Transportation Network Service Act

S00170 Bffice of lia TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES AUG -7 P3:02 First Regular Session RECENED BY. SENATE 1112 S.B. No. Introduced by SEN. WIN GATCHALIAN AN ACT REGULATING TRANSPORTATION NETWORK SERVICES, IMPOSING AND AUTHORIZING FEES, PROVIDING PENALTIES FOR VIOLATIONS THEREOF AND FOR OTHER PURPOSES EXPLANATORY NOTE One of the reasons for the worsening traffic situation in the Philippines is the overpopulation of vehicles in the metropolitan area. Thousands of public utility vehicles (PUVs) and private vehicles clog the streets of Manila every day, which results in traffic jams along the main highways and major roads. As a consequence, not only is the transport of commuters delayed and their time wasted but the country as a whole suffers economic losses. According to the study by the Japan International Cooperation Agency (JICA), the country is projected to lose Php 5.4 billion to traffic daily by 2035 if no interventions are made in Metro Manila. JICA had previously estimated that the Philippines loses Php 3.5 billion daily due to traffic congestion.! The Department of Economy, Planning and Development (DEPDev) proposes that the primary solution to the traffic situation is still the improvement of transportation infrastructure. However, we cannot stand still while waiting for the government to 1 Japanese International Cooperation Agency. "JICA and DOTr to improve service quality of PUVs towards road decongestion Manila." 17, 2024. https://www.jica.go.jp/english/overseas/philippine/information/press/2024/1545461_53492.html

develop our transportation network. We must look for alternatives to alleviate the suffering of our people in their daily commute. It is therefore high time that we institutionalize the regulation of Transportation Network Services (TNS) to spur advancements in the transportation industry. The emergence of Transportation Network Vehicle Services (TNVS) such as Grab, Angkas, Joyride, and inDrive, to name a few, provides commuters more choices in their daily commute. The additional competition in the transportation industry compels existing taxi operators to improve their service in terms of convenience, safety, and efficiency. Furthermore, the use of ridesharing will help decongest roads by encouraging vehicle owners to leave their car at home and utilize a TNS instead. To address this, then Department of Transportation and Communication (DOTC), now the Department of Transportation (DOTr), issued Department Order No. 2015-011 (DO No. 15-011) to recognize the new nature of ridesharing services. It intended to modernize and improve transportation services by the innovative use of technology to facilitate ridesharing services between a Transportation Network Driver (TND) and a Transportation Network Passenger (TNP). DO No. 15-011 allowed Transportation Network Companies (TNC) to operate in the Philippines and facilitate transactions between a TND and a TNP. It also provides the guidelines for the selection and accreditation of drivers. However, DO No. 15-011 has faced heavy opposition since its promulgation. Taxi operators allege that the said Order offers unfair competition in favor of TNCs and TNVs because they are not subject to the same regulation as that of taxis. Some Congressmen also expressed their reservation citing issues on operator liability and tax collection. Eventually, the DOTr promulgated Department Order No. 2018 - 013 giving full authority to the Land Transportation Franchising and Regulatory Board (LTFRB) to regulate and supervise TNCs and TNVS. With these developments, there is still a need to institutionalize the rules regulating TNVS as an emerging mode of land transportation in the metropolitan areas in the country. This bill seeks to define the

nature of TNCs and Transport Network Vehicles (TNV) and clarify their role as a common carrier. TNCs and TNVs are obligated under a contract of carriage once a passenger avails of their service. As a common carrier, liability attaches once the contract between a TNP, a TNV, and a TNC is executed. A TNC therefore cannot evade liability by contending that they are merely a technological platform to connect the TNP with the TND. The TNC is the means and method by which the transportation service is arranged and facilitated. Furthermore, TNCs amass profit from facilitating the TNVS. The TNCs cannot have their cake and eat it too. They must be responsible for the service they provide and be held liable for any breach on the contract of carriage. This bill also provides the standards in the accreditation of transportation network service providers and ensure the qualification of their drivers. It also requires the TNDs to issue electronic receipts for passenger safety and taxation purposes. It is our intention to ensure that regulation is not a hindrance, but continues to be the safety net that the public can rely on for its protection. In the interest of transportation development and public service, support for the passage and approval of this legislation is earnestly sought.

