Regulatory Authority and Compliance
- Grantee must secure all necessary certificates, permits, and licenses from the Civil Aeronautics Board (CAB) and Civil Aviation Authority of the Philippines (CAAP).
- All aircraft and crew must be airworthy and licensed by the Philippine government.
- Aircraft must have required radio communication and safety equipment.
- Operations and equipment are subject to inspection and regulation by CAAP.
- Compliance with Republic Act No. 776 (Civil Aeronautics Act) and other related regulations mandatory.
Service Obligations to the Public
- Grantee must maintain scheduled, nonscheduled, or chartered air services domestically and internationally, except under force majeure or adverse weather.
- At least 25% of flight frequencies must serve domestic routes.
Rate Regulation
- Rates for transport services must be just and reasonable.
- Rate schedules are subject to approval and regulation by CAB and other relevant agencies.
Franchise Duration and Revocation
- Franchise duration is 25 years from effectivity of the Act.
- Franchise shall be automatically revoked if the grantee ceases continuous operations for two years.
Use of Landing Facilities
- The grantee may use government-owned airport and landing facilities within the Philippines under national policy and government-imposed conditions.
- Government retains the right to use landing facilities owned by the grantee.
Contractual Authority
- Grantee authorized to enter into transportation and mail-carrying contracts with the Philippine government.
- Must give preferential consideration to governmental contracts.
- May enter agreements with foreign airlines for air transport and maintenance.
Government Rights in Emergency
- President may temporarily take over or suspend grantee’s facilities/equipment in times of war, calamity, public peril, or emergency.
- Use of facilities by government agencies will be compensated.
Liability Warranty
- The grantee holds the national and local governments free from claims or liabilities arising from accidents during operation.
Employment and Training Commitment
- Grantee to create jobs and accept on-the-job trainees, prioritizing residents near the principal office.
- Must comply with labor laws and provide required benefits.
- Employment figures must be reported annually to the Securities and Exchange Commission (SEC).
Transfer and Assignment Restrictions
- The franchise cannot be sold, leased, transferred, granted usufruct, assigned, merged, or have controlling interest transferred without prior congressional approval.
- Mandatory notification of any changes in ownership to Congress within 60 days.
- Failure to notify results in automatic franchise revocation.
- New owners are bound by the same terms and conditions.
Ownership Dispersal
- At least 30% of outstanding capital stock must be offered to Filipino citizens via securities exchange within five years.
- Failure to comply causes automatic franchise revocation.
Reporting Requirements
- Annual compliance report must be submitted to Congress by April 30 each year.
- Report contents include operational updates, audited financial statements, SEC General Information Sheet, CAB and CAAP certifications, and ownership dispersal status.
- Proof of report submission required before permits or certificates are accepted.
Penalties for Non-Compliance
- Failure to submit annual report incurs a fine of PHP 500 per working day.
- This fine is separate from CAB penalties and remitted to the Bureau of the Treasury.
Equality Clause
- If competitors receive more favorable terms or privileges, such terms will apply equally to the grantee.
Amendment and Nonexclusivity
- Congress may amend, alter, or repeal the franchise in public interest.
- The franchise is non-exclusive.
Separability Clause
- Invalidity of any provision does not affect the validity of remaining provisions.
Repealing Clause
- Inconsistent laws and regulations are repealed or modified accordingly.
Effectivity
- The Act takes effect 15 days after publication in the Official Gazette or a widely circulated newspaper.