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August 24, 1987

The Government of the Republic of the Philippines and The Government of His Majesty The Sultan and Yang Di-Pertuan of Brunei Darussalam;

Being parties to the Convention on International Civil Aviation opened for signature at Chicago on the seventh day of December 1944;

Desiring to conclude an Agreement, consistent with the said Convention, for the purpose of establishing air services between and beyond the Republic of the Philippines and Brunei Darussalam;

Have agreed as follows:

ARTICLE 1 DEFINITIONS

For the purpose of this Agreement, unless the context otherwise requires:

(a) the term "the Convention" means the Convention on International Civil Aviation opened for signature at Chicago on the seventh day of December 1944, and includes any Annex adopted, under Article 90 of that Convention and any amendment of the Annexes or Convention under Articles 90 and 94 thereof so far as these Annexes and amendments have been adopted by both Contracting Parties;

(b) the term "aeronautical authorities" means, in the case of Brunei Darussalam, the Minister of Communications or any person or body authorized to perform any functions exercised at present by him or similar functions, and, in the case of the Republic of the Philippines, the Civil Aeronautics Board or any person or body authorized to perform any function exercised at present by the said board or similar functions;

(c) the term "designated airline" means an airline which has been designated, by one Contracting Party and authorized in accordance with Article 3 of this Agreement;

(d) the term "territory" means in relation to The Government of His Majesty The Sultan and Yang Di-Pertuan of Brunei Darussalam the land areas and territorial waters adjacent thereto under the sovereignty, suzerainty, protection or administration of Brunei Darussalam, and in relation to the Government of the Republic of the Philippines the land areas and territorial waters adjacent thereto under the sovereignty, suzerainty, protection or administration of the Republic of the Philippines;

(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 Convention; and

(f) the term "Schedule" means the Schedule of routes annexed to this Agreement and any amendments thereto as agreed in accordance with the provisions of Article 16 of this Agreement. The Schedule shall form an integral part of this Agreement.

ARTICLE 2 GRANT OF RIGHTS

Each Contracting Party grants to the other Contracting Party the rights specified in this Agreement for the purpose of establishing scheduled 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.

Subject to the provision of this Agreement the airline designated by each Contracting Party shall enjoy, while operating an agreed service on a specified route, the following rights;

(a) to fly without landing across the territory of the other Contracting Party;

(b) to make stops in the said territory for non-traffic purposes; and

(c) to embark and disembark in the said territory at the points specified in the Schedule of this Agreement passengers, baggage, cargo and mail destined for or coming from points in the territory of the other Contracting Party;

(d) to embark and disembark in the territory of third countries at the points specified in the Schedule of this Agreement passengers, baggage, cargo and mail destined for or coming from points in the territory of the other Contracting Party specified in the Schedule of this Agreement.

Nothing in this Article shall be deemed to confer on the airline of one Contracting Party the privilege of embarking, in the territory of the other Contracting Party, passengers, baggage, cargo and mail, destined for another point in the territory of that other Contracting Party.

ARTICLE 3 DESIGNATION AND OPERATING AUTHORIZATION

(1) Each Contracting Party shall have the right to designate in writing to the other Contracting Party one airline for the purpose of operating the agreed services on the specified routes.

(2) On receipt of such designation, the other Contracting Party shall, subject to the provisions of paragraphs (3), (4) and (5) of this Article, without undue delay, grant to the airline designated the appropriate operating authorizations.

(3) The aeronautical authorities 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 such authorities in a manner not inconsistent with the provisions of the Convention.

(4) Each Contracting Party shall have the right to refuse to accept the designation of an airline and to refuse to grant the operating authorization referred to in paragraphs 1 and 2 of this Article, or to impose such conditions as it may deem necessary for the exercise of the rights specified in Article 2 of this Agreement, whenever 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) The exercise by the designated airline of the privileges granted in the appropriate operating authorization mentioned in paragraph (2) of this Article shall be subject to the statutory powers of the aeronautical authorities of the Contracting Parties in order, to ensure the implementation of the provisions of Article 6 of this Agreement.

(6) Having received the operating authorization provided for under paragraph 2 of this Article, the designated airline may at any time operate the agreed services, provided that tariffs established in accordance with the provisions of Article 10 of this Agreement are in force.

ARTICLE 4 REVOCATION AND SUSPENSION OF OPERATING AUTHORIZATION

(1) Each Contracting Party shall have the right to revoke an operating authorization or to suspend the exercise of the rights specified in Article 2 of this Agreement by the airline designated by the other Contracting Party, or to impose such conditions as it may deem necessary on the exercise of these rights:

(a) in any case where it is not satisfied that substantial ownership and effective control of that airline are vested in accordance with paragraph (4) of Article 3; or

(b) in the case of failure by that airline to comply with the laws or regulations in force in the territory of the Contracting Party granting these rights; or

(c) in case 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 to prevent further infringements of laws or regulations, such right shall be exercised only after consultation with the other Contracting Party.

