Philippine Airlines History

Alquetra, Flordeliza Y. Ballesteros, Veronica M. Causing, Dianne Melerie C.

Company History:
Philippine Airlines, Inc. (PAL) has been the dominant air carrier in the Philippines since its creation in 1941. Operating both internationally and within the 7,100 islands that make up the country, PAL has been something of a curiosity and scandal among the world's major airlines, for decades losing money while being traded among the handful of wealthy families in control of the Philippine economy.

Company History:
After 14 years of ownership by the government of deposed President Ferdinand E. Marcos, PAL was sold at the order of President Corazon Aquino in 1992 to a consortium of companies under the leadership of the Soriano and Cojuangco (pronounced "koe-HWAHNGkoe") families. Because Aquino's maiden name was Cojuangco, many believed this "privatization" of PAL was not likely to break the pattern of corruption and inefficiency that has marred the carrier's history since 1941. But events in the late 1990s would conspire to force significant changes in the airline.

Founding in the 1940s

The first Philippine air transport companies were created in the early 1930s, primarily as a means of travel and freight delivery 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 by the Philippine legislature in 1931 for both domestic and international flights. At that early date, when the country was still a possession of the United States, Pan American Airways provided most of the Philippines' international air transportation. PATCO settled for short flights among the major islands of Luzon, Cebu, Leyte, and Mindanao. On the less developed islands, PATCO also provided intra-island flights between distant towns.

 The 1941 transformation of PATCO into PAL involved an international cast of characters, most notably General Douglas D. MacArthur, at that time in charge of the United States Armed Forces in the Philippines preparing for an expected Japanese invasion of the islands. General MacArthur, whose father had served as the first military governor of the Philippine Islands following the SpanishAmerican War of 1898, had served in the country in various capacities throughout his career, including a four-year period before World War II when he was employed by the Philippine government as its field marshal. (MacArthur was recommissioned by the U.S. Army in 1941 and oversaw the eventual loss of the Philippines to the Japanese in 1942.)

 The general employed as his aide-de-camp a wealthy Spaniard named Andres Soriano, who had previously served as consul in Manila for the Spanish dictator Francisco Franco. Soriano controlled the large San Miguel Breweries along with a number of other corporations, and had powerful connections in the Philippine capital. In 1941 he put those connections to good use by teaming with the National Development Company, a government agency, in forming Philippine Airlines, Inc., which promptly absorbed PATCO, thereby becoming the nation's largest air carrier.

 As the creation of General MacArthur's aide de camp, PAL stood an excellent chance of winning contracts from the United States Armed Forces for its transport needs in the coming 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 the summer of 1942. It is not clear what became of PAL during the Japanese occupation, but on December 8, 1941, the day after the Japanese attack on Pearl Harbor, General MacArthur made Andres Soriano a colonel in the U.S. Army, and an American citizen as well. It is safe to assume that Soriano returned to Manila with MacArthur's liberating forces in 1944 and resumed control of his various business interests, including PAL.

 There is considerable evidence that MacArthur helped Soriano and PAL whenever he could. In 1946, MacArthur instructed the War Department to fly 20 tons of bottle caps to 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 the Philippines made his relationship with Soriano more like one of business partners than military officers. Sterling Seagrave commented on the chaotic postwar scene in his book The Marcos Dynasty, "The $2 billion aid package [from the United States to the Philippines] was fought over and devoured by politicians, by rich MacArthur partisans, and by packs of bureaucrats."

Post World War II Activities

Helped by such massive infusions of American capital, the Philippine economy rebounded from its wartime privations. PAL prospered so quickly that by 1948 it had already bought out two of its largest competitors, Far Eastern Air Transport, Inc., and Commercial Air Lines, Inc. Within a few years three other competing lines also threw in the towel, and PAL stood alone as the airline of the Philippines. Its ownership was still split between the Philippine government and the Soriano interests. The Sorianos were minority shareholders, but handled the day-to-day management of the airline, which, if the later pattern of graft and kickbacks was already established in the 1950s, was the more lucrative end of the business. Philippine magnate Enrique Zobel once bluntly remarked in the media that "PAL is a milking cow," and most of the milk seems to have been generated by what Far Eastern Economic Review described delicately as the "company's operations, for instance by dictating its material requirements."

 PAL's activities were described more directly in the New York Times, which quoted a 1989 World Bank study. The latter found that the airline was holding "millions of dollars of spare parts for aircraft it no longer owns and ground equipment so badly maintained that it has little value except as scrap." At one time PAL was even accused of carrying an "inexplicably large inventory of 750,000 sanitary napkins," as reported in the Far Eastern Economic Review. Clearly the finances were being toyed with to someone's advantage, which may help to explain how an airline that so often reported a loss in its annual report could remain a financial plum much sought after by Philippines business families.

