G.R. No. 119528 - Philippine Airlines, Inc. vs. Civil Aeronautics Board

Philippine Airlines, Inc. (PAL) filed a Special Civil Action for Certiorari and Prohibition under Rule 65 seeking to prohibit the Civil Aeronautics Board (CAB) from exercising jurisdiction over Grand International Airways, Inc.’s (GrandAir) application for a Certificate of Public Convenience and Necessity (CPCN) and to annul a Temporary Operating Permit (TOP) issued in GrandAir’s favor.
GrandAir sought authority to engage in scheduled domestic air transportation on the Manila–Cebu, Manila–Davao, and converse routes.

On November 24, 1994, GrandAir filed its CPCN application (CAB Case No. EP-12711). The CAB set the initial hearing for December 16, 1994; GrandAir filed its compliance and requested a TOP on December 14, 1994.
PAL filed an Opposition to the CPCN application on December 16, 1994, alleging:

Lack of CAB jurisdiction because GrandAir lacked a legislative franchise;
Deficiencies in form and substance (absence of route structure with ASK computations, feasibility studies, financial statements, personnel lists, etc.);
Violation of equal protection;
Lack of urgent need; and
Potential for ruinous competition contrary to R.A. 776, § 4(d).

On December 20, 1994, the CAB’s Chief Hearing Officer denied PAL’s jurisdictional opposition, citing Section 10(C)(1) of R.A. 776 and the Court of Appeals decision in Avia Filipinas International vs. CAB.
PAL then opposed GrandAir’s request for a TOP on December 22, 1994, contesting GrandAir’s fitness and absence of clear and urgent public need.
On December 23, 1994, the CAB issued TOP No. 119(92) in favor of GrandAir effective December 22, 1994 to March 22, 1995. PAL’s motion for reconsideration (filed January 11, 1995) was denied by CAB Resolution No. 02(95) on February 2, 1995.
On March 21, 1995, the CAB extended GrandAir’s TOP for six months, up to September 22, 1995.
PAL filed the instant petition with the Supreme Court on April 3, 1995, arguing that GrandAir’s lack of a legislative franchise deprived the CAB of jurisdiction to grant CPCN and TOP.

Whether the CAB has jurisdiction to issue a Certificate of Public Convenience and Necessity and a Temporary Operating Permit to GrandAir in the absence of a legislative franchise, as required under Article XII, Section 11 of the Constitution.
Whether a legislative franchise is a condition precedent to the CAB’s issuance of a CPCN or TOP, or whether its absence only affects the ultimate grant of operational authority.