Question & AnswerQ&A (PRESIDENTIAL DECREE NO. 1590)
The main purpose of Presidential Decree No. 1590 is to grant a new franchise to Philippine Airlines, Inc. to establish, operate, and maintain air-transport services in the Philippines and between the Philippines and other countries.
The grantee of the franchise is Philippine Airlines, Inc.
Philippine Airlines, Inc. is authorized to establish, operate, and maintain transport services for the carriage of passengers, mail, and property by air within the Philippines and between the Philippines and other countries.
Except in cases of force majeure and when weather conditions do not permit, the grantee must maintain scheduled, nonscheduled, or charter air-transport services at frequencies as traffic needs require within the Philippines and internationally.
The grantee shall fix just and reasonable rates for transportation subject to the regulations and approval of the Civil Aeronautics Board or other regulatory agency, with court review available for orders by the Board.
The grantee shall pay either the basic corporate income tax based on net taxable income or a franchise tax of 2% on gross revenues, whichever results in lower tax. This tax is in lieu of all other taxes including those on aviation fuel, imports, lease rentals, interest, registration, licensing, and the corporate development tax, except real property tax.
The government can take over and operate the grantee's equipment upon order of the President during war, insurrection, domestic trouble, public calamity, or national emergency, with just compensation paid.
The franchise is granted for fifty (50) years from the date of acceptance by the grantee.
No, the franchise is not exclusive. If any competitor receives a franchise with more favorable terms, those terms automatically apply to Philippine Airlines, Inc. as well.
With Presidential approval and subject to legal procedures, the grantee may exercise eminent domain reasonably necessary for its stations and structures, with just compensation to the property owners after proper condemnation proceedings.
The grantee is authorized to employ foreign nationals with special qualifications without agency approval but must notify concerned government agencies and ensure the foreign nationals register with the Commission on Immigration and Deportation within thirty days.
The Republic unconditionally guarantees payment of principal, interest, fees, and other charges on foreign loans and lease contracts, and shall pay if the grantee fails to do so, succeeding to the creditors' rights to the extent of payment made.
The grantee cannot lease, transfer, sell, assign, or merge the franchise without the prior approval of the President, and any successor entity is subject to the same terms and conditions.
The grantee may use government-owned airport facilities except those withheld for military reasons and construct wireless communication aids for navigation and weather-related communications following government regulations.