 Whatever the intrigue surrounding its operation, PAL expanded its route system and doubled passenger miles between 1946 and 1950. The airline was serving 36 domestic airports by 1955 and owned a fleet of 35 planes, some of them DC 3/C47s and the rest Convair 240s. PAL's primary business still lay in freight and communication services, such as the mail, since its ticket prices were far beyond the means of the average Filipino. From the international airport in Manila, PAL sent 33 flights weekly to Cebu City, the transport hub of the southern islands, and offered regular service to all sections of the widely scattered nation, even the more remote islands where passengers were few and the operation ran at a loss.

 Indeed, the airline has repeatedly blamed its financial troubles on the large number of short, unprofitable flights it must offer as the nation's only airline. In this regard, it was significant that on the eve of its sale to private investors in 1991, PAL announced a dramatic cutback in the number of its shorter domestic flights, encouraging the formation of new private companies to take these on. PAL claimed in reports published as far apart as 1950 and 1989 that 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-haul domestic 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 PAL until the late 1960s, the period of Ferdinand Marcos's rise to power. Marcos was first elected president of the Philippines in 1965 and remained the country's absolute ruler until his forced exile in 1985, when it was discovered that he and his wife, Imelda, had systematically plundered their country for decades while amassing a fortune estimated to be at least $1 billion.

 Marcos literally had a hand in every major Philippine enterprise, including the nation's airline monopoly. As Imelda Marcos became a regular guest at parties and government capitals around the world, she accrued a debt to PAL of nearly $6 million in the mid-1970s. The airline's owner, Benny Toda, offered to cut the bill in half if the Marcoses would pay it; instead, Imelda Marcos demanded that he transfer his interests in the airline to the government--which meant, in effect, to the Marcoses themselves. Afraid to refuse, Toda settled on a price with Ferdinand Marcos and turned over his stock, for which he later said he was never paid.

 AL became one of the many baubles flaunted by Imelda Marcos, who by this time was one of the richest women in the world. The First Lady of the Philippines traveled around the world in her own PAL DC-8 jet equipped with beds, a built-in shower, and gold bathroom fixtures, sometimes also commandeering a second jet to carry her personal luggage. The airline was officially under the control of the Government Service Insurance System (GSIS), which controlled the pension funds of all government employees in the country and was one of the Philippines' largest financial institutions. GSIS was run by Roman A. Cruz, one of Imelda's favorites, and it was Cruz and his family who ran PAL from its takeover to the election of Corazon Aquino in 1986.

 By that time the airline had racked up consistent losses for the better part of two decades. PAL was at least able to enjoy the benefits of Manila's new international airport, completed in 1982 to replace a network of runways dangerously in need of repair; but, in the words of the Far Eastern Economic Review, "the airline [was] hobbled by ineffective management and corruption." It was also plagued by employee defections to other airlines, which generally paid about four times as much as PAL and were not "hobbled" by corruption in such gross forms. During the 1980s more than 1,000 of 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 an embarrassment to the international aviation industry.

New Leadership in the Mid-1980s

The rise of "People Power" in the mid-1980s, culminating in the election of Corazon Aquino and the escape by the Marcoses to the United States in 1986, apparently offered a chance for significant changes in the Philippine economy. Not dwelt upon in the international press, however, was Aquino's membership in the Cojuangco family, probably the wealthiest of all Philippine business clans and for many years crucial supporters of the Marcos regime. Observers point out that the election of Aquino changed less in the Philippines than her less affluent supporters had hoped, and the privatization of PAL in 1992 offered little evidence of any real diminution of the powers of the elite families.

 President Aquino originally ordered the sale of PAL along with hundreds of other governmentowned companies shortly after her election in 1986. Since the airline had been run at a loss for many years, Aquino first hired a Philippine businessman named Dante Santos to make PAL profitable prior to its sale. Under Santos, PAL did report two years of net income, but these were widely assumed to be the result of creative accounting methods rather than of any substantive changes in PAL's performance.

 Indeed, in late 1990, four years after the accession of Dante Santos as president of the airline, no fewer than 22 of PAL's top executives were charged with negligence, fraud, and/or mismanagement; ten of these officials were eventually fired, including an executive vice-president, two senior vice-presidents, and four vice-presidents. They were accused of precisely the sort of corrupt operational practices that had been a way of life at PAL for decades, including theft of parts, over-purchasing, and kickbacks from travel agents. It was hard to say, according to some critics, whether the firings were part of a genuine cleanup effort at PAL or merely a means of clearing the decks before the company's sale, after which the buyer might wish to install its own people in these lucrative positions.

 The sale of PAL was carried out in a curious fashion. The government first paid approximately $350,000 to the Asian Development Bank for recommendations on how best to proceed with the privatization of the airline. The study concluded that a large infusion of foreign ownership and management would be needed to turn around the airline's performance. For reasons of its own, the government rejected this proposal and instead commissioned a second study, this one from a branch of the World Bank.

