PAL vs Civil Aeronautics Board

Facts: On November 24, 1994, GrandAir applied for a Certificate of Public Convenience
and Necessit !it" t"e #oard, !"ic" application !as doc$eted as CA# Case No% &P'
12(11% Accordin)l, t"e C"ief *earin) Officer of t"e CA# issued a Notice of *earin)
settin) t"e application for initial "earin) on +ecember 1,, 1994, and directin) GrandAir
to serve a cop of t"e application and correspondin) notice to all sc"eduled P"ilippine
+omestic operators% On +ecember 14, 1994, GrandAir filed its Compliance, and
re-uested for t"e issuance of a .emporar Operatin) Permit% PA/, a "older of a
le)islative franc"ise to operate air transport services, filed an Opposition to t"e
application for a Certificate of Public Convenience and Necessit on +ecember 1,, 1990
on t"e follo!in) )rounds:
1A% ."e CA# "as no 2urisdiction to "ear t"e petitioner3s application until t"e latter "as first
obtained a franc"ise to operate from Con)ress%
At t"e initial "earin) for t"e application, petitioner raised t"e issue of lac$ of 2urisdiction of
t"e #oard to "ear t"e application because GrandAir did not possess a le)islative
franc"ise%
On +ecember 24, 1994, t"e C"ief *earin) Officer of CA# issued an Order denin)
petitioner3s Opposition% Pertinent portions of t"e Order read:
1PA/ alle)es t"at t"e CA# "as no 2urisdiction to "ear t"e petitioner3s application until t"e
latter "as first obtained a franc"ise to operate from Con)ress%
."e Civil Aeronautics #oard "as 2urisdiction to "ear and resolve t"e application% 5n Avia
Filipina vs% CA#, CA G%6% No% 277,0, it "as been ruled t"at under 8ection 14 9c: 95: of
6%A% ((,, t"e #oard possesses t"is specific po!er and dut%
5n vie! t"ereof, t"e opposition of PA/ on t"is )round is "ereb denied%
Issue: ;ON CA# "as no 2urisdiction to "ear t"e petitioner3s application to en)a)e in
sc"eduled domestic air transportation services%
Held: 1."e franc"ise is a le)islative )rant, !"et"er made directl b t"e le)islature itself,
or b an one of its properl constituted instrumentalities% ."e )rant, !"en made, binds
t"e public, and is, directl or indirectl, t"e act of t"e state%1
."e issue in t"is petition is !"et"er or not Con)ress, in enactin) 6epublic Act ((,, "as
dele)ated t"e aut"orit to aut"ori<e t"e operation of domestic air transport services to
t"e respondent #oard, suc" t"at Con)ressional mandate for t"e approval of suc"
aut"orit is no lon)er necessar%
Con)ress "as )ranted certain administrative a)encies t"e po!er to )rant licenses for, or
to aut"ori<e t"e operation of certain public utilities% ;it" t"e )ro!in) comple=it of
modern life, t"e multiplication of t"e sub2ects of )overnmental re)ulation, and t"e
increased difficult of administerin) t"e la!s, t"ere is a constantl )ro!in) tendenc
to!ards t"e dele)ation of )reater po!ers b t"e le)islature, and to!ards t"e approval of
t"e practice b t"e courts% 5t is )enerall reco)ni<ed t"at a franc"ise ma be derived
indirectl from t"e state t"rou)" a dul desi)nated a)enc, and to t"is e=tent, t"e po!er
to )rant franc"ises "as fre-uentl been dele)ated, even to a)encies ot"er t"an t"ose of
a le)islative nature% 5n pursuance of t"is, it "as been "eld t"at privile)es conferred b
)rant b local aut"orities as a)ents for t"e state constitute as muc" a le)islative
franc"ise as t"ou)" t"e )rant "ad been made b an act of t"e /e)islature%
1."e franc"ise is a le)islative )rant, !"et"er made directl b t"e le)islature itself, or b
an one of its properl constituted instrumentalities% ."e )rant, !"en made, binds t"e
public, and is, directl or indirectl, t"e act of t"e state%1
."e issue in t"is petition is !"et"er or not Con)ress, in enactin) 6epublic Act ((,, "as
dele)ated t"e aut"orit to aut"ori<e t"e operation of domestic air transport services to
t"e respondent #oard, suc" t"at Con)ressional mandate for t"e approval of suc"
aut"orit is no lon)er necessar%
Con)ress "as )ranted certain administrative a)encies t"e po!er to )rant licenses for, or
to aut"ori<e t"e operation of certain public utilities% ;it" t"e )ro!in) comple=it of
modern life, t"e multiplication of t"e sub2ects of )overnmental re)ulation, and t"e
increased difficult of administerin) t"e la!s, t"ere is a constantl )ro!in) tendenc
to!ards t"e dele)ation of )reater po!ers b t"e le)islature, and to!ards t"e approval of
