i ‘  
THIRTEENTH CONGRESS QF THE REPUBblC 
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“4 
JUN 30 PS :41 
1 
OF THE PHILIPPINE 
1 
First Regular Session 
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Introduced by Senator S. R. Osmeiia 111 
EXPLANATORY NOT 
In 1995, President Fidel V. Ramos signed Executive Order No. 21 9 liberalizing 
the country’s domestic and international civil aviation policy. The domestic market, 
heretofore monopolized by a single airline was opened up to competition. 
New 
domestic carriers were authorized to provide additional flights. Lower prices resulted. 
Even so-called “missionary routes” proved to be financially viable. 
Meanwhile, the liberalization of international airline services encouraged the 
entry of new international carriers and drove prices down for travelers and traders. It 
also provided greater access to the Philippine economy and contributed to a 120% 
rise in visitor arrivals from 1 million in 1992 to 2.2 million in 1997. 
In the late 1990s, the financial difficulties of Philippine Airlines (PAL) led to 
apparent reversals in the country’s aviation policies. The Civil Aeronautics Board 
(CAB) abrogated the RP-Taiwan Airline Service Agreement, contradicting the spirit of 
EO 21 9. The inconsistency between policy declaration and implementation led to 
foregone opportunities during the last quarter of 1999 which included some US$17.6 
million in estimated tourist spending by the Taiwanese, and some $30 million of direct 
and indirect outputs by sectors that supply the tourism sector, including $6.9 million in 
hotel revenues and $4.4 million in entertainment industry revenues. 
This bill seeks to strengthen the earlier initiatives towards the liberalization of 
the country’s aviation policies through provisions which among other things, will 
a) expand the membership of the Civil Aeronautics Board (CAB) 
to allow 
representation from the Departments of Tourism, Trade and Industry, and of other 
sectors which are directly affected by the country’s aviation policies; and 
b) introduce mechanisms that would reduce barriers to entry and promote competition 
in the airline industry, e.g. automatic entry program, experimental certificates, 
encouragement of charters, and anti-trust provisions. 
In the absence of laws that would ensure a level playing field in the airline 
industry, the national interest has often been easily subordinated and held hostage to 
the interest of a single dominant carrier. This bill seeks to promote competitive 
markets to ensure that the interests of the economy as a whole will prevail over the 
narrow interests of a single solitary airline. 


In view of the foregoing, early passage of this bill is earnestly requested. 
lL 
SERGIO OSMENA 111 
Senator 


1 
THIRTEENTH CONGRESS OF THE REPUBLIC 
) 
OF THE PHILIPPINES 
First Regular Session 
) 
S. No. 
* 
45 
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. &I^ 
~, ,.. ....... * C : r l  
Introduced by Senator S. R. Osmefia 111 
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AN ACT 
TO ACCELERATE THE LIBERALIZATION OF CIVIL AVIATION IN ORDER TO 
PROMOTE INVESTMENTS IN MANUFACTURING, AGRICULTURE, TRADE AND 
TOURISM, AMENDING R.A. 776, OTHERWISE KNOWN AS THE CIVIL 
AERONAUTICS ACT OF THE PHILIPPINES, AND FOR OTHER PURPOSES 
Be it enacted by the Senate and the House of Representatives of the Republic of the 
Philippines in Congress assembled: 
SECTION 1.Tifle. - This Act shall be known as the “Civil Aviation 
Liberalization Act of 2004.” 
SEC. 2. Declarafion of Policy - Sec. 2 of RA 776 shall be amended by 
adding at the end thereof the following new paragraph: 
“IT SHAL BE THE POLICY OF THE STATE TO PROMOTE THE PUBLIC 
INTEREST WITH RESPECT TO AIR TRANSPORTATION THROUGH THE 
FOLLOWING OBJECTIVES: 
A) THE 
PRlORlTlZATlON 
OF 
PASSENGER 
SAFETY 
IN AIR 
COMMERCE THROUGH FULL AND THOROUGH EVALUATION OF 
THE SECRETARY OF TRANSPORTATION ON THE SAFETY 
IMPLICATIONS OF NEW AIR TRANSPORT SERVICES; 
B) RELIANCE ON THE CAPABILITY OF COMPETITIVE MARKET 
FORCES TO PROVIDE NEEDED AIR TRANSPORT SYSTEM; 
ATTRACT CAPITAL, ALLOWING PROPERLY CAPITALIZED AND 
WELL-MANAGED CARRIERS TO EARN REASONABLE PROFITS; 


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AND TO DETERMINE THE VARIETY, QUALITY AND PRICE OF AIR 
TRANSPORTATION SERVICES IN THE COUNTRY; 
C) THE 
DEVELOPMENT AND 
MAINTENANCE OF A 
SOUND 
REGULATORY ENVIRONMENT WHICH IS RESPONSIVE TO THE 
NEEDS OF THE PUBLIC AND IN WHICH DECISIONS ARE 
REACHED PROMPTLY IN ORDER TO FACILITATE ADAPTION OF 
THE AIR TRANSPORTATION SYSTEM TO THE PRESENT AND 
FUTURE NEEDS OF THE ECONOMY ESPECIALLY DOMESTIC 
AND FOREIGN TRADERS, TOURISTS, PHILIPPINE OVERSEAS 
MIGRANT WORKERS, AND POSTAL SERVICES; 
D) THE PREVENTION OF UNFAIR, DECEPTIVE, PREDATORY OR 
ANTI-COMPETITIVE PRACTICES IN AIR TRANSPORTATION AND 
THE 
AVOIDANCE 
OF 
A) 
UNREASONABLE 
INDUSTRY 
CONCENTRATION, EXCESSIVE MARKET DOMINATION, AND 
MONOPOLY POWER; AND 6) OTHER CONDITIONS THAT WOULD 
TEND TO ALLOW ONE OR 
MORE AIR 
CARRIERS TO 
UNREASONABLY INCREASE PRICES, REDUCE SERVICES, OR 
EXCLUDE COMPETITION IN AIR TRANSPORTATION; AND 
E) THE ENCOURAGEMENT OF ENTRY INTO AIR TRANSPORT 
MARKETS OF NEW AIR CARRIERS, THE ENCOURAGEMENT OF 
ENTRY INTO ADDITIONAL AIR TRANSPORT MARKETS OF 
EXISTING CARRIERS, AND THE CONTINUED STRENGTHENING 
OF SMALL AIR CARRIERS SO AS TO ASSURE A MORE 
EFFECTIVE, COMPETITIVE AIR TRANSPORT INDUSTRY.” 
Chapter 1 I 
THE CIVIL AERONAUTICS BOARD 
SEC. 3. Sec. 5 of RA 776 shall be amended to read as follows: 
“SEC. 5. A. Composition of the Board. - The Civil Aeronautics 
Board, HEREINAFTER REFERRED TO AS THE BOARD, shall be 


