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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
Third Regular Session

House Bitno.__6021

INTRODUCED BY REP. JOSEPH GILBERT F. VIOLAGO

EXPLANATORY NOTE

This bill seeks to grant PILIPINAS ASIAN PEARL AIRWAYS, INC. a franchise to
establish, operate and maintain domestic and international air transport services.

PILIPINAS ASIAN PEARL AIRWAYS, INC. is a stock corporation incorporated under
the laws of the Republic of the Philippines with the primary purpose to engage in the business of
air transportation and related activities in all their aspects, including the operation of any aircraft
of any kind and description, including airplanes and helicopters, owned or lease or acquired in
any manner, as a common carrier for the carriage of passengers, cargo, freight and mail or all
kinds and nature whatsoever; for itself or for others, scheduled or non-scheduled, within and
outside the Philippines; and to build, operate and maintain facilities for its operations.

Based on its 5-Year Development Plan, PILIPINAS ASIAN PEARL AIRWAYS, INC. shall
be a full service airline servicing scheduled and chartered flights to and from local and
international destinations.

PILIPINAS ASIAN PEARL AIRWAYS, INC, will serve public convenience and necessity
as it will continue to provide the country and the riding public the much needed services to
secondary routes which include not only exotic tourist destinations but more importantly
missionary routes where none or only few airlines operate and invest on. Approval of this
franchise will pave way for the development of tourism by pioneering new and exciting
destinations,

=
JOSEPH GILBERT F. VIOLAGO
Representative

2 District, Nueva Ecija


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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
Third Regular Session

House Bitno.__ 6021

INTRODUCED BY REP. JOSEPH GILBERT F. VIOLAGO

AN ACT GRANTING THE PILIPINAS ASIAN PEARL AIRWAYS, INC. A FRANCHISE TO
ESTABLISH, OPERATE AND MAINTAIN DOMESTIC AND INTERNATIONAL AIR
TRANSPORT SERVICES

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

SECTION 1. Nature and Scope of Franchise. - Subject to the provisions of the 1987
Philippine Constitution and applicable laws, rules and regulations, there is hereby granted to
Pilipinas Asian Pearl Airways, Inc., hereunder referred to as the grantee, its successors or
assignees, a franchise to establish, operate and maintain transport services for the carriage of
passengers, mail, goods and property by air, both domestic and international

Air transport services shall include the maintenance and operation of hangars and
aircraft service stations and facilities and other services of similar nature which may be
necessary, convenient or useful as an auxiliary to aircraft transportation.

The grantee shall have the right at its terminal and landing fields, as well as in its aircraft,
to construct, operate and maintain stations or transmitting sets for wireless telegraphy and
direction findings, and other radio aids to air navigation, using wavelengths in accordance with
the rules and regulations made from time to time by the proper agencies of the government. The
wireless communication facilities shall be used solely for receiving and transmitting weather
forecasts and other matters in connection with the grantee's services.

SEC. 2. Civil Aeronautics Board (CAB).- The grantee shall secure from the CAB the
appropriate permits and licenses for its operations.

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All aircraft used by the grantee including their accessories and equipment shall at all
times be air worthy and the crew members shall be licensed by the Government of the
Philippines. They shall be equipped with radio communications, safety and other equipment and
shall be operated and maintained in accordance with the regulations and technical requirements
of the Civil Aviation Authority of the Philippines (CAAP) or other regulatory bodies the
government may prescribe for this purpose.

The grantee's equipment and the operation of such equipment shall at all times be
subject to inspection and regulation by the CAP.

The grantee shall comply with the provisions of Republic Act Numbered Seven Hundred
and Seventy-Six (R.A. No, 776), as amended, otherwise known as the "Civil Aeronautics Act
of the Philippines", and the regulation promulgated thereunder from time to time.

SEC. 3. Responsibility to the Public. - Excepting cases of force majeure and whenever
weather conditions permit, the grantee shall maintain scheduled and/or non - scheduled and/or
chartered air transport services to any and all points and places throughout the Philippines and
between the Philippines and other countries at such frequencies as traffic needs may
require: Provided, however, That at least twenty - five percent (25%) of all its frequencies shall
be for the domestic market,

SEC. 4, Rates for Services, - The grantee shall fix just and reasonable rates for the
transportation of passengers, mail, goods and freight, subject to the regulations and approval of
the CAB and other proper regulatory agencies of the government,

SEC, 5. Term of Franchise, - This franchise shall be for a term of twenty - five (25)
years from the date of effectivity of this Act, unless sooner revoked or cancelled. This franchise
shall be deemed jpso facto revoked in the event the grantee fails to comply with any of the
following conditions:

(a) Commence operations within one (1) year from the approval of its permit by the CAB;
(b) Operate continuously for two (2) years; and
(c) Commence operations within two (2) years from the effectivity of this Act.


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SEC. 6. Acceptance and Compliance. - Acceptance of this franchise shall be given in
writing within sixty (60) days after the effectivity of this Act. Upon giving such acceptance, the
grantee shall exercise the privileges granted under this Act. Nonacceptance shall render the
franchise void. .