t"e practice b t"e courts% 5t is )enerall reco)ni<ed t"at a franc"ise ma be derived
indirectl from t"e state t"rou)" a dul desi)nated a)enc, and to t"is e=tent, t"e po!er
to )rant franc"ises "as fre-uentl been dele)ated, even to a)encies ot"er t"an t"ose of
a le)islative nature% 5n pursuance of t"is, it "as been "eld t"at privile)es conferred b
)rant b local aut"orities as a)ents for t"e state constitute as muc" a le)islative
franc"ise as t"ou)" t"e )rant "ad been made b an act of t"e /e)islature%
Con)ress, b )ivin) t"e respondent #oard t"e po!er to issue permits for t"e operation of
domestic transport services, "as dele)ated to t"e said bod t"e aut"orit to determine
t"e capabilit and competence of a prospective domestic air transport operator to
en)a)e in suc" venture% ."is is not an instance of transformin) t"e respondent #oard
into a mini'le)islative bod, !it" unbridled aut"orit to c"oose !"o s"ould be )iven
aut"orit to operate domestic air transport services%
1.o be valid, t"e dele)ation itself must be circumscribed b le)islative restrictions, not a
1rovin) commission1 t"at !ill )ive t"e dele)ate unlimited le)islative aut"orit% 5t must not
be a dele)ation 1runnin) riot1 and 1not canali<ed !it" ban$s t"at $eep it from
overflo!in)%1 Ot"er!ise, t"e dele)ation is in le)al effect an abdication of le)islative
aut"orit, a total surrender b t"e le)islature of its prero)atives in favor of t"e dele)ate%1
t"e Court 6&8O/>&+ to +58?588 t"e instant petition for lac$ of merit% ."e respondent
Civil Aeronautics #oard is "ereb +56&C.&+ to CON.5N@& "earin) t"e application of
respondent Grand 5nternational Air!as, 5nc% for t"e issuance of a Certificate of Public
Convenience and Necessit%
SECOND DIVISION
[G.R. No. 119528. March 26, 1997]
PHILIPPINE AIRLINES, INC., petitioner, vs. CIVIL AERONA!ICS
"OAR# a$% GRAN# IN!ERNA!IONAL AIR&A'S,
INC., respondents.
# E C I S I O N
!ORRES, (R., J.:
This Special Civil Action for Certiorari and Prohibition under Rule 6 of the Rules
of Court see!s to prohibit respondent Civil Aeronautics "oard fro# e$ercisin%
&urisdiction over private respondent's Application for the issuance of a Certificate of
Public Convenience and Necessit() and to annul and set aside a te#porar(
operatin% per#it issued b( the Civil Aeronautics "oard in favor of *rand International
Air+a(s ,*randAir) for brevit(- allo+in% the sa#e to en%a%e in scheduled do#estic
air transportation services) particularl( the .anila/Cebu) .anila/Davao) and
converse routes0
The #ain reason sub#itted b( petitioner Philippine Airlines) Inc0 ,PA1- to support
its petition is the fact that *randAir does not possess a le%islative franchise
authori2in% it to en%a%e in air transportation service +ithin the Philippines or
else+here0 Such franchise is) alle%edl() a re3uisite for the issuance of a Certificate of
Public Convenience or Necessit( b( the respondent "oard) as #andated under
Section 44) Article 5II of the Constitution0
Respondent *randAir) on the other hand) posits that a le%islative franchise is no
lon%er a re3uire#ent for the issuance of a Certificate of Public Convenience and
Necessit( or a Te#porar( Operatin% Per#it) follo+in% the Court's pronounce#ents in
the case of Albano vs0 Re(es)
647
as restated b( the Court of Appeals in Avia 8ilipinas
International vs0 Civil Aeronautics "oard
697
and Silan%an Air+a(s) Inc0 vs0 *rand
International Air+a(s) Inc0) and the :on0 Civil Aeronautics "oard0
6;7
On Nove#ber 9<) 4==<) private respondent *randAir applied for a Certificate of
Public Convenience and Necessit( +ith the "oard) +hich application +as doc!eted
as CA" Case No0 EP/49>440
6<7
Accordin%l() the Chief :earin% Officer of the CA"
issued a Notice of :earin% settin% the application for initial hearin% on Dece#ber 46)
4==<) and directin% *randAir to serve a cop( of the application and correspondin%
notice to all scheduled Philippine Do#estic operators0 On Dece#ber 4<) 4==<)
*randAir filed its Co#pliance) and re3uested for the issuance of a Te#porar(
Operatin% Per#it0 Petitioner) itself the holder of a le%islative franchise to operate air
transport services) filed an Opposition to the application for a Certificate of Public
Convenience and Necessit( on Dece#ber 46) 4== on the follo+in% %rounds?