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composed of [the Secretary of Commerce and Industry as Chairman, the 
Civil Aeronautics Administrator, the Commanding Officer of the Philippine 
Air Force, and two other members to be appointed by the President of the 
Philippines. They shall hold office at the pleasure of the President and 
shall be entitled to per diem for each meeting actually attended by them 
in such amount as may be fixed by the President. In case of absence or 
incapacity of the Secretary of Commerce and Industry, the Civil 
Aeronautics Administrator shall Act as Chairman. 
In case the Undersecretary of Commerce and Industry and/or 
Deputy Administrator act in the stead of the Secretary of Commerce and 
Industry and/or Administrator, respectively, they shall hold office and be 
entitled to per diem for each meeting actually attended by them in the 
Civil Aeronautics Board. No member of the Board shall have any 
pecuniary interest in, or own any stock or bond of, any civil aeronautics 
enterprise] SEVEN (7) MEMBERS AS FOLLOWS: 
A) 
THE 
SECRETARY 
OF 
TRANSPORTATION 
AND 
COMM U N ICATIONS AS EX-OF F I C IO CHAl RP ERSON ; 
B) 
THE SECRETARY OF TOURISM AS EX-OFFICIO VICE 
CHAIRPERSON; 
C) 
THE HEAD OF THE AIR TRANSPORTATION OFFICE 
(ATO) AS EX-OFFICIO MEMBER; 
D) 
AN UNDERSECRETARY OF THE DEPARTMENT OF 
TRADE AND INDUSTRY AS EX-OFFICIO MEMBER; 
E) 
AN UNDERSECRETARY OF THE DEPARTMENT OF 
FOREIGN AFFAIRS AS EX-OFFICIO MEMBER; AND 
F) 
TWO (2) MEMBERS FROM THE PRIVATE SECTOR WHO 
SHALL BE APPOINTED BY THE PRESIDENT OF THE PHILIPPINES 
FOR A TERM OF THREE (3) YEARS, ONE OF WHICH SHALL COME 
FROM THE TOURISM INDUSTRY AND THE OTHER FROM THE 


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BUSINESS AND 
INVESTMENT SECTOR. AS LONG AS THE 
POSITIONS OF NON EX-OFFICIO MEMBERSHIP POSITIONS ARE 
NOT VACANT, NO PERSON SHALL BE APPOINTED TO THE 
POSITIONS. SHOULD EITHER POSITION BECOME VACANT BY 
REASON OF EXPIRATION OF TERM, RESIGNATION, INCAPACITY 
OR REMOVAL FROM OFFICE FOR ANY OF THE CAUSES SPECIFIED 
BY LAW, THE SUCCESSOR TO THE POSITIONS SHAL BE 
APPOINTED TO A TERM OF THREE (3) YEARS. ANY PERSON WHO 
HAS BEEN APPOINTED AS NON EX-OFFICIO MEMBER OF THE 
BOARD MAY BE REAPPOINTED TO THE SAME POSITION BUT THE 
TOTAL TERM OF SUCH REAPPOINTEE SHALL NOT EXCEED SIX (6) 
YEARS. 
AT LEAST ONE (1) MEMBER OF THE BOARD SHALL BE A 
LAWYER . ” 
SEC. 4. Sec. 6. of RA 776 shall be amended to read as follows: 
“SEC. 6. Principal Office and Quorum. - The Board shall 
have its principal office in the [City of Manila] NATIONAL CAPITAL 
REGION and may hold hearings on any proceedings at such time and 
places within the Philippines as it may provide by order in writing. The 
[Chairman] CHAIRPERSON OR VICE-CHAIRPERSON and [two] FOUR 
(4) members of the Board shall constitute a quorum to transact business. 
A majority vote of the members constituting a quorum shall be necessary 
for a valid and enforceable decision or order by the Board. A tie vote shall 
be referred to the President of the Philippines for decision. 
THE BOAR SHALL MEET REGULARLY AT LEAST ONCE 
A MONTH AND MAY HOLD SPECIAL MEETINGS TO CONSIDER 
URGENT MATTERS UPON CALL OF ANY OF THE FOLLOWING: 
(A) 
THE 
SECRETARY 
OF 
TRANSPORTATION 
AND 
COMMUNICATIONS 


