Question & AnswerQ&A (Republic Act No. 7151)
Republic Act No. 7151 grants Cebu Air, Inc. a franchise to establish, operate, and maintain air transport services for the carriage of passengers, mail, goods, and property, both domestic and international, with Cebu as its base.
Cebu Air, Inc. has the right to construct, operate, and maintain wireless telegraphy stations or transmitting sets for radio aids to air navigation at its terminals, landing fields, and aircraft, using wavelengths as per government regulations, solely for receiving and transmitting weather forecasts and related services.
The grantee must secure appropriate permits and licenses from the Civil Aeronautics Board, ensure all aircraft and equipment are airworthy, have licensed crew members, and operate in accordance with the Air Transportation Office's regulations and other government regulatory bodies.
Cebu Air, Inc. must maintain at least twenty-five percent (25%) of all its flight frequencies for the domestic market.
The rates for the transportation of passengers, mail, goods, and freight are fixed by the grantee but are subject to regulation and approval by the Civil Aeronautics Board and other proper government regulatory agencies.
The franchise is granted for a term of forty (40) years from the date of approval of the Act unless revoked or cancelled sooner.
The franchise shall be deemed ipso facto revoked if the grantee fails to operate within two (2) years from the effectivity of the Act.
No, Cebu Air, Inc. cannot lease, transfer, sell, assign, or grant usufruct of this franchise or its controlling interest to any other entity without prior approval of Congress.
Within ten (10) years from the effectivity of the Act, Cebu Air, Inc. must make a public offering of at least thirty percent (30%) of its common stocks through the stock exchanges, with no single person or entity allowed to own more than five percent (5%) of the stock offerings.
The grantee must pay a franchise tax of five percent (5%) of gross revenues derived from transport operations and is also subject to income tax and property tax on revenues from other activities as provided by law.
The Philippine Government, upon the President's order, has the right to take over and operate the grantee's equipment during war, insurrection, domestic trouble, public calamity, or national emergency, with payment for its use or damages.
No single person or entity shall be allowed to own more than five percent (5%) of the stock offerings made public by the grantee as part of the public equity participation requirement.
If any section or provision is declared unconstitutional or invalid, the remaining sections shall continue to be in force as if the invalid section had never been incorporated.
The grantee may enter into transportation contracts with the Philippine Government, including carrying mail, and with foreign-owned airlines for routes servicing, maintenance, and other related purposes, giving preferential consideration to contracts with the Philippine Government.
The grantee holds the national, provincial, and municipal governments harmless from all claims, demands or actions arising out of accidents or injuries caused by the operation of its services, attributable solely to the grantee's act or omission.