[33] PAL v.

CAB financial capacity, route flight schedule, contracts on

GR No. 119528 | March 26, 1997 | J. Torres, Jr. facilities (hangars, maintenance, lot) etc.
- Approval of petitioner's application would violate the equal
SUMMARY: Following GrandAir’s application for a CPCN with the CAB, PAL filed an protection clause of the constitution.
opposition on the ground that GrandAir does not possess a legislative franchise - There is no urgent need and demand for the services applied for.
authorizing it to engage in air transportation service within the Philippines or - To grant petitioner's application would only result in ruinous
elsewhere, and therefore, lacking a requisite for the issuance of a Certificate of Public competition contrary to Section 4(d) of R.A. 776.
Convenience or Necessity by the respondent Board, as mandated under Section 11, - At the initial hearing for the application, petitioner raised the issue of lack of
Article XII of the Constitution. The Court held that by virtue of RA No. 776, Congress jurisdiction of the Board to hear the application because GrandAir did not
has delegated the authority to authorized the operation of domestic air transport possess a legislative franchise.
services to CAB. - On December 20, 1994, the Chief Hearing Officer of CAB issued an Order
denying petitioner's Opposition.
DOCTRINE: The use of the word "necessity", in conjunction with "public convenience" - Meantime, on December 22, 1994, petitioner this time, opposed
in a certificate of authorization to a public service entity to operate, does not in any private respondent's application for a temporary permit
way modify the nature of such certification, or the requirements for the issuance of - On December 23, 1994, the Board promulgated Resolution No.
the same. It is the law which determines the requisites for the issuance of such 119(92) approving the issuance of a Temporary Operating Permit in
certification, and not the title indicating the certificate. favor of Grand Air for a period of three months, i.e., from December
22, 1994 to March 22, 1994.
FACTS: - Petitioner moved for the reconsideration of the issuance of the
- On November 24, 1994, private respondent GrandAir applied for a Certificate Temporary Operating Permit on January 11, 1995, but the same
of Public Convenience and Necessity with the Board. was denied in CAB Resolution No. 02 (95) on February 2, 1995. In
- Accordingly, the Chief Hearing Officer of the CAB issued a Notice of the said Resolution, the Board justified its assumption of
Hearing setting the application for initial hearing on December 16, jurisdiction over GrandAir's application.
1994, and directing GrandAir to serve a copy of the application and - On March 21, 1995, upon motion by private respondent, the temporary
corresponding notice to all scheduled Philippine Domestic permit was extended for a period of six (6) months or up to September 22,
operators. 1995.
- On December 14, 1994, GrandAir filed its Compliance, and requested for the - Hence this petition.
issuance of a Temporary Operating Permit.
- Petitioner, itself the holder of a legislative franchise to operate air transport ISSUE w/ HOLDING: Whether or not Congress, in enacting Republic Act 776, has
services, filed an Opposition to the application for a Certificate of Public delegated the authority to authorize the operation of domestic air transport services
Convenience and Necessity on the following grounds: to the respondent Board, such that Congressional mandate for the approval of such
- The CAB has no jurisdiction to hear the petitioner's application until authority is no longer necessary. - YES
the latter has first obtained a franchise to operate from Congress. - The Civil Aeronautics Board has jurisdiction over GrandAir's Application for a
- The petitioner's application is deficient in form and substance in Temporary Operating Permit, as established in the case of Philippine Air
that: Lines Inc., vs. Civil Aeronautics Board, promulgated on June 13, 1968.
