PAL History

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Philippine Airlines History

Alquetra, Flordeliza Y.

Ballesteros, Veronica M.

Causing, Dianne Melerie C.



Company History:

Philippine Airlines, Inc. (PAL) has been thedominant air carrier in the Philippines since itscreation in 1941. Operating both

internationally and within the 7,100 islandsthat make up the country, PAL has beensomething of a curiosity and scandal amongthe world's major airlines, for decades losingmoney while being traded among the handfulof wealthy families in control of the Philippineeconomy.



Company History:

After 14 years of ownership by the government of deposed President Ferdinand E. Marcos, PAL was soldat the order of President Corazon Aquino in 1992 to a

consortium of companies under the leadership of theSoriano and Cojuangco (pronounced "koe-HWAHNG-koe") families. Because Aquino's maiden name wasCojuangco, many believed this "privatization" of PALwas not likely to break the pattern of corruption and

inefficiency that has marred the carrier's history since1941. But events in the late 1990s would conspire toforce significant changes in the airline.



Founding in the 1940s

The first Philippine air transport companies were created inthe early 1930s, primarily as a means of travel and freightdelivery between the nation's scattered islands. One of these pioneering companies was the Philippine Aerial Taxi

Company (PATCO), which was granted a 25-year charter bythe Philippine legislature in 1931 for both domestic andinternational flights. At that early date, when the countrywas still a possession of the United States, Pan AmericanAirways provided most of the Philippines' international airtransportation. PATCO settled for short flights among the

major islands of Luzon, Cebu, Leyte, and Mindanao. On theless developed islands, PATCO also provided intra-islandflights between distant towns.



The 1941 transformation of PATCO into PAL involved aninternational cast of characters, most notably GeneralDouglas D. MacArthur, at that time in charge of the UnitedStates Armed Forces in the Philippines preparing for an

expected Japanese invasion of the islands. GeneralMacArthur, whose father had served as the first militarygovernor of the Philippine Islands following the Spanish-American War of 1898, had served in the country in variouscapacities throughout his career, including a four-yearperiod before World War II when he was employed by the

Philippine government as its field marshal. (MacArthur wasrecommissioned by the U.S. Army in 1941 and oversaw theeventual loss of the Philippines to the Japanese in 1942.)



The general employed as his aide-de-camp a wealthySpaniard named Andres Soriano, who had previouslyserved as consul in Manila for the Spanish dictatorFrancisco Franco. Soriano controlled the large SanMiguel Breweries along with a number of othercorporations, and had powerful connections in thePhilippine capital. In 1941 he put those connections togood use by teaming with the National Development

Company, a government agency, in forming PhilippineAirlines, Inc., which promptly absorbed PATCO, therebybecoming the nation's largest air carrier.



As the creation of General MacArthur's aide de camp, PALstood an excellent chance of winning contracts from theUnited States Armed Forces for its transport needs in thecoming war. Unfortunately for Andres Soriano and his

fellow investors, the invasion came early and ended quickly,with the Japanese gaining control over the islands by thesummer of 1942. It is not clear what became of PAL duringthe Japanese occupation, but on December 8, 1941, theday after the Japanese attack on Pearl Harbor, GeneralMacArthur made Andres Soriano a colonel in the U.S. Army,

and an American citizen as well. It is safe to assume thatSoriano returned to Manila with MacArthur's liberatingforces in 1944 and resumed control of his various businessinterests, including PAL.



There is considerable evidence that MacArthur helpedSoriano and PAL whenever he could. In 1946, MacArthurinstructed the War Department to fly 20 tons of bottle capsto Soriano's San Miguel Brewery to cover a shortage. In

addition, the two men were both strongly anti-Communist,and MacArthur's own extensive business holdings in thePhilippines made his relationship with Soriano more likeone of business partners than military officers. SterlingSeagrave commented on the chaotic postwar scene in hisbook The Marcos Dynasty, "The $2 billion aid package [from

the United States to the Philippines] was fought over anddevoured by politicians, by rich MacArthur partisans, andby packs of bureaucrats."



