LTFRB to Grab: Why change fares on your own?

MANILA, Philippines – The Land Transportation Franchising and Regulatory Board (LTFRB) on Tuesday, April 17, emphasized that it has the sole power to change fares for public utility vehicles and ride-hailing services.

On Tuesday, the LTFRB conducted a hearing on the alleged illegal charges by Grab Philippines on top of its government-approved pricing scheme. (READ: Did Grab 'illegally' charge its riders higher fare?)

During the hearing, the regulatory board questioned representatives from Grab on how they "unilaterally" changed their fare scheme mid-2017, adding P2 per minute for every ride.

"We are very specific how this mechanism was supposed to be implemented when a December 27, 2016 order remains as of today," LTFRB Chairman Martin Delgra III said.

The December 2016 order regulated ride-hailing services' fares, allowing Grab to charge a flagdown rate of P40, with an additional P10 to P14 per kilometer. The order does not include travel duration charges.

"It is the position of the Board that the December 27, 2016 order mandates the fare structure – therefore there should be no other change in the fare structure, considering the fact that the Board exercised our adjudicatory powers," Delgra said.

The LTFRB instructed Grab to disclose in another hearing – set for May 29 – when exactly the travel duration charge was implemented, and how many rides were affected.

It also asked Grab to further explain its algorithm for fare pricing in May.

Illegal charges?

Grab maintained, however, that it informed the LTFRB of its fare structure in a technical working group (TWG) meeting in July 2017.

John Paul Nabua, Grab's lawyer, said the ride-hailing company started charging the travel duration rate in "early June 2017" and informed the LTFRB about it the following month.

As to why Grab implemented the new fare structure without the LTFRB's approval, Nabua said Department Order (DO) 2015-11 issued by the Department of Transportation (DOTr) allows pricing changes, only "subject to oversight from the LTFRB in cases of disruptions in the market."

Nabua also said the LTFRB's December 2016 order mentions the "time travel charge," and Grab deemed this applicable to ride-hailing firms.

But Delgra said the provision does not apply to Grab, as the company did not charge by travel duration prior to the December 2016 order.

"Was there a time rate when the order was decided in December 2016?" Delgra asked Grab, and was told, "No."

In response, the LTFRB chairman said, "Then this [provision] does not apply to you."

Refund?

PBA Representative Jericho Nograles, who was also present during the hearing as complainant, said Grab only confirmed it did not go through the right process.

"First of all, informing [the LTFRB] through a PowerPoint presentation is not a cause for approval. What we are pushing for here is due process for the rights of our consumers. The P2-per-minute charge did not undergo due process," Nograles told reporters in a mix of English and Filipino.

The lawmaker said that based on his calculations, Grab owes its riders some P3.2 billion.

Some Grab drivers and operators who were also present during the hearing argued that they would bear the brunt of the refund, should the LTFRB deem the charges illegal.

Some senators had also slammed the ride-hailing company's "predatory pricing and overcharging."

The LTFRB previously ordered Grab to lower its surge pricing cap from multiplied by two times to only 1.5 times the normal fare.

Grab is now the only transport network company offering ride-hailing services in the Philippines, after Uber formally closed down on April 16.

Four other ride-hailing companies are applying for LTFRB accreditation. – Rappler.com

Aika Rey

Aika Rey is a business reporter for Rappler. She covered the Senate of the Philippines before fully diving into numbers and companies. Got tips? Find her on Twitter at @reyaika or shoot her an email at aika.rey@rappler.com.

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