Air Manila, Inc. vs. Civil Aeronautics Board, et al.

A provisional or temporary approval of a flight schedule by the Civil Aeronautics Board does not violate administrative due process where the Board refers unapproved schedules to a hearing examiner for economic justification, the affected party is given notice and opportunity to be heard, and the temporary permit is issued to prevent the stoppage or cessation of services in the affected areas.

Air Manila, Inc. and Philippine Air Lines, Inc. (PAL) are domestic air carriers whose flight operations are subject to regulation by the Civil Aeronautics Board (the Board) under Republic Act No. 776. The Board is empowered not only to grant certificates of public convenience and necessity but also to issue, deny, revise, alter, modify, cancel, suspend or revoke, in whole or in part, any temporary operating permit, upon petition or complaint of another or even at its own initiative, conditioned upon the paramount consideration of public convenience and necessity.

Air Manila, Inc. and Philippine Air Lines, Inc. (PAL) are domestic air carriers whose flight operations are subject to regulation by the Civil Aeronautics Board (the Board) under Republic Act No. 776. On 1 April 1968, PAL petitioned the Board for approval of a proposed schedule introducing seven night flights — F515/516, F555/556, F561/562, F531/532, F591/338, F527/528, and F211/212 — and the adjustment of the flight schedule that may thus be affected (CAB Case No. 1414). On 15 April 1968, action on the petition was deferred for further study.

On 22 April 1968, the Board passed Resolution No. 109 (68), referring PAL's petition to a hearing examiner for economic justification, and the designated hearing officer set the initial hearing for 30 April 1968. On 29 April 1968, PAL moved for reconsideration of Resolution No. 109 (68); by resolution of 6 May 1968, the Board deferred action on this motion until PAL resumed its DC-3 services in certain airports named therein. On 9 May 1968, PAL filed another motion for reconsideration, arguing that the new flights would be serviced by jet-prop or pure jet equipment only, so the order for resumption of DC-3 services was improper and should be deleted. In Resolution No. 131 (68) of 20 May 1968, the Board deferred action on this motion.

On 15 May 1968, PAL filed an Urgent Petition for approval of a consolidated schedule of jet and jet prop flights, with an interim DC-3 schedule to different secondary and feeder points (DTS-35). On 28 May 1968, the Board issued Resolution No. 139 (68), approving DTS-35 for a period of 30 days, effective 1 June 1968, subject to the conditions that (a) the flight between Manila and San Fernando, La Union, F210/211, be operated daily instead of twice a week as proposed, and (b) all schedules under DTS-35 for which no previous approval had been granted by the Board be referred to a hearing examiner for reception of evidence on its economic justification. After the examiner's report, several of the proposed flights were approved for 30 days from 31 July 1968.

On 31 May 1968, Air Manila filed the instant petition for certiorari, claiming that the Board acted without or in excess of jurisdiction and/or with abuse of discretion in issuing Resolution No. 139 (68). Air Manila alleged that the proposed new schedule, involving an increase of frequencies, would not only saturate the routes served also by petitioner, but would also affect its schedule; that the Board's approval of the Domestic Traffic Schedule without receiving the evidence of the parties constituted a deprivation of petitioner's right to be heard; and that the authorization to PAL to operate the proposed schedule without economic justification amounted to a capricious and whimsical exercise of the Board's power amounting to lack of jurisdiction.

The Board, for its part, disclosed that the schedule of flights provisionally approved in Resolution No. 139 (68) was subsequently readjusted to conform with its established policy on separation time between flights, and that by Resolution No. 190 (68) in the same Case No. EP-1414, the Board allowed only three or four frequencies of the proposed seven new flights, such authorization terminating after 30 days from 31 July 1968.