"A. The CAB has no jurisdiction to hear the petitioner's application until the latter
has first obtained a franchise to operate from Congress.
B. The petitioner's application is deficient in form and substance in that:
1. The application does not indicate a route structure including a computation of
trunkline, secondar and rural a!ailable seat kilometers "A#$% &hich shall al&as
be maintained at a monthl le!el at least '( and )*( of the A#$ offered into and
out of the proposed base of operations for rural and secondar, respecti!el.
). +t does not contain a project,feasibilit stud, projected profit and loss
statements, projected balance sheet, insurance co!erage, list of personnel, list of
spare parts in!entor, tariff structure, documents supporti!e of financial capacit,
route flight schedule, contracts on facilities "hangars, maintenance, lot% etc.
C. Appro!al of petitioner's application &ould !iolate the e-ual protection clause of
the constitution.
.. There is no urgent need and demand for the ser!ices applied for.
/. To grant petitioner's application &ould onl result in ruinous competition
contrar to #ection 0"d% of 1.A. 223."
4'5
At the initial hearin% for the application) petitioner raised the issue of lac! of
&urisdiction of the "oard to hear the application because *randAir did not possess a
le%islative franchise0
On Dece#ber 9@) 4==<) the Chief :earin% Officer of CA" issued an Order
den(in% petitioner's Opposition0 Pertinent portions of the Order read?
"6A7 alleges that the CAB has no jurisdiction to hear the petitioner's application
until the latter has first obtained a franchise to operate from Congress.
The Ci!il Aeronautics Board has jurisdiction to hear and resol!e the application. +n
A!ia 8ilipina !s. CAB, CA 9.1. :o. );;3', it has been ruled that under #ection 1*
"c% "+% of 1.A. 223, the Board possesses this specific po&er and dut.
+n !ie& thereof, the opposition of 6A7 on this ground is hereb denied.
#< <1./1/.."
.eanti#e) on Dece#ber 99) 4==<) petitioner this ti#e) opposed private
respondent's application for a te#porar( per#it #aintainin% that?
"1. The applicant does not possess the re-uired fitness and capabilit of operating
the ser!ices applied for under 1A 223= and,
). Applicant has failed to pro!e that there is clear and urgent public need for the
ser!ices applied for."
435
On Dece#ber 9;) 4==<) the "oard pro#ul%ated Resolution No0 44=,=9-
approvin% the issuance of a Te#porar( Operatin% Per#it in favor of *rand Air
6>7
for a
period of three #onths) i0e0) fro# Dece#ber 99) 4==< to .arch 99) 4==<0 Petitioner
#oved for the reconsideration of the issuance of the Te#porar( Operatin% Per#it on
Aanuar( 44) 4==) but the sa#e +as denied in CA" Resolution No0 @9 ,=- on
8ebruar( 9) 4==0
6B7
In the said Resolution) the "oard &ustified its assu#ption of
&urisdiction over *randAir's application0
">?/1/A#, the CAB is specificall authori@ed under #ection 1*AC "1% of
1epublic Act :o. 223 as follo&s:
'"c% The Board shall ha!e the follo&ing specific po&ers and duties:
"1% +n accordance &ith the pro!ision of Chapter +B of this Act, to issue, den,
amend re!ise, alter, modif, cancel, suspend or re!oke, in &hole or in part, upon
petitionerAcomplaint, or upon its o&n initiati!e, an temporar operating permit or
Certificate of 6ublic Con!enience and :ecessit= 6ro!ided, ho&e!er= that in the
case of foreign air carriers, the permit shall be issued &ith the appro!al of the
6resident of the 1epublic of the 6hilippines."
>?/1/A#, such authorit &as affirmed in 6A7 !s. CAB, "); #C1A CC)%,
&herein the #upreme Court held that the CAB can e!en on its o&n initiati!e, grant
a T<6 e!en before the presentation of e!idence=
>?/1/A#, more recentl, A!ia 8ilipinas !s. CAB, "CAA91 :o. );;3'%,
promulgated on <ctober ;*, 1CC1, held that in accordance &ith its mandate, the
CAB can issue not onl a T<6 but also a Certificate of 6ublic Con!enience and
:ecessit "C6C:% to a -ualified applicant therefor in the absence of a legislati!e
franchise, citing therein as basis the decision of Albano !s. 1ees "12' #C1A )30%
&hich pro!ides "inter alia% that:
a% 8ranchises b Congress are not re-uired before each and e!er public utilit
ma operate &hen the la& has granted certain administrati!e agencies the po&er to
grant licenses for or to authori@e the operation of certain public utilities=
b% The Constitutional pro!ision in Article D++, #ection 11 that the issuance of a
franchise, certificate or other form of authori@ation for the operation of a public
utilit does not necessaril impl that onl Congress has the po&er to grant such
authori@ation since our statute books are replete &ith la&s granting specified
agencies in the /Eecuti!e Branch the po&er to issue such authori@ation for certain
classes of public utilities.