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(B) 
(C) 
INTERNAL RULES OF PROCEDURE IN THE CONDUCT OF 
THE SECRETARY OF TOURISM; OR 
ANY THREE (3) BOARD MEMBERS. 
BOARD MEETINGS SHALL BE AS PRESCRIBED BY THE BOARD. 
THE BOARD MAY DELEGATE ANY OF ITS POWERS TO ANY 
MEMBER THEREOF OR THE EXECUTIVE DIRECTOR OF THE 
BOARD ON VERY IMPORTANT MATTERS SPECIFIED IN THE 
IMPLEMENTING RULES AND REGULATIONS (IRR) AND SUCH 
DELEGATION CONTINUES IN FORCE DESPITE CHANGES IN THE 
COMPOSITION OF THE BOARD. SUCH DELEGATION MAY BE 
REVOKED, REVIVED OR MODIFIED BY RESOLUTION OF THE 
BOARD, DESPITE CHANGES IN THE COMPOSITION OF THE BOARD, 
ANY EXERCISE OF SUCH DELEGATED POWERS SHALL BE 
REPORTED IN WRITING TO THE BOARD AT ITS NEXT REGULAR 
MEETING AFTER SUCH EXERCISE. 
IN VERY URGENT MATTERS TO BE SPECIFIED IN THE IRR, 
THE BOARD MAY PASS A RESOLUTION BY ELECTRONIC MEANS 
AND SUCH RESOLUTION SHALL BE DEEMED TO HAVE BEEN 
PASSED AT A BOARD MEETING.” 
SEC. 5. A new Section 22(A) shall be inserted under Chapter IV of RA 
read as follows: 
“SEC. 22(A). DETERMINATIONS FOR THE ISSUANCE OF 
CERTIFICATES. - IN ANY DETERMINATION AS TO WHETHER OR 
NOT ANY APPLICANT IS FIT, WILLING AND ABLE TO PERFORM 
PROPERLY THE AIR TRANSPORTATION SPECIFIED IN THE 
APPLICATION FOR A CERTIFICATE, AND TO CONFORM TO THE 
PROVISIONS OF THIS ACT, THE APPLICANT SHALL HAVE THE 
BURDEN OF SHOWING THAT IT IS SO FIT, WILLING AND ABLE. 


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IN ANY DETERMINATION AS TO WHETHER THE AIR 
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TRANSPORTATION SPECIFIED IN ANY APPLICATION FOR A 
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CERTIFICATE IS OR IS NOT CONSISTENT WITH THE PUBLIC 
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CONVENIENCE AND 
NECESSITY, AN 
OPPONENT 
OF 
THE 
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APPLICATION SHALL HAVE THE BURDEN OF SHOWING THAT 
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SUCH AIR TRANSPORTATION IS NOT CONSISTENT WITH THE 
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PUBLIC CONVENIENCE AND NECESSITY. 
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TRANSPORTATION COVERED BY ANY APPLICATION FOR A 
CERTIFICATE SHALL, FOR PURPOSES OF SUCH PARAGRAPHS BE 
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DEEMED TO BE CONSISTENT WITH THE PUBLIC CONVENIENCE 
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AND NECESSITY, UNLESS THE BOARD FINDS THAT BASED UPON 
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A PREPONDERANCE OF EVIDENCE, SUCH TRANSPORTATION IS 
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NOT CONSISTENT WITH THE PUBLIC CONVENIENCE AND 
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to read as follows: 
N EC ESS ITY ,” 
Sec. 6. A new section 24(a) shall be inserted under Chapter IV of RA 776 
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“SEC. 24 (A) UNUSED AUTHORITY. - IF AN AIR CARRIER IS 
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AUTHORIZED BY ITS PERMIT TO PROVIDE ROUND TRIP SERVICE 
NONSTOP EACH WAY BETWEEN ANY TWO POINTS IN DOMESTIC 
OR OVERSEAS AIR TRANSPORTATION AND IF SUCH AIR CARRIER 
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FAILS TO PROVIDE SUCH SERVICE PURSUANT TO PUBLISHED 
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FLIGHT SCHEDULES AT A MINIMUM OF FIVE ROUND TRIPS PER 
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WEEK FOR AT LEAST THIRTEEN WEEKS DURING ANY TWENTY-SIX 
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WEEK PERIOD (OTHER THAN SUCH A PERIOD DURING WHICH 
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SERVICE WAS INTERRUPTED BY A LABOR DISPUTE WHICH 
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LASTED MORE THAN SIX WEEKS) THE LAST DAY OF WHICH ENDS 
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ON OR AFTER THE DATE OF ENACTMENT OF THIS PARAGRAPH 
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AND IF SUCH SERVICE, AT A MINIMUM OF FIVE ROUND TRIPS PER 
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WEEK HAS BEEN PROVIDED BETWEEN SUCH POINTS FOR AT 


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LEAST THIRTEEN WEEKS DURING SUCH TWENTY-SIX WEEK 
PERIOD, PURSUANT TO PUBLISHED FLIGHT SCHEDULES, BY NO 
MORE THAN ONE OTHER AIR CARRIER, THEN THE BOARD SHALL 
ISSUE A CERTIFICATE TO THE FIRST APPLICANT WHO, WITHIN 
THIRTY DAYS AFTER THE LAST DAY OF SUCH TWENTY-SIX WEEK 
PERIOD, SUBMITS AN APPLICATION WHICH CERTIFIES THAT ITS 
AIRCRAFT SHALL MEET ALL REQUIREMENTS ESTABLISHED BY 
THE SECRETARY OF TRANSPORTATION FOR THE CARRIAGE BY 
AIRCRAFT OF PERSONS OR PROPERTY AS A COMMON CARRIER 
FOR COMPENSATION OR HIRE OR THE CARRIAGE OF MAIL BY 
AIRCRAFT IN COMMERCE AND THAT IT IS ABLE TO CONFORM TO 
THE RULES, REGULATIONS, AND REQUIREMENTS OF THE BOARD 
PROMULGATED PURSUANT TO THIS ACT. 
“WITH 
RESPECT 
TO 
ANY 
APPLICATION 
SUBMITTED 
PURSUANTTOTHEPRECEDlNGPARAGRAPH,THEBOARDSHALL 
ISSUE A FINAL ORDER GRANTING SUCH CERTIFICATE WITHIN 
FIFTEEN DAYS OF THE DATE OF SUCH APPLICATION, UNLESS THE 
BOARD FINDS THAT THE ISSUANCE OF SUCH CERTIFICATE IS 
INCONSISTENT 
WITH 
THE 
PUBLIC 
CONVENIENCE 
AND 
NECESSITY. PRIOR TO ISSUING SUCH FINAL ORDER, THE BOARD 
SHALL AFFORD ADEQUATE NOTICE AND OPPORTUNITY FOR 
INTERESTED 
PERSONS 
TO 
FILE 
APPROPRIATE 
WRITTEN 
EVIDENCE AND ARGUMENT, BUT THE BOARD NEED NOT HOLD 
ORAL EVIDENTIARY HEARINGS.” 
SEC. 7. A new SEC 24 (B) shall be inserted in Chapter IV of RA 776 to 
read as follows: 
“SEC. 24 (B). AUTOMATIC ENTRYPROGRAM. -A) AFTER THE 
FIRST BUSINESS DAY OF EACH CALENDAR YEAR AND BEFORE 
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THE THIRTIETH DAY OF SUCH CALENDAR YEAR. 