• Lack of Jurisdiction: Petitioner claimed that the respondent Board acted without or in excess of jurisdiction and/or with abuse of discretion in issuing Resolution No. 139 (68).
• Deprivation of Right to be Heard: Petitioner argued that the Board's approval of the Domestic Traffic Schedule without receiving the evidence of the parties constituted a deprivation of petitioner's right to be heard.
• Capricious Exercise of Power: Petitioner maintained that the authorization to PAL to operate the proposed schedule without economic justification amounted to a capricious and whimsical exercise of the Board's power amounting to lack of jurisdiction.
• Saturation of Routes: Petitioner alleged that the proposed new schedule, involving an increase of frequencies, would not only saturate the routes served also by petitioner, but would also affect its schedule.

• Prevention of Service Stoppage: Respondents countered that the Board's action was impelled by the circumstance that at the time, the authorizations of certain flight schedules previously allowed but incorporated in DTS-35 were about to expire; thus, the consolidated schedule had to be approved temporarily if the operations of the flights referred to were not to be suspended.
• Hearings Actually Conducted: Respondents argued that hearings were actually conducted by the hearing examiner and a report on the result thereof was submitted to the Board, and that there was no proof, not even allegation, that petitioner was not notified or given opportunity to adduce evidence in support of its opposition.

• Jurisdiction: Whether the Civil Aeronautics Board acted without or in excess of jurisdiction in issuing Resolution No. 139 (68).
• Administrative Due Process: Whether the provisional approval of DTS-35 without first receiving the parties' evidence deprived petitioner of its right to be heard.
• Mootness: Whether the issue presented in the petition had become moot and academic.

• Jurisdiction: No. The Board acted within its jurisdiction, being empowered under Section 10 (C) (1) of Republic Act No. 776 to issue temporary operating permits conditioned upon the paramount consideration of public convenience and necessity.
• Administrative Due Process: No. The provisional approval did not violate administrative due process because the Board referred unapproved schedules to a hearing examiner for economic justification, and hearings were actually conducted with notice and opportunity to adduce evidence.
• Mootness: Yes. The resolution had been modified and its effectivity fixed up to 30 September 1968, and there was no proof that the situation existing when Resolution No. 139 (68) was issued still persisted.

• Jurisdiction: The Civil Aeronautics Board is not only empowered to grant certificates of public convenience and necessity; it can also issue, deny, revise, alter, modify, cancel, suspend or revoke, in whole or in part, any temporary operating permit, upon petition or complaint of another or even at its own initiative. The exercise of the power is conditioned upon the paramount consideration of public convenience and necessity, and nothing was presented to prove that the disputed action by the Board was prompted by a cause other than the good of the service. The temporary permit was issued to prevent the stoppage or cessation of services in the affected areas, a point the petitioner failed to refute.

• Administrative Due Process: Administrative proceedings are not exempt from the operation of certain basic and fundamental procedural principles, such as the due process requirements in investigations and trials. Administrative due process includes (a) the right to notice, actual or constructive, of the institution of the proceedings that may affect a person's legal rights; (b) reasonable opportunity to appear and defend his rights, introduce witnesses and relevant evidence in his favor; (c) a tribunal so constituted as to give reasonable assurance of honesty and impartiality, and one of competent jurisdiction; and (d) a finding or decision by that tribunal supported by substantial evidence presented at the hearing, or at least contained in the records or disclosed to the parties affected. In the present case, the provisional approval of DTS-35 did not do away with the requisite hearing and investigation of the new flight schedules, because the resolution itself prescribed that all schedules under DTS-35 for which no previous approval had been granted be referred to a hearing examiner for reception of evidence on its economic justification. Such hearings were actually conducted, and the Board, considering the hearing examiner's report, passed Resolution No. 190 (68) approving only three or four frequencies of the seven proposed new flights for 30 days. There was no proof, not even allegation, that petitioner was not notified or given opportunity to adduce evidence in support of its opposition.

• Mootness: The schedule of flights provisionally approved in Resolution No. 139 (68) was subsequently readjusted by the Board to conform with its established policy on separation time between flights, and by Resolution No. 190 (68) the Board allowed only three or four frequencies of the proposed seven new flights, such authorization terminating after 30 days from 31 July 1968. Not only had the resolution subject of the petition been modified, but its effectivity had been fixed up to 30 September 1968. There being no proof that the situation existing when Resolution No. 139 (68) was issued still persists, the issue presented had become moot and academic.