Offer of the ar TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES First Regular Session ] 25 AUG -7 P3:02 RECEIVED Bi SENATE S.B. No. 1112 Introduced by SEN. WIN GATCHALIAN AN ACT REGULATING TRANSPORTATION NETWORK SERVICES, IMPOSING AND AUTHORIZING FEES, PROVIDING PENALTIES FOR VIOLATIONS THEREOF AND FOR OTHER PURPOSES Be it enacted by the Senate and the House of Representatives of the Philippines in Congress assembled:

SECTION 1. Short Title. - This Act shall be known as the "Transportation

Network Service Act."

SEC. 2. Declaration of Policy. - It is hereby declared as a policy of the State to

promote a rising standard of living and an improved quality of life for all Filipinos. Thus, the State shall encourage the provision of alternative modes of transportation, afford more riding options to the public, and drive advancements in the transportation industry. Towards this end, the State shall enact measures for the development and regulation of transportation network companies and vehicles and to ensure the safety of both the driver and the riding public.

SEC. 3. Definition of Terms. - As used in this Act:

a) Board refers to the Land Transportation Franchising and Regulatory Board. b) Digital network refers to any online-enabled application, software, website, or system offered or used by a transportation network company that enable the pre- arrangement of a ride with a transportation network driver. c) Transportation Network Services refer to transportation provided by a 7 Transportation Network Driver (TND) to a Transportation Network Passenger (TNP), beginning at the time the driver accepts a ride requested by the passenger through a digital network controlled by a Transportation Network Company (TNC), continuing while the driver transports the passenger, and ending at the time the last requesting passenger departs from the driver's transportation network vehicle. d) Transportation Network Company (TNC) refers to an organization, whether a corporation, partnership, sole proprietor, or any association, operating in the Philippines that provides pre-arranged transportation services for compensation using an online-enabled app or platform to connect passengers with drivers using their personal vehicles. e) Transportation Network Driver (TND) refers to an individual who: i. Receives connections to potential TNP and related services from a TNC in exchange for payment of a fee to the company; and ii. Uses a TNV to offer or provide TNS to a TNP through a digital network controlled by the company in exchange for compensation or payment. f) Transportation Network Vehicle (TNV) refers to a vehicle accredited by a TNC and used by a TND to provide TNS. g) Transportation Network Vehicle Operators (TNVO) refers to owners of TNVS used by a TND to provide TNS. h) Transportation Network Passenger (TNP) refers to an individual who uses a TNC's digital network to connect with a TND who provides TNS to the individual using 28 a TNV between points chosen by the individual.

i) Commercial Liability Insurance refers to a standard insurance policy issued to a TNC to cover any liability claims for breach, bodily injury, death, and property damage arising during the course of the TNS.

SEC. 4. Nature of Transportation Network Companies and Vehicles. - TNCs

offer, represent, or engage themselves to carry TNPs who opt to avail of their digital network service. TNCs are hereby declared as common carriers. A contract of carriage commences from the time a TNP makes a pre-arranged ride with the TNC and ends at the time the TNV carrying the TNP arrives at the designated location. TNV operators are common carriers in the course of the TNS and are responsible for any breach in the contract of carriage.

SEC. 5. Liabilities. -

a) The diligence required of TNCs and TNDs in the conduct of their business is extraordinary diligence as defined by law. A TND is presumed to be negligent when there is breach in the contract of carriage. The liability may include, but is not limited to, actual and moral damages as well as indemnity for loss of earning capacity. The TNC and the owner/operator of the TNV shall be jointly and solidarily liable with the TND. b) Taxicabs, limousines, or similar vehicles for-hire which also avail of digital networks to connect and provide transportation services to their passengers for pre- arranged rides shall likewise be covered under the provisions of this Act and remain liable under the conditions set forth under their Certificate of Public Convenience and Necessity and other existing laws, rules and regulations.

SEC. 6. Applicability of Existing Regulations. - All memoranda and guidelines

promulgated by the Board shall apply suppletorily to all claims in case of any breach by the TNC or the owner/operator of TNV on the contract of carriage without prejudice to any other administrative or court proceedings instituted by the aggrieved party.

SEC 7. Regulatory Authority. - TNCs and TNVOs shall be governed by the

provisions of this Act and other rules adopted by the Board pursuant to this Act.

SEC. 8. Accreditation. - A person, firm, or corporation shall only be allowed to

operate a TNC by obtaining and maintaining a permit to be issued by the Board upon compliance with the requirements set forth by this Act and other reasonable conditions as may be provided by the Board.

SEC 9. Accreditation Fee. - An accreditation fee to be set by the Board shall be

paid upon filing of the application and before the issuance of the Certificate of TNC Accreditation.