>?/1/A#, /Eecuti!e <rder :o. )1C &hich took effect on )) Fanuar 1CC',
pro!ides in #ection ).1 that a minimum of t&o ")% operators in each route,link shall
be encouraged and that routes,links presentl ser!iced b onl one "1% operator
shall be open for entr to additional operators.
1/#<7B/., "T%?/1/8<1/, that the Gotion for 1econsideration filed b
6hilippine Airlines on Fanuar *', 1CC' on the 9rant b this Board of a Temporar
<perating 6ermit "T<6% to 9rand +nternational Air&as, +nc. alleging among
others that the CAB has no such jurisdiction, is hereb ./:+/., as it hereb
denied, in !ie& of the foregoing and considering that the grounds relied upon b
the mo!ant are not indubitable."
On .arch 94) 4==) upon #otion b( private respondent) the te#porar( per#it
+as e$tended for a period of si$ ,6- #onths or up to Septe#ber 99) 4==0
:ence this petition) filed on April ;) 4==0
Petitioners ar%ue that the respondent "oard acted be(ond its po+ers and
&urisdiction in ta!in% co%ni2ance of *randAirCs application for the issuance of a
Certificate of Public Convenience and Necessit() and in issuin% a te#porar(
operatin% per#it in the #eanti#e) since *randAir has not been %ranted and does not
possess a le%islative franchise to en%a%e in scheduled do#estic air transportation0 A
le%islative franchise is necessar( before an(one #a( en%a%e in air transport
services) and a franchise #a( onl( be %ranted b( Con%ress0 This is the #eanin%
%iven b( the petitioner upon a readin% of Section 44) Article 5II)
6=7
and Section
4) Article VI)
64@7
of the Constitution0
To support its theor() PA1 sub#its Opinion No0 46;) S0 4=B= of the Depart#ent
of Austice) +hich reads?
H.r. Arturo C. Corona
/Eecuti!e .irector
Ci!il Aeronautics Board
667 Building, 1*** I.:. A!enue
/rmita, Ganila
#ir:
This has reference to our re-uest for opinion on the necessit of a legislati!e
franchise before the Ci!il Aeronautics Board "HCABJ% ma issue a Certificate of
6ublic Con!enience and :ecessit and,or permit to engage in air commerce or air
transportation to an indi!idual or entit.
Kou state that during the hearing on the application of Cebu Air for a
congressional franchise, the ?ouse Committee on Corporations and 8ranchises
contended that under the present Constitution, the CAB ma not issue the
abo!estated certificate or permit, unless the indi!idual or entit concerned
possesses a legislati!e franchise. Kou belie!e other&ise, ho&e!er, for the reason
that under 1.A. :o. 223, as amended, the CAB is eEplicitl empo&ered to issue
operating permits or certificates of public con!enience and necessit and that this
statutor pro!ision is not inconsistent &ith the current charter.
>e concur &ith the !ie& eEpressed b the ?ouse Committee on Corporations and
8ranchises. +n an opinion rendered in fa!or of our predecessorAinAoffice, this
.epartment obser!ed that,A
HEEE it is useful to note the distinction bet&een the franchise to
operate and a permit to commence operation. The former is
so!ereign and legislati!e in nature= it can be conferred onl b the
la&making authorit "12 > and 6, pp. 3C1A3C2%. The latter is
administrati!e and regulator in character "+n re Application of
8ort CrookABelle!ue Boule!ard 7ine, )L; :> ));%= it is granted
b an administrati!e agenc, such as the 6ublic #er!ice
Commission 4no& Board of Transportation5, in the case of land
transportation, and the Ci!il Aeronautics Board, in case of air
ser!ices. >hile a legislati!e franchise is a preAre-uisite to a grant
of a certificate of public con!enience and necessit to an airline
compan, such franchise alone cannot constitute the authorit to
commence operations, inasmuch as there are still matters rele!ant
to such operations &hich are not determined in the franchise, like
rates, schedules and routes, and &hich matters are resol!ed in the
process of issuance of permit b the administrati!e. "#ecretar of
Fustice opn :o. 0', s. 1CL1%
+ndeed, authorities are agreed that a certificate of public con!enience and necessit
is an authori@ation issued b the appropriate go!ernmental agenc for the operation
of public ser!ices for &hich a franchise is re-uired b la& "Almario,
Transportation and 6ublic #er!ice 7a&, 1C22 /d., p. )C;= Agbaani, Commercial
7a& of the 6hil., Bol. 0, 1C2C /d., pp. ;L*A;L1%.
