Regulation of Ride-Sharing Services, Transportation Network Vehicle Service

[Note: On 8 May 2015, Secretary Emilio Aguinaldo Abaya of the Department of Transportation and Communication (DOTC) issued Department Order No. 2015-011, amending Department Order No. 97-1092 to promote mobility. Among the amendment is the provision of the Transportation Network Vehicle Service (TNVS), which basically refers to existing “ride-sharing” or “app-based ride-hailing” services like Uber and GrabCar. The Philippines is the FIRST country in the world to regulate this service. There is, of course, an opposition from operators of taxis and Public Utility Vehicles (PUVs), which are required to comply with certain requirements (e.g., franchise, insurance coverage). PUVs are common carriers and are issued the corresponding PUV license plates. The TNVS are private vehicles that can operate like PUVs and, for purposes of liability, will most likely be treated as a common carrier. PUVs must also secure prior approval from the LTFRB before they can raise fares, but TNVS, based on the D.O 2015-011, are not covered by the same requirement. On the other hand, ride-sharing private vehicles are not required to be registered with the LTFRB based on existing practice. This will change because the regulations now require the driver to be accredited with the LTFRB. There is a high likelihood that the driver will also be required to register with the Bureau of Internal Revenue (BIR) which, in turn, will also require the registration with the local government (Mayor’s Permit). What do you think of the new regulations? Express your thoughts through the comment section below. The pertinent portion of Department Order No. 2015-011 relating to TNVS is reproduced below.]


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Republic of the Philippines
DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS

May 8, 2015

Department Order No. 2015-011

Subject: FURTHER AMENDING DEPARTMENT ORDER NO. 97-1097 TO PROMOTE MOBILITY

INTRODUCTION

The cities and municipalities of the Philippine are growing very rapidly. With urbanization and growth come increased demand for mobility.

Mobility is a key concern in various Philippine cities and municipalities. Recognizing such need, the DOTC is developing and implementing mass transport systems that can deliver safe, efficient, and reliable transport services. However, given that conventional forms of mass transport, such as urban rail, take time to implement, the Department will recognize new forms of transport services that can help to address the large demand for transport services in expeditious and responsive ways. In addition to recognizing these new forms of transport services, there is also a need to modernize and improve transport services currently being offered to the Filipino commuting public.

Our objective is to encourage innovation across all forms of public land transport in order to increase mobility on major thoroughfares, boost travel times, improve the quality, sustainability and reliability of public transport services, and respond to the needs of the modern commuter.

Department order 97-1097 (as amended), which set the standard classifications for public transport conveyances to be used as basis for the issuance of Certificates of Public Convenience for public utility vehicles, is hereby further amended.

X X X

4. TRANSPORTATION NETWORK VEHICLE SERVICE

Technological innovations are constantly challenging and often transforming established practices of industries. One such “catalytic” technology in the transportation industry is the “Online-Enabled Transportation Service (OETS)” that connects drivers with potential customers who request a ride. The internet-based digital technology application (“Application”) provides services by connecting available registered vehicles with registered customers who request rides. Once a request is accepted, the driver picks up the customers and brings them to their destination. Globally, the service providers which provide this type of Application and facilitate this new type of transportation service is referred to by many jurisdictions as Transportation Network Companies (TNC).

Borrowing from the California Public Utilities Commission, TNC is defined as an “organization whether a corporation, partnership, sole proprietor, or other form, that provides pre-arranged transportation services for compensation using an online-enabled application or platform technology to connect passengers with drivers using their personal vehicles.” In this jurisdiction, TNC shall mean as an “organization whether a corporation, partnership, or sole proprietor, that 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.”

The amendment shall read:

12. TRANSPORTAITON NETWORK VEHICLE SERVICE

Vehicle Type: Sedan, Asian Utility Vehicle, Sports Utility Vehicle, Van, Sport Utility Vehicle or other similar vehicles

Seating Capacity: Not more than 7 passengers, excluding the driver

Ventilation: Airconditioned

Route: No fixed route

Fare: As set by TNC, subject to oversight from the LTFRB in cases of abnormal disruptions of the market, such as but not limited to any change in the market, whether actual or imminently threatened, resulting from stress of weather, convulsion of nature, failure or shortage of electric power or other source of energy, strike, civil disorder, war, military action, national or local emergency, or other cause of an abnormal disruption of the market which results in the declaration of a state of emergency by the President.

Mode of Payment: Pre-arranged

Operation Conditions:

a) Driver must be accredited by the TNC;

b) Driver must hold a professional driver’s license;

c) Driver must be registered with the LTFRB;

d) Vehicle must be accredited by the TNC;

e) Vehicle must not be more than 3 years old from date of manufacture;

f) Maximum age limit of the vehicle is 7 years from date of of manufacture;

g) Vehicle must be equipped with proper tools and equipment;

h) Driver must always have an on-line enabled digital device during a pre-arranged ride;

i) Driver must only carry passengers who pre-arrange rides through TNC-provied online-enabled application and not through phone call or booking service;

j) Driver is prohibited from accepting street hails from potential passengers;

k) Driver is prohibited from accepting passengers in the airports, unless authorized by the airport management;

l) Driver must display during trips his Identification Card prescribed by LTFRB;

m) Passengers must be insured with the LTFRB accredited personal accident insurance providers; and

n) Operators and their drivers must comply with the rules and regulations issued by government agencies.

Validity: One year and may be renewed. Grantee must always remain in good standing with the TNC.”

For purposes of this Department Order, the LTFRB is mandated to promulgate the relevant implementing Memorandum Circular within thirty (30) days from date hereof.

Regarding the TNVS, considering than an accreditation by the TNC is required of the TNVS applicant, the LTFRB is further directed to accredit the TNCs while waiting guidance from the legislature regarding regulation of this new industry and to promulgate the guidelines for their accreditation.

This Department Order amends and supersedes all issuances inconsistent herewith, and shall take effect immediately, following its publication in a newspaper of general circulation.

For strict compliance.

6 thoughts on “Regulation of Ride-Sharing Services, Transportation Network Vehicle Service

  1. PattersonLaw

    From what I glean, It is deemed more important that the BIR is the common denominator, taking precedence over over the livelihood of private taxi drivers whom in other countries have made huge protests against the likes of Uber. PUV’s are for the most part public services municipaly paid. It seems revenue is above fair competition.

    Reply
  2. Anonymous

    Sir,

    Does a “Department Order” mean that it is mandated by the Government? What department or who specifically has authority over this matter?

    Thanks.

    Reply
  3. Jo

    Good day Sir/Ma’am,

    May I know if Department Orders require publication in a major newspaper before it is implemented? If so, do you know if and where this DO 2015-11 from DOTC was published? And what is the relationship of DO 2015-11 to MC 2015-017 from LTFRB?

    Thank you for your attention. I hope to hear from you soon.

    – Jo

    Reply
  4. Peejay

    Good day! Mam/Sir, i just want to make a clear explanation about this “”Vehicle must not be more than 3 years old from date of manufacture;” I am planning to buy a second hand car model 2013 and I want it to register in UBER or GRAB. do you think it will accredit by LTFRB? Hoping for your response so I can decide whether I Buy it or not. Thank you in advance!

    Reply
  5. Prashant

    Transportation is one of the best trending words in logistics market. It can manage the 3PL chain segments. Sir, I have read the post, Many of words are totally different in Transport segments. like “LTFRB” and one more question, Why should ride-sharing private vehicles are not required to be registered with the LTFRB ?

    Reply

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