Post World War II Activities

Helped by such massive infusions of American capital, thePhilippine economy rebounded from its wartime privations. PALprospered so quickly that by 1948 it had already bought out two of its largest competitors, Far Eastern Air Transport, Inc., andCommercial Air Lines, Inc. Within a few years three other

competing lines also threw in the towel, and PAL stood alone as theairline of the Philippines. Its ownership was still split between thePhilippine government and the Soriano interests. The Sorianos wereminority shareholders, but handled the day-to-day management of the airline, which, if the later pattern of graft and kickbacks wasalready established in the 1950s, was the more lucrative end of the

business. Philippine magnate Enrique Zobel once bluntly remarkedin the media that "PAL is a milking cow," and most of the milkseems to have been generated by what F ar Eastern EconomicReview described delicately as the "company's operations, forinstance by dictating its material requirements."



PAL's activities were described more directly in the New York Times, which quoted a 1989 World Bank study. Thelatter found that the airline was holding "millions of dollarsof spare parts for aircraft it no longer owns and ground

equipment so badly maintained that it has little valueexcept as scrap." At one time PAL was even accused of carrying an "inexplicably large inventory of 750,000 sanitarynapkins," as reported in the F ar Eastern Economic Review.Clearly the finances were being toyed with to someone'sadvantage, which may help to explain how an airline that

so often reported a loss in its annual report could remain afinancial plum much sought after by Philippines businessfamilies.



Whatever the intrigue surrounding its operation, PALexpanded its route system and doubled passenger milesbetween 1946 and 1950. The airline was serving 36domestic airports by 1955 and owned a fleet of 35 planes,

some of them DC 3/C47s and the rest Convair 240s. PAL'sprimary business still lay in freight and communicationservices, such as the mail, since its ticket prices were farbeyond the means of the average Filipino. From theinternational airport in Manila, PAL sent 33 flights weekly toCebu City, the transport hub of the southern islands, and

offered regular service to all sections of the widelyscattered nation, even the more remote islands wherepassengers were few and the operation ran at a loss.



Indeed, the airline has repeatedly blamed its financialtroubles on the large number of short, unprofitable flightsit must offer as the nation's only airline. In this regard, itwas significant that on the eve of its sale to private

investors in 1991, PAL announced a dramatic cutback in thenumber of its shorter domestic flights, encouraging theformation of new private companies to take these on. PALclaimed in reports published as far apart as 1950 and 1989that it enjoyed the lowest cost of operation in the industry,so it would be hard to explain its frequent losses other than

by blaming the unprofitability of the line's short-hauldomestic business. (Unless, as some suspect, the airline's"loose accounting methods" have been to blame.)



PAL under the Marcos Regime

The Soriano family retained control of PALuntil the late 1960s, the period of FerdinandMarcos's rise to power. Marcos was first

elected president of the Philippines in 1965and remained the country's absolute ruleruntil his forced exile in 1985, when it wasdiscovered that he and his wife, Imelda, had

systematically plundered their country fordecades while amassing a fortune estimatedto be at least $1 billion.



Marcos literally had a hand in every major Philippineenterprise, including the nation's airline monopoly. AsImelda Marcos became a regular guest at parties andgovernment capitals around the world, she accrued a

debt to PAL of nearly $6 million in the mid-1970s. Theairline's owner, Benny Toda, offered to cut the bill inhalf if the Marcoses would pay it; instead, ImeldaMarcos demanded that he transfer his interests in theairline to the government--which meant, in effect, to

the Marcoses themselves. Afraid to refuse, Toda settledon a price with Ferdinand Marcos and turned over hisstock, for which he later said he was never paid.



AL became one of the many baubles flaunted by ImeldaMarcos, who by this time was one of the richest women inthe world. The First Lady of the Philippines traveled aroundthe world in her own PAL DC-8 jet equipped with beds, a

built-in shower, and gold bathroom fixtures, sometimesalso commandeering a second jet to carry her personalluggage. The airline was officially under the control of theGovernment Service Insurance System (GSIS), whichcontrolled the pension funds of all government employeesin the country and was one of the Philippines' largest

financial institutions. GSIS was run by Roman A. Cruz, oneof Imelda's favorites, and it was Cruz and his family who ranPAL from its takeover to the election of Corazon Aquino in1986.