SEC 10. Application for accreditation. -

a) An application for a TNC accreditation must be in a form prescribed by the Board. The application shall contain information required by this Act and other pertinent data that the Board may deem necessary to assess and identify the applicant's qualifications to adequately serve the public. b) The applicant shall notify the Board of any material change in the information included in an application not later than ten (10) days after the change occurs. The Board shall prescribe a form for the disclosure of material changes.

SEC. 11. Term and Renewal of Accreditation. -

a) An accreditation issued under this Act is valid for two (2) years unless sooner revoked by the Board for reasonable cause. The Board shall prescribe the form and requirements necessary for the renewal of an accreditation; b) The Board shall notify each person holding an accreditation of the date of its expiration and the amount of the fee required for the renewal. The Board shall send the notice not later than thirty (30) days before the accreditation expires.

SEC. 12. Agent. - A TNC shall maintain a resident agent authorized to accept

summons and process in all legal proceedings and all notices affecting the TNC.

SEC. 13. Fares. - A TNC charging a fare for its services shall disclose to the

TNP the fare calculation method within the company's software application service or on the company's internet website and provide the TNP with the applicable rates being charged for the service and the option to receive an estimated fare.

SEC. 14. Identification of Vehicles and Drivers. - The TNC's software application

or internet website must display a picture of the TND and the plate number of the TNV.

SEC. 15. Insurance Coverage. - TNCs shall maintain a commercial liability

insurance policy to cover claims for incidents involving vehicle and drivers while they are providing TNC services. It shall likewise cover claims of passengers for breach of the contract of carriage per incident coverage. The Board shall determine, upon consultation with stakeholders, the amount that TNCs shall maintain during the validity of their accreditation. Each TNC driver shall maintain insurance coverage. Nothing in the TNC's Terms of Service can be used or relied on by the TNC to deny insurance coverage, or otherwise evade the insurance requirements to be determined by the Board. A TND shall carry proof of transportation network company insurance coverage with him or her at all times during his or her use of a vehicle in connection with a transportation network company's online-enabled application or platform. In the event of an accident, a participating driver shall provide the insurance coverage information to any other party involved in the accident, and to a police officer, upon request.

SEC. 16. Electronic Receipt. - Upon completion of a trip, a TNC shall transmit

an electronic receipt to the TNP that lists:

a) The origin and destination of the trip; b) The total time and distance of the trip; and c) An itemization of the total fare paid, if any. Electronic receipts of each TND of all its transactions shall be recorded by the TNC and reported to the Bureau of Internal Revenue (BIR) for purposes of taxation.

SEC. 17. Zero-tolerance Policy for Drug or Alcohol Use. -

a) Every TNC shall: 1) Implement a zero-tolerance policy that prohibits a TND from using or being under the influence of illegal drugs and alcohol abuse; and 2) Post in its internet website a notice of the policy and the procedures to report a complaint about a driver with whom a TNP was matched and who the TNP reasonably suspects was using or was under the influence of drugs or alcohol during the course of the trip. b) Upon receipt of a complaint alleging a violation of the zero-tolerance policy, the TNC shall investigate the reported incident and immediately suspend the TND's access to the company's digital network for the duration of the investigation. c) The TNC shall maintain records relevant to any complaint for a period of at least two years after receipt of the complaint.

SEC 18. Driver Requirements. -

a) Before allowing an individual to be a TND on its digital network, a TNC shall: 1) Require the individual to submit an application to the TNC, which must include information regarding the individual's address, age, driver's license, driving history, motor vehicle registration, motor vehicle liability insurance, and other information as may be required by the TNC; 2) Conduct or have a third party conduct a local and national criminal background check for each individual; and 3) Obtain and review the individual's driving record.

b) The TNC may not permit any individual to act as a TND on its digital network when the individual: 1) Has been convicted of any of the following offenses in the preceding three-year period: i) Evading arrest or detention; ii) Reckless driving; iii) Driving without a valid driver's license; or iv) Driving under the influence of alcohol or prohibited drugs. 2) Has been convicted at any time of: i) Fraud; ii) A sexual offense; or ili) Theft. 3) Does not possess a valid professional driver's license; and 4) Does not possess proof of registration for the TNV used to provide transportation network services.

SEC. 19. No Street Hails. - A TND may only accept pre-arranged rides made

through a TNC's digital network or software application service and may not solicit or accept street hails.

SEC. 20. No Fleet Service. - A TNC is not allowed to have its own fleet service.

Otherwise, it shall be required to secure a Certificate of Public Convenience and Necessity from the Board pursuant to the Public Service Law.

