Omnibus position paper on the LRT 1, LRT 2 and MRT 3 fare increases
Bagong Alyansang Makabayan
February 14, 2023

The train lines such as the PNR, LRT 1, LRT 2 and MRT 3 are vital public utilities imbued with great public interest as they provide mass transport for the population, especially students, government employees and private sector workers. The economic benefits of having efficient, reliable and affordable mass transport cannot be overstated. It is for these reason that these trains are subsidized by government, sometimes even operating at a loss.

As public utilities, train lines should be subject to regulation to protect public interest. Fare increases are not entitlements that the operators can invoke at any time, and which the DoTr can approve at any time.

The flawed process that saw the approval of fare hikes in 2015 through a mere department order resulted in a petition before the Supreme Court which remains pending to this day. Unlike other utilities, there is no regulatory body mandated by law to approve fares for our train system. For electricity we have the ERC, for water we have the MWSS RO, and for toll fees we have the TRB. While we recognize the seeming effort of the DoTr to create a regulatory unit to hear and approve fare hike petitions, however, it is our position that the DOTr cannot create an agency or body such as the Railway Regulatory Unit without an express authority from Congress. Further, while DOTr is granted with the authority under Sec. 5 (p) of E.O. 125, as amended by E.O. 125-A to “fix and/or prescribe charges and/or rates pertinent to the operation of public air and land transportation utility facilities and services”, however, such power does not include the power to fix and prescribe rates/charges for railways. Consequently, it cannot delegate to the RRU an authority it does not have.

The RRU also faces a conflict of interest situation because it is not independent from the DoTr, whose attached agencies are the petitioners seeking a fare hike. The head of the RRU is also the DoTr Undersecretary for Rails overseeing the development of the country’s railway system. All petitioners seeking a fare hike have invoked railway improvement and expansion as their basis for seeking a fare hike. The DoTr Secretary sits on the board of the LRTA which is a petitioner in this case. The MRT3, a project management office under the DoTr, is also a petitioner for a fare hike. With all due respect to the head of the RRU and his staff, there are just too many overlapping interests here which hampers the independence of the RRU.

Thus we approach this public hearing with great caution. While we register our position that the RRU’s creation is legally defective and irregular, we see this hearing as a venue for raising public opposition to the proposed fair increase. Our engagement is without prejudice to any legal remedy available to question the Department Order creating the RRU.

Bayan opposes all of the proposed fare increases as these are added burdens to the people at a time when inflation is at a 14-year high and wages have been nailed to the floor.

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On the LRT 1 fare hike

The LRT 1 fare hike proposed by LRMC is based on an onerous concession agreement provision that allows it to increase its fares every 2 years and if not allowed, will receive reimbursement from the national government. Thus in its petition for a fare hike, LRMC makes the veiled threat that if its fare hike is not approved the “deficit payment” owed by the national government will increase.

LRMC’s claim that the fare hike will have an impact of “only P8.97 per passenger” and that this will be acceptable to commuters, is so out of touch with reality and is oblivious to the prevailing economic crisis. LRMC is in fact asking for a maximum fare hike of up to P14.00 if we consider the end-to-end trip from Roosevelt to Baclaran.

LRMC’s claim that a survey showing a 96% passenger satisfaction rating for LRT 1 is patently self-serving and ignores the many complaints and hardships endured daily by commuters.

As of February 12, the fare hike petition of LRMC has not been posted in the DoTr website as of February 13, and there was no proof of publication in any newspaper of general circulation 10 days prior to this hearing included in the documents we received from DoTr.

LRMC’s fare hike petition is based on a guaranteed increase in the notional fares based on the provisions of its concession agreement with the DoTr/LRTA. This is in the nature of an automatic increase that if LRMC is unable to collect, it is government who will pay for the deficit.

The Philippine government should not be held hostage by the onerous provisions of the concession agreement with LRMC which provides a sovereign guarantee to the profits of the consortium. The only choices that are provided by the CA is for either commuters to carry the burden or for the taxpayers to pay for the deficit. These terms are unacceptable. Already,
LRMC has filed for arbitration, demanding deficit payments of up to P2.67 billion. This is just one of the many problems with the government’s privatization of the rail operations which favors private profits over public service. LRMC also makes the threat that the LRT 1 Cavite extension project will be delayed or suffer adverse effect if the fare hike is not granted. This again is unacceptable and should be rejected by the Philippine government.

