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September 01, 2000

PREABLE

The Government of the Republic of the Philippines and the Government of Mongolia, hereinafter referred to as the "Contracting Parties";

Being Parties to the Convention on International Civil Aviation, which was opened for signature at Chicago on 7 December 1944; and

Desiring to conclude an Agreement supplementary to the said Convention for the purpose of establishing air services between their respective territories;

Have agreed as follows;

ARTICLE 1
DEFINITIONS

For the purpose of this Agreement, the terms enumerated hereunder shall have the following meanings, unless the context otherwise requires:

(a) "The Chicago Convention"- the Convention on International Civil Aviation, opened for signature at Chicago on 7 December 1944 and includes: {1) any amendment thereto which has entered into force under Article 94(a) thereof and has been ratified by both Contracting Parties; and (2) any Annex or any amendment thereto adopted under Article 90 of that Convention, in so far as such amendment or is at any given time effective for both Contracting Parties:

(b) ''Aeronautical authorities"- in the case of the Philippines, the Civil Aeronautics Board; in the case of Mongolia, the Ministry of Infrastructure, and for the purpose of Article 7. the Civil Aviation Authority; or in both cases, any person or body, authorized to perform any functions at present exercised by the above-mentioned authorities or similar functions;

(c) "Designated airline"- an airline which has been designated and authorized in accordance with Article 4 of this Agreement;

(d) "Territory"- the term territory shall mean the national territory of the Contracting Parties as defined in their respective Constitutions;

(e) The terms "air service", "international air service", "airline" and "stop for non-traffic purposes" have the meanings respectively assigned to them in Article 96 of the Chicago Convention;

(f) "The Agreement"- includes Annexes and any amendments to this Agreement,

(g) "User charges"-a charge made to airlines by the competent authority or permitted by them to be made for the provision of airport property or facilities or of air navigation facilities, including related services and facilities, for aircraft, their crews, passengers and cargo;

(h) "Specified route"- the routes specified in the Annex to the present Agreement

(i) "Agreed services"-the air services operated on the specified routes.

ARTICLE 2
APPLICABILITY OF THE CHICAGO CONVENTION

The provisions of this Agreement shall be subject to the provisions of the Chicago Convention insofar as those provisions are applicable to international air services.

ARTICLE 3
GRANT OF RIGHTS

1. Each Contracting Party grants to the other Contracting Party the following rights in respect of its international air services:

a) The right to fly across its territory without landing

b) The right to make stops in its territory for non-traffic purposes

2. Each Contracting Party grants to the other Contracting Party the rights hereinafter specified in this Agreement for the purpose of operating international air services on the routes specified in the appropriate Section of the Schedule annexed to this Agreement. Such services and. routes are hereinafter called "the agreed services" and "the specified routes" respectively.
While operating an agreed service on a specified route the airline or airlines designated by each Contracting Party shall enjoy in addition to the rights specified in paragraph (1) of this Article the right to make stops in the territory of the other Contracting Party at the points specified for that route in the Schedule to this Agreement for the purpose of taking on board and discharging passengers and cargo, including mail separately or in combination.

3. Nothing in paragraph (2) of this Article shall be deemed to confer on the designated airline or airlines of one Contracting Party the right to take on board, in the territory of the other Contracting Party, passengers and cargo, including mail, carried for hire or reward and destined for another point in the
territory of the other Contracting Party.

4. If because of armed conflict, political disturbances or developments, or special
and unusual circumstances, a designated airline of one Contracting Party is unable to operate a service on its normal route, the other Contracting Party shall use its best efforts to facilitate the continued operation of such service through appropriate temporary rearrangements of routes.

ARTICLE 4
DESIGNATION AND AUTHORIZATION OF AIRLINES

1. Each Contracting Party may designate in writing to the other Contracting Party one or more airlines for the purpose of operating the agreed services on the specified routes and to withdraw or alter such designations.

2. On receipt of such a designation the other Contracting Party shall, subject to the provisions of paragraphs (3) and (4) of this Article, without delay grant to the airline or airlines so designated, the appropriate operating authorizations.

3. The aeronautical authority of one Contracting Party may require an airline designated by the other Contracting Party to satisfy them that it is qualified to fulfill the conditions prescribed under the laws and regulations normally and reasonably applied to the operation of international air services by that authority in conformity with the provisions of the Chicago Convention.

