising and Regulatory Board (LTFRB) is
mandated to “…promulgate, administer, enforce, and monitor compliance of
policies, laws, and regulations of public land transportation services”v, having
mentioned this, they are linked to Uber and Grab through the Memorandum
Circular 2015-015 which defined Transport Network Companies (TNC) and
categorized the latter as such making these two companies under the
supervision and regulation of the former. Based on the Memorandum Circular
2015-015, a Transport Network Company (TNC) would be the term used for
“organization whether a corporation, partnership, or sole proprietor, that provides
pre-arranged transportation services for compensation using an internet-based
technology application or digital platform technology to connect passengers with
drivers using their personal vehicles.”vi The definition set forth by the Land
Transportation Franchising and Regulatory Board (LTFRB) completely embraces
the elements that make up Uber and Grab which made it mandatory for the latter
to comply with the rules set forth by the former in order to be fully operational in
the country.

III. RATIONALE BEHIND THE REGULATION OF UBER AND GRAB


There is contradicting opinion on whether or not Uber and Grab should be regulated
by the Land Transportation Franchising and Regulatory Board (LTFRB). On the first
hand, for a common person, he or she is not in favor to the regulation of Uber and
Grab because it would just be detrimental for the development of the economy if our
government give them a hard time because these two companies gives opportunities
for employment and there is a huge demand from consumers who prefer
convenience by using their mobile applications to book rides. There are also a few
that is just skeptical about the government thinking that the latter only wants to make
the people suffer. On the other hand the following are the reasons why this paper
pushes forth the regulation of Uber and Grab:

A. Government Should Promote Public Safety and Welfare


The Philippine Government is established to serve the people, so the first and
foremost responsibility of the government is to make sure that uphold the
Constitution, it should protect life, liberty, or propertyvii. In other words, the
government should focus more on the safe-keeping of the people than any profit
they could gain from giving Uber and Grab free reign on how they would operate.
Many people may get inconvenienced by these regulations but at the end of the
day, they should keep in mind that the government is like a parent to their
children, parents impose strict rules even if the children may not agree because
the end goal of parenting is to keep your children safe from harm. If the
government does not regulate these companies, who would ensure that all the
drivers have the expertise to deliver the riders to their destination free from any
harm? How would people know who would be liable if any harm is inflicted to the
passengers while in transit? If any property was damaged while a Transport
Network Company was on the road, who would take responsibility for this?
Therefore, the need of government supervision, through the Land Transportation
Franchising and Regulatory Board (LTFRB), is vital in the operation of Uber and
Grab in terms of road safety and personal safety. Life and property should never
be compromised in all services rendered by private companies"viii. Dura lex sed
lex, the law may be harsh but it is still the law, there is a need to apply and
comply with the law regardless if there may be some who disagree with it.

B. Government Intervention Against Price Surge


There were many incidences where Uber and Grab has been reported on taking
advantage of price surge. Most of those who use these mobile applications are
just shrugging off this issue for as long as they could reach their destination.
This should not be the case, hence the need for government intervention to
place a surge cap and avoid taking advantage of these ride-hailing companies.
The rule of supply and demand may be used by these platforms however the
government would still need to standardized the algorithms used by these digital
platforms for ride-hailing, like the meter used by traditional taxi drivers which is
uniform.

C. Government Should Uphold Equal Opportunity Between Transport Network


Company (TNC) and Traditional Taxis
Traditional taxi companies bear the grunt in the entrance of Uber and Grab. This
can be seen in the form of maintaining a large fleet of taxis that are rented out to
professional taxi driversix. How can these traditional taxi drivers compete when
they are against Transport Network Company drivers whose fares surges and
there is no agency to regulate these price surges? And what about the number of
drivers that could avail a franchise with these ride-hailing companies, who would
regulate them? The combination of a flexible vehicle fleet and dynamically
changing fares gives ride-hailing service companies and drivers a financial
advantage over taxi driversx.

IV. CONCLUSION
The Land Transportation Franchising and Regulatory Board (LTFRB) is needed to
regulate Uber and Grab. It is the agency most appropriate to supervise ride hailing
companies since it is covered by the mandate given to it by the government.

i
OECD. Policy Brief: Science, Technology and Innovation in the New Economy, September 2000,
http://www.oecd.org/science/sci-tech/1918259.pdf (accessed September 30, 2017)
ii
PSA, Highlights of the Philippine Population 2015 Census of Population,
https://www.psa.gov.ph/content/highlights-philippine-population-2015-census-population (accessed September
30, 2017)
iii
NACTO, Ride-Hailing Services: Opportunities & Challenges For Cities, June 2016, https://nacto.org/wp-
content/uploads/2016/06/Policy-Ride-Hailing-Services-2016.06.pdf (accessed September 30, 2017)
iv
LTFRB, Brief on the Agency, http://ltfrb.gov.ph/media/downloadable/Brief_on_the_agency.pdf (accessed
September 30, 2017)
v
LTFRB, Brief on the Agency, http://ltfrb.gov.ph/media/downloadable/Brief_on_the_agency.pdf (accessed
September 30, 2017)
vi
LTFRB, Memorandum Circular 2015-015, http://ltfrb.gov.ph/media/downloadable/MC_NO._2015-015_.pdf
(accessed September 30, 2017)
vii
The 1987 Constitution of the Republic of the Philippines, Article III: Bill of Rights, Sec 1
viii
Low, Donald, “Uber: To regulate or not to regulate?”, October 27, 2015,
http://www.straitstimes.com/opinion/uber-to-regulate-or-not-to-regulate
ix
Low, Donald, “Uber: To regulate or not to regulate?”, October 27, 2015,
http://www.straitstimes.com/opinion/uber-to-regulate-or-not-to-regulate
x
NACTO, Ride-Hailing Services: Opportunities & Challenges For Cities, June 2016, https://nacto.org/wp-
content/uploads/2016/06/Policy-Ride-Hailing-Services-2016.06.pdf (accessed September 30, 2017)