ARTICLE 5 EXEMPTION FROM DUTIES AND TAXES

(1) Aircraft operated on international services by the designated airline of either Contracting Party, as well as its regular equipment, spare parts, supplies of fuels and lubricants, and aircraft stores (including food, beverages and tobacco) on board such aircraft shall be exempt from all customs duties, inspection fees and other duties or taxes on arriving in the territory of the other Contracting Party, provided such equipment and supplies remain on board the aircraft up to such time as they are re-exported.

(2) Supplies of fuels, lubricants, spare parts, regular equipment and aircraft stores introduced into the territory of one Contracting Party by or on behalf of a designated airline of the other Contracting Party or taken on board the aircraft operated by such designated airline and intended solely for use in the operation of international air services shall be exempt from all duties and charges, including customs duties and inspection fees imposed in the territory of the first Contracting Party, even when these supplies are to be used on the parts of the journey performed over the territory of the Contracting Party in which they are taken on board. The materials referred to above may be required to be kept under customs supervision or control.

(3) The regular airborne equipment, spare parts, aircraft stores and supplies of fuels and lubricants retained on board the aircraft of either Contracting Party may be unloaded in the territory of the other Contracting Party only with the approval of the customs authorities of that Party, who may require that those materials be placed under their supervision up to such time as they are re-exported or otherwise disposed of in accordance with customs regulations.

ARTICLE 6 EXERCISE OF RIGHTS

For the purpose of achieving and maintaining equilibrium between the capacity of the specified air services and the requirement of the public for air transportation, as determined by the aeronautical authorities of the Contracting Parties, it is agreed that:

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

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

(3) The agreed services provided by the airlines designated by the Contracting Parties shall bear 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, baggage, cargo and mail between the territories of the two Contracting Parties.

(4) Provision for the carriage of passengers, baggage, cargo and mail both taken up and put down 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 other transport services established by airlines of the States comprising the area; and

(c) the requirements of through airline operation.

ARTICLE 7 TECHNICAL AND ADMINISTRATIVE PERSONNEL

Each designated airline is authorized to maintain in the territory of the other Contracting Party its own technical and administrative personnel, without prejudice to the national regulations of the respective Contracting Parties.

ARTICLE 8 IMMIGRATION AND CUSTOM REQUIREMENTS

(1) The laws and regulations of one Contracting Party relating to the admission to or departure from its territory of aircraft engaged in international air services, or to the operation and navigation of such aircraft while within its territory, shall be applied to the aircraft of the airline designated by the other Contracting Party, and shall be complied with by such aircraft upon entering or departing from or while within the territory of the first party.

(2) The laws and regulations of one Contracting Party as to the entrance into, stay within, or departure from its territory of passengers, crew or cargo of aircraft, such as regulations relating to entry, clearance, immigration, passports, customs, and quarantine shall be complied with by or on behalf of such passengers, crew or cargo of the airline designated by the other Contracting Party upon entrance into or departure from, or while within the territory of the first party.

(3) Passengers in direct transit across the territory of either Contracting Party shall be subject to no more than a very simplified control. Baggage and cargo in direct transit shall be exempt from customs duties and other similar taxes. For purposes of this paragraph, the term "direct transit" shall apply only to passengers, baggage and/or cargo who/which are never out of the control of the customs authorities of the Contracting Parties.

ARTICLE 9 AIRWORTHINESS CERTIFICATE

Certificates of airworthiness, certificate 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 routes and services described in the Annex to this Agreement. Each Contracting Party reserves the right to refuse to recognize for the purpose of flight above its own territory, certificates of competency and licenses granted to its own nationals by another state.

ARTICLE 10 TARIFFS

(1) For the purpose of the following paragraphs, the term "tariff" means the prices to be paid for the carriage of passengers, baggage and cargo and the conditions under which those prices apply, including prices and conditions for agency and other auxiliary services, but excluding remuneration and conditions For the carriage of mail.

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

(3) The tariffs referred to in paragraph (2) of this Article shall, if possible, be agreed by the airlines designated by both Contracting Parties, and if necessary taking into account the tariffs applied by the other airlines operating over the whole or part of the route, and such agreement shall, wherever possible, be reached by the use of the procedures of the International Air Transport Association for the working out of tariffs.

(4) The tariffs so agreed shall be submitted for approval to the aeronautical authorities of the Contracting Party at least sixty 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. Upon receipt of the submission of the tariffs, the aeronautical authorities shall consider such tariffs without undue delay. No tariff shall come into force if the aeronautical authorities of either Contracting Party is dissatisfied with it.

(5) If the designated airlines cannot agree, or if the tariffs are not approved by the aeronautical authorities of one Contracting Party, the aeronautical authorities of both Contracting Parties shall endeavour to determine the tariffs by mutual agreement.

(6) In default of agreement the dispute may be submitted to the procedure provided for in Article 14.