4. Each Contracting Party may refuse to grant the operating authorizations referred to in paragraph (2) of this Article, or impose such conditions as it may deem necessary on the exercise by a designated airline of the rights specified in Article 3 (2) of this Agreement, in any case where the said Contracting Party is not satisfied that substantial ownership and effective control of that airline are vested in the Contracting Party designating the airline or in its nationals.

5. When an airline has been so designated and authorized it may begin to operate the agreed services, provided that the airline complies with the applicable provisions of this Agreement.

ARTICLE 5
REVOCATION OR SUSPENSION OF OPERATING AUTHORIZATIONS

1. The aeronautical authorities of each Contracting Party may revoke an operating authorization or suspend the exercise of the rights specified in Article 3 (2) of this Agreement by an airline designated by the other Contracting Party, or impose such conditions as it-may deem necessary on the exercise of those rights:

a) In any case where it is not satisfied that the substantial ownership and effective control of that airline are vested in the Contracting Party designating the airline or in nationals of such Contracting Party, or

b) In the case of failure by that airline to comply with the Saws or regulations normally and reasonably applied by the Contracting Party granting those rights; or

c) If the airline otherwise fails to operate in accordance with the conditions prescribed under this agreement.

2. Unless immediate revocation, suspension or imposition of the conditions mentioned in paragraph (1) of this Article is essential tc prevent further infringements of laws or regulations, such right shall be exercised only after consultation with the aeronautical authorities of the other Contracting Party.

ARTICLE 6
CAPACITY

1. There shall be fair and equal opportunity for the designated airlines of both Contracting Parties to operate the agreed services on the specified routes between their respective territories.

2. In operating the agreed services the designated airline or airlines of each Contracting Party shall take into account the interests of the designated airline or airlines of the other Contracting Party so as not to affect unduly the services which the latter provide on the whole or part of the same routes.

3. The agreed services provided by the designated airlines of the Contracting Parties shall bear a close relationship to the requirements of the public for transportation on the specified routes and shall have as their primary objective the provision at a reasonable load factor of capacity adequate to carry the current and reasonably anticipated requirements for the carriage of passengers and cargo, including mail, coming from or destined for the territory of the other Contracting Party which has designated the airline. Provision for the carriage of passengers and cargo, including mail, both taken on board and discharged at points on the specified routes in the territories of States other than that-designating the airline shall be made in accordance with the general principles that capacity shall be related to:

(a) traffic requirements to and from the territory of the Contracting Party which has designated the.airline;

(b) traffic requirements of the area through which the agreed service passes, after taking account of the other transport services established by airlines of the States comprising the area; and

(c) the requirements of through airline operation.

ARTICLE 7
TARIFFS

(1) The tariffs to be charged by the airline or airlines of one Contracting Party for carriage of traffic to or from the territory of the other Contracting Party shail be established at reasonable levels, due regard being paid to all relevant factors including cost of operation, reasonable profit, and the tariffs of other airlines.

(2) The tariffs referred to in paragraph (1) of this Article shall, if possible, be agreed to by the designated airlines concerned of both Contracting Parties, in consultation with other airlines operating over the whole or part of the route.

(3) The tariffs so agreed shall be submitted for the. approval of the aeronautical authorities of the Contracting Parties at least thirty (30) days before the proposed date of their introduction; in special cases, this time limit may be reduced, subject to the agreement of the said authorities.

(4) If the designated airline or airlines cannot agree on any of these tariffs, or if for some other reason a tariff cannot be fixed in accordance with the provisions of paragraph (2) of this Article, or if during the first fifteen (15) days of the thirty (30) days period referred to in paragraph (3) of this Article one Contracting Party gives the other Contracting Party notice of its dissatisfaction with any tariff agreed in accordance with the provisions of paragraph (2) of this Article, the aeronautical authorities of the Contracting Parties shall try to determine the tariff by agreement between themselves.

(5) If the aeronautical authorities cannot agree on the approval of any tariff submitted to them under paragraph (3) of this Article and on the determination of any tariff under paragraph (4), the dispute shall be settled in accordance with the provisions of Article 16 of the present Agreement.

(6) No tariff shall come into force if the aeronautical authorities of either Contracting Party have not approved it.

