Amendments to Act No. 4271 (Grant of Franchise to PAL)

June 20, 1959

REPUBLIC ACT NO. 2360

AN ACT TO AMEND CERTAIN SECTIONS OF ACT NUMBERED FORTY-TWO HUNDRED AND SEVENTY-ONE, AS AMENDED

SECTION 1. Section one of Act Numbered Forty-two hundred and seventy-one is hereby amended to read as follows:

"SEC. 1. There is hereby granted to the Philippine Air Lines, Incorporated, hereinafter referred to as the grantee, a franchise to establish, operate and maintain transport services for the carriage of passengers, mail, and property by air in and between any and all points and places throughout the Philippines, and in and between the Philippines and other countries."

SECTION 2. Section two of the same Act is hereby amended to read as follows:

"SEC. 2. Excepting cases of force majeure and whenever weather conditions permit, the grantee shall maintain scheduled or non-scheduled air transport services in and between any and all points and places throughout the Philippines as well as between the Philippines and other countries at such frequencies as traffic needs may require."

SECTION 3.  Section three of the same Act is amended to read as follows:

"SEC. 3. The grantee shall fix just, reasonable and uniform rates for the transportation of passengers and freight, subject to the regulations and approval of the Civil Aeronautics Board or such other regulatory agency as the Government may designate for this purpose. Any order of the Civil Aeronautics Board made under this section shall be subject to review by the courts.

"All aircrafts used by the grantee and the flight crew members operating such aircraft shall be licensed by the Government of the Philippines and, together with its accessories and equipment, shall at all times be in airworthy condition; it shall be equipped with radio communication, safety and other equipment and shall be operated and maintained in accordance with the regulations and technical requirements of the Civil Aeronautics Administration of such other regulatory body as 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 Civil Aeronautics Administration whose decisions on technical matters shall be binding until revoked or annulled by the Department Head under whose control this office falls or by the courts for excess, or abuse of jurisdiction.

"The grantee shall comply with the provisions of Republic Act Numbered Seven hundred and seventy-six, and the regulations promulgated thereunder from time to time."

SECTION 4.  Section six of the same Act is amended to read as follows:

"SEC. 6. The grantee is authorized to enter into transportation contracts with the Philippine Government, including the carrying of mail, upon terms and conditions to be mutually agreed upon. The grantee shall give preferential consideration to contracts with the Philippine Government."

SECTION 5.  Section twelve of the same Act is hereby amended to read as follows:

"SEC. 12. The grantee shall hold the national, provincial and municipal governments of the Philippines harmless 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 service under the franchise hereby granted." casia

SECTION 6.  Section thirteen of the same Act is amended to read as follows:

"SEC. 13. In consideration of the franchise and rights hereby granted, the grantee shall pay to the National Government during the life of this franchise a tax of two percent of the gross revenue or gross earning derived by the grantee from its operation under this franchise. Such tax shall be due and payable quarterly and shall be in lieu or all taxes of any kind, nature or description, levied, established or collected by any municipal, provincial or National authority: Provided, That if, after the audit of the accounts of the grantee by the Commissioner of Internal Revenue, a deficiency tax is shown to be due, the deficiency tax shall be payable within ten days from the receipt of the assessment. The grantee shall pay the tax on its real property in conformity with existing law."

SECTION 7.  Section fourteen of the same Act is amended to read as follows:

"SEC. 14. The grantee shall keep an account of the gross receipts, revenues or earnings of the business transacted by it and shall furnish to the Commissioner of Internal Revenue a report of such gross receipts, revenues or earnings quarterly, during the month next following the close of the quarter. For the purpose of verification of gross receipts, revenues or earnings and for assessment of the franchise tax due on such gross receipts, revenues or earnings as rendered to the Commissioner of Internal Revenue, all the books and accounts of the grantee shall be kept in the Philippines, and shall be subject to inspection by the Commissioner of Internal Revenue or his authorized representatives. The audit and approval of such accounts by the Commissioner of Internal Revenue shall be final and conclusive as to the determination of the amount of said gross receipts, revenues or earnings, except that the grantee shall have the right to appeal to the courts of the Republic of the Philippines in the manner provided for by the laws of the Republic of the Philippines.

"the words 'gross receipts', 'revenues' and 'earnings' are herein defined as the total receipts obtained from transportation services or revenues derived from other services or earnings realized from the disposition of equipment by the grantee through its operation under this franchise."

SECTION 8.  Section seventeen of the same Act is amended to read as follows:

"SEC. 17. This franchise is granted with the understanding that it shall be subject to amendment, alteration or repeal by the Congress of the Philippines when the public interest so requires."

SECTION 9.  Section eighteen of the same Act is amended to read as follows:

"SEC. 18. The term of this franchise shall be fifty years from the date of the acceptance of this Act by the grantee."

SECTION 10.  Section twenty of the same Act is repealed. cdt

SECTION 11. Wherever the phrase "Secretary of Public Works and Communications" appears in sections nineteen and twenty-two of Act Numbered Forty-two hundred and seventy-one, as amended, the same shall read "Secretary of Commerce and Industry."

SECTION 12. Wherever the phrase "Philippine Legislature" appears in Act Numbered Forty-two hundred and seventy-one, the same shall read "Congress of the Philippines."

SECTION 13. The title of Act Numbered Forty-two hundred and seventy-one is amended to read as follows: "An Act granting a franchise to the Philippine Air Lines, Incorporated, to establish, operate and maintain an air transport service in the Philippines and between the Philippines and other countries."

SECTION 14. This Act shall take effect upon its approval.

Approved: June 20, 1959

Published in the Official Gazette, Vol. 55, No. 33, p. 6649 on August 17, 1959