View full case

PHILIPPINE AIRLINES v. CIVIL AERONAUTICS BOARD

FACTS:

The case involves a Special Civil Action for Certiorari and Prohibition filed by petitioner Philippine Airlines, Inc. (PAL) against the Civil Aeronautics Board (CAB) and Grand International Airways (GrandAir) seeking to prohibit CAB from exercising jurisdiction over GrandAir's application for a Certificate of Public Convenience and Necessity (CPCN). PAL argues that GrandAir does not possess a legislative franchise to engage in air transportation services, which PAL claims is a requisite for the issuance of a CPCN. On November 24, 1994, GrandAir applied for a CPCN with CAB. GrandAir also requested the issuance of a Temporary Operating Permit (TOP). PAL opposed the application for a CPCN on various grounds, including the lack of a legislative franchise and deficiencies in the application. PAL also opposed the issuance of a TOP. Despite PAL's opposition, CAB denied PAL's motion and issued a TOP to GrandAir for a period of three months. PAL moved for reconsideration but it was denied by CAB.

This case involves a petition filed by Philippine Airlines (PAL) against the Civil Aeronautics Board (CAB) regarding the issuance of a temporary operating permit (TOP) to Grand International Airways. PAL argues that the CAB exceeded its powers and jurisdiction in granting the TOP to GrandAir because the latter does not possess a legislative franchise to engage in scheduled domestic air transportation. PAL contends that a franchise can only be granted by Congress and that the CAB does not have the authority to issue a certificate of public convenience and necessity without a legislative franchise. PAL supports its argument with an opinion from the Department of Justice, which states that a franchise is required before a certificate of public convenience and necessity can be granted. The CAB denies PAL's motion for reconsideration and extends the temporary permit for GrandAir. PAL files a petition against this decision.

ISSUES:

  1. Whether a legislative franchise is an indispensable requirement for the issuance of a Certificate of Public Convenience and Necessity (CPCN) by the Civil Aeronautics Board (CAB) to a domestic air transport operator.

  2. Whether the CAB has jurisdiction to issue a Temporary Operating Permit (TOP) to a domestic air transport operator without a legislative franchise.

RULING:

  1. Legislative Franchise Requirement The Supreme Court ruled that there is nothing in the law nor in the Constitution indicating that a legislative franchise is an indispensable requirement for an entity to operate as a domestic air transport operator. The CAB, under Republic Act 776, has the authority to issue a CPCN or TOP to a qualified domestic air transport operator that meets all the other requirements prescribed by law.

  2. CAB Jurisdiction The Supreme Court affirmed that the CAB has jurisdiction to hear the application and issue a TOP to Grand International Airways, Inc. The CAB’s authority to issue both a CPCN and a TOP, even in the absence of a legislative franchise, is derived from the delegation of power under Section 10 of Republic Act 776.

PRINCIPLES:

  1. Delegation of Legislative Authority Congress can delegate the authority to issue permits and licenses for public utilities to administrative agencies. This is supported by the growing complexity of modern life and the necessity of specialized agencies regulating specific sectors.

  2. Administrative Issuance of Permits The CAB has specific powers under Republic Act 776 to issue, deny, or modify any temporary operating permit or Certificate of Public Convenience and Necessity, which encompasses the authority for air transport operations.

  3. Constitutional Interpretation Although Section 11, Article XII of the Constitution recognizes Congress' control over franchises, certificates, or any authority to operate a public utility, it does not monopolize this authority to Congress. Administrative agencies may also exercise such authority if granted by legislation.

  4. Regulatory Procedures The competency and fitness of a prospective operator are determined through established regulatory procedures that ensure only qualified entities are granted the authority to operate public utilities.