- The application does not indicate a route structure - The Board is expressly authorized by Republic Act 776 to issue a
including a computation of trunkline, secondary and rural temporary operating permit or Certificate of Public Convenience
available seat kilometers (ASK) which shall always be and Necessity, and nothing contained in the said law negates the
maintained at a monthly level at least 5% and 20% of the power to issue said permit before the completion of the applicant's
ASK offered into and out of the proposed base of evidence and that of the oppositor thereto on the main petition.
operations for rural and secondary, respectively. - Indeed, the CAB's authority to grant a temporary permit "upon its
- It does not contain a project/feasibility study, projected own initiative" strongly suggests the power to exercise said
profit and loss statements, projected balance sheet, authority, even before the presentation of said evidence has begun.
insurance coverage, list of personnel, list of spare parts - Assuming arguendo that a legislative franchise is prerequisite to
inventory, tariff structure, documents supportive of the issuance of a permit, the absence of the same does not affect
 the jurisdiction of the Board to hear the application, but tolls only - A reading of Section 10 of the same reveals the clear intent of Congress to
upon the ultimate issuance of the requested permit. delegate the authority to regulate the issuance of a license to operate
- The power to authorize and control the operation of a public utility is domestic air transport services
admittedly a prerogative of the legislature, since Congress is that branch of
government vested with plenary powers of legislation. [RELEVANT]
- The franchise is a legislative grant, whether made directly by the - Petitioner argues that R.A. 776 gives the Board the authority to issue
legislature itself, or by any one of its properly constituted "Certificates of Public Convenience and Necessity", this, according to
instrumentalities. The grant, when made, binds the public, and is, petitioner, means that a legislative franchise is an absolute requirement.
directly or indirectly, the act of the state. This relies on the premise that the authority to issue a certificate of public
- Congress has granted certain administrative agencies the power to grant convenience and necessity is a regulatory measure separate and distinct
licenses for, or to authorize the operation of certain public utilities. from the authority to grant a franchise for the operation of the public utility
- With the growing complexity of modern life, the multiplication of the subject of this particular case, which is exclusively lodged by petitioner in
subjects of governmental regulation, and the increased difficulty of Congress. However, the SC does not agree with the petitioner.
administering the laws, there is a constantly growing tendency - Many and varied are the definitions of certificates of public
towards the delegation of greater powers by the legislature, and convenience which courts and legal writers have drafted. Some
towards the approval of the practice by the courts. statutes use the terms "convenience and necessity" while others
- It is generally recognized that a franchise may be derived indirectly use only the words "public convenience." The terms "convenience
from the state through a duly designated agency, and to this extent, and necessity", if used together in a statute, are usually held not to
the power to grant franchises has frequently been delegated, even be separable, but are construed together. Both words modify each
to agencies other than those of a legislative nature. other and must be construed together. The word 'necessity' is so
- In pursuance of this, it has been held that privileges conferred by connected, not as an additional requirement but to modify and
grant by local authorities as agents for the state constitute as much qualify what might otherwise be taken as the strict significance of
a legislative franchise as though the grant had been made by an act the word necessity.
of the Legislature. - Public convenience and necessity exists when the proposed facility
- The trend of modern legislation is to vest the Public Service Commissioner will meet a reasonable want of the public and supply a need which
with the power to regulate and control the operation of public services under the existing facilities do not adequately afford. It does not mean or
reasonable rules and regulations, and as a general rule, courts will not require an actual physical necessity or an indispensable thing.
interfere with the exercise of that discretion when it is just and reasonable - The terms "convenience" and "necessity" are to be construed
and founded upon a legal right. together, although they are not synonymous, and effect must be
- In this regard, the Civil Aeronautics Board has the authority to issue a given both. The convenience of the public must not be
Certificate of Public Convenience and Necessity, or Temporary Operating circumscribed by according to the word "necessity" its strict
Permit to a domestic air transport operator, who, though not possessing a meaning or an essential requisites.
legislative franchise, meets all the other requirements prescribed by the - The use of the word "necessity", in conjunction with "public
law. Such requirements were enumerated in Section 21 of R.A. 776. convenience" in a certificate of authorization to a public service
- There is nothing in the law nor in the Constitution, which indicates that a entity to operate, does not in any way modify the nature of such
legislative franchise is an indispensable requirement for an entity to operate certification, or the requirements for the issuance of the same. It
as a domestic air transport operator. is the law which determines the requisites for the issuance of such
- Although Section 11 of Article XII recognizes Congress' control over certification, and not the title indicating the certificate.
any franchise, certificate or authority to operate a public utility, it
does not mean Congress has exclusive authority to issue the same. - Congress, by giving the respondent Board the power to issue permits for
- Franchises issued by Congress are not required before each and the operation of domestic transport services, has delegated to the said
every public utility may operate. body the authority to determine the capability and competence of a
- In many instances, Congress has seen it fit to delegate this function prospective domestic air transport operator to engage in such venture.
to government agencies, specialized particularly in their respective
areas of public service.
