Road Rules: Is the law apt for an app?

Road Rules: Is the law apt for an app? image

Text: Atty. Paul Cornelius Castillo / Photos: | posted August 19, 2015 09:57

The issue of regulating ridesharing platforms is a sensitive one

The issue of regulating ridesharing platforms is a sensitive one. While varied personal sentiments are generally tolerated, external action must always conform to the law, the sole aspect of the matter sought to be explored here.

Department Order (D.O.) 2015-11 of the Department of Transportation and Communications (DOTC) created the "Transportation Network Vehicle Service" (TNVS) as a new transport classification. A TNVS is the vehicle hailed through ridesharing apps.

A TNVS is availed of through an 'Online-Enabled Transportation Service', which connects "registered vehicles with registered customers who request rides". Those that give this service are referred to as Transportation Network Companies (TNC).

A TNC "provides pre-arranged transportation services for compensation using internet-based technology application or digital platform technology to connect passengers with drivers using their personal vehicles." Uber and GrabCar are examples of TNCs.

It is important to note that a TNC is different from a TNVS. A TNC provides the technology (aka the "App") in order for the TNVS (the vehicles plying the streets) to be contacted by potential customers.

It appears beyond question that the DOTC, broadly speaking, has authority to regulate TNCs such as Uber and GrabCar, as well as the TNVS' using the service of the TNCs. The DOTC's wide authority over transportation matters has been described by the Court in "Mirasol vs. DPWH", G.R. No. 158793, (8 June 2006):

"Under… EO 546… among the functions of the [DOTC] were to… regulate, whenever necessary, activities relative to transportation and communications … [I]t is the DOTC which is authorized to administer and enforce all laws, rules and regulations in the field of transportation and to regulate related activities." 

While the TNVS' are clearly engaged in transportation, the TNCs are arguably doing activities 'related' to transportation (and/or possibly even communications). The transport of people and goods is an activity in which the government has (or should have) much concern, especially in view of public interest and safety.

Meanwhile, DO 2015-11 required the Land Transportation Franchising and Regulatory Board (LTFRB) to come up with an implementing circular for the said DO, which the LTFRB did through Memorandum Circular 2015-015.

The LTFRB's authority includes the following: (i) regulation of areas of operation of public land transportation services, (ii) issuance of permits for land transport services by motorized vehicles, and (iii) prescribing rates for the foregoing. The LTFRB also exercises some functions pursuant to the Public Service Act.

Stated simply, the LTFRB regulates public land transportation. It has authority over land "common carriers"- the delicate consideration that may set apart TNCs and TNVS' in terms of proper regulation. A common carrier is "one engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air, for compensation, offering such services to the public." 

Common carriers are required to show extraordinary diligence in their transport of persons or cargo, and are presumed at fault in case of death or injury.

Are Uber, GrabCar, and similar entities – as TNCs- common carriers, such that they can be subject to the LTFRB's regulatory authority? Both Uber and GrabCar, in their respective terms and conditions for service (available in their websites), declare that they are not engaged in the business of transportation.

Uber states: "Para maka-iwas sa pag-aalinlangan: Ang mismong Uber ay hindi nagbibigay ng mga serbisyo ng transportasyon, at ang Uber ay hindi isang carrier ng transportasyon." 

GrabCar declares: "The Company is a technology company that does not provide transportation services and the company is not a transportation provider."

Both also state that they merely link the customer with a third party transportation provider (the TNVS), and are not parties to any transportation contract. While a declaration is not automatically right merely because one claims it as its policy, Uber and Grabcar may have a point.

The Supreme Court's ruling in "Crisostomo vs. CA", G.R. No. 138334 (25 August 2003) could apply by analogy. The Court ruled there that a travel agency merely arranges the booking of a person, but the actual act of transporting the customer is done by the airline. Therefore, the travel agency is not a common carrier.

The Court said that a contract of transportation is one where "a certain person or association of persons obligate themselves to transport persons, things… from one place to another for a fixed price…" In the case, because the travel agency "did not undertake to transport [the customer] from one place to another since its covenant with its customers is simply to make travel arrangements", it cannot possibly be a common carrier. The agreement between the travel agency and the customer is merely an ordinary service contract.

Similarly, TNCs only make arrangements for the customer to get in touch with a TNVS. When a match is made, a contract of transportation is formed between the customer and the TNVS. Uber and GrabCar do not by themselves agree to or actually transport the customer, and in this sense are not "common carriers". Like the case above, the TNCs may just have regular service contracts with the customers looking for a ride.

Uber and GrabCar, as TNCs that do not carry passengers or cargo, could be beyond the regulatory frameworks that apply to common carriers. This is not to say that TNCs cannot be regulated, but only that the responsibility for their regulation may not belong to an agency primarily handling land transport. However, in deference to the DOTC, it seems that it required the LTFRB to accredit TNCs not so much to place them under the LTFRB's authority, but because of circumstance. 

DO 2015-11 directed the LTFRB to "accredit the TNCs while waiting (for) guidance from the legislature regarding regulation of this new industry and to promulgate the guidelines for their accreditation." The DOTC recognized this development as it best could under existing law, even as it found itself in the middle of a legislative void over a specific technology.

Meanwhile, it is less difficult to consider TNVS' as common carriers, although there is some room for advocacy to the contrary. When they accept a customer's request for a ride, TNVS' obligate themselves to transport the customer from point A to point B, a business endeavor they hold out or show to the public. The presence of a public transportation contract here is not difficult to see.

Nonetheless, the Supreme Court's pronouncement in "Sps. Pereña vs. Sps. Zarate", G.R. No. 157917 (29 August 2012) is worth examining: 'The true test for a common carrier is not the quantity or extent of the business actually done, but whether the undertaking is a part of the activity engaged in by the carrier that he has shown to the general public as his business or occupation.' 

Uber declares that a driver can "go offline" if desired, and that a transportation provider can decide to accept or reject a ride request. Although many drivers appear to give full time transport service, some may be doing it under unique circumstances.

Others may argue that they just share rides with persons going to the same general area where they are also headed, capitalizing only on the chance to earn extra for a trip that would be made even without a "ride-sharer". After all, they can reject ride requests that do not suit their personal travel itinerary. They could also say that they do not represent to the public that they are in the transport business, as opposed to those who perform transportation services full time, and do not engage in transportation as a general business. Whether this stance will find legal merit remains to be seen.

To borrow from the Honorable Chief (then Associate) Justice, 'as man-made creations, laws are not always entirely encompassing, as future conditions may change which could not have been perceived by the legislators.' That could be the case here. Nonetheless, broad legislation is available to somehow govern the situation in the meantime.

Personal sentiment, on how things should be, is not without proper recourse in our system of government. Until such position is translated to correct action through lawful means, however, it will stand as a silent witness to the supremacy of existing law.