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1) 
ANY AIR CARIER WHICH HAS OPERATED DURING THE 
PRECEDING 
CALENDAR 
YEAR 
IN 
ACCORDANCE 
WITH 
A 
CERTIFICATE ISSUED BY THE BOARD UNDER THIS SECTION 
WHICH HAS BEEN IN FORCE DURING SUCH ENTIRE PRECEDING 
CALENDAR 
YEAR, 
AND 
HAS 
PROVIDED 
DOMESTIC 
AIR 
TRANSPORTATION OF PERSONS DURING SUCH CALENDAR YEAR 
AND 
II) ANY DOMESTIC AIR CARRIER WHICH HAS A VALID CERTIFICATE 
OR LICENSE ISSUED BY THE BOARD TO ENGAGE IN DOMESTIC 
AIR TRANSPORTATION AND WHICH HAS OPERATED MORE THAN 
ONE 
MILLION AVAILABLE 
SEAT-MILES 
IN 
DOMESTIC 
AIR 
TRANSPORTATION IN THE PRECEDING CALENDAR YEAR. 
MAY APPLY TO THE BOARD FOR A CERTIFICATE UNDER 
THIS PARAGRAPH TO ENGAGE IN NONSTOP SERVICE BETWEEN 
ANY ONE PAIR OF POINTS IN DOMESTIC OR OVERSEEAS AIR 
TRANSPORTATION IN ADDITION TO ANY PAIR OF POINTS 
AUTHORIZED BY ANY EXISTING CERTIFICATE OR LICENSE HELD 
BY SUCH AIR CARRIER OR DOMESTIC AIR CARRIER, EXCEPT 
THAT NO AIR CARRIER MAY APPLY TO ENGAGE IN NONSTOP 
SERVICE BETWEEN SUCH PAIR OF POINTS IF ANY AIR CARRIER 
HAS FILED WRITTEN NOTICE TO THE BOARD PURSUANT TO 
PARAGRAPH C OF THIS SECTION WITH RESPECT TO SUCH PAIR 
OF POINTS. NOT LATER THAN THE SIXTIETH DAY AFTER THE 
DATE ON WHICH THE BOARD RECEIVES AN APPLICATION FROM 
AN APPLICANT UNDER THIS PARAGRAPH, THE BOARD SHALL 
ISSUE A CERTIFICATE TO SUCH APPLICANT FOR THE NONSTOP 
SERVICE SPECIFIED IN SUCH APPLICATION, UNLESS WITHIN 
SUCH SIXTY-DAY PERIOD THE BOARD DETERMINES THAT THE 
APPLICANT IS NOT FIT, WILLING AND ABLE TO PROVIDE SUCH 


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NONSTOP SERVICE AND TO CONFORM TO THE PROVISIONS OF 
THIS ACT AND THE RULES, REGULATIONS AND REQUIREMENTS 
OF THE BOARD ISSUED UNDER THIS ACT. 
B) NOT LATER THAN THE ONE HUNDRED TWENTIETH DAY 
OF EACH CALENDAR YEAR, ANY CARRIER WHICH SUBMITTED AN 
APPLICATION TO THE BOARD IN ACCORDANCE WITH PARAGRAPH 
(A) OF THIS SECTION IN SUCH CALENDAR YEAR AND 
I) 
WHICH DID NOT RECEIVE A CERTIFICATE TO PROVIDE 
SERVICE BETWEEN THE PAIR OF POINTS SET FORTH IN THE 
APPLICATION BECAUSE OF A DETERMINATION BY THE BOARD 
UNDER SUCH PARAGRAPH A; OR 
I I )  WHICH RECEIVED A CERTIFICATE TO PROVIDE SERVICE BETWEEN 
SUCH PAIR OF POINTS, BUT WAS NOT THE ONLY AIR CARRIER TO 
RECEIVE A CERTIFICATE UNDER SUCH PARAGRAPH (A) DURING 
SUCH 
CALENDAR YEAR 
TO 
PROVIDE 
NONSTOP 
SERVICE 
BETWEEN SUCH PAIR OF POINTS. 
MAY REAPPLY TO THE BOARD FOR A CERTIFICATE TO 
ENGAGE IN NONSTOP SERVICE BETWEEN ANY ONE PAIR OF 
POINTS IN DOMESTIC OR OVERSEAS AIR TRANSPORTATION 
(OTHER THAN THE PAIR OF POINTS SPECIFIED IN THE FIRST 
APPLICATION SUBMITTED TO THE BOARD BY SUCH AIR CARRIER 
IN SUCH CALENDAR YEAR) IN ADDITION TO ANY PAIR OF POINTS 
AUTHORIZED BY ANY EXISTING CERTIFICATE OR LICENSE HELD 
BY SUCH AIR CARRIER EXCEPT THAT NO AIR CARRIER MAY 
APPLY TO ENGAGE IN NONSTOP SERVICE BETWEEN SUCH PAIR 
OF POINTS IF ANY AIR CARRIER HAS FILED WRITTEN NOTICE TO 
THE BOARD PURSUANT TO PARAGRAPH C OF THIS SECTION WITH 
RESPECT TO SUCH PAIR OF POINTS. NOT LATER THAN THE 
SIXTIETH DAY AFTER THE DATE ON WHICH THE BOARD RECEIVES 