By that time the airline had racked up consistent losses for thebetter part of two decades. PAL was at least able to enjoy thebenefits of Manila's new international airport, completed in 1982 toreplace a network of runways dangerously in need of repair; but, inthe words of the F ar Eastern Economic Review, "the airline [was]

hobbled by ineffective management and corruption." It was alsoplagued by employee defections to other airlines, which generallypaid about four times as much as PAL and were not "hobbled" bycorruption in such gross forms. During the 1980s more than 1,000of PAL's licensed mechanics, its most valuable ground workers,were lured by competing airlines, "exacerbating flight reliability

problems," according to the industry magazine Aviation Week &Space Technology. PAL had become something of anembarrassment to the international aviation industry.



New Leadership in the Mid-1980s

The rise of "People Power" in the mid-1980s, culminating inthe election of Corazon Aquino and the escape by theMarcoses to the United States in 1986, apparently offered achance for significant changes in the Philippine economy.

Not dwelt upon in the international press, however, wasAquino's membership in the Cojuangco family, probably thewealthiest of all Philippine business clans and for manyyears crucial supporters of the Marcos regime. Observerspoint out that the election of Aquino changed less in thePhilippines than her less affluent supporters had hoped,

and the privatization of PAL in 1992 offered little evidenceof any real diminution of the powers of the elite families.



President Aquino originally ordered the sale of PAL along with hundreds of other government-owned companies shortly after her election in1986. Since the airline had been run at a loss formany years, Aquino first hired a Philippinebusinessman named Dante Santos to make PALprofitable prior to its sale. Under Santos, PAL didreport two years of net income, but these were

widely assumed to be the result of creativeaccounting methods rather than of anysubstantive changes in PAL's performance.



Indeed, in late 1990, four years after the accession of DanteSantos as president of the airline, no fewer than 22 of PAL'stop executives were charged with negligence, fraud, and/ormismanagement; ten of these officials were eventually

fired, including an executive vice-president, two seniorvice-presidents, and four vice-presidents. They wereaccused of precisely the sort of corrupt operationalpractices that had been a way of life at PAL for decades,including theft of parts, over-purchasing, and kickbacksfrom travel agents. It was hard to say, according to some

critics, whether the firings were part of a genuine cleanupeffort at PAL or merely a means of clearing the decks beforethe company's sale, after which the buyer might wish toinstall its own people in these lucrative positions.



The sale of PAL was carried out in a curiousfashion. The government first paid approximately$350,000 to the Asian Development Bank forrecommendations on how best to proceed withthe privatization of the airline. The studyconcluded that a large infusion of foreignownership and management would be needed toturn around the airline's performance. For

reasons of its own, the government rejected thisproposal and instead commissioned a secondstudy, this one from a branch of the World Bank.



The second report also recommended that about one-third of theairline be transferred to foreign hands, chiefly as a means of retiringsome of PAL's $650 million in foreign debt. This plan was alsolargely ignored, however, and in the months immediately prior tothe airline's sale, PAL officials admitted that they could not return

the company to profitability and were expecting a shortfall betweenits sale price and the amount of its debt. The company itself valuedthe two-thirds of its assets up for sale at somewhere between P6.35 billion and P 6.69 billion, while the World Bank study hadpegged their worth between P 5.25 billion and P 7.51 billion. Butwhen the written bids were opened in January 1992, two groups of

Philippine companies had bid over P 9 billion, with AB Capital &Investment Corporation the winner at P 9.78 billion.