(7) The tariffs established in accordance with the provisions of this Article shall remain in force until new tariffs have been established in accordance with the provisions of this Article.

ARTICLE 8
CUSTOMS DUTIES

1) Aircraft operated in international air services by the designated airline or airlines of either Contracting Party shall be relieved from all customs duties, national excise taxes and similar national fees, as shall:

a) The following items introduced by a designated airline of one Contracting Party into the territory of the other Contracting Party:

(i) repair, maintenance and servicing equipment and component parts;

(ii) passenger handling equipment and component parts;

(iii) cargo-loading equipment and component parts;

(iv) security equipment including component parts for incorporation into security equipment;

(v) instructional material and training aids;

(vi) air me and operators' documents; and

b) the following items introduced by a designated airline of one Contracting Party into the territory of the other Contracting Party or supplied to a designated airline of one Contracting Party in the territory of the other Contracting Party.

(i) Aircraft stores (including but not limited to such items as food, beverages and tobacco) whether introduced into or taken on board in the territory of the other Contracting Party.

(ii) Fuel, lubricants and consumable technical supplies; and

(iii) Spare parts including engines.

2) The relief from customs duties, national excise taxes and similar national fees shall not extend to charges based on the cost of services provided to the designated airline or airlines of a Contracting Party in the territory of the other Contracting Party.

3) Equipment and supplies referred to in paragraph (1) of this Article may berequired to be kept under the supervision or control of the appropriate authorities.

4) The relief provided for by this Article shall also be available in situations where the designated airline or airlines of a Contracting Party have entered into arrangements with another airline or airlines for the loan or transfer in the territory of the other Contracting Party of the items specified in paragraph (1) of this Article, provided such other airline or airlines similarly enjoy such relief from such other Contracting Party.

ARTICLE 9
AVIATION SECURITY

1. The assurance of safety for civil aircraft, their passengers and crew being a fundamental pre-condition for the operation of international air services, the Contracting Parties reaffirm that their obligations to each other to provide for the security of civil aviation against acts of unlawful interference (and in particular their obligations under the Chicago Convention, the Convention on Offenses and Certain Other Acts Committed on Board Aircraft, signed at Tokyo on 14 September 1963, the Convention for the Suppression of Unlawful Seizure of Aircraft, signed at the Hague on 16 December 1970, the Convention for the Suppression of Unlawful Acts against the Safety of Civil Aviation, signed at Montreal on 23 September 1971 and the Protocol for Suppressions of Unlawful Acts of Violence at Airports Serving International Civil Aviation signed at Montreal on 24 February 1988) form an integral part of this Agreement.

2. The Contracting Parties shall provide upon request all necessary assistance to each other to prevent acts of unlawful seizure of civil aircraft and other unlawful acts against the safety of such aircraft, their passengers and crew, airports and air navigation facilities, and any other threat to the security of civil aviation.

3. The Contracting Parties shall, in their mutual relations, act in conformity with the aviation security Standards and, so far as they are applied by them, the Recommended Practices established by the International Civil Aviation Organization and designated as Annexes to the Chicago Convention; and shall require that operators of aircraft of their registry, operators who have their principal place of business or permanent residence in their territory, and the operators of airports in their territory, act in conformity with such aviation security provisions.

4. Each Contracting Party shall ensure that effective measures are taken within its territory to protect aircraft, to screen passengers and their carry-on items, and to carry out appropriate checks on crew, cargo (including hold baggage) and aircraft stores prior to and during boarding or loading and that those measures are adjusted to meet increases in the threat Each Contracting Party agrees that its airlines may be required to observe the aviation security provisions referred to in paragraph (3) required by the other Contracting, Party for entrance into, departure from or while within, the territory of that other Contracting Party. Each Contracting Party shall also act favorably upon any request from the other Contracting Party for reasonable special security measures to meet a particular threat.

5. When an incident or threat of an-incident of unlawful seizure of civil aircraft or any other unlawful acts against the safety of such aircraft, their passengers and crew, airports or air navigation facilities occurs, the Contracting Parties shall assist each other by facilitating communications and other appropriate measures intended to terminate as rapidly and safely such incident or threat thereof.