 - This is not an instance of transforming the respondent Board into a (c) The regulation of air transportation in such manner as to recognize and
mini-legislative body, with unbridled authority to choose who should preserve the inherent advantages of, assure the highest degree of safety in,
be given authority to operate domestic air transport services. and foster sound economic condition in, such transportation, and to improve
- To be valid, the delegation itself must be circumscribed by the relations between, and coordinate transportation by, air carriers;
legislative restrictions, not a "roving commission" that will give the (d) The promotion of adequate, economical and efficient service by air carriers
delegate unlimited legislative authority. It must not be a delegation at reasonable charges, without unjust discriminations, undue preferences or
"running riot" and "not canalized with banks that keep it from advantages, or unfair or destructive competitive practices;
overflowing." (e) Competition between air carriers to the extent necessary to assure the
- Otherwise, the delegation is in legal effect an abdication of sound development of an air transportation system properly adapted to the
legislative authority, a total surrender by the legislature of its need of the foreign and domestic commerce of the Philippines, of the Postal
prerogatives in favor of the delegate. Service, and of the National Defense;
- In this case, the Congress has set specific limitations on how such authority (f) To promote safety of flight in air commerce in the Philippines; and,
should be exercised. (g) The encouragement and development of civil aeronautics.
- Firstly, Section 4 of R.A. No. 776, as amended, sets out guidelines
or policies (see provision). Sec. 10. Powers and Duties of the Board.
- Said law has enumerated the requirements to determine the (A) Except as otherwise provided herein, the Board shall have the power to
competency of a prospective operator to engage in the public regulate the economic aspect of air transportation, and shall have general
service of air transportation (see Sec. 12 and 21, RA 776). supervision and regulation of, the jurisdiction and control over air carriers,
- Furthermore, the procedure for the processing of the application of general sales agents, cargo sales agents, and air freight forwarders as well
a Certificate of Public Convenience and Necessity had been as their property rights, equipment, facilities and franchise, insofar as may
established to ensure the weeding out of those entities that are not be necessary for the purpose of carrying out the provision of this Act.
deserving of public service.
- In sum, respondent Board should now be allowed to continue hearing the Sec. 12. Citizenship requirement. Except as otherwise provided in the Constitution
application of GrandAir for the issuance of a Certificate of Public and existing treaty or treaties, a permit authorizing a person to engage in domestic air
Convenience and Necessity, there being no legal obstacle to the exercise of commerce and/or air transportation shall be issued only to citizens of the Philippines.
its jurisdiction.
Sec. 21. Issuance of permit. The Board shall issue a permit authorizing the whole or
RATIO: ACCORDINGLY, in view of the foregoing considerations, the Court RESOLVED any part of the service covered by the application, if it finds: (1) that the applicant is
to DISMISS the instant petition for lack of merit. The respondent Civil Aeronautics fit, willing and able to perform such service properly in conformity with the provisions
Board is hereby DIRECTED to CONTINUE hearing the application of respondent Grand of this Act and the rules, regulations, and requirements issued thereunder; and (2)
International Airways, Inc. for the issuance of a Certificate of Public Convenience and that such service is required by the public convenience and necessity; otherwise the
Necessity. application shall be denied.

NOTES:

Sec. 4. Declaration of policies. In the exercise and performance of its powers and
duties under this Act, the Civil Aeronautics Board and the Civil Aeronautics
Administrator shall consider the following, among other things, as being in the public
interest, and in accordance with the public convenience and necessity:
(a) The development and utilization of the air potential of the Philippines;
(b) The encouragement and development of an air transportation system
properly adapted to the present and future of foreign and domestic
commerce of the Philippines, of the Postal Service and of the National
Defense;