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PAL vs. CAB
PAL vs. CAB
Ô
À
à àà petitioner,
vs.
À
respondents.
u
@ is Special Civil Action for 2 and Pro ibition under Rule 65 of t e Rules of
Court seeks to pro ibit respondent Civil Aeronautics Board from exercising jurisdiction
over private respondent's Application for t e issuance of a Certificate of Public
Convenience and Necessity, and to annul and set aside a temporary operating permit
issued by t e Civil Aeronautics Board in favor of Grand International Airways (GrandAir,
for brevity) allowing t e same to engage in sc eduled domestic air transportation
services, particularly t e Manila-Cebu, Manila-Davao, and converse routes.
@ e main reason submitted by petitioner P ilippine Airlines, Inc. (PAL) to support its
petition is t e fact t at GrandAir does not possess a legislative franc ise aut orizing it to
engage in air transportation service wit in t e P ilippines or elsew ere. Suc franc ise
is, allegedly, a requisite for t e issuance of a Certificate of Public Convenience or
Necessity by t e respondent Board, as mandated under Section 11, Article XII of t e
Constitution.
On November 24, 1994, private respondent GrandAir applied for a Certificate of Public
Convenience and Necessity wit t e Board, w ic application was docketed as CAB
Case No. EP-12711.!Accordingly, t e C ief Hearing Officer of t e CAB issued a Notice
of Hearing setting t e application for initial earing on December 16, 1994, and directing
GrandAir to serve a copy of t e application and corresponding notice to all sc eduled
P ilippine Domestic operators. On December 14, 1994, GrandAir filed its Compliance,
and requested for t e issuance of a @emporary Operating Permit. Petitioner, itself t e
older of a legislative franc ise to operate air transport services, filed an Opposition to
t e application for a Certificate of Public Convenience and Necessity on December 16,
1995 on t e following grounds:
On December 20, 1994, t e C ief Hearing Officer of CAB issued an Order denying
petitioner's Opposition. Pertinent portions of t e Order read:
SO ORDERED.
2. Applicant as failed to prove t at t ere is clear and urgent public need for t e services
applied for.
GHEREAS , t e CAB is specifically aut orized under Section 10-C (1) of Republic Act
No. 776 as follows:
GHEREAS, suc aut ority was affirmed in àë . 2ë, (23 SCRA 992), w erein t e
Supreme Court eld t at t e CAB can even on its own initiative, grant a @OP even before
t e presentation of evidence;
GHEREAS, more recently, ë . 2ë, (CA-GR No. 23365), promulgated on
October 30, 1991, eld t at in accordance wit its mandate, t e CAB can issue not only a
@OP but also a Certificate of Public Convenience and Necessity (CPCN) to a qualified
applicant t erefor in t e absence of a legislative franc ise, citing t erein as basis t e
decision of ë .
(175 SCRA 264) w ic provides ( ) t at:
a) Franc ises by Congress are not required before eac and every public utility may
operate w en t e law as granted certain administrative agencies t e power to grant
licenses for or to aut orize t e operation of certain public utilities;
GHEREAS, Executive Order No. 219 w ic took effect on 22 January 1995, provides in
Section 2.1 t at a minimum of two (2) operators in eac route/link s all be encouraged
and t at routes/links presently serviced by only one (1) operator s all be open for entry to
additional operators.
RESOLVED, (@)HEREFORE, t at t e Motion for Reconsideration filed by P ilippine
Airlines on January 05, 1995 on t e Grant by t is Board of a @emporary Operating Permit
(@OP) to Grand International Airways, Inc. alleging among ot ers t at t e CAB as no
suc jurisdiction, is ereby DENIED, as it ereby denied, in view of t e foregoing and
considering t at t e grounds relied upon by t e movant are not indubitable.
On Marc 21, 1995, upon motion by private respondent, t e temporary permit was
extended for a period of six (6) mont s or up to September 22, 1995.
Petitioners argue t at t e respondent Board acted beyond its powers and jurisdiction in
taking cognizance of GrandAir's application for t e issuance of a Certificate of Public
Convenience and Necessity, and in issuing a temporary operating permit in t e
meantime, since GrandAir as not been granted and does not possess a legislative
franc ise to engage in sc eduled domestic air transportation. A legislative franc ise is
necessary before anyone may engage in air transport services, and a franc ise may
only be granted by Congress. @ is is t e meaning given by t e petitioner upon a
reading of Section 11, Article XII, and Section 1, Article VI, "of t e Constitution.