AB Capital represented a consortium of Philippineinterests headed by the Soriano and Cojuangcofamilies, who had created the airline in 1941. Contraryto the recommendations of both preliminary studies,

none of the company was sold to foreign investors;instead, the remaining 33 percent was kept by thePhilippine government, specifically by GSIS, throughwhich the Marcoses had taken over PAL in 1978. Ineffect, PAL remained under the control of the same few

Philippine families, this time without the bothersomeintrusions of foreign investors, who might possiblyinsist on a more rigorous accounting of its dailyoperations.



Prospects for the 1990s and Beyond

Thus when president and COO Jose Antonio Garcia in early1996 proclaimed that PAL would "take on the world" onceit had "a clean house," to many observers this sounded likea familiar refrain built around false notes. According to

Michael Mackey in Air Transport World in February 1996,the company had lost P 1.7 billion (US$61 million) in thefiscal year that ended March 31, a figure that in subsequentreports would be raised to $70 million ( Asian Business,April 1996) and $93 million ( Airfinance Journal, June 1996).Revenues had flattened, operating expenses had risen,

losses were spreading, and debt-equity ratios were movingin the wrong direction. The causes of the airline's pooreconomic performance were likewise familiar.



Mackey identified three key factors: problems with thecountry's aviation infrastructure, growing competitionfor the Philippine market, and "the huge, sprawlingsubject of PAL's relationship with the government androle in development of the economy."

Inefficiency was as rampant as ever in the fields of technology, logistics, and operations. Of the airline's 11Boeing 747-200s, six had GE engines, and the rest Pratt

& Whitney--thus creating a less efficient maintenancesituation than if all used the same type of engine.Worse, its fleet was both small and old.



The size meant limitations on the number of flights--just 14 a week to the U.S., compared totwice that many for its American competitors--and the age of the aircraft placed limits onnonstop distance. A trip from Manila to Londonwas, as Mackey wrote in October 1997, "aHomeric odyssey" that required travelers to stopin Bangkok, Abu Dhabi, and Frankfurt. Not only

did this create inconveniences for passengers, butPAL had to pay fees at every airport, thus cuttinginto its profit margins.



Its people posed as much of a liability to PAL as itsmachines. Abby Tan in Asian Business (April 1996) recordedthe following litany of larcenous acts against the airline byits own employees: "In one recent incident, 13 employees

were charged in a ticket refund scam in Iloilo City that wasestimated to be costing the company US$3,000 everymonth. PAL also loses around US$15.2 million each yearthrough theft of plane parts and other supplies. That figuredoesn't include items stolen from provincial stationscentres where the airline's catering and ground-handling

facilities are located. In one case, security agentsdiscovered a fuel line running directly off companygrounds."



Source:

http://www.fundinguniverse.com/company-

histories/Philippine-Airlines-Inc-Company-

History.html



Philippine Airlines Policies



Policy

When this Policy Begins and Ends All coverages, except Trip

Cancellation, commence two (2) hours before the Insureds

scheduled PAL flight departure time and ceases on

whichever of the following occurs first: (a) upon arrival of

Insureds scheduled return flight; (b) the expiry of the policy

period specified in the Policy; (c) the Insureds return to his

/ her place of residence or employment; (d) for one-way

itineraries, upon Insureds arrival at PAL flights destination

For Trip Cancellation, coverage takes effect upon acceptanceand approval of application and receipt of premium

payment.



Section 1 Emergency Medical

Assistance and Medical Expenses 1.1 Medical Expense Including Follow-up Treatment The

Company will reimburse the Insured for all reasonable and

customary charges up to the benefit amount per event,

subject to a deductible of PHP500 per claim per event,

following an accident or sickness incurred during a Trip

within the Philippines. Covered medical expenses are

services and supplies which are recommended by the

attending physician and they include: (a) the services of a

qualified medical practitioner; (b) hospital confinement and use of operating room; (c) anesthetics (including

administration), x-ray examinations or treatments, and

laboratory tests; (d) ambulance service; (e) drugs

medicines, and therapeutic services and supplies.



1.2 Emergency Medical Evacuation

When as the result of injury commencing while the

Insured is traveling within the Philippines and if in

the opinion of the Company or its authorized

representative, it is judged medically appropriate tomove the Insured to another location for medical

treatment, or to return the Insured to the place of

residence, the Company or its authorized

representative shall arrange for the evacuationutilizing the means best suited to do so, based on the

medical severity of the Insureds condition.



