Granting the San Miguel Aerocity, Inc. a Franchise to Establish and Operate an Airport in Bulakan, Bulacan
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Granting the San Miguel Aerocity, Inc. a Franchise to Establish and Operate an Airport in Bulakan, Bulacan
Republic Act No. 11506
December 20, 2020
Case Overview and Summary
Summary of Republic Act No. 11506Nature and Scope of Franchise (Section 1):
- Grants San Miguel Aerocity, Inc. (the grantee) a franchise to construct, develop, establish, operate, and maintain a domestic and international airport in Barangays Taliptip and Bambang, Bulakan, Bulacan.
- Allows the grantee to construct, acquire, lease, operate or manage related facilities like toll roads, railroads, mass transport systems, hotels, warehouses, hangars, aircraft service stations, and develop adjacent areas into an Airport City.
Manner of Operation (Section 2):
- Airport facilities must be operated and maintained according to standards and procedures required by the Manual of Standards-Aerodromes.
- The grantee must modify, improve, and change facilities as required by the Department of Transportation (DOTr) or Civil Aviation Authority of the Philippines (CAAP).
Authority of CAAP (Section 3):
- The grantee must secure appropriate certification, permit or license from CAAP for construction, installation and operation of the airport.
- CAAP has the power to impose conditions for construction, operation, and maintenance of the airport in compliance with international standards.
- CAAP has the authority to regulate the construction and operation of the airport.
Responsibility to the Public (Section 4):
- The grantee must conform to ethics of honest enterprise and not use the airport for subversive or treasonable acts.
- The grantee must operate and maintain the airport and Airport City in a satisfactory manner, comply with environmental and sustainability standards, and work with local governments and communities for safe and inclusive development.
Rates for Services (Section 5):
- Charges and rates for the use of the airport shall be subject to the approval of CAAP.
Airport City and Related Businesses (Section 6):
- The grantee is authorized to construct, acquire, own, lease, operate, develop or manage the Airport City, and conduct other businesses related to the airport.
- The grantee has the right to lease, sublease or assign interests in, and collect income from toll roads, railroads, mass transport systems, advertising, car parks, installation of cables, telephone lines, fiber optics or water mains, and other business ventures within the airport and Airport City.
Right of the Government (Section 7):
- The President of the Philippines reserves the right to temporarily take over and operate the airport, suspend its operation, or authorize temporary use by any government agency during times of war, rebellion, public peril, calamity, emergency, disaster, or disturbance of peace and order, upon due compensation to the grantee.
Term of Franchise (Section 8):
- The franchise is effective for 50 years from the effectivity of the Act, inclusive of a 10-year maximum period for design, planning and construction.
- The franchise shall be revoked if the grantee fails to: (a) commence construction within 1 year, (b) commence operations within 1 year from CAAP's operating permit approval, (c) commence operations within 12 years, and (d) operate continuously for 2 years.
- At the expiration of the franchise, the grantee shall turn over ownership of the airport to DOTr.
Acceptance and Compliance (Section 9):
- The grantee must give written acceptance of the franchise to Congress within 60 days from the effectivity of the Act.
- Non-acceptance shall render the franchise void.
Bond (Section 10):
- The grantee must file a bond with CAAP in an amount determined by CAAP to guarantee compliance with the franchise conditions.
- If the grantee fulfills the conditions after 3 years from CAAP's permit approval, the bond shall be cancelled. Otherwise, the bond shall be forfeited in favor of the government and the franchise revoked.
Gross Receipts (Section 11):
- The grantee must keep a separate account of gross receipts and furnish the Commission on Audit (COA) and Bureau of the Treasury a copy annually by January 31.
Books and Accounts (Section 12):
- The grantee's books and accounts shall always be open to inspection by COA.
- The grantee must submit quarterly reports on gross receipts, net profits and general condition of the business to COA.
Warranty in Favor of National and Local Governments (Section 13):
- The grantee shall hold the national, provincial, city, and municipal governments free from all claims, accounts, demands, or actions arising out of accidents or injuries caused by the construction or operation of the airport.
Sale, Lease, Transfer, Grant of Usufruct, or Assignment of Franchise (Section 14):
- The grantee cannot sell, lease, transfer, grant usufruct, or assign the franchise or rights acquired without prior approval of Congress.
- Congress must be informed of any such transaction within 60 days after completion.
- Failure to report shall render the franchise revoked.