ARTICLE 10
PROVISION OF STATISTICS

The aeronautical authority of a Contracting Party shall supply to the aeronautical authority of the other Contracting Party at their request such periodic or other statements of statistics as may be reasonably required for the purpose of reviewing the capacity provided on the agreed services by the designated airline or airlines of the Contracting Party referred to first in this Article. Such statements shall include all information required to determine the amount of traffic carried by those airlines on the agreed services and the origins and destinations of such traffic.

ARTICLE 11
TRANSFER OF EARNINGS

Each designated airline may convert and remit to its country on demand local revenues in excess of sums locally disbursed. Conversion and remittance shall be permitted without restrictions at the rate of exchange applicable to current transactions which is in effect at the time such revenues are presented for conversion and remittance, and shall not be subject to any charges except those normally made by banks for carrying out such conversion and remittance.

ARTICLE 12
AIRLINE REPRESENTATION AND SALES

1. The designated airline or airlines of one Contracting Party may, in accordance with the laws and regulations relating to entry, residence and employment of the other Contracting Party, bring in and maintain in the territory of the other Contracting Party those of their own managerial, technical, operational and other specialist staff who are required for the provision of air services.

2. The designated airline or airlines of each Contracting Party may engage in the sale of air transportation in the territory of the other Contracting Party, either directly or through agents appointed by the designated airline. The designated airline or airlines of each Contracting Party may sell, and any person shall be free to purchase, such transportation in local currency or in any freely convertible other currency.

ARTICLE 13
USER CHARGES

1. Neither Contracting Party shall impose or permit to be imposed on the designated airline or airlines of the other Contracting Party user charges higher than those imposed on other foreign airlines operating similar international air services.

2. Each Contracting Party shall encourage consultation on user charges between their competent charging authorities and airlines using the services and facilities provided by those charging authorities, where practicable through those airlines' representative organizations. Reasonable notice of any proposals for changes in user charges should be given to such users to enable them to express their views before changes are made. Each Contracting Party shall further encourage their competent charging authorities and such users to exchange appropriate information concerning user charges.

ARTICLE 14
RECOGNITION OF CERTIFICATES AND LICENSES

Certificates of airworthiness, certificates of competency and licenses issued or rendered valid by one Contracting Party shall be recognized as valid by the other Contracting Party for the purpose of operating the route and services described in this Agreement. Each Contracting Party reserves the right to refuse to recognize for the purpose of flight over its territory, certificates of competency and licenses granted to its own nationals by another state.

ARTICLE 15
CONSULTATIONS

Either Contracting Party may at any time request consultations on the implementation, interpretation, application or amendment of this Agreement in compliance with this Agreement. The consultations between the Contracting Parties shall begin within a period of sixty (60) days from the date the other Contracting Party receives a written request, unless otherwise agreed by the Parties.

ARTICLE 16
SETTLEMENT OF DISPUTES

1. If any dispute arises between the Contracting Parties relating to the interpretation or application of this Agreement, the Contracting Parties shall in the first place try to settle it by negotiation.

2. If the Contracting Parties fail to reach a settlement by negotiation the dispute shall be submitted for decision at the request of the other Contracting Party to a tribunal of three arbitrator one to be named by each Contracting Party and the third to be nominated by the two arbitrators so chosen, provided that such third arbitrator shall not be a national of either Contracting Party. Each of the Contracting Parties shall nominate an arbitrator within sixty (60) days of the date of delivery by either Party to the other Party of a diplomatic note requesting arbitration of the dispute and the third arbitrator shall be nominated within thirty (30) days after such a period of sixty (60) days. If either Contracting Party fails to nominate its arbitrator within the period specified, or if the third arbitrator is not agreed upon, the President of the Council of the international Civil Aviation Organization may be requested by either Contracting Party to appoint an arbitrator or arbitrators as the case requires. In any case, the third arbitrator shall be a national of a third state which has diplomatic relations with both Contracting Parties and shall act as President of the arbitral body.

3. Except as hereinafter provided in this Article or as otherwise agreed by the Contracting Parties, the tribunal shall determine the limits of its jurisdiction and establish its own procedure. At the direction of the tribunal, or at the request of either of the Contracting Parties, a conference to determine the precise issues to be arbitrated and the specific procedures to be followed shall be held not later than thirty (30) days after the tribunal is fully constituted.