 The second report also recommended that about one-third of the airline be transferred to foreign hands, chiefly as a means of retiring some of PAL's $650 million in foreign debt. This plan was also largely ignored, however, and in the months immediately prior to the airline's sale, PAL officials admitted that they could not return the company to profitability and were expecting a shortfall between its sale price and the amount of its debt. The company itself valued the two-thirds of its assets up for sale at somewhere between P 6.35 billion and P 6.69 billion, while the World Bank study had pegged their worth between P 5.25 billion and P 7.51 billion. But when 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 Philippine interests headed by the Soriano and Cojuangco families, who had created the airline in 1941. Contrary to the recommendations of both preliminary studies, none of the company was sold to foreign investors; instead, the remaining 33 percent was kept by the Philippine government, specifically by GSIS, through which the Marcoses had taken over PAL in 1978. In effect, PAL remained under the control of the same few Philippine families, this time without the bothersome intrusions of foreign investors, who might possibly insist on a more rigorous accounting of its daily operations.

Prospects for the 1990s and Beyond

Thus when president and COO Jose Antonio Garcia in early 1996 proclaimed that PAL would "take on the world" once it had "a clean house," to many observers this sounded like a 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 the fiscal year that ended March 31, a figure that in subsequent reports 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 moving in the wrong direction. The causes of the airline's poor economic performance were likewise familiar.

 Mackey identified three key factors: problems with the country's aviation infrastructure, growing competition for the Philippine market, and "the huge, sprawling subject of PAL's relationship with the government and role in development of the economy." Inefficiency was as rampant as ever in the fields of technology, logistics, and operations. Of the airline's 11 Boeing 747-200s, six had GE engines, and the rest Pratt & Whitney--thus creating a less efficient maintenance situation 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 to twice that many for its American competitors-and the age of the aircraft placed limits on nonstop distance. A trip from Manila to London was, as Mackey wrote in October 1997, "a Homeric odyssey" that required travelers to stop in Bangkok, Abu Dhabi, and Frankfurt. Not only did this create inconveniences for passengers, but PAL had to pay fees at every airport, thus cutting into its profit margins.

 Its people posed as much of a liability to PAL as its machines. Abby Tan in Asian Business (April 1996) recorded the following litany of larcenous acts against the airline by its own employees: "In one recent incident, 13 employees were charged in a ticket refund scam in Iloilo City that was estimated to be costing the company US$3,000 every month. PAL also loses around US$15.2 million each year through theft of plane parts and other supplies. That figure doesn't include items stolen from provincial stations centres where the airline's catering and ground-handling facilities are located. In one case, security agents discovered a fuel line running directly off company grounds."

Source:
http://www.fundinguniverse.com/companyhistories/Philippine-Airlines-Inc-CompanyHistory.html

Philippine Airlines Policies

Policy
When this Policy Begins and Ends All coverages, except Trip Cancellation, commence two (2) hours before the Insured s scheduled PAL flight departure time and ceases on whichever of the following occurs first: (a) upon arrival of Insured s scheduled return flight; (b) the expiry of the policy period specified in the Policy; (c) the Insured s return to his / her place of residence or employment; (d) for one-way itineraries, upon Insured s arrival at PAL flight s destination For Trip Cancellation, coverage takes effect upon acceptance and 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 to move 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 evacuation utilizing the means best suited to do so, based on the medical severity of the Insured s 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 medical practitioner. 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 Insured s mortal 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 necessary transportation 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 and accommodation 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 advance by 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 within thirty (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 codirector; (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 Insured s principal residence from fire, flood or similar natural disaster (typhoon, earthquake, etc.) within one week from the departure date which requires your 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 Insured has 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 Insured s 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) The Company 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 year old;

 (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 accompanied by 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 Insured s 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 by the 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 to travel.

 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 considered the 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 visited in 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 be reported 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 another person, 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 day for 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 a passenger 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 is required 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) months after 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 this Policy 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 and answers in any proposal and/or application and of evidence required from an Insured in connection with this insurance shall be conditions 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 the excess 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 within the 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 the parties 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 before entering 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 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. This is known 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 may reasonably require. If the Company takes over an Insured s 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 the insurer 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 laws and/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 or as soon as reasonably possible. Notice should include the Insured s 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 after the 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 is furnished 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 Insured s 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 for the claim, the Company may make arrangements to pay claims to the Insured s legal guardian, committee or other qualified representative. Under section 1, in the event funds for emergency medical treatment are guaranteed to the provider 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 pendency of 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 such provision 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 to 10% of Personal Accident benefit while other benefits remain the same.

16. MAXIMUM DURATION OF COVERAGE

Maximum duration of coverage is 45 days (inclusive).

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 the establishment 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 to prolonged standing/sittingabout 15% of the 100% has sore throat due to changes in environmental temperature and fever