- Certain exceptions apply related to transfer or issuance of shares, sale to investors, capital increase, and transactions with affiliates.
Right-of-Way (Section 15):
- The grantee has the power to acquire private lands within or adjacent to the airport premises through purchase, negotiation, expropriation or condemnation proceedings for development of the airport and Airport City, and acquisition of right-of-way.
- Lands within Barangays Taliptip and Bambang comprising the airport and Airport City, and the right-of-way, are declared as agricultural and converted/reclassified as mixed-use commercial and/or industrial.
Tax Exemptions (Section 16):
- During the 10-year construction period, the grantee is exempt from all direct and indirect taxes and fees related to construction, development, establishment, and operation of the airport and Airport City.
- After the 10-year construction period and during the remaining franchise term, the grantee is exempt from income taxes and taxes on real estate, buildings and personal property, until the Bureau of Internal Revenue (BIR) determines the grantee has fully recovered its investment cost.
Revenue Sharing with the Government (Section 17):
- After the BIR determines the grantee has fully recovered its investment cost on the Airport City, the grantee is entitled to generate income equivalent to a 12% per annum Internal Rate of Return (IRR).
- Any amount in excess of the 12% IRR shall be remitted to the National Government.
- The IRR shall be reckoned and calculated within 3 months after the BIR's determination, and the grantee shall remit the government's share immediately after.
Dispersal of Ownership (Section 18):
- The grantee must offer at least 20% or a higher percentage of its outstanding capital stock in a securities exchange in the Philippines within 5 years from the BIR's determination that the grantee has fully recovered its investment cost.
- Non-compliance shall render the franchise revoked.
Reportorial Requirement (Section 19):
- The grantee must submit an annual report to Congress on its compliance with the franchise terms and operations on or before April 30 of every year during the franchise term.
- A reportorial compliance certificate from Congress is required before CAAP accepts any permit or certificate application.
Penalty Clause (Section 20):
- Failure to submit the annual report to Congress shall be penalized by a fine of One million pesos (P1,000,000.00) per working day of non-compliance, collected by CAAP from the grantee and remitted to the Bureau of the Treasury.
Equality Clause (Section 21):
- Any advantage, favor, privilege, exemption, or immunity granted under existing or future franchises, upon prior review and approval of Congress, shall become part of this franchise and be accorded to the grantee, except for provisions concerning territorial coverage, term, or type of service.
Repealability and Non-exclusivity Clause (Section 22):
- The franchise is subject to amendment, alteration, or repeal by Congress when the public interest requires, and shall not be interpreted as an exclusive grant.
Separability Clause (Section 23):
- If any section or provision is held invalid, all other valid provisions shall remain in effect.
Repealing Clause (Section 24):
- All laws, decrees, orders, resolutions, instructions, rules and regulations inconsistent with this Act are repealed, amended, or modified accordingly.
Effectivity (Section 25):
- The Act shall take effect 15 days after its publication in the Official Gazette or a newspaper of general circulation.
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Law
Granting the San Miguel Aerocity, Inc. a Franchise to Establish and Operate an Airport in Bulakan, Bulacan
Republic Act No. 11506
•December 20, 2020
December 20, 2020
REPUBLIC ACT NO. 11506
AN ACT GRANTING SAN MIGUEL AEROCITY, INC. A FRANCHISE TO CONSTRUCT, DEVELOP, ESTABLISH, OPERATE, AND MAINTAIN A DOMESTIC AND INTERNATIONAL AIRPORT IN THE MUNICIPALITY OF BULAKAN, PROVINCE OF BULACAN, AND TO CONSTRUCT, DEVELOP, ESTABLISH, OPERATE, AND MAINTAIN AN ADJACENT AIRPORT CITY
SECTION 1. Nature and Scope of Franchise. — Subject to the provisions of the Constitution and applicable laws, rules and regulations, there is hereby granted to San Miguel Aerocity, Inc., hereinafter referred to as the grantee, its successors or assignees, a franchise to construct, develop, establish, operate, and maintain for commercial purposes and in the public interest, a domestic and international airport, hereinafter referred to as the airport, in Barangays Taliptip and Bambang in the Municipality of Bulakan, Province of Bulacan.
The grantee, its successors or assignees, shall likewise have the right to construct, acquire, lease, operate or manage such properties as are convenient or essential to efficiently carry out the objectives of this Act, such as toll roads, railroads, mass transport systems, hotels, warehouses, hangars, aircraft...
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