Based on the foregoing, it is clear that a franchise is the legislati!e authori@ation to
engage in a business acti!it or enterprise of a public nature, &hereas a certificate
of public con!enience and necessit is a regulator measure &hich constitutes the
franchiseMs authorit to commence operations. +t is thus logical that the grant of the
former should precede the latter.
6lease be guided accordingl.
"#9..% #/.81/K A. <1.<N/O
#ecretar of Fustice"
Respondent *randAir) on the other hand) relies on its interpretation of the
provisions of Republic Act >>6) +hich follo+s the pronounce#ents of the Court of
Appeals in the cases of Avia 8ilipinas vs0 Civil Aeronautics "oard) and Silan%an
Air+a(s) Inc0 vs0 *rand International Air+a(s ,supra-0
In both cases) the issue resolved +as +hether or not the Civil Aeronautics "oard
can issue the Certificate of Public Convenience and Necessit( or Te#porar(
Operatin% Per#it to a prospective do#estic air transport operator +ho does not
possess a le%islative franchise to operate as such0 Rel(in% on the Court's
pronounce#ent in Albano vs0 Re(es (supra)) the Court of Appeals upheld the
authorit( of the "oard to issue such authorit() even in the absence of a le%islative
franchise) +hich authorit( is derived fro# Section 4@ of Republic Act >>6) as
a#ended b( P0D0 4<690
6447
The Civil Aeronautics "oard has &urisdiction over *randAir's Application for a
Te#porar( Operatin% Per#it0 This rule has been established in the case of
Philippine Air 1ines Inc0) vs0 Civil Aeronautics "oard) pro#ul%ated on Aune 4;) 4=6B0
6497
The "oard is e$pressl( authori2ed b( Republic Act >>6 to issue a te#porar(
operatin% per#it or Certificate of Public Convenience and Necessit() and nothin%
contained in the said la+ ne%ates the po+er to issue said per#it before the
co#pletion of the applicant's evidence and that of the oppositor thereto on the #ain
petition0 Indeed) the CA"'s authorit( to %rant a te#porar( per#it Dupon its o+n
initiativeD stron%l( su%%ests the po+er to e$ercise said authorit() even before the
presentation of said evidence has be%un0 Assu#in% arguendo that a le%islative
franchise is prere3uisite to the issuance of a per#it) the absence of the sa#e does
not affect the &urisdiction of the "oard to hear the application) but tolls onl( upon the
ulti#ate issuance of the re3uested per#it0
The po+er to authori2e and control the operation of a public utilit( is ad#ittedl( a
prero%ative of the le%islature) since Con%ress is that branch of %overn#ent vested
+ith plenar( po+ers of le%islation0
"The franchise is a legislati!e grant, &hether made directl b the legislature itself,
or b an one of its properl constituted instrumentalities. The grant, &hen made,
binds the public, and is, directl or indirectl, the act of the state."
41;5
The issue in this petition is +hether or not Con%ress) in enactin% Republic Act
>>6) has dele%ated the authorit( to authori2e the operation of do#estic air transport
services to the respondent "oard) such that Con%ressional #andate for the approval
of such authorit( is no lon%er necessar(0
Con%ress has %ranted certain ad#inistrative a%encies the po+er to %rant
licenses for) or to authori2e the operation of certain public utilities0 Eith the %ro+in%
co#ple$it( of #odern life) the #ultiplication of the sub&ects of %overn#ental
re%ulation) and the increased difficult( of ad#inisterin% the la+s) there is a constantl(
%ro+in% tendenc( to+ards the dele%ation of %reater po+ers b( the le%islature) and
to+ards the approval of the practice b( the courts0
64<7
It is %enerall( reco%ni2ed that a
franchise #a( be derived indirectl( fro# the state throu%h a dul( desi%nated a%enc()
and to this e$tent) the po+er to %rant franchises has fre3uentl( been dele%ated) even
to a%encies other than those of a le%islative nature0
647
In pursuance of this) it has
been held that privile%es conferred b( %rant b( local authorities as a%ents for the
state constitute as #uch a le%islative franchise as thou%h the %rant had been #ade
b( an act of the 1e%islature0
6467
The trend of #odern le%islation is to vest the Public Service Co##issioner +ith
the po+er to re%ulate and control the operation of public services under reasonable
rules and re%ulations) and as a %eneral rule) courts +ill not interfere +ith the e$ercise
of that discretion +hen it is &ust and reasonable and founded upon a le%al ri%ht0
64>7
It is this polic( +hich +as pursued b( the Court in Albano vs0 Re(es0 Thus) a
readin% of the pertinent issuances %overnin% the Philippine Ports Authorit()
64B7
proves
that the PPA is e#po+ered to underta!e b( itself the operation and #ana%e#ent of
the .anila International Container Ter#inal) or to authori2e its operation and
#ana%e#ent b( another b( contract or other #eans) at its option0 The latter po+er
havin% been dele%ated to the PPA) a franchise fro# Con%ress to authori2e an entit(
other than the PPA to operate and #ana%e the .ICP beco#es unnecessar(0
*iven the fore%oin% postulates) +e find that the Civil Aeronautics "oard has the
authorit( to issue a Certificate of Public Convenience and Necessit() or Te#porar(
Operatin% Per#it to a do#estic air transport operator) +ho) thou%h not possessin% a
le%islative franchise) #eets all the other re3uire#ents prescribed b( the la+0 Such
re3uire#ents +ere enu#erated in Section 94 of R0A0 >>60
There is nothin% in the la+ nor in the Constitution) +hich indicates that a
le%islative franchise is an indispensable re3uire#ent for an entit( to operate as a
do#estic air transport operator0 Althou%h Section 44 of Article 5II reco%ni2es
Con%ress' control over an( franchise) certificate or authorit( to operate a public
utilit() it does not #ean Con%ress has e$clusive authorit( to issue the sa#e0
8ranchises issued b( Con%ress are not re3uired before each and ever( public utilit(
#a( operate0
64=7
In #an( instances) Con%ress has seen it fit to dele%ate this function
to %overn#ent a%encies) speciali2ed particularl( in their respective areas of public
service0
A readin% of Section 4@ of the sa#e reveals the clear intent of Con%ress to
dele%ate the authorit( to re%ulate the issuance of a license to operate do#estic air
transport services?
