BENEDICTO C. LAGMAN, DOING BUSINESS UNDER THE FIRM NAME AND STYLE MARCO TRANSIT, PETITIONER, VS. HON. ENRIQUE MEDINA, THE HON. PUBLIC SERVICE COMMISSION, THE CHIEF OF POLICE OF …

Lagman versus Medina

The Case

This is Benedicto Lagman against Public Service Commissioner Enrique Medina, the Public Service Commission, and the Chief of Police of Manila. Lagman brought an original petition for certiorari and prohibition in the Supreme Court, asking the Court to invalidate certain orders of the Public Service Commission, or to declare them inapplicable to him, and to restrain their enforcement while the case was pending. The case matters because it fixes the relationship between a certificate of public convenience and the rules and regulations of the Commission: a bus ban imposed by the Commissioner is a regulation, not an amendment of the certificate, and it binds even an operator whose certificate was granted after the ban was first announced.

Procedural History

Lagman first sought relief from the Commission itself. After the ban took effect, he filed an urgent petition for exemption, and he reiterated that petition before the Commission sitting en banc. Before the Commission had acted on either petition, he commenced this original action in the Supreme Court. When he filed the petition, the Court required the Commissioner, the Commission, and the Chief of Police of Manila to answer. Lagman twice moved for a writ of preliminary injunction, and the Court denied both motions. The Court then decided the case on the merits, dismissing the petition.

Facts

On February 13, 1963, the Commissioner issued an order, to take effect after ninety days, providing that only public utility buses operating exclusively within the City of Manila could enter and continue operating within its limits. Provincial public utility buses, those running from Manila to any point in Luzon and back, were required to establish terminals outside the City and were prohibited from entering or operating within its perimeter. A supplemental order dated March 12, 1963, extended the authority to enter the City to buses operating exclusively within the limits of Greater Manila, which was deemed to include Pasay City, Baclaran, Makati, Quezon City, San Juan, Mandaluyong, Caloocan, Navotas, and Malabon. The effectivity of the ban was postponed by an order dated May 7, 1963, to August 15, 1963, and later still to March 2, 1964.

On July 22, 1963, the Commissioner issued another order. It recited that notices had been sent to all public utility bus operators and publicized in the newspapers, inviting them to a conference on January 17, 1963; that the operators appeared personally or by counsel and aired their opinions freely and at length; and that an agreement was reached to regulate the operation of provincial buses and of buses in the City of Manila and its suburbs. The order reaffirmed and provisionally maintained the earlier orders, provisionally included Pasig, Marikina, and Pateros within Greater Manila, and required operators with straight routes from Manila and the suburbs to the provinces to inform the Commission which units would be operated in the City and suburbs and which in the provinces. The measures were implemented by Administrative Order Number 1 of the Commissioner, dated February 17, 1964, which required provincial vehicles to carry the words "For Provincial Operation" in bold type, allowed them to carry provincial passengers through the boundary line to their Manila termini under a sticker furnished by the Commission and the mayors, and fixed the places where they could load and unload.

On March 20, 1963, the Commission had granted Lagman a certificate of public convenience to operate fifteen autotrucks, with fixed route and regular termini, for passengers and freight on the line from Bocaue in Bulacan to Parañaque in Rizal, passing through Manila. After the ban became effective, on March 5, 1964, he filed an urgent petition for exemption, reiterated it before the Commission en banc on March 12, 1964, and then came to the Supreme Court on March 20, 1964. He argued that the ban did not apply to him because he was not yet an operator when the first order was issued, that he had not been notified of the hearings held in August 1963, that the ban had not been incorporated into his certificate, that it could reach him only through a decision of the Commission after notice and hearing based on material changes in the facts, and that it was unfair, unreasonable, and oppressive.

Issues

• Whether or not the bus ban is inapplicable to Lagman because his certificate of public convenience was granted after the first order establishing the ban was issued.
• Whether or not the ban amended his certificate of public convenience, so that it could be imposed only by a decision of the Commission, after due notice and hearing, and not by an order of the Commissioner.
• Whether or not the ban is unfair, unreasonable, and oppressive.

Applicable Provisions

The decision states that the contested orders were issued pursuant to Section 13(a), 16(g), and 17(a) of Commonwealth Act Number 146, as amended, the Public Service Act. These provisions supply the Commission's authority to issue the rules and regulations that the ban embodies, and they are the source of the condition read into every certificate.

The decision also quotes the condition carried by Lagman's certificate, and by all similar certificates, that operators:

shall observe and comply . . . all the rules and regulations of the Commission relative to PUB service.

This condition is decisive: because the ban is a rule or regulation of the Commission, the certificate itself obliges Lagman to obey it.

Ruling

On the first issue, the Court held that the ban applies to Lagman. Although his certificate was granted on March 20, 1963, a little over a month after the first order of February 13, 1963, that order was amended by the orders of March 12, May 7, and July 22, 1963, and February 27, 1964, all issued after his certificate was granted, and these amendatory orders took the place of the original order. The purpose of the ban, to minimize the traffic problem in the City of Manila and the traffic congestion, delays, and even accidents caused by the free entry of buses in great number and size, and the letter and spirit of the orders, are inconsistent with excluding Lagman or others granted certificates after the orders were issued. The Court also noted that two of his buses, fifteen percent of his units, had been exempted to shuttle his passengers from the entry control points in Manila.

On the second issue, the Court held that the ban does not amend the certificate. The certificate was issued subject to the condition that the operator shall observe and comply with all the rules and regulations of the Commission relative to public utility bus service, and the contested orders, issued under the Public Service Act, partake of the nature of such rules and regulations. The theory that the orders must come from the Commission and not merely its Commissioner, after notice and hearing, rests on the false premise that the ban amends the certificate. The Court added that the orders were merely provisional, since public hearings on the ban were still being held. It also relied on its earlier decision in the companion case of Lagman versus City of Manila, promulgated on June 30, 1966, where it rejected the claim that a Manila ordinance rerouting traffic, substantially identical in terms to the ban, amended certificates of public convenience; that decision binds Lagman, who was the petitioner there.

On the third issue, the Court held that the objections were untenable. From January 1963, when notices were sent to all operators and publicized in the newspapers, to March 2, 1964, when the ban became effective, Lagman had more than ample time to submit his objections, yet he did not do so until after the ban took effect.

Doctrine

A certificate of public convenience is issued subject to the condition that the operator shall observe and comply with all the rules and regulations of the Commission relative to public utility bus service. An order of the Commission regulating bus operations, such as a bus ban, partakes of the nature of such a rule or regulation; it does not amend the certificate, and it may therefore be issued by the Commissioner without a prior decision of the Commission after notice and hearing. The ban binds operators granted certificates after the ban was first announced, because the amendatory orders issued after the grant take the place of the original order, and because the purpose and spirit of the ban admit no exclusion. An operator who sleeps on his objections while notices are publicized and hearings are held cannot later complain that the ban is unfair, unreasonable, and oppressive.

Disposition

The Supreme Court dismissed the petition and denied the writs prayed for, with costs against Lagman.

Remember This

Memorize the line that a certificate of public convenience is issued subject to the condition that the operator shall observe and comply with all the rules and regulations of the Commission, so that a bus ban is a regulation and not an amendment of the certificate. Examiners use this case on the regulatory power of the Public Service Commission over bus operators, on the binding effect of regulations on later grantees, and on the requirement of notice and hearing before a ban takes effect.