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AN APPLICATION UNDER THIS PARAGRAPH, THE BOARD SHALL 
ISSUE A CERTIFICATE TO THE APPLICANT FOR SUCH NONSTOP 
SERVICE, UNLESS WITHIN SUCH SIXTY-DAY PERIOD THE BOARD 
MAKES A DETERMINATION WITH RESPECT TO THE ISSUANCE OF 
SUCH CERTIFICATE 
IN ACCORDANCE 
WITH THE SECOND 
SENTENCE OF PARAGRAPH A OF THIS SECTION. IF THE BOARD 
ISSUES A 
CERTIFICATE TO AN APPLICANT 
UNDER THIS 
PARAGRAPH, IT SHLL 
REVOKE ANY 
AUTHORITY 
IN ANY 
CERTICATE WITH WAS GRANTED TO SUCH APPLICANT IN THE 
SAME CALENDAR YEAR UNDER PARAGRAPH A OF THIS SECTION. 
C) ( I )  SUBJECT TO CLAUSE I I  OF THIS PARAGRAPH, ANY AIR 
CARRIER WHICH IS AUTHORIZED PURSUANT TO PARAGRAPH (1) 
OR (2) OF THIS SUBSECTION TO ENGAGE IN NONSTOP SERVICE 
BETWEEN ANY PAIR OF POINTS IN DOMESTIC OR OVESEAS AIR 
TRANSPORTAITON ON THE FIRST BUSINESS DAY OF EACH 
CALENDARY YEAR, AND WHICH WANTS TO PRECLUDE ANY 
OTHER AIR CARRIER FROM OBTAINING AUTHORITY UNDER 
SUBPARAGRAPH A OR B OF THIS PARAGRAPH TO ENGAGE IN 
NONSTOP SERVICE BETWEEN SUCH PAIR OF POINTS DURING 
SUCH CALENDAR YEAR MAY, ON SUCH DAY, FILE WRITTEN 
NOTICE TO THE BOARD WHICH SETS FORTH SUCH PAIR OF 
POINTS. UPON RECEIPT OF ANY WRITTEN NOTICE UNDER THE 
PRECEDING SENTENCE, THE BOARD SHAL.L MAKE SUCH NOTICE 
AVAILABLE TO THE PUBLIC. 
(11) NO AIR CARRIER MAY FILE A WRITTEN NOTICE UNDER 
CLAUSE (I) OF THIS SUBPARAGRAPH DURING ANY CALENDAR 
YEAR WITH RESPECT TO MORE THAN ONE PAIR OF POINTS IN 
DOMESTIC OR OVESEAS AIR TRANSPORTATION. 


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D) I. THE BOARD SHALL, ON AN EMERGENCY BASES, BY 
RULE, MODIFY THE PROGRAM ESTABLISHED BY THIS SECTION, IF 
THE BOARD FINDS THAT 
(I) 
THE 
OPERATION 
OF 
SUCH 
PROGRAM 
IS 
CAUSING 
SUBSTANTIAL HARM TO THE NATIONAL AIR TRANSPORTATION 
SYSTEM, OR A SUBSTANTIAL REDUCTION IN AIR SERVICE TO 
SMALL AND MEDIUM SIZED COMMUNITIES IN ANY REGION OF THE 
COUNTRY; 
(11) THE MODIFICATION PROPOSED BY THE BOARD IS REQUIRED BY 
THE PUBLIC CONVENIENCE AND NECESSITY IN ORDER TO 
ALLEVIATE SUCH HARM OR REDUCTION; AND 
(Ill) SUCH HARM OR REDUCTION IDENTIFIED BY THE BOARD CANNOT 
BE RECTIFIED BY ANY REASONABLY AVAILABLE MEANS OTHER 
THAN THE MODIFICATION PROPOSED BY THE BOARD. 
ANY EMERGENCY MODIFICATION PROPOSED BY THE 
BOARD 
UNDER 
THIS 
PARAGRAPH 
SHALL 
MODIFY 
SUCH 
PROGRAM ONLY TO THE MINIMUM EXTENT NECESSARY TO 
RECTIFY THE HARM OR REDUCTION IDENTIFIED BY THE BOARD 
ANY EMERGENCY MODIFICATION OF SUCH PROGRAM MAY BE 
LIMITED TO ANY PAIR OF POINTS. 
II. THE FINDINGS OF FACT BY THE BOARD IN ANY 
PROCEEDING HELD 
PURSUANT TO 
THJS 
PARAGRAPH, 
IF 
SUPPORTED 
BY 
SUBSTANTIAL 
EVIDENCE, 
SHALL 
BE 
CONCLUSIVE. NO OBJECTION TO A MODIFICATION OF THE 
PROGRAM PROPOSED BY THE BOARD UNDER THIS PARAGRAPH 
SHALL BE CONSIDERED BY A COURT UNLESS SUCH OBJECTION 
SHALL HAVE BEEN SUBMITTED TO THE BOARD, IF IT WAS NOT SO 
SUBMITTED, UNLESS THERE WERE REASONABLE GROUNDS FOR 
FAILURE TO DO SO. 