On the LRT 2 fare hike

The LRTA-owned and operated LRT 2 is proposing a minimum P13.00 fare, from the current P11.00 fare. The end-to-end fare will be increased from P28.00 to P33.00. The range of the fare hike will thus be from P2.00 to P5.00. Again this is a huge burden to commuters.

While LRT 2 published its petition in the LRTA website, we find no record or proof of publication of the petition and proposed fare matrix in any newspaper of general circulation 10 days prior to the February 17 hearing in the documents we received from DoTr. The LRTA also did not follow the COA recommendation to involve the TRB in the fare hike process as no records were provided that any meeting took place.

There was already a provisional approval of the LRT 2 fare hike as early as October 25, 2022 yet we know of no record or proof of publication for such an increase. In fact when confronted with the issue of the fare hike in January 2023, the LRTA administrator was quoted in the media as saying that the matter still awaited the approval of the LRTA Board. This is misleading since the same LRTA administrator in his petition for the rate increase said that the LRTA board had already approved the fare hike as early as December 19, 2022.

The LRT 2 fare hike is arbitrary, whimsical and totally unnecessary in light of the current economic crisis. The LTFRB and LRTA position that LRT 2 fares are lower that bus fares therefore they are entitled to a fare hike is non sequitur as this is an apples and oranges comparison. PUB’s are operated mainly for profit while the LRT 2 is operated as a public service subsidized by government. There is no pressing nor urgent need to set the LRT 2 fares to the level of commercial buses or any other commercial land transport.

There is likewise no pressing nor urgent need to reduce government subsidy for the LRT 2 as appropriations have already been approved for its operations for this year. Has there been a directive from the Executive, from the DBM or even Congress for the reduction in subsidy for LRT 2 such that the LRTA now deems it necessary to raise fares? Does the LRTA deem the transportation subsidy for students and workers a waste of taxpayers funds that it now seeks to reduce subsidy for the government-owned and operated train line?

On the MRT 3 fare hike

In the case of the MRT 3 fare hike, we have not seen any proof of publication of the fare hike in any newspaper of general circulation 10 days prior to the hearing. No proof of publication was attached to the documents that were provided to us by the RRU nor in the petition posted on the DoTr website. We would also like to know when the petition was uploaded in the DoTr website because such was not available in the MRT 3 website as of February 12, 2023.

There is no document authorizing GM Federico Canar to file a fare hike petition before the RRU. The latest resolution of the MRT 3 Fare Adjustment Review Committee dated January 17, 2023 was a recommendation for approval by the GM of a draft position paper, and to recommend to the DoTr Secretary through the Undersecretary for Rails, the approval of the fare increase of MRT 3. Nothing in the resolution authorizes the GM to file a petition before the RRU. Also, no copy of the position paper and approval thereof by the GM and the DoTr Secretary were attached to the petition submitted to the RRU and uploaded on the DoTr website. Does the GM have authorization from the DoTr Secretary to file a petition for fare increase?

MRT3 argues that the government subsidy for the train line runs in the billions of pesos but fails to explain that this is due to the onerous terms of the BLT agreement. The Philippine government has to pay MRTC some P8 billion every year in equity rental payments to guarantee MRTC’s 15% ROI. All previous DOTC and DoTr administrations have done nothing to end this unjust situation. The MRTC BLT agreement will end in 2025 and so will the equity rental payments. The assets of MRT 3 will be transferred to the government. Thus, the government subsidy for MRT3 will be significantly lower by this time. We maintain that the subsidy for riders of MRT3 is necessary and should not be made the reason for the fare hike. What the DoTr should do is to end the onerous terms of the BLT agreement to be able to reduce the subsidy for the MRT 3. To pass on the burden of the onerous contract to the commuters is truly unjust.

We call on the operators of LRT 1, LRT 2 and MRT 3 to withdraw their petitions for fare increase in the light of the severe economic crisis faced by our people. The government petitioners in particular should show consideration for the plight of the commuters and immediately withdraw their petitions are there is no need for an increase because the government has already appropriated funds for train subsidies for this year, and will surely do so in the coming years. ###

During the hearing, LRMC and LRTA provided proof of compliance with the publication requirement prior to the hearing. MRT3’s last publication was on February 10, which does not comply with the 10-day publication requirement before a hearing could be set. The MRT3 GM also could not show any authorization for his filing of a petition for fare hike.

Categories: Statements


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