Case Summary (G.R. No. 119528)
Petitioner, Respondent, and Key Dates
– GrandAir filed its application for a Certificate of Public Convenience and Necessity (CPCN) on November 24, 1994 (CAB Case No. EP-12711).
– Initial hearing set for December 16, 1994; GrandAir requested a Temporary Operating Permit (TOP) on December 14, 1994.
– CAB issued TOP on December 23, 1994 (valid until March 22, 1995), extended on March 21, 1995 to September 22, 1995.
– PAL filed its Rule 65 petition on April 3, 1995. Decision rendered March 26, 1997.
Applicable Law
1987 Constitution, Article XII, Section 11 (public utilities franchise requirement) and Article VI, Section 1 (vested legislative power) govern. Republic Act No. 776, as amended by P.D. 1462, delegates to the CAB the power to issue, deny, amend or revoke TOPs and CPCNs under Section 10(C)(1) and prescribes fitness and public-need criteria under Section 21.
Procedural History Before the CAB
PAL filed its opposition on December 16, 1994, challenging CAB’s jurisdiction because GrandAir lacked a legislative franchise and alleging deficiencies in GrandAir’s application form and public-need showing. On December 20, 1994, the CAB denied PAL’s jurisdictional objection, citing Section 10(C)(1) of RA 776 and the Court of Appeals’ Avia Filipinas decision. PAL’s motion for reconsideration of the TOP issuance was likewise denied on February 2, 1995, by CAB Resolution No. 02 (95).
Petitioner's Jurisdictional Argument
PAL contends that Article XII, Section 11 of the 1987 Constitution and Article VI, Section 1 reserve to Congress the exclusive grant of legislative franchises for public utilities, including air carriers. Therefore, CAB lacks jurisdiction to entertain or grant GrandAir’s CPCN or TOP absent a prior franchise.
Respondents’ Legal Position
GrandAir maintains that Cab may grant a CPCN or TOP pending completion of franchise proceedings, relying on:
- Albano vs. Reyes (175 SCRA 264) – administrative agencies may authorize public utilities when empowered by statute;
- Avia Filipinas (CA-G.R. No. 23365, Oct. 30, 1991) and Silangan Airways (CA-G.R. No. 36787, July 19, 1995) – uphold Cab’s power under RA 776 to issue CPCNs and TOPs without a legislative franchise.
The Department of Justice Opinion No. 163, s. 1989 further distinguishes the legislative franchise as sovereign in nature, and the CPCN/TOP as purely regulatory.
Statutory and Constitutional Framework
Article XII, Section 11 recognizes Congress’ power over franchises but does not prohibit delegation. RA 776, Section 10(A) grants the CAB broad economic-regulation and supervisory authority over air carriers, while Section 10(C)(1) specifically authorizes the CAB to issue or revoke CPCNs and TOPs “upon its own initiative.” Section 21 sets the fitness and public-need standards for permit issuance.
Jurisprudential Developments on Delegation
The Court has long recognized that Congress may delegate rule-making or licensing authority to specialized administrative bodies when clearly circumscribed by legislative standards. In Albano vs. Reyes, the Supreme Court affirmed that administrative issuance of public-utility authorizations is valid when provided by statute. Subsequent appellate rulings have consistently applied this doctrine to air-carrier licensing.
Nature and Requirements of CPCNs and TOPs
A CPCN/TOP is an administrative authorization granting an applicant the right to commence public-utility operations upon meeting statutory requirements—fitness, financial capacity, safety measures, and demonstration of public convenience and necessity—not an independent legi
Case Syllabus (G.R. No. 119528)
Procedural History
- Special Civil Action for Certiorari and Prohibition under Rule 65, Rules of Court, filed by Philippine Airlines, Inc. (PAL) on April 3, 1995 (G.R. No. 119528).
- November 24, 1994: Grand International Airways, Inc. (GrandAir) filed Application for Certificate of Public Convenience and Necessity (CPCN), docketed CAB Case No. EP-12711.
- December 16, 1994: Initial hearing scheduled by Chief Hearing Officer; PAL filed Opposition to CPCN application.
- December 14, 1994: GrandAir filed Compliance and requested Temporary Operating Permit (TOP).
- December 20, 1994: CAB Hearing Officer denied PAL’s opposition to jurisdiction.
- December 22, 1994: PAL opposed issuance of TOP; argued GrandAir lacked fitness and public need.
- December 23, 1994: CAB promulgated Resolution No. 119(92) granting a three-month TOP (Dec 22, 1994–Mar 22, 1995).
- January 11, 1995: PAL moved for reconsideration of TOP grant; denied by CAB Resolution No. 02(95) on February 2, 1995.
- March 21, 1995: GrandAir’s TOP extended to September 22, 1995.
- March 26, 1997: Supreme Court promulgated decision dismissing PAL’s petition.
Factual Background
- PAL holds a legislative franchise to operate scheduled domestic air transport services.
- GrandAir, without any congressional franchise, sought to operate scheduled services on the Manila-Cebu, Manila-Davao, and converse routes.
- PAL contends that Article XII, Section 11 of the Constitution requires a legislative franchise as precondition to a CPCN or TOP.
- GrandAir relies on jurisprudence (Albano vs. Reyes; Avia Filipinas vs. CAB; Silangan Airways vs. GrandAir) and RA 776 to assert CAB’s power to issue CPCN/TOP absent a franchise.
- Executive Order No. 219 (effective Jan 22, 1995) encourages at least two operators per route.
Issues
- Does the Civil Aeronautics Board have jurisdiction to entertain and resolve GrandAir’s CPCN application in the absence of a legislative franchise?
- Is a legislative franchise a constitutional or statutory precondition to the issuance of a Certificate of Public Convenience and Necessity or a Temporary Operating Permit by the CAB?
- Did the CAB act beyond its powers in granting GrandAir a TOP pending resolution of the CPCN application?
Petitioner’s Contentions
- Constitutional Argument: Article XII, Section 11 and Article VI, Section 1 vest exclusive power in Congress to grant franchises for public utilities, including air transport.
- Statutory Argument: Legislative franchise is a prerequisite un