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E) THE BOARD SHALL CONDUCT A STUDY OF THE 
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PROCEDURE FOR CERTIFICATION OF AIR 
CARRIERS AND 
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DOMESTIC AIR CARRIERS SET FORTH IN SUBPARAGRAPHS A AND 
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B OF THIS PARAGRAPH TO EVALUATE. 
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I) 
WHETHER 
SUCH PROCEDURE IS CONSISTENT WITH THE 
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CRITERIA SET FORTH IN SECTION 102 OF THIS ACT, AND 
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II) THE RELATIVE EFFECTIVENESS OF SUCH PROCEDURE AS 
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COMPARED WITH OTHER PROCEDURES FOR CERTIFICATION SET 
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FORTH IN THIS ACT, INCLUDING BUT NOT LIMITED TO, THE 
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PROCEDURES SET FORTH IN PARAGRAPHS 5 AND 6 OF THIS 
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SUBSECTION AND IN SUBSECTION (P) OF THIS SECTION. 
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STUDY TO CONGRESS.” 
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read as follows: 
NOT LATER THAN DECEMBER 31, 2002, THE BOARD SHALL 
COMPLETE SUCH STUDY AND REPORT THE RESULTS OF SUCH 
SEC. 8. A new Sec. 24 (C) shall be inserted in Chapter IV of RA 776 to 
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“SEC. 24 (C) EXPERlMENTAL C€RT/F/CAT€S. - THE BOARD 
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MAY GRANT AN APPLICATION UNDER SEC 21 OF THIS ACT 
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(WHETHER 
THE 
APPICATION 
BE 
FOR 
PERMANENT 
OR 
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TEMPORARY AUTHORITY) FOR ONLY A TEMPORARY PERIOD OF 
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TIME WHENEVER THE BOARD DETERMINES THAT A TEST PERIOD 
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IS DESIRABLE IN ORDER TO DETERMINE IF PROJECTED 
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S ERVl CES , EFFl Cl EN CI ES, METHODS, RATES, FARES, CHARGES 
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OR OTHER PROJECTED RESULTS WILL IN FACT MATERIALIZE AND 
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REMAIN FOR A SUSTAINED PERIOD OF TIME, OR TO ASSESS THE 
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IMPACT OF THE NEW SERVICES ON THE NATIONAL AIR ROUTE 
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STRUCTURE, OR OTHERWISE TO EVALUATE THE PROPOSED NEW 
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SERVICES. IN ANY CASE WHERE THE BOARD HAS ISSUED A 
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CERTIFICATE UNDER ANY ONE OF SUCH SUBSECTIONS ON THE 


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BASIS THAT THE AIR CARRIER HOLDING SUCH CERTIFICATE WILL 
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PROVIDE INNOVATIVE OR LOW-PRICED AIR TRANSPORTATION 
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UNDER SUCH CERTIFICATE, THE BOARD UPON PETITION OR ITS 
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OWN MOTION, MAY REVIEW THE PERFORMANCE OF SUCH AIR 
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CARRIER, AND MAY ALTER, AMEND, MODIFY, SUSPEND, OR 
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REVOKE SUCH CERTIFICATE OR AUTHORITY IN ACCORDANCE 
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WITH THE PROCEDURES PRESCRlBED IN THIS ACT, ON THE 
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GROUNDS THAT SUCH AIR CARRIER HAS NOT PROVIDED OR IS 
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NOT PROVIDING SUCH AIR TRANSPORTATION.” 
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SEC. 9. A new SEC. 24 (C) shall be inserted under Chapter IV of RA 776 
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to read as follows: 
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“SEC. 24 (C). REMOVAL OF RESTRICTIONS. - ON AND AFTER 
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THE ENACTMENT OF THIS ACT, THE BOARD SHALL NOT ATTACH A 
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CLOSED-DOOR RESTRICTION TO ANY CERTIFICATE ISSUED 
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UNDER 
THIS 
SECTION. 
ANY 
CLOSED-DOOR 
RESTRICTION 
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ATTACHED TO ANY CERTIFICATE ISSUED BEFORE SUCH A DATE 
SHALL, ON AND AFTER SUCH DATE, HAVE NO FORCE OR EFFECT. 
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THIS 
SECTION 
SHALL 
NOT APPLY 
TO 
A 
CLOSED-DOOR 
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22 
CARRIER. 
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“UPON APPLICATION OF ANY AIR CARRIER SEEKING 
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REMOVAL OR MODIFICATION OF A TERM, CONDITION, OR 
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LIMITATION ATTACHED TO A CERTIFICATE ISSUED UNDER THIS 
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SECTION TO ENGAGE IN DOMESTIC, OVERSEAS OR FOREIGN AIR 
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TRANSPORTATION, THE BOARD SHALL, WITHIN SIXTY DAYS 
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AFTER 
THE 
FILING 
OF 
SUCH 
APPLICATION 
SET 
SUCH 
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APPLICATION FOR ORAL EVIDENTIARY HEARINGS ON THE 
RESTRICTION IN EFFECT ON SUCH DATE WHICH RESULTED FROM 
A SALE, EXCHANGE, OR TRANSFER BY ANY AIR CARRIER OF ITS 
AUTHORITY TO PROVIDE AIR TRANSPORTATION TO ANOTHER AIR 