SEC. 7. Bond. - The grantee shall file a bond issued in favor of the CAB, which shall
determine the amount, to guarantee the compliance with and fulfillment of the conditions under
which this franchise is granted. If, after three (3) years from the date of the approval of its permit
by the Board, the grantee shall have fulfilled the same, the bond shall be cancelled by the
Board, Otherwise, the bond shalll be forfeited in favor of the government and the franchise ipso
facto revoked

SEC. 8, Landing Facilities. - The grantee may use the landing and other airport facilities
on land and water as may be maintained or owned by the government within the Philippines on
the grantee's line subject to such terms and conditions, restrictions, and national policy
considerations as the Philippine Government may impose: Provided, That the Philippine
Government shall have the right to use the landing and other airport facilities as may be
maintained and owned by the grantee in the Philippines.

SEC. 9. Contracts. - The grantee is authorized to enter into transportation contracts with
the Philippine Government, including the carrying of mail, upon such terms and conditions as
may be mutually agreed upon. The grantee shall give preferential consideration to contracts
with the Philippine Government. The grantee may likewise enter into transportation
maintenance and/or servicing contracts, and such other contracts relating to air transport with
other foreign-owned airlines particularly with those which have international routes.

SEC. 10. Right of Government. - A special right is hereby reserved to the President of
the Philippines, in times of war, rebellion, public peril, calamity, emergency, disaster, or
disturbance of peace and order: to temporarily take over and operate the facilities or equipment
of the grantee; to temporarily suspend the operation of any facility or equipment in the interest of
public safety, security, and public welfare; or to authorize the temporary use and operation
thereof by any agency of the government, upon due compensation to the grantee, for the use of
said facilities or equipment during the period when they shall be so operated.


SEC. 11, Warranty in Favor of the National and Local Governments. - The grantee shall
hold the national, provincial, city, and municipal governments of the Philippines free from all
claims, accounts, demands, or actions arising out of accidents or injuries, whether to property or

to persons, caused by the operation of the services under the franchise hereby granted.

SEC. 12. Sale, Lease, Transfer, Usufruct, or Assignment of Franchise. - The grantee
shall not lease, transfer, grant the usufruct of, sell nor assign this franchise or the rights and
privileges acquired thereunder to any person, firm, company, corporation or other commercial or
legal entity, nor merge with any other corporation or entity, nor shall transfer the controlling

interest of the grantee, whether as a whole or in parts, and whether simultaneously or
10 contemporaneously, to any such person, firm, company, corporation or entity without the prior
11 approval of the Congress of the Philippines: Provided, That Congress shall be informed of any
12 sale, lease, transfer, grant of usufruct of, or assignment of franchise or the rights or privileges
13 acquired thereunder, or the merger or transfer of the controlling interest of the grantee, within
14 sixty (60) days after the completion of said transaction: Provided, further, That failure to report to
15 Congress such change of ownership shall render the franchise ipso facto revoked: Provided,
16 finally, That any person or entity to which this franchise is sold, transferred, or assigned, shall be
17. subject to the same conditions, terms, restrictions, and limitations of this Act.

18 SEC. 13. Dispersal of Ownership. - In accordance with the constitutional provision to
19 — encourage public participation in public utilities, the grantee shall offer to Filipino citizens at least
20 thirty per cent (30%) of its outstanding capital stock or a higher percentage that may hereafter
21 be provided by law in any securities exchange in the Philippines within five (5) years from the
22 commencement of its operations.

23 Section 14. Equality Clause. - Any advantage, favor, privilege, exemption, or immunity
24 granted under other existing franchises, or which may hereafter be granted, upon prior review
25 and approval of Congress, shall become part of this franchise and shall be accorded
26 _immediately-and unconditionally to the herein grantee: Provided, That the foregoing shall neither
27 apply to nor affect provisions of air transport services franchises concerning territory covered by
28 the franchise, the life span of the franchise or the type of service authorized by the franchise.

29 SEC. 15. Reportorial Requirement. — The grantee shall submit an annual report to the
30 Congress of the Philippines, through the Committee on Legislative Franchises of the House of
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Representatives and the Committee on Public Services of the Senate, on its compliance with
the terms and conditions of the franchise and on its operations on or before April 30 of every
year during the term of its franchise. The reportorial compliance certificate issued by Congress
shall be required before any application for permit or certificate is accepted by the CAB.

SEC. 16. Penalty Clause — Failure of the grantee to.submit the requisite annual report to
Congress shall be penalized by a fine in the amount of Five hundred pesos (PS00.00) per
working day of noncompliance. The fine shall be collected by the CAB from the delinquent
franchise grantee, separate from the reportorial penalties imposed by the CAB.

SEC. 17. Separability Clause. — If any of the sections or provisions of this Act is held
invalid, all other provisions not affected thereby shall remain valid.

SEC. 18. Repealability and Nonexclusivity 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 provided for.

SEC. 19. Effectivity- This Act shall take effect fifteen (15) days after its publication in
the Official Gazette or in a newspaper of general circulation.

Approved,