#/CT+<: 1*. 6o&ers and .uties of the Board. "A% /Ecept as other&ise pro!ided
herein, the Board shall ha!e the po&er to regulate the economic aspect of air
transportation, and shall ha!e general super!ision and regulation of, the
jurisdiction and control o!er air carriers, general sales agents, cargo sales agents,
and air freight for&arders as &ell as their propert rights, e-uipment, facilities and
franchise, insofar as ma be necessar for the purpose of carring out the pro!ision
of this Act.
In support of the "oard's authorit( as stated above) it is %iven the follo+in%
specific po+ers and duties?
"C% The Board shall ha!e the follo&ing specific po&ers and duties:
"1% +n accordance &ith the pro!isions of Chapter +B of this Act, to issue, den,
amend, re!ise, alter, modif, cancel, suspend or re!oke in &hole or in part upon
petition or complaint or upon its o&n initiati!e an Temporar <perating 6ermit or
Certificate of 6ublic Con!enience and :ecessit: 6ro!ided ho&e!er, That in the
case of foreign air carriers, the permit shall be issued &ith the appro!al of the
6resident of the 1epublic of the 6hilippines.
Petitioner ar%ues that since R0A0 >>6 %ives the "oard the authorit( to issue
DCertificates of Public Convenience and Necessit(D) this) accordin% to petitioner)
#eans that a le%islative franchise is an absolute re3uire#ent0 It cites a nu#ber of
authorities supportin% the vie+ that a Certificate of Public Convenience and
Necessit( is issued to a public service for +hich a franchise is re3uired b( la+) as
distin%uished fro# a DCertificate of Public ConvenienceD +hich is an authori2ation
issued for the operation of public services for +hich no franchise) either #unicipal or
le%islative) is re3uired b( la+0
69@7
This sub#ission relies on the pre#ise that the authorit( to issue a certificate of
public convenience and necessit( is a re%ulator( #easure separate and distinct fro#
the authorit( to %rant a franchise for the operation of the public utilit( sub&ect of this
particular case) +hich is e$clusivel( lod%ed b( petitioner in Con%ress0
Ee do not a%ree +ith the petitioner0
.an( and varied are the definitions of certificates of public convenience +hich
courts and le%al +riters have drafted0 So#e statutes use the ter#s Dconvenience and
necessit(D +hile others use onl( the +ords Dpublic convenience0D The ter#s
Dconvenience and necessit(D) if used to%ether in a statute) are usuall( held not to be
separable) but are construed to%ether0 "oth +ords #odif( each other and #ust be
construed to%ether0 The +ord 'necessit(' is so connected) not as an additional
re3uire#ent but to #odif( and 3ualif( +hat #i%ht other+ise be ta!en as the strict
si%nificance of the +ord necessit(0 Public convenience and necessit( e$ists +hen
the proposed facilit( +ill #eet a reasonable +ant of the public and suppl( a need
+hich the e$istin% facilities do not ade3uatel( afford0 It does not #ean or re3uire an
actual ph(sical necessit( or an indispensable thin%0
6947
"The terms 'con!enience' and 'necessit' are to be construed together, although the
are not snonmous, and effect must be gi!en both. The con!enience of the public
must not be circumscribed b according to the &ord 'necessit' its strict meaning or
an essential re-uisites."
