Grab defiant against weak LTFRB penalty

Ride-hailing service Grab Philippines is defiant against regulators penalizing it P10 million for unauthorized charges on 67 million rides.

“We stand by the legality of the P2-per-minute fare component,” Grab’s country head Brian Cu says. “We would like to reiterate that it is legal, pursuant to the DO (Department Order) 2015-11.”

The Land Transportation Franchising and Regulatory Board last Tuesday fined Grab P10 million for overcharging its passengers millions of times. The public utility agency also ordered Grab to refund passengers via fare rebates.

LTFRB found Grab in violation of fare limits when it secretly set a travel-time rate of P2 per minute on all rides from June 5, 2017 to April 19, 2018. The latter date was when LTFRB suspended Grab’s per-minute charge, which Congressman Jericho Nograles had discovered weeks earlier.

LTFRB’s P10-million penalty was for immediate compliance. A weeklong deadline also was set for Grab to report its implementation of the refund in the form of fare discounts to those unknowingly charged.

Still, Cu says in his Facebook page that they are studying “legal options” on LTFRB’s penalties. “But no matter how we decide to move forward from this, be assured, Grab will stay.”

DO 2015-11 that Cu invokes supposedly authorizes transport network companies to set their own charges and rates, subject only to LTFRB oversight. Then-transport chief Joseph Abaya and then-LTFRB head Winston Ginez issued it in May 2015 for the emergent ride-hailing service.

The new LTFRB ruling, however, reiterates the laws that require franchising and fare setting by the government. Those legislative powers were delegated to the LTFRB. The agency’s issuances have the force of Implementing Rules and Regulations, or IRRs, but can never supersede the laws themselves, the ruling states. It also cites a recent Department Order by Sec. Arthur Tugade clarifying that LTFRB has authority to regulate public transports, set fares, and impose penalties. Grab was allowed under a Dec. 2016 LTFRB issuance to charge only P40 basic fare, P11 to P14 per kilometer, and surge rate of 1.5 to two times the travel-distance rate.

Consumerists are decrying the weakness of LTFRB’s ruling, on the other hand. It was signed only by chairman Martin Delgra III and board member Engr. Ronaldo Corpus. The other board member Atty. Aileen Lourdes Lizada wrote a separate dissenting opinion. Such dissent is unprecedented in LTFRB, consumerists say. More so since it essentially echoes Grab’s justification of the P2-per-minute charge.

Consumerists also deem the P10-million too weak, considering that Grab, by its own admission, had imposed the P2 per minute on 67 million rides. They cite Nograles’ manner of computing the fine, under Joint Administrative Order 2014-001, of June 2014, by the Dept. of Transportation, Land Transportation Office, and LTFRB.

That issuance imposes a fine of P5,000 for the first offense of overcharging, P10,000 and vehicle impoundment on the second offense, and P15,000 plus franchise suspension or revocation on succeeding ones. It covers all public utilities, like jitneys, buses, taxis, and UV Express.

For simplicity, Nograles assumed all 67 million ride overcharges to be first offenses, multiplied them by P5,000, and came up with the proper penalty: P335 billion.

In Aug. 2017 LTFRB fined Grab’s American competitor Uber P195 million for a relatively lighter violation of over-recruiting partner-drivers. Uber closed shop last Mar. 2018 and sold its Asia division to Grab. The latter is a Malaysian company registered in Singapore.

Last May Lizada went after jitney operator-drivers in Metro Manila and surrounding provinces for overcharging their passengers P1 to P2.

The refund also must be hefty, the consumers say, based on Nograles’ computation. The congressman assumed an average travel time of 30 minutes, for total hidden charge of P60 per ride, disregarding the surge factor. Multiplying P60 by 67 million, he came up with a required refund of P4.02 billion.

Arguing for stiff penalties against Grab during LTFRB investigative hearings, Nograles had asked that the 45,000 or so partner-drivers be spared since they were not complicit with the unauthorized charge. LTFRB heeded his plea in its ruling last Tuesday.

Part of Grab’s justification for the P2-per-minute hidden rate is that it informed LTFRB about it during a technical workshop in July 2017, a month after imposition. It has yet to disclose who in LTFRB it talked to.

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