Uber: clash of law vs common sense

The commuting public hid none of its contempt for the Land Transportation and Franchising Regulatory Board’s crackdown on Uber, its trusted (albeit unlicensed) alternative to Manila taxis. The LTFRB was legally correct, but only demonstrated how going strictly by black-letter law can be the worst possible myopia.

Uber is a startup tech company from San Francisco with a simple idea: Use smartphones to connect passengers and drivers willing to hire out. It has a preset fee system with “surge” pricing that increases fees during peak hours. In practice, many cars and drivers are full-time Uber partners, including, in other countries, Uber-owned cars. With cashless, credit-card-based payments, GPS tracking, automatic recording of drivers, passengers and destinations, and a system where passengers rate drivers, Uber is reputed for disciplined, reliable, courteous drivers and comfortable cars—despite being self-regulated.

In contrast, we all hate Manila taxis. Passengers, even from commercial centers with heavy traffic, perpetually fear being held up by drivers or coconspirators who suddenly board the cab, or being molested after the air-conditioning is laced with a sleep-inducing chemical. One recent viral CCTV video caught a driver chasing a female passenger who had jumped out of the cab. Beyond security, one must deal with broken upholstery that reeks of stale sweat, tampered meters and drivers’ impunity in rejecting passengers with long trips.

And as motorists know, the laws of nature dictate that taxi drivers not follow lane markings, swerve in front of turning cars or into their blind spots, move slowly in the fast lane, and stop abruptly in the middle of the street oblivious to cars behind them. A friend’s happiest Facebook update featured a photo of a taxi that collided with a jeepney, with this caption: “Karma.”

Even taxi drivers must hate themselves given the boundary system and the sleep deprivation that comes with 24-hour shifts. Pass by the corner of Valero and Dela Costa Streets in Makati at 3 a.m. to see the parked taxis with catnapping drivers. And taxi drivers get held up, too.

Uber solves many of those problems, but its drivers hold no public franchises. Philippine law imposes grave responsibilities on those who regularly accept paying passengers from the public, beyond someone who casually offers a friend a ride. Certainly, public transport must be regulated to ensure safety and reliability. This must extend to regular Uber drivers and their credit-card- and smartphone-holding clientele, as it does to taxi, bus and jeepney operators. The disconnect, though, is that no mishap with self-regulated Uber has been reported, while our heavily regulated buses fall off flyovers. SoWhatsNews satirized that Uber should hire reckless, chloroform-wielding drivers to pass LTFRB standards.

Outside highfalutin’ philosophical debates on human rights, when law deals with commerce, it must don a practical, consumer-friendly hat. Judges know that when they assign liability, the classic case being who must pay after an accident, they nudge economic behavior and must ensure a net benefit to society. Regulation realizes a net benefit when its benefits exceed its costs. From this loftier legal vantage point, the problem is clear. If self-regulated Uber produces far better service, the LTFRB necessarily produces a negative social benefit. When we discard our bar-exam- and memory-oriented legal education and stop being enamored of enforcing law for its own sake, common sense tells us that we could abolish the LTFRB tomorrow and society would be better off.

Common sense cries out that it is the LTFRB that must harness Uber’s innovations for more commuters’ benefit, and not Uber that must conform to the antiquated regulatory regime the LTFRB enforces—a mindset for which Metro Manila Development Authority Chair Francis Tolentino immediately voiced support. Transportation Secretary Jun Abaya soberly called for a dialogue, after which Uber agreed to have its drivers obtain LTFRB franchises and present legal reforms it advocates in other countries to the LTFRB. However, it is not enough to push taxi companies to adopt relatively superficial reforms such as centralized booking and tracking of lost and found items.

If Uber has proven beyond all doubt that self-regulation is far more effective, LTFRB regulation must inevitably be streamlined to give way to market forces. A congressional inquiry is beginning and we hope one of our visionary, tech-savvy young legislators will overhaul black-letter law to conform to common sense, and breathe life into the sentence in our Constitution that reads: “The State recognizes the indispensable role of the private sector, encourages private enterprise, and provides incentives to needed investments.”

Finally, Uber is a simple, technology-driven solution from a foreign company, and one would think hellish Manila traffic would have stimulated more homegrown solutions, such as local carpool app Tripid (and carpools have a stronger case for not needing franchises). Indeed, an increasing number of foreign entrepreneurs appear to be flocking to Manila’s nascent tech startup sector. One wonders if the LTFRB’s misstep is but a symptom of a much larger problem of our schools lagging in the production of entrepreneurs and out-of-the-box engineers that could envision an Uber, and our failure to produce a no-nonsense, business-friendly environment that could sustain it.

Oscar Franklin Tan (@oscarfbtan, facebook.com/OscarFranklinTan) cochairs the Philippine Bar Association committee on constitutional law and teaches this subject at the University of the East. He also teaches securities law at San Beda Graduate School of Law.