Royal Cargo Corporation vs. Civil Aeronautics Board

Courts decline jurisdiction over cases that have become moot and academic, where no actual interests are involved and no justiciable controversy remains. Where a supervening event renders the resolution of the issues of no practical use or value, and no actual substantial relief can be granted to the petitioner, the Court will refrain from expressing its opinion on the merits.

Royal Cargo Corporation is a stock corporation organized under Philippine laws, seventy percent (70%) owned by Filipino citizens and thirty percent (30%) by foreigners. The petitioner operated as an international airfreight forwarder under the regulatory authority of the Civil Aeronautics Board, which was empowered by Republic Act No. 776 to regulate the economic aspect of air transportation, including jurisdiction over airfreight forwarders. Section 11, Article XII of the Constitution restricts participation of foreign investors in the governing body of any public utility enterprise to their proportionate share in its capital and requires that all executive and managing officers of such corporation must be citizens of the Philippines.

Royal Cargo Corporation, then operating under the name Royal Air Cargo, Inc., was initially granted by the Civil Aeronautics Board an indefinite authority to engage in international air freight forwarding on February 25, 1977. On October 11, 1983, the petitioner changed its corporate name to Royal Cargo Corporation. The petitioner's president, Michael K. Raeuber, was a German national married to a Filipina, while the Chairman of the Board, the Executive Vice-President, and all the Vice-Presidents were Filipinos.

The petitioner subsequently filed a petition with the Board requesting a fixed duration for its authority, and by Civil Aeronautics Board Resolution No. 140(85) dated April 12, 1985, its permit was extended for five years, or until April 11, 1990. On the day its permit was to expire, April 11, 1990, the petitioner applied for renewal for another five years, alleging in its petition that its president was a German national. The Air Carrier Accounts System and Field Audit Division of the Board recommended granting the petition on the condition that the position of president be transferred to a Filipino within thirty days, otherwise the permit would be cancelled, and recommended fines of P5,000.00 for the alien occupying a top position and another P5,000.00 for operating without a permit and filing the petition on the day the permit expired.

After due hearing, the Board promulgated Resolution No. 209(90) on June 1, 1990, imposing a fine of P10,000.00 for operating with an expired permit, payable within ten days, and directing the petitioner to transfer its top position to a Filipino national within thirty days from receipt of the resolution, otherwise its authority would be revoked. The petitioner sought reconsideration of the second paragraph of the resolution, but the Board denied the motion in Resolution No. 298(90) dated August 3, 1990, stating that it was the Board's policy to grant permits to engage in international airfreight forwarding only to citizens of the Philippines as defined in RA 776, as amended; that no law precluded the Board from adopting such a policy; and that foreign capital was not very necessary in the business of airfreight forwarding.

The petitioner elevated the case to the Court of Appeals, which affirmed the Board's resolutions. While the petition for review was pending before the Supreme Court, the petitioner's authority to operate as an international airfreight forwarder under the permit in question expired in 1995. The Court directed the parties to manifest why the case should not be dismissed for being moot and academic. The Office of the Solicitor General interposed no objection to the dismissal, while the petitioner affirmed that the Board had already renewed its authority to operate as an International Airfreight Forwarder for a period of five years up to April 12, 2005.

• Reversible Error by the CA: The petitioner alleged that the Court of Appeals committed a reversible error in rendering the assailed decision and resolution affirming the Board's directive to transfer its top position to a Filipino national.
• Mootness Opposition: The petitioner affirmed to the Court that the respondent Board had already renewed its authority to operate as an International Airfreight Forwarder for a period of five years up to April 12, 2005, apparently to show that the case was not moot.

• Mootness Concurrence: The Office of the Solicitor General stated that it interposed no objection to the dismissal of the petition on the ground that the case had become moot and academic.

• Mootness: Whether the instant petition has become moot and academic such that the Court should decline to resolve the merits of the case.

• Mootness: Yes. The petition was denied for being moot and academic. The permit to operate as an international airfreight forwarder that the respondent Board sought to withhold from the petitioner for failing to meet the constitutional Filipinization requirement had already lapsed in 1995, and the petitioner's authority had since been renewed up to April 12, 2005, leaving no actual legal interest for the petitioner to pursue.

• Mootness: The Court applied the universal rule that courts of justice constituted to pass upon substantial rights will not consider questions where no actual interests are involved; they decline jurisdiction of moot cases. Where the issue has become moot and academic, there is no justiciable controversy, so that a declaration thereon would be of no practical use or value. The Court found that the permit the Board sought to withhold had already lapsed in 1995, and with the current renewal of the petitioner's authority to operate, it is to be assumed that the petitioner had finally decided to comply with the citizenship requirement mandated by the Constitution for its line of business. There was no actual substantial relief to which the petitioner would be entitled and which would be negated by the dismissal of the petition. The Court thus refrained from expressing its opinion in a case where no practical relief may be granted in view of a supervening event.

• Mootness Doctrine — Courts decline jurisdiction over cases where no actual interests are involved and where the issue has become moot and academic, such that a declaration thereon would be of no practical use or value. The Court applied this doctrine where the petitioner's permit had already lapsed and been renewed, leaving no justiciable controversy and no actual substantial relief that could be granted.

• "It is a rule of universal application that courts of justice constituted to pass upon substantial rights will not consider questions where no actual interests are involved; they decline jurisdiction of moot cases. And where the issue has become moot and academic, there is no justiciable controversy, so that a declaration thereon would be of no practical use or value." — This passage states the controlling mootness doctrine and the rationale for the Court's dismissal of the petition.
• "There is no actual substantial relief to which the petitioner would be entitled and which would be negated by the dismissal of the petition." — This passage explains why the supervening events — the lapse of the permit in 1995 and its subsequent renewal — deprived the petitioner of any legal interest in the case.
• "Thus, the Court will refrain from expressing its opinion in a case where no practical relief may be granted in view of a supervening event." — This passage articulates the Court's judicial restraint in declining to rule on the merits of a moot case.

• Gancho-on vs. Secretary of Labor and Employment, 271 SCRA 204 (1997) — Cited as authority for the rule that courts decline jurisdiction over moot cases and that where the issue has become moot and academic, there is no justiciable controversy.

• Section 11, Article XII, 1987 Constitution — Provides that the participation of foreign investors in the governing body of any public utility enterprise shall be limited to their proportionate share in its capital, and all the executive and managing officers of such corporation or association must be citizens of the Philippines. The Court of Appeals applied this provision in affirming the Board's directive, though the Supreme Court did not reach the merits due to mootness.
• Sections 10(a) and (b), Republic Act No. 776 — Empowers the Civil Aeronautics Board to regulate the economic aspect of air transportation and to exercise general supervision and regulation over air carriers, general sales agents, cargo sales agents, and airfreight forwarders, and to perform such acts and issue such orders as necessary to carry out the provisions of the Act. The Court of Appeals relied on these provisions in upholding the Board's resolutions.

Puno (Chairman), Quisumbing, Austria-Martinez, and Tinga, JJ., concurred.