Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

SEVENTEENTH CONGRESS
First Regular Session

5813

House Bill No.

Introduced by Rep. Pantaleon D. Alvarez, Rep. Rodolfo C. Farinas and Rep. Danilo E.
Suarez

EXPLANATORY NOTE

Article XIE Section 11 of the Philippine Constitution states that no franchise,
certificate, or any other form of authorization for the operation of a public utility shall be
granted, except under the condition that it shall be subject to amendment, alteration, or
repeal by the Congress when the common good so requires.

Article 1733 of the Civil Code on the other hand provides that common carriers are
bound to observe extraordinary diligence in the vigilance over the goods and for the safety
of the passengers transported by them, according to all circumstances of each case.

It is in this regard that Air Philippines Corporation (presently known as PAL
Express) was granted a legislative franchise by Congress through Republic Act No. 9215 on
July 26, 2003, with the express provision that it will charge just and reasonable rates and
provide efficient service to the ridling public

Unfortunately, various complaints have been mace by passengers regarding the
poor service of Air Philippines, specifically exorbitant fees charged during, peak season,
inordinate delays in flights, and worse, unilateral cancellation of flights, causing, severe
inconvenience to the people, These practices of Air Philippines are detrimental to the
common good and do not fall within the purview of “extraordinary diligence.”

In fact, these are grounds for the amendment and alteration of the franchise of Air

Philippines, something that this bill seeks to achieve to make the franchise of Air Philippines
more beneficial to the riding, public

In view of the foregoing, bill isffarnestly sought.

PANTALEON D. AL} Z

Cb ru

DANILO E. SUAREZ RODOLFO C. FARINAS


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

Seventeenth Congress
First Regular Session

House Bill No. __ 5813

Introduced by Honorable Pantaleon D, Alvarez, Honorable Rodolfo C. Farinas and
Honorable Danilo E, Suarez

AN ACT
FURTHER AMENDING THE FRANCHISE GRANTED TO AIR PHILIPPINES:
CORPORATION, UNDER REPUBLICACT NO. 8339, OTHERWISE KNOWN AS "AN
ACT GRANTING AIR PHILIPPINES CORPORATION (AIR PHILIPPINES) A.
FRANCHISE TO ESTABLISH, OPERATE, AND MAINTAIN DOMESTIC AND
INTERNATIONAL AIRTRANSPORT SERVICES” AS AMENDED.

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

i SECTION 1, Section 4 of Republic Act No. 8339, otherwise known as “An Act Granting Air
2 Philippines Corporation (Air Philippines) a Franchise to Establish, Operate and Maintain

3 Domestic and International Air Transport Services” is hereby amended to read as follows:

4 “SECTION 4, Rules for Services. ~ The grantee shall fix just and reasonable rates for
5 the transportation of passengers, mail, goods and freight, subject to. the
6 regulations and approval of the Civil Aeronautics Board and other proper

regulatory agencies of the government. PROVIDED HOWEVER, THAT ANY
8 INCREASE IN RATES THAT IS A NATURAL CONSEQUENCE OF HE INCREASE
9 IN DEMAND DURING PEA

SON, SHALL BE SUBJECT TO A CAP OF 20%

10 OVER THE REGULAR OFF-PEAK RATES

ul

12. SECTION 2. Section 5 of Republic Act No. 8339 is hereby amended to read as follows:

1B “SECTION 5. Tern of Franchise. ~ ‘This franchise shall be for a term of twenty-five (25)
ir years from the date of effectivity of this Act, unless sooner revoked or cancelled. This,
15 franchise shall be deemed ipso facto revoked in the event the grantee fails to comply:
16 with any of the following conditions:


(a) Commence operations within one (1) year from the approval of its permit by

the Civil Aeronautics Board;

3 (b) Operate continuously for two (2) years; and
4 () Commence operations within two (2) years from the effectivity of this Act.