SEC 21. No Discrimination; Accessibility. -

a) A TNC shall adopt policies concerning non-discrimination that comply with national laws; b) A TND shall follow all policies concerning non-discrimination and accessibility in compliance with national laws;

c) A TNC may not impose additional charges for providing services to persons with disabilities, nor pass on to TNDs discounts afforded by law to senior citizens or persons with disabilities; d) A TNC shall provide a TNP an opportunity to indicate whether they require a wheelchair-accessible vehicle. If a TNC is unable to arrange wheelchair accessible TNS, the company shall direct the TNS to an alternate provider of wheelchair- accessible TNS, if available; e) A TND may not discriminate in the provision of transportation network services based on the geographic location of a departure point or destination. A TND may refuse a request for an extended ride beyond the pre-arranged destination.

SEC. 22. Records. - All TNCs shall maintain individual trip records for at least

one (1) year after the date the trip was completed. TNCs shall also keep TND records for at least one (1) year from the time a TND's activation on the company's digital network has ended.

SEC. 23. Personally Identifiable Information. -

a) A TNC may not disclose a TNP's personally identifiable information to a third party unless: 1) The passenger consents to the disclosure; 2) The disclosure is required by a legal obligation; or 3) The disclosure is required to protect or defend the terms of use of the service or investigate violations of those terms. b) In addition to the disclosures authorized under paragraph (a), a TNC may share a TNP's name or telephone number with the TND providing transportation network services to the passenger to facilitate correct identification of the TNP by the TND or to facilitate communication between the TNP and the TND.

SEC. 24. Record Audits. - The Board may audit the records of a TNC in

connection with the performance of its duties under this Act through investigations of

specific alleged violations or a random sample of the TNC's records related to TND. 2 Failure to provide records as required by this Section constitutes a violation of this Act.

SEC. 25. Disciplinary Action; Fine. -

a) The Board, after due notice and opportunity for hearing, may deny an application for an accreditation or suspend or revoke an accreditation if the applicant: 1) Makes a material misrepresentation or omission in any application or other information filed under this Act or rules of the Board; 2) Violates this Act or a rule or order of the Board; 3) Violates any law relating to the operation of a TNC; or 4) Fails to maintain the qualifications for an accreditation. b) In addition to the authority under the preceding paragraph (a), the Board, after due notice and opportunity for hearing, may request that the Department of Justice (DO]) bring an action against a person that has violated this Act or the rules promulgated by the Board pursuant to this Act to collect a fine in the amount not to exceed Fifty thousand pesos (Php 50,000.00) for each violation. c) Each act as enumerated in paragraph (a) of this Section constitutes a violation and each day a violation continues will be considered a separate violation. In determining the amount of penalty, the Board shall consider: i) The seriousness of the violation, including the nature, circumstances, extent, and gravity of any prohibited act, and the harm or potential harm to the safety of the public; ii) The economic damage to the public caused by the violation; iii) The history of previous violations; iv) The amount necessary to deter future violations; v) Efforts to correct the violation; and vi) Any other matter that justice may require.

SEC. 26. Complaint Procedure and Notice. -

a) A TNC shall establish and maintain a complaint procedure through which any TNP or another person using the transportation network may submit a complaint with the Board about the TNC, the TNS, a TND, or another affiliate of the TNC; b) A TNC shall provide a notice of the complaint procedure provided by this Section to each TNP and to each person that contacts the company to inquire about TNS; c) A TNC shall provide notice of the complaint procedure under this Section to 9 each electronic receipt required under this Act; d) The Board shall approve the content and manner of delivery of the notice required by subsections (a), (b), and (c); and e) Failure to provide notice as required by this Section is a violation of this Act.

SEC. 27. Implementing Rules and Regulations. - Within (60) days from the

effectivity of this Act, the Board shall promulgate the implementing rules and regulations as may be necessary to ensure the efficient and effective implementation of this Act.

SEC. 28. Separability Clause. - Should any part of this Act be declared

unconstitutional, the rest of the provisions of this Act shall continue to be in effect and subsisting.

SEC. 29. Repealing Clause. - The pertinent provisions of the Land

Transportation and Traffic Code, in so far as they are inconsistent herewith, are hereby amended or modified accordingly. The provisions of other laws, decrees, executive orders, rules and regulations inconsistent with this Act are hereby repealed, amended, or modified accordingly.

SEC. 30. Effectivity. - This Act shall take effect fifteen (15) days after its

publication in the Official Gazette or in at least two (2) national newspapers of general circulation. Approved,