4))5
The use of the +ord Dnecessit(D) in con&unction +ith Dpublic convenienceD in a
certificate of authori2ation to a public service entit( to operate) does not in an( +a(
#odif( the nature of such certification) or the re3uire#ents for the issuance of the
sa#e0 It is the la+ +hich deter#ines the re3uisites for the issuance of such
certification) and not the title indicatin% the certificate0
Con%ress) b( %ivin% the respondent "oard the po+er to issue per#its for the
operation of do#estic transport services) has dele%ated to the said bod( the
authorit( to deter#ine the capabilit( and co#petence of a prospective do#estic air
transport operator to en%a%e in such venture0 This is not an instance of transfor#in%
the respondent "oard into a #ini/le%islative bod() +ith unbridled authorit( to choose
+ho should be %iven authorit( to operate do#estic air transport services0
"To be !alid, the delegation itself must be circumscribed b legislati!e restrictions,
not a "ro!ing commission" that &ill gi!e the delegate unlimited legislati!e
authorit. +t must not be a delegation "running riot" and "not canali@ed &ith banks
that keep it from o!erflo&ing." <ther&ise, the delegation is in legal effect an
abdication of legislati!e authorit, a total surrender b the legislature of its
prerogati!es in fa!or of the delegate."
4);5
Con%ress) in this instance) has set specific li#itations on ho+ such authorit(
should be e$ercised0
8irstl() Section < of R0A0 No0 >>6) as a#ended) sets out the follo+in% %uidelines
or policies?
"#/CT+<: 0. .eclaration of policies. +n the eEercise and performance of its
po&ers and duties under this Act, the Ci!il Aeronautics Board and the Ci!il
Aeronautics Administrator shall consider the follo&ing, among other things, as
being in the public interest, and in accordance &ith the public con!enience and
necessit:
"a% The de!elopment and utili@ation of the air potential of the 6hilippines=
"b% The encouragement and de!elopment of an air transportation sstem properl
adapted to the present and future of foreign and domestic commerce of the
6hilippines, of the 6ostal #er!ice and of the :ational .efense=
"c% The regulation of air transportation in such manner as to recogni@e and preser!e
the inherent ad!antages of, assure the highest degree of safet in, and foster sound
economic condition in, such transportation, and to impro!e the relations bet&een,
and coordinate transportation b, air carriers=
"d% The promotion of ade-uate, economical and efficient ser!ice b air carriers at
reasonable charges, &ithout unjust discriminations, undue preferences or
ad!antages, or unfair or destructi!e competiti!e practices=
"e% Competition bet&een air carriers to the eEtent necessar to assure the sound
de!elopment of an air transportation sstem properl adapted to the need of the
foreign and domestic commerce of the 6hilippines, of the 6ostal #er!ice, and of the
:ational .efense=
"f% To promote safet of flight in air commerce in the 6hilippines= and,
"g% The encouragement and de!elopment of ci!il aeronautics.
.ore i#portantl() the said la+ has enu#erated the re3uire#ents to deter#ine
the co#petenc( of a prospective operator to en%a%e in the public service of air
transportation0
#/CT+<: 1). Citi@enship re-uirement. /Ecept as other&ise pro!ided in the
Constitution and eEisting treat or treaties, a permit authori@ing a person to engage
in domestic air commerce and,or air transportation shall be issued onl to citi@ens
of the 6hilippines.
4)05
#/CT+<: )1. +ssuance of permit. The Board shall issue a permit authori@ing the
&hole or an part of the ser!ice co!ered b the application, if it finds: "1% that the
applicant is fit, &illing and able to perform such ser!ice properl in conformit
&ith the pro!isions of this Act and the rules, regulations, and re-uirements issued
thereunder= and ")% that such ser!ice is re-uired b the public con!enience and
necessit= other&ise the application shall be denied.
8urther#ore) the procedure for the processin% of the application of a Certificate
of Public Convenience and Necessit( had been established to ensure the +eedin%
out of those entities that are not deservin% of public service0
697
In su#) respondent "oard should no+ be allo+ed to continue hearin% the
application of *randAir for the issuance of a Certificate of Public Convenience and
Necessit() there bein% no le%al obstacle to the e$ercise of its &urisdiction0
ACCOR#INGL') in vie+ of the fore%oin% considerations) the Court RESO1VED
to DIS.ISS the instant petition for lac! of #erit0 The respondent Civil Aeronautics
"oard is hereb( DIRECTED to CONTINFE hearin% the application of respondent
*rand International Air+a(s) Inc0 for the issuance of a Certificate of Public
Convenience and Necessit(0
SO OR#ERE#.