4. Except as otherwise agreed by the Contracting Parties or prescribed by the tribunal, each Contracting Party shall submit a memorandum within forty-five (45) days after the tribunal is fully constituted. Each Contracting Party may submit a reply within sixty (60) days of submission of the other Contracting Party's memorandum. The tribunal shall hold a hearing at the request of either Contracting Party, or at its discretion, within thirty (30) days after replies are due.

5. The tribunal shall attempt to give a written decision within thirty (30) days after completion of the hearing or, if no hearing is held, thirty (30) days after the date both replies are submitted by the Contracting Parties. The decision shall be taken by a majority vote.

6. The Contracting Parties may submit requests for clarification which shall be issued within fifteen (15) days after such request.

7. The decision of the tribunal shall be binding on the Contracting Parties.

8. Each Contracting Party shall bear the costs of the arbitrator appointed by them. The other costs of the tribunal shall be shared equally by the Contracting Parties including any expenses incurred by the President or Member of the Council of the International Civil Aviation Organization in implementing the procedures in paragraph (2) of this Article.

ARTICLE 17
AMENDMENT

The amendments of this Agreement agreed upon by the Contracting Parties shall come into effect when confirmed by an Exchange of Notes.

ARTICLE 18
OPERATION OF LEASED AIRCRAFT

The designated airlines of the Contracting Parties may use the aircraft and crew on leasing condition in the agreed services, provided that the leasing arrangements shall be subject to the approval of the civil aeronautical authorities of the other Contracting Party.

ARTICLE 19
MULTILATERAL CONVENTIONS

In the event of a general multilateral air transport convention accepted by the Contracting Parties entering into force, the provisions of such convention shall prevail. Any discussions with a view to determining the extent to which this Agreement is terminated, superseded, amended or supplemented by the provisions of the multilateral convention shall take place in accordance with Article 16 of this Agreement.

ARTICLE 20
TERMINATION

Either Contracting Party may at any time give notice in writing to the other Contracting Party of their decision to terminate this Agreement. Such notice shall be simultaneously communicated to the International Civil Aviation Organization. This Agreement shall terminate at midnight (at the place of receipt of the notice) immediately before the first anniversary of the date of receipt of the notice of the Contracting Party, unless the notice is withdrawn by agreement before the end of this period. in the absence of acknowledgement of receipt by the other Contracting Party, the notice shall be deemed to have been received fourteen (14) days after receipt of the notice by the International Civil Aviation Organization.

ARTICLE 21
REGISTRATION WITH ICAO

This agreement and any amendments thereto shall be registered with the International Civil Aviation Organization.

ARTICLE 22
ENTRY INTO FORCE

This Agreement shall enter into force through an exchange of diplomatic notes.

IN WITNESS whereof, the undersigned, being duly authorized by their respective Governments, have signed this Agreement.

Done in duplicate at Manila this 01 day of September, 2000 in the English language, both texts being authoritative.

FOR THE PHILIPPINE DELEGATION	FOR THE MONGOLIAN DELEGATION
(Sgd.) DOMINGO L. SIAZON, JR.	(Sgd.) LUVSANGIIN ERDENECHULUUN
Secretary of Foreign Affairs	Minister of Foreign Affairs
ROUTE SCHEDULE		ANNEX "B-1"

Section 1

Routes to be operated by the designated airline or airlines of Mongolia:

Points of Origin:	Intermediate Points:	Points of Destination:
Points in Mongolia	To be determined later	Points in the Philippines

NOTES:

1. Intermediate points may be omitted on any flight provided that the service begins or ends in Mongolia.

2. No traffic may be picked up at an intermediate point to be set down in the territory of Philippines and vice versa, except as may be from time to time be agreed by the Contracting Parties. This restriction also applies to all forms of stop over traffic.

Section 2

Routes to be operated by the designated airline or airlines of the Philippines:

Points of Origin:	Intermediate Points:	Points of Destination:
Points in Philippines	To be determined later	Points in the Mongolia

NOTES:

1. Intermediate points may be omitted on any flight provided that the service begins or ends in the Philippines.

2. No traffic may be picked up at an intermediate point to be set down in the territory of Mongolia, and vice versa, except as may from time to time be agreed by the Contracting Parties. The restriction also applies to all forms of stop over traffic.