REPUBLIC OF THE PHILIPPINES
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

House Bill No. its

Introduced by Pangasinan Fifth District Representative
HON. RAMON V. GUICO III

EXPLANATORY NOTE

Aviation is generally considered as a positive indicator of economic development in a local
area, Communities located within an airport’s vicinity usually find a marked improvement on their
quality of life; swift access to needed social services; effective and timely response to natural and
man-made disasters; and strong economic growth, among others.

The problem, however, is that many areas in the Philippines—rural ones particularly—are
deprived of such benefits, despite the myriad of potential that a local airport can unlock in these
areas. This is a great disservice to our countrymen whose hopes of a better life are crushed by the
lack of opportunities, or in this case, amenities to spur commercial activity on their respective
hometowns. To address this, rural airports must be established in rural areas where such service is,
deemed necessary.

While major airports, like the NAIA, provide a variety of services, the sheer size of its
overall infrastructure and the cost of building and operating one are burdens that local governments
in rural areas may find too cumbersome. Rural airports on the other hand, while operationally
limited, can cater to the unique needs of an area, which includes, but is not limited to: providing
access to agricultural spray planes, medical transport, recreational, and emergency services. Using
rural airports strategically can reduce the onslaught of congestion in major airports, reduce
transportation costs, provide easier access points to tourist destinations, and allow for better
personnel, service and goods delivery.

‘As such, this bill is proposed to address the lack of this key infrastructure in the national air
transport network. Under this Act, rural airports shall be established whenever and wherever it is
deemed feasible and necessary with the help of the private sector.

In view of the foregoing, immediate passage of this bill is earnestly sought.

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Rep. Rampn V. Guic) Il



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REPUBLIC OF THE PHILIPPINES
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

House Bill No. 5075

Introduced by Pangasinan Fifth District Representative
HON. RAMON V. GUICO II

AN ACT
GRANTING THE RIGHT TO FRANCHISEES TO DEVELOP THE RURAL AIRPORT
iFRASTRUCTURE NETWORK IN THE PHILIPPINES FOR COMMERCIAL AND OTHER
PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in Congress
assembled,

SECTION 1. Short Title—This Act shall be known as the “Rural Airport Development
Act.”

SEC. 2. Franchisee.—The provisions of this Act shall be available to any congressional
franchise holder engaged in rural air transport operating any type or fixed or rotary wing, land, or sea
type of aircraft.

SEC. 3. Rural Airport—As used in this Act, a rural airport shall mean any runway, take-off
and landing area or seaway, not exceeding one thousand two hundred (1,200) meters in length, with a
total land area not exceeding twenty (20) hectares, which may be accessed by any type of aircraft rated
by its manufacturers to utilize the facilities.

Such airports are those which, due to the remoteness, lack the presence and continuous
operations of any government regulatory body.

Such an airport shall be so certified as a regular rural destination by any franchise.

SEC. 4. Construction, Management, Operation, and Maintenance of Rural Airports.—Any
franchisee may construct, manage, operate and/or maintain any rural airport in any part of the
Philippines in order to eventually make each municipality regularly accessible within easy reach of the
principal and proximate urban areas with a population of at least one hundred thousand (100,000).

SEC. 5. Use of Provincial or Municipal Road.—Any provincial or municipal road may be
used for take-off and landing purposes, provided these are delineated and previously approved by the
municipal or provincial government for such use, provided further, that the features of the said airport
in the specifications and operating limits according to the manufacturers of the aircraft
employed and provided finaly, that adequate safety standards are followed by the franchisee.



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SEC. 6. Development of the Surrounding Area of the Airport—In order to encourage
industries to be developed within the immediately surrounding area of the airport, the franchisee may
establish, manage, lease, and operate the following activities: aircraft hangarage, educational facilities
for aircraft mechanics, pilot and personnel; warehouses, light industry, commercial and financial
facilities; hotel guest house and tourism facilities; and telecommunications facilities to support
activities, provided these facilities are within five hundred-meter (500m) radius of the runway of said

airports.

SEC. 7. Government Use.—The franchisee, with the use of its own aircraft and airport facilities
may provide said services to any branch of the Armed Forces of the Philippines (AFP) or any
government agency to be compensated either in cash or in the equivalent amount of aviation fuel to be
drawn from any government branch or agency in areas where these are available within terms mutually
acceptable to both parties.

SEC. 8. Right to Operate.—To relieve the government of the expenses in maintaining rural
airports and other missionary destinations, and as a variation of the Build-Operate-Transfer Law, the
franchisee may take-over the management, maintenance, and operation of any existing government
agency-operated rural airport, provided that the franchisee’s own annual operating costs of operating
and maintaining said airport, adjusted for an annual increment not to exceed ten percent (10%) per
annum. All subsequent operating expenses of the airport and the air terminal shall be for the account of
the franchisee. The savings to the government agency due to the relief from operating the airport and
terminal may be employed for other airport projects elsewhere.

