By authority of the United States, be it enacted by the Philippine Commission, that:
Section 1. There is hereby granted to “Philippine Aerial Taxi Company, Incorporated,” hereinafter referred to as the grantee, a franchise to establish, operate and maintain an air transport service, for the transportation of passengers, mail and property by means of aircraft, in or between the following provinces: Manila, Baguio, Camarines Norte, and Cagayan. Manila and Baguio shall be understood to mean the cities of Manila and Baguio or any point near the same.
Section 2. Excepting cases of force majeure and whenever weather conditions permit, the grantee shall maintain a regular air service between Manila and Baguio, with not less than one regular daily round trip during the months from December to April, both inclusive, and at least two round trips weekly during the rest of the year, and on the other lines with at least one regular round trip every two months.
Section 3. The grantee shall fix just, reasonable and uniform rates for the transportation of passengers and freight, subject to the supervision and approval of the Public Service Commission. Any order of the Public Service Commission made under this section shall be subject to review by the Supreme Court in the same manner as the decisions of said Commission in other cases.
All aircraft used by the grantee shall be licensed by the Government of the Philippines and, together with its accessories and equipment, shall be at all times modern, safe and first class; it shall be provided with a radio transmitting set and, whenever the voyage is in excess of three hours, it shall carry a pilot and an assistant and shall have as many life preserved as there shall be passengers.
The service and equipment of the grantee shall be at all time subject to inspection and supervision by the Department of Public Works and Communications whose decisions shall be binding until revoked or annulled by the courts for excess or abuse of jurisdiction.
The grantee shall comply with the provisions of Act Numbered Thirty-nine hundred and nine, as amended by Act Thirty-nine hundred and ninety-six, and the regulations promulgated thereunder from time to time.
Section 4. Subject to such terms and conditions as the Philippine Government may prescribe, the grantee may use such landing and replenishment facilities on land or water as may be maintained or owned by the Government within the Philippines on the grantee’s lines, excepting those which, in the opinion of said Government, may not be used by the grantee because of military or naval considerations, and, reciprocally, the Philippine Government shall have the right to use the landing and replenishment facilities on land or water maintained or owned by the grantee in the Philippines.
Section 5. The grantee shall have the right, at its terminals and landing fields, as well as in its aircrafts, to construct, operate and maintain stations or transmitting sets for wireless telegraphy and direction finding, and other radio aids to air navigation using such wave lengths as shall be in accordance with the rules and regulations made from time to time by the Philippine Government; but the wireless communication facilities shall be used solely for receiving and transmitting weather forecasts and messages relating to the grantee’s aircraft and other matters in connection with the grantee’s services.
Section 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. In the absence of an agreement, the rates shall be fixed by the Public Service Commission. The grantee shall give preferential attention to contracts with the Philippine Government.
Section 7. In case of war, insurrection, domestic trouble, public calamity or national emergency, the Philippine Government upon order of its Chief Executive, shall have the right to take over and operate the equipment of the grantee, paying for such use or damages.
Section 8. The grantee shall be subject to the laws of the Philippines now existing or hereafter enacted.
Section 9. With the approval of the Chief Executive of the Philippine Government, and subject to the limitations and procedure prescribed by law, the grantee shall be authorized to exercise the right of eminent domain as may be reasonably necessary for its stations, landing fields, hangars, docks, ramps, wireless stations and other structures in connection with the grantee’s activities.
No private property shall be taken for any purpose by the grantee without proper condemnation proceedings and just compensation paid or tendered therefor, and any authority to take and occupy land contained herein shall not apply to the taking, use or occupation of any land except such as is required for the actual purposes for which this franchise is granted.
Section 10. The grantee shall not issue stock or bonds except in exchange for actual cash or for property at least equal in value to the par value of the stock or bonds so issued, and shall not declare stock or bond dividends.
Section 11. It shall be unlawful for the grantee to use, employ, or contract for the labor of persons held in involuntary servitude.
Section 12. The grantee shall hold the Insular, 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.
Section 13. In consideration of the franchise and rights hereby granted, the grantee shall pay to the Insular Government during the first ten years of the life of this franchise a tax of one percent of the gross revenue derived by the grantee from its operation under this franchise; and during the last fifteen years of the life of this franchise a tax of two per cent of such gross revenue. Such tax shall be due and payable quarterly and shall be in lieu of all taxes, of any kind, nature or description, levied, established or collected by any municipal, provincial or Insular authority. The grantee shall pay the tax on its real property in conformity with existing law.