Regalado (Chairman)) and Puno, JJ0) concur0
Romero) J0) no part0 Related to counsel0
Mendoza, J0) no part0 Relative in #ana%e#ent of part(0
647
*0R0 No0 B;4) Aul( 44) 4=B=) 4> SCRA 96<0
697
CA *0R0 SP No0 9;;6) October ;@) 4==40
6;7
CA *0R0 SP No0 ;6>B>) Aul( 4=) 4==0
6<7
Anne$ DAD Petition) p0 ;4) Rollo0
67
Anne$ DDD) Petition) Rollo) pp0 <;/<<0
667
Anne$ D8D) Petition) Rollo) pp0 </6;0
6>7
Anne$ D:D) Petition) Rollo) p0 >=0
6B7
Anne$ DID) Petition) Rollo) pp0 B@/B40
6=7
Section 440 No franchise) certificate) or an( other for# of authori2ation for the operation of a public
utilit( shall be %ranted e$cept to citi2ens of the Philippines or to corporations or associations
or%ani2ed under the la+s of the Philippines at least si$t( per centu# of +hose capital is
o+ned b( such citi2ens) nor shall such franchise) certificate) or authori2ation be e$clusive in
character or for a lon%er period than fift( (ears0 Neither shall an( franchise or ri%ht be %ranted
e$cept under the condition that it shall be sub&ect to a#end#ent) alteration) or repeal b( the
Con%ress +hen the co##on %ood so re3uires0 The state shall encoura%e e3uit( participation
in public utilities b( the %eneral public0 The participation of forei%n investors in the %overnin%
bod( of an( public utilit( enterprise shall be li#ited to their proportionate share in its capital)
and all the e$ecutive and #ana%in% officers of such corporation or association #ust be
citi2ens of the Philippines0
64@7
Section 40 The le%islative po+er shall be vested in the Con%ress of the Philippines) +hich shall
consist of a Senate and a :ouse and a :ouse of Representatives) e$cept to the e$tent
reserved to the people b( the provision on initiative and referendu#0
6447
SECTION 4@0 Po+ers and Duties of the "oard0 ,A- E$cept as other+ise provided herein) the "oard
shall have the po+er to re%ulate the econo#ic aspect of air transportation) and shall have %eneral
supervision and re%ulation of) the &urisdiction and control over air carriers) %eneral sales a%ents) car%o
sales a%ents) and air frei%ht for+arders as +ell as their propert( ri%hts) e3uip#ent) facilities and
franchise) insofar as #a( be necessar( for the purpose of carr(in% out the provision of this Act0
,"- The "oard #a( perfor# such acts) conduct such investi%ation) issue and a#end such orders) and
#a!e and a#end such %eneral or special rules) re%ulations) and procedures as it shall dee#
necessar( to carr( out the provisions of this Act0
,C- The "oard shall have the follo+in% specific po+ers and duties?
,4- In accordance +ith the provisions of Chapter IV of this Act) to issue) den() a#end) revise) alter)
#odif() cancel) suspend or revo!e in +hole or in part upon petition or co#plaint or upon its
o+n initiative an( Te#porar( Operatin% Per#it or Certificate of Public Convenience and
Necessit(? Provided ho+ever) That in the case of forei%n air carriers) the per#it shall be
issued +ith the approval of the President of the Republic of the Philippines0 $$$
6497
*0R0 No0 1/9<94=) 9; SCRA ==90
64;7
Ealla Ealla v0 Ealla Ealla Eater Co0 4>9 FS 4) ;6 A# Aur 9d >;<0
64<7
Pan%asinan Transportation Co0) Inc0 vs. The Public Service Co##ission) *0R0 No0 <>@6) Aune 96)
4=<@) >@ Phil 9940
647
D(er vs. Tus!aloosa "rid%e Co0) 9 Port0 9=6) 9> A#0 D0 6G Christian/Todd Tel0
Co0 vs. Co##on+ealth) 464 S0E0 <;) 46 H(0 >) ;> C0A0S0 4B0
6467
Superior Eater) 1i%ht and Po+er Co0 Vs. Cit( of Superior) 4B4 N0E0 44;) 4>< Eis0 9>) affir#ed
4B; N0E0 9<) ;> C0A0S0 4B0
64>7
Inchausti Stea#ship Co0 vs. PFC) <9 Phil 6<90
64B7
P0D0 B> and E$ecutive Order No0 ;@
64=7
Albano vs. Re(es) supra0
69@7
.e#orandu# of Petitioner) Rollo) pp0 <4>/<4B0
6947
Al#ario) Transportation and the Public Service 1a+) 4=66 ed0) p0 9BB0
6997
Eisconsin Tel0 Co0 vs0 Railroad Co##ission) 46 N0E0 64<) 469 N0E0 ;B;) >; C0A0S0 4@==0
69;7
Cru2) I0) Philippine Political 1a+) 4==60 p0=>0
69<7
See Section 44) Article 5II) Constitution) supra0
697
See Sections 49) 4;) 4<) 4) 46) 4>) 4B) 4=) 9@) 99) 9;) and 9<) RA >>60