• Administrative Due Process — The requisites of administrative due process are: (a) the right to notice, actual or constructive, of the institution of the proceedings that may affect a person's legal rights; (b) reasonable opportunity to appear and defend his rights, introduce witnesses and relevant evidence in his favor; (c) a tribunal so constituted as to give reasonable assurance of honesty and impartiality, and one of competent jurisdiction; and (d) a finding or decision by that tribunal supported by substantial evidence presented at the hearing, or at least contained in the records or disclosed to the parties affected. The Court applied these requisites and found them satisfied because the Board referred unapproved schedules to a hearing examiner for economic justification, hearings were actually conducted, and the petitioner was given notice and opportunity to adduce evidence.

• Mootness — A case becomes moot and academic when the subject matter of the controversy has been resolved or the situation that gave rise to the dispute no longer persists. The Court applied this doctrine because Resolution No. 139 (68) had been modified by subsequent Board resolutions and its effectivity had been fixed up to 30 September 1968, and there was no proof that the situation existing when the resolution was issued still persisted.

• "It has been correctly said that administrative proceedings are not exempt from the operation of certain basic and fundamental procedural principles, such as the due process requirements in investigations and trials." — This establishes that administrative due process applies to proceedings before the Civil Aeronautics Board, citing Asprec vs. Itchon.

• "And this administrative due process is recognized to include (a) the right to notice, be it actual or constructive, of the institution of the proceedings that may affect a person's legal rights; (b) reasonable opportunity to appear and defend his rights, introduce witnesses and relevant evidence in his favor, (c) a tribunal so constituted as to give him reasonable assurance of honesty and impartiality, and one of competent Jurisdiction; and (4) a finding or decision by that tribunal supported by substantial evidence presented at the hearing, or at least contained in the records or disclosed to the parties affected." — This is the canonical formulation of the requisites of administrative due process, frequently cited in subsequent jurisprudence.

• "In short, the temporary permit was issued to prevent the stoppage or cessation of services in the affected areas." — This explains the justification for the provisional approval of DTS-35 and why the Board's action was impelled by public convenience and necessity.

• "For, under the law, the Civil Aeronautics Board is not only empowered to grant certificates of public convenience and necessity; it can also issue, deny, revise, alter, modify, cancel, suspend or revoke, in whole or in part, any temporary operating permit, upon petition or complaint of another or even at its own initiative." — This states the Board's statutory power under Section 10 (C) (1) of Republic Act No. 776, which supports the validity of the provisional authorization.

• "There being no proof that the situation existing when Resolution No. 139 (68) was issued still persists, the issue herein presented apparently has become moot and academic." — This is the mootness holding that disposed of the petition.

• Asprec vs. Itchon, L-21695, 30 April 1966, 16 SCRA 921 — Cited for the proposition that administrative proceedings are not exempt from the operation of basic and fundamental procedural principles such as due process requirements in investigations and trials.
• Garcia vs. Executive Secretary, L-19748, 13 September 1962, 6 SCRA 1 — Cited for the requisites of administrative due process, including notice, opportunity to be heard, an impartial tribunal, and a decision supported by substantial evidence.
• Ang Tibay vs. CIR, 69 Phil. 635 — Cited as authority for the requisites of administrative due process.

• Section 10 (C) (1), Republic Act No. 776 — Empowers the Civil Aeronautics Board to issue, deny, revise, alter, modify, cancel, suspend or revoke, in whole or in part, any temporary operating permit, upon petition or complaint of another or even at its own initiative. The Court applied this provision to uphold the validity of Resolution No. 139 (68), which provisionally approved PAL's consolidated flight schedule DTS-35.

Concepcion, C.J., Dizon, Makalintal, Zaldivar, Castro, Fernando, Teehankee, Barredo, Villamor, and Makasiar, JJ., concurred.