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RECORD OR BEGIN TO CONSIDER SUCH APPLICATION UNDER 
THE SIMPLIFIED PROCEDURES ESTABLISHED BY THE BOARD IN 
REGULATIONS PURSUANT TO THIS ACT FOR PURPOSES OF 
ELIMINATING OR MODIFYING ANY SUCH TERM, CONDITION OR 
LIMITATION WHICH IT FINDS IS INCONSISTENT WITH THE 
CRITERIA SET FORTH IN THIS ACT. 
“FOR PURPOSES OF THIS SECTION, THE TERM “CLOSED- 
DOOR RESTRICTION” MEANS ANY CONDITION ATTACHED TO A 
CERTIFICATE TO PROVIDE DOMESTIC OR OVERSEAS AIR 
TRANSPORTATION 
ISSUED TO ANY 
AIR 
CARRIER 
WHICH 
PROHIBITS 
SUCH AIR 
CARRIER FROM PROVIDING LOCAL 
PASSENGER SERVICE BETWEEN ANY PAIR OF POINTS WHERE IT 
IS AUTHORIZED TO OPERATE PURSUANT TO SUCH CERTIFICATE.” 
SEC. I O .  A new Sec. 24(D) shall be inserted under Chapter IV of RA 776 
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to read as follows: 
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“SEC. 
24 
D. 
TERMlNATlON, 
REDUCTIONS, 
AND 
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SUSPENSIONS O f  SERVICE. - NO AIR CARRIER HOLDING A 
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19 
A) 
TERMINATE OR SUSPEND ALL AIR TRANSPORTATION 
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WHICH IT IS PROVIDING TO A POINT UNDER SUCH CERTIFICATE; 
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OR 
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B) 
REDUCE ANY SUCH AIR TRANSPORTATION BELOW 
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THAT WHICH THE BOARD HAS DETERMINED TO BE ESSENTIAL AIR 
CERTIFICATE ISSUED UNDER THIS ACT SHALL 
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TRANSPORTATION‘ FOR SUCH POINT. 
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UNLESS SUCH AIR CARRIER FIRST GIVEN THE BOARD, ANY 
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COMMUNITY AFFECTED AND THE LOCAL GOVERNMENT OF THE 
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PROVINCE IN WHICH SUCH COMMUNITY IS LOCATED, AT LEAST 90 
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DAYS NOTICE OF ITS INTENT TO SO TERMINATE, SUSPEND, OR 
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REDUCE SUCH AIR TRANSPORTATION. THE BOARD MAY, BY 


REGULATION OR OTHERWISEl AUTHORIZE SUCH TEMPORARY 
SUSPENSION OF SERVICE AS MAY BE IN THE PUBLIC INTEREST. 
“IF AN AIR CARRIER HOLDING A CERTIFICATE ISSUED 
PURSUANT TO THIS ACT PROPOSES TO TERMINATE OR SUSPEND 
NONSTOP OR SINGLE-PLANE AIR TRANSPORTATION BETWEEN 
TWO POINTS BEING PROVIDED BY SUCH AIR CARRIER UNDER 
SUCH CERTIFICATE, AND SUCH AIR CARRIER IS THE ONLY AIR 
CARRIER WITH A CERTIFICATE TO PROVIDE NONSTOP OR 
SINGLE-PLANE AIR TRANSPORTATION BETWEEN SUCH POINT, AT 
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to read as follows: 
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“SEC. 24 (E). CHARTER AIR CARRlER . - NO AIR CARRIER 
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PROVIDING AIR 
TRANSPORTATION 
UNDER A 
CERTIFICATE 
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ISSUED UNDER SECTION 21 OF THIS ACT SHALL COMMINGLE, ON 
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THE SAME FLIGHT, PASSENGERS BEING TRANSPORTED IN 
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DOMESTIC OR OVERSEAS CHARTER AIR TRANSPORTAION WITH 
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PASSENGERS BEING TRANSPORTED IN SCHEDULED DOMESTIC 
LEAST SIXTY DAYS BEFORE SUCH PROPOSED TERMINATION OR 
SUSPENSION, SUCH AIR CARRIER SHALL FILE WITH THE BOARD 
AND SERVE UPON EACH COMMUNITY TO BE DIRECTLY AFFECTED 
NOTICE OF SUCH TERMINATION OR SUSPENSION.” 
SEC. 1 I. 
A new Sec. 24 (E) shall be inserted under Chapter IV of RA 776 
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24 
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26 
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OR OVERSEAS AIR TRANSPORTATIONl EXCEPT THAT THIS 
SECTION SHALL NOT APPLY TO THE CARRIAGE OF PASSENGERS 
IN AIR TRANSPORTAION UNDER GROUP FARE TARIFFS. 
“NO RULE, REGULATION OR ORDER ISSUED BY THE BOARD 
SHALL 
RESTRICT 
THE 
MARKETABILITY, 
FLEX1 B I LITY , 
ACCESSIBILITY OR VARIETY OF CHARTER TRIPS PROVIDED 
UNDER A CERTIFCATE ISSUED UNDER SECTION 21 OF THIS ACT 
EXCEPT TO THE EXTENT REQUIRED BY THE PUBLIC INTEREST, 


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AND SHALL IN NO EVENT BE MORE RESTRICTIVE THAN THOSE 
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REGULATIONS REGARDING CHARTER AIR TRANSPORTATION IN 
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EFFECT ON JANUARY 3,1995. 
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“NO CERTIFICATE ISSUED UNDER THIS SECTION SHALL 
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PERMIT A CHARTER AIR CARRIER TO SELL OR TO OFFER FOR 
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SALE AN INCLUSIVE TOUR IN AIR TRANSPORTATION BY SELLING 
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OR OFFERING FOR SALE INDIVIDUAL TICKETS DIRECTLY TO 
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MEMBERS OF THE GENERAL PUBLIC, OR TO DO SO INDIRECTLY 
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BY CONTROLLING, BEING CONTROLLED BY, OR UNDER COMMON 
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CONTROL WITH A PERSON AUTHORIZED BY THE BOARD TO MAKE 
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SUCH SALES.” 
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SEC. 12. A new Section 24 (F) shall be inserted under Chapter IV of RA 
776 to read as follows: 
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“SEC. 24 (F) PROHIBITED ACTS. - IT SHALL BE UNLAWFUL 
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1) FOR TWO OR MORE AIR CARRIERS, OR FOR ANY AIR CARRIER 
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AND ANY OTHER COMMON CARRIER OR ANY PERSON 
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SUBSTANTIALLY ENGAGED IN THE BUSINESS OF AERONATICS, 
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TO CONSOLIDATE OR MERGE THEIR PROPERTIES, OR A 
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SUBSTANTIAL PORTION THEREOF, INTO ONE PERSON FOR 
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THE OWNERSHIP, MANAGEMENT OR OPERATION OF THE 
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PROP E RTI ES P REV1 OU SLY IN SEPARATE 0 WN E RS H I PS ; 
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23 
2) FOR ANY AIR CARRIER, ANY PERSON CONTROLLNG AN AIR 
CARRIER, ANY OTHER COMMON CARRIER OR ANY PERSON 
24 
SUBSTANTIALLY 
ENGAGED 
IN 
THE 
BUSINESS 
OF 
25 
AERONAUTICS, TO PURCHASE, LEASE OR CONTRACT TO 
26 
OPERATE ALL OR A 
SUBSTANTIAL 
PORTION OF THE 
27 
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3) FOR ANY AIR CARRIER OR PERSON CONTROLLING AN AIR 
29 
CARRIER TO PURCHASE, LEASE OR CONTRACT TO OPERATE 
PROPERTIES OF ANY AIR CARRIER; 