@o support its t eory, PAL submits Opinion No. 163, S. 1989 of t e Department of
Justice, w ic reads:
Sir:
Indeed, aut orities are agreed t at a certificate of public convenience and necessity is an
aut orization issued by t e appropriate governmental agency for t e operation of public
services for w ic a franc ise is required by law (Almario, @ransportation and Public
Service Law, 1977 Ed., p. 293; Agbayani, Commercial Law of t e P il., Vol. 4, 1979 Ed.,
pp. 380-381).
(SGD.)
SEDFR
EY A.
ORDO
NEZ
Secreta
ry of
Justice
In bot cases, t e issue resolved was w et er or not t e Civil Aeronautics Board can
issue t e Certificate of Public Convenience and Necessity or @emporary Operating
Permit to a prospective domestic air transport operator w o does not possess a
legislative franc ise to operate as suc . Relying on t e Court's pronouncement in
ë .
( ), t e Court of Appeals up eld t e aut ority of t e Board to
issue suc aut ority, even in t e absence of a legislative franc ise, w ic aut ority is
derived from Section 10 of Republic Act 776, as amended by P.D. 1462.
Sec. 10. Powers and Duties of t e Board. (A) Except as ot erwise provided erein, t e
Board s all ave t e power to regulate t e economic aspect of air transportation, and
s all ave general supervision and regulation of, t e jurisdiction and control over air
carriers, general sales agents, cargo sales agents, and air freig t forwarders as well as
t eir property rig ts, equipment, facilities and franc ise, insofar as may be necessary for
t e purpose of carrying out t e provision of t is Act.
Petitioner argues t at since R.A. 776 gives t e Board t e aut ority to issue "Certificates
of Public Convenience and Necessity", t is, according to petitioner, means t at a
legislative franc ise is an absolute requirement. It cites a number of aut orities
supporting t e view t at a Certificate of Public Convenience and Necessity is issued to
a public service for w ic a franc ise is required by law, as distinguis ed from a
"Certificate of Public Convenience" w ic is an aut orization issued for t e operation of
public services for w ic no franc ise, eit er municipal or legislative, is required by law.
"
@ e terms "convenience" and "necessity" are to be construed toget er, alt oug t ey are
not synonymous, and effect must be given bot . @ e convenience of t e public must not
be circumscribed by according to t e word "necessity" its strict meaning or an essential
requisites.
Firstly, Section 4 of R.A. No. 776, as amended, sets out t e following guidelines or
policies:
Sec. 4. Declaration of policies. In t e exercise and performance of its powers and duties
under t is Act, t e Civil Aeronautics Board and t e Civil Aeronautics Administrator s all
consider t e following, among ot er t ings, as being in t e public interest, and in
accordance wit t e public convenience and necessity:
Sec. 21. Issuance of permit. @ e Board s all issue a permit aut orizing t e w ole or any
part of t e service covered by t e application, if it finds: (1) t at t e applicant is fit, willing
and able to perform suc service properly in conformity wit t e provisions of t is Act and
t e rules, regulations, and requirements issued t ereunder; and (2) t at suc service is
required by t e public convenience and necessity; ot erwise t e application s all be
denied.
SO ORDERED.
##$%
9 Sec. 11. No franc ise, certificate, or any ot er form of aut orization for t e operation of
a public utility s all be granted except to citizens of t e P ilippines or to corporations or
associations organized under t e laws of t e P ilippines at least sixty of
w ose capital is owned by suc citizens, nor s all suc franc ise, certificate, or
aut orization be exclusive in c aracter or for a longer period t an fifty years. Neit er s all
any franc ise or rig t be granted except under t e condition t at it s all be subject to
amendment, alteration, or repeal by t e Congress w en t e common good so requires.
@ e state s all encourage equity participation in public utilities by t e general public. @ e
participation of foreign investors in t e governing body of any public utility enterprise s all
be limited to t eir proportionate s are in its capital, and all t e executive and managing
officers of suc corporation or association must be citizens of t e P ilippines.
14 Pangasinan @ransportation Co., Inc. vs. @ e Public Service Commission, G.R. No.
47065, June 26, 1940, 70 P il 221.
15 Dyer vs. @uskaloosa Bridge Co., 2 Port. 296, 27 Am. D. 655; C ristian-@odd @el. Co.
vs. Commonwealt , 161 S.G. 543, 156 Ky, 557, 37 C.J.S. 158.
16 Superior Gater, Lig t and Power Co. vs. City of Superior, 181 N.G. 113, 174 Gis.
257, affirmed 183 N.G. 254, 37 C.J.S. 158.
20 Memorandum of Petitioner,
, pp. 417-41 8.
22 Giscon @el. Co. vs. Railroad Commission, 156 N.G. 614, 162 N.G. 383, 73 C.J.S.
1099.
25 Ô Sections 12, 13, 14, 15, 16, 17, 18, 19, 20, 22, 23, and 24, RA 776.