AN ACT GRANTING SOUTHEAST ASIAN AIRLINES (SEAIR)

Case Overview and Summary

Summary of Republic Act No. 9517

Nature and Scope of Franchise (Section 1):
- Grants Southeast Asian Airlines (SEAir), Inc. a franchise to establish, operate and maintain domestic and international air transport services.
- Allows the operation of hangars, aircraft service stations, and other auxiliary facilities.
- Permits the construction and operation of wireless communication facilities for weather forecasts and air navigation purposes.

Civil Aeronautics Board (CAB) Regulation (Section 2):
- SEAir must secure appropriate permits and licenses from the CAB.
- All aircraft, crew, and equipment must comply with regulations and technical requirements of the Civil Aviation Authority of the Philippines.
- SEAir's operations are subject to inspection and regulation by the Civil Aviation Authority.

Responsibility to the Public (Section 3):
- SEAir must maintain scheduled, non-scheduled, and chartered air transport services within the Philippines and between the Philippines and other countries, as traffic needs require.
- At least 25% of all frequencies must be for the domestic market.

Rates for Services (Section 4):
- SEAir shall fix just and reasonable rates for transportation of passengers, mail, goods, and freight, subject to CAB and other regulatory agencies' approval.

Term of Franchise (Section 5):
- The franchise is valid for 25 years from the date of effectivity, unless revoked or cancelled earlier.
- The franchise will be revoked if SEAir fails to:
    a) Commence operations within 1 year from CAB permit approval.
    b) Operate continuously for 2 years.
    c) Commence operations within 2 years from the Act's effectivity.

Acceptance and Compliance (Section 6):
- SEAir must accept the franchise in writing within 60 days after the Act's effectivity.
- Non-acceptance will render the franchise void.

Bond (Section 7):
- SEAir must file a bond determined by the CAB to guarantee compliance with the franchise conditions.
- The bond will be cancelled after 3 years if SEAir fulfills the conditions, otherwise forfeited.

Landing Facilities (Section 8):
- SEAir may use government-owned landing and airport facilities in the Philippines, subject to terms and conditions imposed by the government.
- The Philippine Government has the right to use SEAir's landing and airport facilities in the Philippines.

Contracts (Section 9):
- SEAir is authorized to enter into transportation contracts with the Philippine Government, including mail carrying.
- SEAir must give preferential consideration to contracts with the Philippine Government.
- SEAir may enter into transportation, maintenance, servicing, and other air transport-related contracts with foreign-owned airlines.

Right of Government (Section 10):
- The President of the Philippines reserves the right to temporarily take over, suspend operations, or authorize temporary use of SEAir's facilities in times of war, public peril, calamity, emergency, or disturbance, with due compensation.

Warranty in Favor of Governments (Section 11):
- SEAir shall hold the national, provincial, city, and municipal governments harmless from claims arising out of accidents or injuries caused by its operations.

Nontransferability of Franchise (Section 12):
- SEAir cannot lease, transfer, sell, assign, or merge the franchise or rights without prior approval from the Congress of the Philippines.
- Any entity to which the franchise is transferred shall be subject to the same conditions and limitations.

Dispersal of Ownership (Section 13):
- SEAir must offer at least 30% of its outstanding capital stock in a securities exchange in the Philippines within 5 years from commencement of operations.
- Non-compliance will render the franchise revoked.

Reportorial Requirement (Section 14):
- SEAir must submit an annual report to the Congress of the Philippines on its compliance with the franchise terms and operations within 60 days from the end of every year.

Equality Clause (Section 15):
- If any competing entity receives more favorable terms or privileges, such terms shall be deemed part of SEAir's franchise and operate equally in its favor.

Separability Clause (Section 16):
- If any section or provision is held invalid, other unaffected provisions shall remain valid.

Repealability and Nonexclusivity Clause (Section 17):
- The franchise is subject to amendment, alteration, or repeal by the Congress of the Philippines when public interest requires.
- The franchise shall not be interpreted as an exclusive grant of privileges.

Effectivity Clause (Section 18):
- The Act shall take effect 15 days from its publication in at least two newspapers of general circulation in the Philippines, upon SEAir's initiative.