Liability of TNCs

Is a transport network company (TNC) liable for the death or injuries suffered by its passengers, as well as the loss, damage or deterioration of the goods that their accredited drivers and vehicles carry?

As defined by the Department of Transportation, a TNC refers to a person or entity that provides pre-arranged transportation services for compensation using an internet-based technology application or digital platform technology to connect passengers with drivers using their personal vehicles.

We are all familiar with Grab Philippines, which is classified as a TNC. Using an internet-based app which can be downloaded and accessed using a computer or a mobile phone, one can book a ride. The app user does not get to choose the specific driver or vehicle that the user wants to book. It is the system that looks for the vehicle. In the case of Grab, however, you are free to choose between a Grab accredited taxicab, a two-seater or a four-seater vehicle. These Grab-accredited drivers are, however, free to accept or reject the booking. In fact, I can no longer count the number of times that my bookings were cancelled by the driver.

Department Order  2018-12 (13) of the DOTr issued on June 11, 2018 refers to the accredited driver/vehicle as a transportation network vehicle service (TNVS). It said that a TNVS is a TNC-accredited private vehicle owner, which is a common carrier, using the internet-based technology app or digital platform technology transporting passengers from one point to another for compensation. The order also emphasized that the TNVS cannot operate as a common carrier outside of, or independent from the use of the internet-based technology of the TNC to which they are accredited.

In a case decided last March 11, 2019 based on earlier issuances of the DOTr, the latest of which was DO 2017-11, the Supreme Court noted that in its issuances, the Land Transportation Franchising and Regulatory Board (LTFRB) has declared that a TNC is treated as a transport provider whose accountability commences from the acceptance by its TNVS while online. On the other hand, the accountability of the TNVS as a common carrier attaches from the time the TNVS is online and offers its services to the riding public.

The SC explained that a mobile application, like Angkas in that particular case, practically functions as a booking agent or at the very least acts as a third-party liaison for its accredited bikers.

Based on the issuances of the DOTr and the LTFRB, the SC held that it is the TNVS, and not the TNC, that is considered as a common carrier, and therefore engaged in public service.

And since it is the accredited vehicle/driver that is a common carrier engaged in public service, it is the TNVS and not the TNC that secures a certificate of public convenience (CPC) from the LTFRB. And under the Public Service Act, those engaged in public service and issued CPCs/CPCNs have to get approval from their respective government regulators before they can set/increase their rates imposed on the public.

Because TNCs are not required to get CPCs and get approval from the LTFRB before they can fix/increase their rates, the LTFRB has found itself inutile in so far as regulating ride-hailing operators is concerned.

It is probably for this reason, and the growing pressure especially from the legislators, for the LTO to finally come up with a definitive policy in so far as TNCs are concerned that this little-known DO 2018-012 (13).

The DOTr, in the said order, emphasized that there is a further need to regulate TNCs and TNVS to promote and develop a safe, reliable, and efficient land transportation service and that the objective of said order is to centralize the regulation of entities operating as TNC and TNVS under the LTFRB.

It defined a public utility as a business or service engaged in regularly supplying the public with some commodity or service of public consequence and a common carriers as those engaged in the business of carrying or transporting passengers or goods or both for compensation, offering their services to the public.

The order now categorically states that both the TNC and the TNVS are engaged in the operation of a public utility and are subject to the full regulation and supervision of the LTFRB, including but not limited to application and approval/denial of franchise (CPC), setting of fares, routes, operating conditions, and imposition of fines, suspension and cancellation of franchise. Thus, fares for the TNVS shall be determined by the LTFRB after public hearing or in consultation with the TNCs and the TNVS.

Interestingly, while DO 2018-012 (13) categorically referred to TNVS as common carriers under Section 2 of the said order, it did not in the case of TNCs. It merely stated in Section 8 that both the TNCs and the TNVS shall observe the diligence required of common carriers in accordance with the New Civil Code and in Section 9 that both shall comply with the law governing common carriers, which I believe merely reinforces what was mentioned in Section 8. The order also mentioned in an earlier paragraph that both are considered as engaged in the business of carrying or transporting passengers for compensation and offering their services to the public.

Under the Civil Code, common carriers are required to exercise extraordinary diligence in the transport of both passengers and goods. In earlier rulings, the SC said that arrastre operators are required to exercise extraordinary diligence in handling goods, just like common carriers and warehousemen. But they are not considered common carriers.

What does all these mean? I believe that the DOTr simply wants TNCs to be solidarily liable with their accredited TNVS, whose drivers are not the employees of the TNCs, in case of death or injury to passengers or loss, deterioration or damage to the goods carried by the TNVS. Not being categorically classified as common carriers, will TNCs be presumed negligent in case the passengers or goods suffer while being transported by the TNVS unless they can prove that they exercised extraordinary diligence in the transport of goods and services? The answer is yes, if the law on common carriers is made to apply to them.

While common carriers must exercise extraordinary diligence in the selection and supervision of their employees, the LTFRB in Resolution 071 (2018) in connection with the accreditation of Citimuter Corp. as a TNC, noted that under LTFRB MC 2015-015-A, a TNC shall exercise only ordinary diligence (or the due diligence of a good father of a family in accrediting and supervising its drivers, but shall be held liable for acts or omissions committed by its TNVS while online, except if the same is beyond the TNC’s control.

So going back to our question, can a passenger sue the TNC if they suffer injuries in the course of the transportation? The answer is yes. But whether the action will be based on tort (quasi-delict) or breach of contract of carriage is something that the DOTr has to clarify. And if there is breach, is it based on private or common carriage? If it will be based on tort or private carriage, then the passenger has the burden of proving fault or negligence on the part of the TNC in order to be awarded damages unlike if it is common carriage where the law also provides a disputable presumption of negligence on the part of the TNC.

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