Section 14. The grantee shall keep account of the gross receipts of the business transacted by it and shall furnish to the Insular Auditor and the Insular Treasurer a copy of such account quarterly, during the month next following the close of the quarter. For the purpose of auditing accounts so rendered to the Insular Auditor and Treasurer, all the books and accounts of the grantee, and duplicates thereof, shall be kept in the Philippines, and shall be subject to the inspection of the Insular Auditor or his authorized representatives. The audit and approval of such accounts by the Bureau of Audits shall be final and conclusive evidence as to the amount of said gross receipts, except that the grantee shall have the right to appeal to the courts of the Philippines and the Supreme Court of the United States, under the terms and conditions provided in the laws of the Philippines and the Act of the United States Congress of March twenty-fourth, nineteen hundred and thirty-four.
The words “gross receipts” are herein defined as the total receipts obtained by the grantee from its operation under this franchise.
Section 15. This franchise is granted with the understanding that the grantee is a corporation sixty per cent of the capital stock of which is the bona fide property of citizens of the Philippines and/or the United States, and that the interest of such citizens in its capital stock or in the capital of the company with which it may merge shall at no time be allowed to fall below such percentage, under the penalty of the cancellation of this franchise.
Section 16. This franchise shall not be interpreted to mean an exclusive grant of the privileges herein provided for.
Section 17. This franchise is granted with the understanding that it shall be subject to amendment, alteration, or repeal by the Philippine Legislature or, pending the inauguration of the Commonwealth of the Philippines, by the Congress of the United States.
Section 18. The term of this franchise shall be twenty-five years from the date of the acceptance of this Act by the grantee.
Section 19. This franchise shall not be valid unless the grantee accepts the same within six months after its approval, filing such acceptance in writing with the Secretary of Public Works and Communications.
Section 20. The grantee shall execute a bond of two thousand pesos in favor of the Philippine Government, in a form and with sureties satisfactory to the Secretary of Public Works and Communications, conditioned upon the establishment and operation of any of the lines to Camarines Norte and Cagayan which the grantee may decide to operate within one year from the acceptance of this franchise. If the grantee shall fail to execute such bond and commence operation on any of said lines within the term mentioned, the franchise shall be ipso facto cancelled as regards the line abandoned. After a year of satisfactory operation of a bonded line, the bond thereof shall be cancelled by the Secretary of Public Works and Communications.
Section 21. The grantee shall not, without the previous approval of the Philippine Legislature, lease, transfer, grant the usufruct of, sell or assign this franchise and the rights and privileges acquired thereunder to any person, firm, company, corporation, or other mercantile or legal entity, nor merge with any other company or corporation organized for the same or any other purpose. Any corporation to which this franchise may be sold, transferred or assigned or with which the grantee may merge, with the approval above mentioned, shall be subject to the corporation laws of the Philippines now existing or hereafter enacted, and any person, firm, company, corporation or other commercial or legal entity to which this franchise is validly sold, transferred or assigned or with which the grantee may merge, shall be subject to all the conditions, terms, restrictions and limitations of this franchise as fully and completely and to the same extent as if this franchise had been originally granted to the said person, firm, company, corporation or other commercial or legal entity.
Section 22. The abandonment by the grantee, for one year, of any of the lines covered by this franchise shall give rise to the cancellation of the franchise as regards the line so abandoned, upon judicial proceedings instituted by the Secretary of Public Works and Communications.
Section 23. If the grantee should commit any substantial violation of any provision of this Act, it shall forfeit all its privileges, franchises and grants to engage in business in the Philippines upon an action or proceeding instituted for said purpose in any competent court by any officer of the Philippine Government, or by virtue of a complaint filed by any Philippine citizen, in conformity with such rules and regulations as the Philippine Legislature may prescribe, and it shall, besides, be deemed guilty of a violation of the law and shall be punished by a fine of not more than twenty thousand pesos, in proceedings identical with those provided for ordinary civil cases.
Section 24. Upon the termination of this franchise by repeal, forfeiture, annulment or expiration in due course, all public land and other property and the right to occupy and use the same granted to the grantee shall revert to the Philippine Government; and all real property of the grantee not disposed of within two years after the termination of the franchise shall likewise revert to said Government.
Section 25. This Act shall take effect on its approval.