1.3 Hospital Confinement Benefit

This section pays for Hospital Confinement due to Accident or

Sickness sustained during a trip within the Philippines. The

Company shall pay for hospital room and board expense, up

to the daily limit stated in the Policy, as a result of any one (1)

injury or sickness, but not to exceed ten (10) days. This

benefit will only apply while the insured person is in the

Philippines. Hospital Confinement Benefit shall mean hospital

room and board expenses incurred as an in-patient under the

professional care of a legally qualified and registered medicalpractitioner. Payment will be made after the period of

confinement in the hospital.



1.4 Emergency Communication

Expenses

The Company will reimburse the Insured for

reasonable communication expenses incurred

by the Insured as a result of a medical

emergency.



1.5 Emergency Repatriation

When as the result of injury covered under

this Policy commencing while the Insured is

traveling within the Philippines, the Insured

dies within thirty (30) days from the date of

injury, the Company or its authorized

representative shall make the necessary

arrangements for the return of the Insuredsmortal remains to his or her place of

residence. The Company shall cover expenses

for such repatriation.



1.6 Compassionate Visit

If the Insured is hospitalized more than five (5) days

and medical condition forbids the repatriation and

no adult member of the family is with the Insured,

this section will cover reasonable and necessarytransportation and hotel accommodation expenses

of one (1) of the immediate family member of the

Insured, up to the limit specified in the schedule of

benefits, provided such transportation andaccommodation is arranged by the Company or its

authorized representatives.



Section 2- Emergency Trip

Cancellation and Termination 2.1 Emergency Trip Cancellation Under this section,

the Company pays the Insured up to the limit stated

in the schedule of benefits for loss of travel fare

and/or accommodation expenses paid in advanceby the Insured and for which the Insured is legally

liable and which are not recoverable from any other

source consequent upon the cancellation of the Trip

necessitated by the following occurring withinthirty (30) days before the date of the

commencement of the Trip:



(a) Death or serious Injury or sickness or compulsory

quarantine of the Insured, spouse, parent, parent-in-law,

child, grandparent, brother, sister, business partner or co-

director; (b) Unexpected outbreak of strike, riot, or civil

commotion at the planned destination arising out of

circumstances beyond the control of the Insured Person;

(c) serious damage to the Insureds principal residence from

fire, flood or similar natural disaster (typhoon, earthquake,

etc.) within one week from the departure date which requiresyour presence on the premises on the departure date; (d)

witness summons or jury service.



Policy Deductible: This Insurance will not pay

the deductible of PHP500 for each and every

loss.



2.2 Emergency Trip Termination

Emergency trip termination means

abandonment of the planned trip by return to

the place of initial departure after arrival at

the booked destination as shown on the

booking invoice.



Section 3 Baggage Delay

This benefit will reimburse the Insured for the

purchase of necessary clothing and toiletries up to

the maximum benefit per twelve (12)-hour delay if

the checked-in baggage accompanying the Insuredhas been delayed, misdirected or temporarily

misplaced in delivery from more than twelve (12)

hours from the time of the arrival at the destination.

The insurance is allowed a maximum of eight (8)payments for every twelve (12)-hour delay if the

same baggage is still not in the physical possession of

the Insured.



Section 4 Baggage and Personal

Effects This section pays for loss or damage to the Insureds baggage

and clothing and personal effects within the baggage, up to

the maximum benefit amount, during the period between the

date of departure and the date of return to the place of

residence or employment, or when the Policy expires as

stated whichever occurs first and subject to the following. (a)