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ALL OR A SUBSTANTlAL PORTION OF THE PROPERTIES OF ANY 
PERSON SUBSTANTIALLY ENGAGED IN THE BUSINESS OF 
AERONAUTICS OTHERWISE THAN AS AN AIR CARRIER; 
4) FOR ANY FOREIGN AIR CARRIER OR PERSON CONTROLLING A 
FOREIGN AIR CARRIER TO ACQUIRE CONTROL IN ANY 
MANNER WHATSOEVER OF ANY CITIZEN OF THE PHILIPPINES 
SUBSTANTIALLY 
ENGAGED 
IN 
THE 
BUSINESS 
OF 
AERONAUTICS; 
5) FOR ANY AIR CARRIER OR PERSON CONTROLLING AN AIR 
CARRIER, ANY OTHER COMMON CARRIER, OR ANY PERSON 
SUBSTANTIALLY 
ENGAGED 
IN 
THE 
BUSINESS 
OF 
AERONAUTICS TO ACQUIRE CONROL OF ANY AIR CARRIER IN 
ANY MANNER WHATSOEVER; 
6) FOR ANY AIR 
CARRIER OR 
PERSON CONTROLLING A 
CERTIFICATED AIR CARRIER TO ACQUIRE CONTROL IN ANY 
MANNER WHATSOEVERl OF ANY PERSON SUBSTANTILLY 
ENGAGED IN THE BUSINESS OF AERONAUTICS OTHER THAN 
AS AN AIR CARRIER; OR 
7) FOR 
ANY 
PERSON 
TO 
CONTINUE 
TO 
MAINTAIN ANY 
RELATIONSHIP 
ESTABLISHED 
IN 
VIOLATION 
OF 
THE 
FOREGOING PARAGRAPHS OF THIS SUBSECTION.” 
SEC. 13. Paragraph (A), Section 42 of RA 776 shall be amended to read 
as follows: 
“SEC. 42. Specific Penalties. - (A) Any person engaging in air 
commerce without a permit issued by the board as provided in this Act 
shall be punished by a fine [not exceeding five thousand pesos,] OF NOT 
LESS THAN ONE MILLION PESOS (P1,000,000.00) NOR MORE THAN 
FIVE MILLION PESOS (P5,000,000.00) or by imprisonment for [not more 
than one vear.1 NOT LESS THAN ONE (1) YEAR NOR MORE THAN 
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FIVE (5) YEARS or both in the discretion of the court: Provided, That [a 
person engaging in air commerce on the data of the approval of this Act 
may continue so to engage until such time as the Board shall pass upon 
an application for a permit for such service, which application must be 
filed, as provided in Chapter IV of this Act, within one hundred and twenty 
days after the approval of this Act] IN THE CASE OF ADMINISTRATIVE 
FINES AS SPECIFIED IN THE IRR, THE SAME MAY BE IMPOSED BY 
THE BOARD: PROVIDED, FURTHER, THAT A PERSON ENGAGING 
IN AIR COMMERCE ON THE DATE OF THE APPROVAL OF THIS ACT 
MAY CONTINUE SO TO ENGAGE UNTIL SUCH TIME AS THE BOARD 
SHALL PASS UPON AN APPLICATION FOR A PERMIT FOR SUCH 
SERVICE, WHICH APPLICATION MUST BE FILED WITHIN ONE 
HUNDRED AND TWENTY (120) DAYS AFTER THE APPROVAL OF 
THIS ACT. 
“THE ADMINISTRATIVE FINES ABOVE STATED SHALL BE 
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PAID TO THE GOVERNMENT OF THE PHILIPPINES THROUGH THE 
BOARD, AND FAILURE TO PAY THE FINE IN ANY CASE WITHIN THE 
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TIME SPECIFIED IN THE ORDER OR DECISION OF THE BOARD 
SHALL BE A GROUND FOR THE SUSPENSION OF THE PERMIT OF 
SUCH AIR CARRIER UNTIL PAYMENT SHALL BE MADE.’’ 
SEC. 14. lrnplemenfing Rules and Regulations. - The Department of 
Transportation and Communications in consultation with the Department of 
Tourism and the Department of Trade and Industry shall issue the necessary 
rules and regulations to implement the provisions of this Act. 
SEC. 15. Separability Clause. If any section or provision of this Act 
shall be declared unconstitutional or invalid, the other sections or provisions 
thereof shall continue in full force and effect 


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SEC. 16. Repealing Clause. - Laws, rules and regulations and other 
2 
issuances inconsistent with the provisions of this Act are deemed modified, 
3 
revoked or repealed accordingly. 
4 
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Approved, 
SEC. 17. Effectivity, This law shall take effect fifteen (15) days after its 
publication in at least two (2) national newspaper of general circulation.