SEC. 9. Right to Purchase or Lease.—The franchisee shall have the right to purchase and/or
lease, whichever is applicable and available, adequate space at any government or government agency-
‘owned airport, aerodome, or air terminal for purposes of linking the rural air transport system with
national and international flight and providing necessary support services.

SEC. 10. Insurance Coverage.—The franchisee shall be required to cover all passengers and
cargo with insurance as specified by the Civil Aviation Authority of the Philippines (CAP). Any third
party liability of the franchisee shall be limited to the amount of the insurance cover so specified.

SEC. 11. Franchisee as Deputy of CAAP.—Whenever the Civil Aviation Authority of the
Philippines (CAAP) is not present in any airport point of origin or destination within the Philippines,
the franchisee shall automatically assume the status as the deputy of the CAAP for air safety purposes.
The franchisee, as well as the airports operated by the franchisee shall not be subject to any restrictive
operations by any government agency except those that pertain to the national interest. Regular reports
on all airports operated by the franchisee shall be made by the franchisee to the CAAP.

SEC. 12. Full Authority to Administer.—The franchisee shall exercise authority as may be
necessary within its premises or airports of operation and carry out its functions, provided that the
Franchisee may request the assistance of law enforcement agencies, including deputization may be
required. Such authority shall be exercised in connection with the following:

a. Maintenance of safety and security to passengers, cargos, aircraft, airport
equipment, structures, facilities, personnel, funds and documents;

b. Regulating entry to, exit from and movement within the airports;


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c. Maintenance of peace and order within the premises;
4. Contracting of private security agencies;

e. Removal of natural obstructions that affect safety of takeoff and landing such as
trees without need for government clearances; and

f. Enforcement of the rules and regulations promulgated by the franchisee pursuant to
the law.

In case of emergencies or imminent danger involving national security within the airport
premises, the Philippine Air Force Security Command shall take charge.

SEC. 13. Tax Incentives.—The franchisee as operator of rural airport, shall be exempt from
any and all taxes, including income, capital gains, lease, rental, gross, value-added, ad valorem,
compensating, import and export duties on its aircraft parts and maintenance and overhauling
equipment, interest on loans and dividends on investment contracted or granted, fuel, oil and real-estate
taxes. In lieu of said taxes, the franchisee shall pay the government, through the National Treasury, ten
(10%) percent of the gross revenue charged for all landing and take-off fees being charged on certified
rural airports.

SEC. 14. Authority to Offset—The provisions of the existing laws to the contrary
notwithstanding, the Secretary of Budget and Management and/or the National Treasurer are hereby
authorized to offset any outstanding obligation of the franchisee as the operator of rural airport to any
agency or instrumentality of the government, including those incurred in the construction and
maintenance of certified rural airports.

SEC. 15. Proceeds of the Offset—The franchisee shall be authorized to purchase, lease,
construct, rehabilitate, modernize, improve rural airports as defined in this Act and apply the to offset
in accordance with Section 13 its expenses, provided that the amounts do not exceed fifty percent
(50%) of the equivalent costs of the government airport nearest to the certified rural airport. The
franchisee shall also be authorized to manage, maintain, and administer said rural airports and apply its
costs of management, administration, and maintenance to its right to offset under Section 14, provided
that such costs do not exceed fifty percent (50%) of the current management, administration, and
maintenance costs of the government airport nearest to the certified rural airports.

SEC. 16. Leniency Clause.—The franchisee shall be required to comply with the provisions of
Presidential Decree No.442 as amended, subject however to periodic review by the Department of
Labor and Employment.

SEC.17. No Disruption Policy.—As the rural airport is vital to the air transport system in
particular and the economy in general, its operations may not be disrupted by any agency unless
specifically approved by the President of the Philippines and such disruptions shall not exceed thirty
(30) days for any one occasion.

SEC. 18, Duration of Privilege-—These powers and privileges herein presented to an eligible
franchisee shall be valid for fifty (50) years and renewable for another fifty (50) years, unless
invalidated by Congress.


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SEC. 19. Penalty.—Violators of this Act shall be subjected to a fine of not more than five-
hundred thousand pesos (P500,000) or imprisonment for six months, or both, for any offense against
the provisions of this Act.

SEC. 19. Repealing Clause.—All laws, decrees, executive orders or parts thereof inconsistent
with the provisions of this Act is hereby repealed or modified accordingly.

SEC. 20. Separability Clause.—If any part or provision of this Act is declared invalid or
unconstitutional, the other parts not otherwise affected shall remain in full effect and force.

SEC. 21. Effectivity.—This Act shall take effect fifteen (15) days after its publication in the
Official Gazette or at least two newspapers of general circulation.

Approved,