The amount payable in respect of any one item shall not

exceed the maximum limit stated in the policy, subject to a

deductible of PHP500 for each and every loss; (b) TheCompany may make payment or, at its option, reinstate or

repair as it may select in respect of articles not older than one

(1) year; (c) the Company may make payment or, at its

option, reinstate or repair subject to due allowance of wear

and tear and depreciation in respect of articles more than one



(d) Loss must occur (i) while the baggage or personal effects

is/are in the possession of hotel staff or a common carrier and

proof of such loss must be obtained in writing from the hotel

management or the common carrier management and such

proof must be provided to the Company, or (ii) as the result of

theft of the baggage or the personal effects from the Insured

provided that such loss must be reported to the police having

jurisdiction at the place of the loss no more than twenty-four

(24) hours from the incident. Any claim must be accompaniedby written documentation from such police; (e) Insured

cannot claim from under both benefits of the section for

Baggage and Personal Effects and section of Baggage Delay

for the same loss.



Section 5 Personal Accident When, as the

result of an Accident occurring between the

Departure and Return Dates, the Insured

sustains bodily injury which results in his or

her death or disablement, the Company will

pay to his or her beneficiaries the amount as

provided in the Benefit Table below;provided that such death occurs within

ninety (90) days after the date of accident

causing such death.



1. Death 100%

2. Permanent Total Disablement 100%

3. Permanent and Incurable Paralysis of All Limbs 100%

4. Permanent Total Loss of Sight of Both Eyes 100%

5. Permanent Total Loss of Sight of One Eye 100%

6. Loss of or Permanent Total Loss of Use of Two Limbs 100%

7. Loss of or Permanent Total Loss of Use of One Limb 100%

8. Loss of Speech and Hearing 100%

9. Permanent Total Loss of Hearing in

a. Both Ears 75% b. One Ear 15%



5.1 Funeral Benefit

If bodily injury due to an Accident should

result in accidental death of the Insured, the

Company will in addition to all other benefits

payable under this Policy, pay for all actual

funeral and burial expenses incurred, subject

to the maximum amount of reimbursement

stated in the Schedule.



Section 6 Flight Delay

This section will reimburse the Insured up to the

maximum benefit amount per twelve-(12) delay,

hour if the Insureds flight is delayed for more than

twelve (12) hours, for: (a) any prepaid, unused,non-refundable land or water accommodations; (b)

any reasonable expenses incurred in respect of meals

and lodging which were necessarily incurred as a

result of the delay and which were not provided bythe airline or any other party free of charge; (c) the

cost of transfer to and from the airport.



Only those delays caused by the following will

be covered; (a) delay caused by any severe

weather conditions; (b) delay due to a strike

or other job action by employees of the airline

on which Insured is scheduled to travel; (c)

delay caused by the equipment failure of the

aircraft on which Insured is scheduled totravel.



This insurance will allow for a maximum of

eight (8) payments for every twelve (12)-hour

delay. This section only applies to normally

scheduled airline flights which Insured had

duly confirmed according to the airlines rules

and regulations. In the event of dispute, the

ABC World Airways Guide will be consideredthe reference work to determine the

timetable of flights and connections. Any

delay of a charter flight will not be covered.



Section 7 Loss of Travel

Documents The Company will reimburse the Insured up to the

maximum benefit amount in respect of reasonable

additional hotel, travel and communications

expenses necessarily incurred in the location visitedin obtaining the replacement of a lost passport or

visa, provided always that an Insured shall exercise

reasonable care for the safety and supervision or the

property and that any loss of passport must bereported to the Police within twenty-four (24) hours

of the discovery.



Section 8 Personal Liability

The Company will indemnify the Insured in respect of legal

liability occurring during the Trip as a result of:

(a) death or accidental bodily injury to another person, or

(b) accidental loss or damage to the property of anotherperson, up to the maximum benefit amount, which shall be

the aggregate limit for all losses incurred during the policy

period. Included within this same limit are all costs and

expenses incurred with the written consent of the Company

in connection with the defense of claims against the Insured

which may be the subject of any indemnity under this

coverage.



Section 9 Hijacking

Any seizure or exercise of control by force or

violence or threat of force or violence and with

wrongful intent, of an aircraft. This section will pay

the Insured the amount stated in the Policy per dayfor the delay or interruption of the journey in excess

of a waiting period of 12 (twelve) hours which

prevents the Insured from reaching the scheduled

destination of the aircraft on which he or she is apassenger as a result of an act of Aircraft Hijacking.



