Grab rebuts P10-M penalty for overcharging

The P10-million fine imposed on Grab Philippines for allegedly overcharging passengers for almost a year has no actual legal basis, said Brian P. Cu, Grab Philippines head.

Cu believes in the legality of the P2-per-minute charge that customers paid from June 5, 2017, to April 19 this year.

He cited an order by the then-Department of Transportation and Communications spelling out policies on transportation network companies (TNCs).  “We stand by the legality of the P2-per-minute fare component. We would like to reiterate that it is legal, pursuant to the DO 2015-011,” he said.

Grab used to charge a P2-per-minute rate on fares on top of its P40-flagdown rate and P10 to P14 per kilometer rate.

The per-minute charge was scrapped from the fare matrix of Grab on April 19, when the regulator ordered Grab to remove it.

Based on the order, companies that offer app-based ride-hailing services are allowed to set their own fares while being overseen by the Land Transportation Franchising and Regulatory Board (LTFRB).

The order said that fares, although set by the operator, are subject to “oversight from the LTFRB in cases of abnormal disruptions of the market.”

The order was rescinded when the Department of Transportation gave the LTFRB full regulatory and supervisory functions over TNCs and transportation network vehicle service (TNVS) operators.

In slapping Grab with a fine amounting to P10 million, the regulator cited an appellate court issuance on public utilities.

“If the rates they charge are unrestrained and predatory, franchising and regulation are useless and are a reproach to the process,” the order read.

The penalty for the first offense is P5,000. Based on this, the sanction against Grab could have resulted in “trillions of pesos in fines.”

However, the LTFRB ruled to consider the case as “one continuing offense,” saying, “Imposing such amount of monetary penalty may not only be considered excessive or disproportionate to the violation committed, but might also result to cessation of respondent TNC’s services which will affect not only the transportations system of key cities in our country, but also the employment of thousands of drivers relying on respondent TNC’s operation for their continued income, as well as the adverse effect of the same upon our economy.”

Grab is also ordered to reimburse riders affected by the alleged overcharging in the form of a rebate.  Cu noted his group will exercise all legal options to help counter the sanction.

The fine comes amid the company’s other notable expenses—namely the P100 million initially meant to be a temporary fix until the regulatory body granted the company back its P2-per-minute fare charge.

The company affixed this monthly price tag to its “fare-subsidy scheme” devised in order to address Grab drivers’ loss of income due to the rate suspension.

This move stemmed from the company’s belief its drivers must earn at least P330 an hour in order to cover high fuel, traffic and vehicle maintenance costs.  Those drivers not earning P330 an hour receive Grab’s subsidy into their accounts.

During its first week of implementing the subsidy program alone, Grab shelled out P30 million, already 20 percent higher than its initial P100-million per month allocation.