1. The DoTr has no jurisdiction on fare hikes for railways

After the public hearing conducted by the DoTr Rail Regulatory Unit last February 17 on the proposed fare hikes by LRT 1, LRT 2 and MRT 3, Bayan is calling on the LRTA and DoTr to withdraw the petitions for the LRT 2 and MRT 3 fare hike. We call likewise call on the DoTr and its RRU to defer any action on the LRT 1, LRT 2 and MRT 3 fare hike for lack of jurisdiction over the increase.

The DoTr and its RRU do not have the authority to approve fare increases for railways. While DoTr can indeed regulate land transportation under E.O. 125 and E.O. 125-A, it is the Public Service Act which expressly and specifically regulates railways as a public service through the Public Service Commission. The RRU was created by a mere department order that cannot be superior a law such as the Public Service Act.

When examining the enumeration of DoTr’s powers and functions under E.O. 125 (as amended by E.O. 125-A), while Section 5 indeed enables DoTr to establish and prescribe rules and regulations for the enforcement of laws governing land transportation, the only instance railways are mentioned with regard to DoTr regulatory powers is for the issuance of certificates of public convenience (Section 5(l)) and inspection and registration (Section 5(m)).

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For emphasis, while Section 5(o) and (p) of EO 125 generally gives DoTr the power to establish and prescribe rules as well as determine, fix, and prescribe charges or rates for land transportation utilities, such cannot be applied to railways because a more specific law has jurisdiction, supervision, and control over this matter – specifically the Public Service Commission.

We submit that the only regulatory power DoTr has with regards to railways, as per its enabling law, is the issuance of certificates of public convenience and inspection and registration. All other powers such as the jurisdiction, supervision, and control of railways, including the determination of rates, as a public service, remain with the Public Service Commission. Following this, the DoTr cannot create a regulatory unit for railways that is tasked to approve fare increases.

2. The RRU is not an independent regulatory body

The entire process of approving the fare hike has conflict of interest written all over it as the proponent is also the approving authority.

There is no independence on the part of the RRU because under D.O. 2022-27, the Regulatory Unit’s Approving Authority is the DoTr Secretary and the RRU Chairperson the Undersecretary for Railways as well as the hearing officers are also officials of the DoTr. The DoTr Secretary is also the Chairperson of the LRTA which is a petitioner for fare hike. The DoTr Secretary’s signature appears on the LRTA Board resolution that approved the proposed fare hike. The DoTr Secretary is also the immediate superior of the MRT3 GM who can only file a petition for fare hike upon authorization by the DoTr secretary. In fact, during the hearing, when we asked if the MRT 3 GM has written authorization from the DoTr Secretary to initiate a fare hike petition, he was asked by the hearing officer to produce the authorization since he did not submit any.

What the entire exercise shows us is that the DoTr secretary is involved in approving the filing of the petition and in granting the petitions. Clearly this is a conflict of interest and shows the need for a real regulatory body that is independent and not part of the structure of the DoTr. The DoTr merely created a unit that would regulate itself, composed of its own officials. This is in contrast to public utilities like electricity that is regulated by the ERC, land transportation regulated by LTFRB, water services regulated by the MWSS RO, and toll fees regulated by the TRB. The petitioner cannot be simultaneously the approving authority. This is the very issue that led us to question the previous fare hike in 2015.

We also would like to point out inconsistencies in the Department Order issued by the DoTr Secretary and the Rules and Regulations of the RRU. In Section C.5 of the Department Order, it is stated that “the hearing officers shall submit their findings individually to Chairperson who in turn, shall submit recommendations for approval of the Approving Authority. The approval of the Secretary of any recommendation under this D.O. is pursuant to his power and authority as Approving Authority.”. It is clear form this provision that the final approval of any fare hike rests with the DoTr Secretary.

Meanwhile, in its PROPOSED RULES OF PROCEDURE FOR FARE RATE-FIXING UNDER THE DEPARTMENT OF TRANSPORTATION RAILWAY REGULATORY UNIT posted on the DoTr website, there is no mention of the role of the DoTr secretary as the approving authority in the matter of fare hikes and that the decisions of the RRU can be appealed not to the DoTr Secretary but directly to the Office of the President based on the Administrative Code of 1987.
Whatever the case may be, from the above discussion, it is clear that the DoTr Secretary is involved in the filing of the fare hike petition, whether as chair of the LRTA Board or immediate superior of the MRT 3, and is also the final approving authority based on the Department Order creating the RRU. This is an untenable situation that clearly shows conflict of interest and lack of independence. We reserve the right to question before the court’s questions involving jurisdiction and the clear conflict of interest involved in the process of approving the fare hike.

3. The trains are subsidized and so no reason to raise fares

Both the LRTA and the MRT 3 are government agencies whose mandate should be helping commuters, not imposing an added burden on them. The justification for the fare hike, that government subsidies for train lines have become too big, implies that these subsidies are wasted on the commuters. When asked by Bayan during the hearing if there was an order from Congress or the Executive to reduce subsidies for train lines, the representatives of the LRTA and MRT 3 could not present any. The LRTA merely referred to the National Transport Policy that advocated the “users pay” principle. The reality is that there has been no explicit order from the national government to the effect that it will reduce subsidy for commuters and thus a fare hike would be necessary.

When asked about the end of the MRT 3 BLT agreement in 2025, the MRT3 GM agreed that the government subsidy for the train line will be significantly reduced because the government will no longer have to pay equity rental payments, which is the biggest item being subsidized currently.

As for the LRT 1 fare hike, we reiterate our opposition to the provision in the concession agreement that allows the 10% increase in notional fares every 2 years and government penalties should LRMC be unable to increase their actual fares. This is a form of sovereign guarantee that goes against public interest. This remains the subject of a petition pending before the SC in relation to the concession agreement.

To conclude, in this time of severe economic hardships, commuters do not deserve another fare hike that would be an added burden. The alternatives to a fare hike remain government subsidy for trains, and removal of onerous contract provisions that have remained disadvantageous to the government. If government was able to review and amend the water privatization concession agreements, then there is no reason why it cannot do the same with disadvantageous railway agreements. In the end, it is our position that railways, because of their important role in mass transport, should not be subjected to privatization in order to avoid the onerous provisions that have burdened government in the past. ###

Categories: Statements


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