Miscellaneous Terms and

Conditions



1. CONTROLLING LAW.

Any interpretation of this Policy relating to its

construction, validity or operation shall be

determined by the laws of the Republic of the

Philippines.



2. LEGAL ACTIONS.

No action at law or in equity shall be brought

to recover on this Policy prior to the expiration

of 60 days after written proof of loss has been

furnished in accordance with the

requirements of the Policy. No such action

shall be brought after the expiration of one

year after the time written proof of loss isrequired to be furnished.



If a claim be made and rejected and an action or suit be not

commenced either in the Insurance Commission or any court

of competent jurisdiction within twelve (12) months from

receipt of notice of such rejection or in case of an arbitration

taking place as provided herein, within twelve (12) monthsafter due notice of the award made by the arbitrator or

arbitrators or umpire, then the claim shall for all purposes be

deemed to have been abandoned and shall not thereafter be

recoverable hereunder. Any action or suit arising from thisPolicy shall be brought before the proper courts of the City of

Makati, Philippines, to the exclusion of other courts.



3. COMPLYING WITH POLICY

CONDITIONS.

The due observance and fulfillment of the

terms of this Policy insofar as they relate to

anything to be done or complied with by an

Insured and the truth of the statements andanswers in any proposal and/or application

and of evidence required from an Insured in

connection with this insurance shall beconditions precedent to any liability of the

Company to make any payment under this

Policy.



4. CUMULATIVE INSURANCES.

If at the time of occurrence of any loss, except

in respect of the Personal Accident coverage,

there is other valid and collectible insurance in

place, the Company will be liable only for theexcess of the amount of loss, over the amount

of such other insurance, and any applicable

deductible.



5. EXCEPTIONAL CIRCUMSTANCES.

The Company or its authorized representatives

cannot be held liable for delays in the execution of

services in the event of strikes, riots, any act of

sabotage or terrorism, civil or foreign war, release of heat or irradiation coming from the splitting of nuclei

of atoms, radioactivity, other accidents or cases of

natural events. All interventions by the Company or

its authorized representatives are conducted withinthe context of the national and international laws

and regulations and are dependent on the necessary

authorizations being obtained from the competent

authorities.



6. ARBITRATION.

All differences as to the amount of any loss or damage

covered by this Policy shall be referred to the decision of an

arbitrator to be appointed by the parties in difference, or if

they cannot agree upon a single arbitrator, to the decision of

two arbitrators, one to be appointed in writing by each of theparties within thirty (30) days after having been required in

writing to do so by either of the parties or in case of

disagreement between the arbitrators, to the decision of an

umpire to be appointed in writing by the arbitrators beforeentering on the reference and an award by the arbitrators or

umpire shall be a condition precedent to any right of action

against the Company only in cases of differences as to amount

of liability actually arising out of this Policy.

7 SUBROGATION OR CLAIM



7. SUBROGATION OR CLAIM

AGAINST THOSE LIABLE FOR THE

CLAIM. To the extent the Company pays for a loss suffered by

an Insured, the Company take over the rights and

remedies the Insured had relating to the loss.T

his isknown as subrogation. The Insured must help the

Company preserve the rights against those

responsible for the loss. This may involve signing any

papers and taking any other steps the Company mayreasonably require. If the Company takes over an

Insureds rights, the Insured must sign an appropriate

subrogation form supplied by the Company.



8. TRADE EMBARGO.

The Company is not liable to make any payments for liability

under any coverage sections of this policy or make any

payments under extension for any loss of claim arising in, or

where the insured or any beneficiary under the policy is a

citizen or instrumentality of the government of, any country(ies) against which any laws and/or regulations governing this

policy and/or the insurer, its parent company or its ultimate

controlling entity have established an embargo or other form

of economic sanction which have the effect of prohibiting theinsurer to provide insurance coverage, transacting business

with or otherwise offering economic benefits to the insured

or any other beneficiary under the policy.