5 THIS FRANCHISE IS SUBJECT TO REVIEW BY CONGRESS EVERY FIVE YEARS
6 FROM THE EFFECTIVITY OF THIS AMENDATORY ACT

8 TION 3. Section 11 of Republic Act No, 8339, as amended by Republic Act 9215, is

9 hereby further amended to read as follows:
10 “SEC. 11, Tax Provisions, — The grantee, ils successors or assigns, shall pay to the

ul Philippine Government during, the life of its franchise, THE VALUE-ADDED TAX

12: UNDER REPUBLIC ACT NO 7716, AS AMENDED, OR A FRANCHISE TAX OF
3 FIVE PERCENT (5%) PER ANNUM OR AT SUCH PERCENTAGE AS MAY BE
MW PRESCRIBED BY LAW ON ALL GROSS RECEIPTS OF ITS TRANSPORT BUSINESS
15 TRANSCTED UNDER THIS FRANCHISE, WHICHEVER IS HIGHER; PROVIDED
16 THAT THE GRANTEE, ITS SUCCESSORS OR ASSIGNS, SHALL CONTINUE TO
17 BE LIABLE FOR INCOME TAXES PAYABLE UNDER TITLE II OF THE NATIONAL
18 INTERNAL REVENUE CODE PURSUANT TO SEC, 2 OF EXECUTIVE ORDER NO,
9 72, UNLESS THE LATTER ENACTMENT IS AMENDED OR REPEALED, IN
20) WHICH CASE, THE AMENDMENT OR REPEAL SHALL BE APPLICABLE
21 THERETO, [a franchise tax of five percent (5%) of the gross revenues derived by the
22 grantee from ils transport operations. |

23

4 [In the event that any competing, individual, partnership or corporation

receives or enjoys tax privileges and other favorable terms which tend to place the

26 herein grantee at any disadvantage, then such provisions shall be deemed ipso facto
2 part hereof and shall operate equally in favor of the grantee. The grantee shall,
28 however, be subject to income tax levied under Title I of the National Internal
29 Revenue Code, as amended, and tax on its real property under existing laws on
30 revenues earned from activities other than air transportation.”]

31

32 THE GRANTEE, ITS SUCCESSORS OR ASSIGNEES, SHALL BE LIABLE TO PAY
oo) THE SAME TAXES ON THEIR REAL ESTATE, BUILDINGS AND PERSONAL
34 PROPERTY, EXCLUSIVE OF THIS FRANCHISE, AS OTHER PERSONS OR


CORPORATIONS ARE NOW OR HEREAFTER MAY BE REQUIRED BY LAW TO
PAY.

SECTION 4. A new Section 14 is hereby inserted in Republic Act No, 8339, to read as

follows:
“SECTION 14. COMPLIANCE WITH APPLICABLE LAWS. - THE GRANTEE
SHALL COMPLY WITH ALL APPLICABLE LAWS, RULES, AND REGULATIONS,
PARTICULARLY REPUBLIC ACT NO. 7432, AS AMENDED BY REPUBLIC ACT
NO, 9994, OTHERWISE KNOWN AS THE “EXPANDED SENIOR CITIZENS ACT
OF 2010” AND REPUBLIC ACT NO, 7277, AS AMENDED BY REPUBLIC ACT NO.
10754, OTHERWISE KNOWN AS “AN ACT EXPANDING THE BENEFITS AND
PRIVILEGES OF PERSONS WITH DISABILITY (PWD)".

All other sections are hereby renumbered accordingly

SECTION 5. Repeatability and Non-exclusivity Clause, ~ This franchise shall be subject
to amendment, alteration, or repeal by the Congress of the Philippines when the

public interest so requires and shall not be interpreted as an exclusive grant of the

privileges herein proviced for.
SECTION 6. Separability Clause. ~ If any of the sections or provisions of this Act is

held invalid, all other provisions not affected thereby shall remain valid.

SECTION 7, Repealing Clause. ~ All laws, decrees, orders, resolutions, instructions,
rules and regulations, and other issuances, or parts there of which are inconsistent
with the provisions of this Act are hereby repealed, amended, or modified

accordingly

SECTION 8. Effectivity.- This Act shall take effect fifteen (15) days after its

publication in the Official Gazette or in a newspaper of general circula ion.

Approved,