It is further understood and agreed that no

benefits or payment will be made to any

beneficiary (ies) who is/are declared unable

to receive economic benefits under the lawsand/or regulations governing this policy

and/or the insurer, its parent company or its

ultimate controlling entity.



9. NOTICE OF LOSS.

In case of hospitalization or medical emergency the

Insured, a person traveling with him or her, or the

treating medical authority or institution must contact

the Company or its authorized representative

immediately to verify coverage and arrange the

appropriate medical care. In case of bodily injury or

death written notice of claim must be given to us

within thirty (30) days after a covered loss begins oras soon as reasonably possible. Notice should include

the Insureds name and the policy number.



10. PROOF OF LOSS.

Written proof of loss including original policy/

certificate, original receipts, invoices and all other

relevant documents must be furnished the Company

at one of the local offices within sixty (60) days afterthe date of such loss. Failure to furnish such proof

within the time required shall not invalidate nor

reduce any claim if it was not reasonably possible to

give proof within such time, provided such proof isfurnished as soon as reasonably possible and not

later than one (1) year from the time proof is

otherwise required.



11. PAYMENT OF CLAIMS.

Death claims will be paid to the Insureds estate, unless the

Company receives a written request from the Insured Person

designating a named beneficiary. All other claims will be paid

to the Insured. In the event the Insured Person is a minor,

incompetent, or otherwise unable to give a valid release forthe claim, the Company may make arrangements to pay

claims to the Insureds legal guardian, committee or other

qualified representative. Under section 1, in the event funds

for emergency medical treatment are guaranteed to theprovider of healthcare by the Company or its authorized

representative, indemnities shall be payable directly to the

provider of healthcare.



12. PHYSICAL EXAMINATION AND

AUTOPSY.

The Company, at its own expense, shall have

the right and opportunity to examine the

person of the Insured when and as often as it

may reasonably require during the pendencyof a claim under Sections 5 and 6 of this policy

and to make an autopsy in the case of death

where it is not forbidden by law.



13. RULE OF REFUND AND

CANCELLATION.

The Company will not allow any cancellation

of Policy once it has been issued. The

Company will not allow any refund of

premium once the Policy has been issued.



14. ASSIGNMENT.

No assignment of interest under this Policy shall be binding

upon the Company unless and until the original or a duplicate

thereof is filed with the Company. The Company does not

assume any responsibility for the validity of an assignment.

No change of Beneficiary under this Policy shall bind the

Company unless consent thereto is formally endorsed hereon

by an executive officer of the Company. No provision of the

charter, constitution or by-laws of the Company shall be used

in defense of any claim arising under this Policy, unless suchprovision is incorporated in full in this Policy.



15. AGE LIMIT.

Individuals 2 to 70 years old (inclusive) are

entitled to 100% of all benefits. Free coverage

is extended for the accompanying infant 0 to 2

years old (exclusive), coverage is limited to10% of Personal Accident benefit while other

benefits remain the same.

16 MAXIMUM DURATION OF



16. MAXIMUM DURATION OF

COVERAGE

Maximum duration of coverage is 45 days

(inclusive).

17 ARTICLE 1250 NEW CIVIL CODE



17. ARTICLE 1250 NEW CIVIL CODE

WAIVER CLAUSE.

It is hereby declared and agreed that the

provision of Article 1250 of the New Civil Code

of the Philippines (Republic Act No. 386)

which reads:

In case of extraordinary inflation or deflation

of the currency stipulated should supervene,

the value of the currency at the time of theestablishment of the obligation shall be the

basis of payment..



Philippine Airlines Statistics



In an estimation, in 100% total population of the

patients: about 30% of the 100% has fever due to weather

conditions and flu

about 25% of the 100% has hypertension and for the

refill of medication/s

about 15% of the 100% has migraine due to stress

and changes in sleeping pattern

about 15% of the 100% has backache due toprolonged standing/sittingabout 15% of the 100%

has sore throat due to changes in environmental

temperature and fever