(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.

(8) The aeronautical authorities of each Contracting Party shall exercise their best efforts to ensure that the designated airlines conform with the agreed tariffs filed with the aeronautical authorities of the Contracting Parties as well as with the laws or regulations in this regard.

ARTICLE 11 PROVISION OF STATISTICS

The aeronautical authorities of a Contracting Party may supply to the aeronautical authorities of the other Contracting Party at their request such periodic or other statements of statistics as may be reasonably requested for the purpose of reviewing the capacity provided on the agreed services by the airline designated by the Contracting Party referred to first in this Article. Such statements shall include all available in formation to determine the amount of traffic carried by that airline on the agreed services.

ARTICLE 12 CONVERSION AND TRANSFER OF REVENUE

The airline designated by each Contracting Party shall be granted the right of free transfer, at the official rate of exchange prevailing at the time of transfer, of the excess of airline receipts over expenditures achieved on its territory in connection with the carriage of passengers, baggage, cargo and mail by the designated airline of the other Contracting Party, subject to the rules and regulations of the monetary authorities of the Contracting Party concerned.

ARTICLE 13 CONSULTATIONS

(1) In a spirit of close cooperation, the aeronautical authorities of the Contracting Parties shall consult each other fro in time to time with a view to ensuring the implementation of, and satisfactory compliance with, the provisions of this Agreement and the Schedule annexed thereto and shall consult when necessary to provide for modification thereof.

(2) Either Contracting Party may request consultation, which may be through discussion or by correspondence and shall begin within a period of sixty (60) days of the date of receipt of the request, unless both Contracting Parties agreed to an extension of this period.

ARTICLE 14 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 endeavour to settle it by negotiation. This negotiation shall begin within sixty (60) days after receipt of the request by one Contracting Party from the other.

(2) If the Contracting Parties fail to reach a settlement by negotiation, they may agree to refer the dispute for decision to some person or body; if they do not so agree, the dispute shall at the request of either Contracting Party be submitted for decision to a tribunal of three arbitrators, one to be nominated by each Contracting Party and the third to be appointed by the two so nominated, provided that such third arbitrator shall not be a national of either Contracting Party. Each of the Contracting Parties shall nominate an arbitrator within a period of sixty (60) days from the date of receipt by either Contracting Party from the other of a notice through the diplomatic channel requesting arbitration of the dispute by such a tribunal, and the third arbitrator shall be appointed within a further period of sixty (60) days. If either of the Contracting Parties fails to nominate an arbitrator within the period specified, or if the third arbitrator is not appointed within the period specified, the President of the Council of the International Civil Aviation Organization may at the request of either Contracting Party appoint an arbitrator or arbitrators as the case requires. In such case, the third arbitrator shall be a national of a third State and shall act as President of the arbitral tribunal.

(3) Unless otherwise provided by the Contracting Parties, the arbitral body shall determine its seat and prescribe its own rules of procedure. The decision of the arbitral body shall be determined by, at least, a majority vote.

(4) The Contracting Parties shall comply with any decision given under paragraphs (2) and (3) of this Article.

(5) If and so long as either Contracting Party or the designated airline of either Contracting Party fails to comply with a decision given under paragraphs (2) and (3) of this Article, the other Contracting Party may limit, withold or revoke any rights privileges which it has granted by virtue of Agreement to the Contracting Party in default or to designated airline in default as the case may be.

ARTICLE 15 AVIATION SECURITY

The Contracting Parties agree to provide maximum aid to each other with a view to preventing hijacking and sabotage to aircraft, airports and air navigation facilities, and threats to aviation security. They shall have regard to security provisions established by the International Civil Aviation Organization. When incidents or threats of hijacking or sabotage against aircraft, airports or air navigation facilities occur, the Contracting Parties shall assist each other by facilitating the communication of measures intended to terminate such' incidents or threats rapidly and safely. Each Contracting Party shall give sympathetic consideration to any request from the other for special security measures for its aircraft or passengers to meet a particular threat.

ARTICLE 16 MODIFICATIONS

(1) If either of the Contracting Parties considers it desirable to modify any provisions of this Agreement, such modification, if agreed between the Contracting Parties, shall come into force when confirmed by an Exchange of Diplomatic Notes.

(2) Modifications to the Schedule of this Agreement may be agreed directly between the aeronautical authorities of the Contracting Parties. They maybe applied provisionally from the date they have been agreed upon and shall enter into force when confirmed by an Exchange of Diplomatic Notes.

(3) In the event o f "the conclusion of any general multilateral convention concerning air transport by which both Contracting Parties become bound, this Agreement shall be so modified as to conform with the provisions of such Convention.

ARTICLE 17 TERMINATION

Either Contracting Party may at any time give notice to the other Contracting Party of its decision to terminate this Agreement; such notice shall be simultaneously communicated to the International Civil Aviation Organization. In such case this Agreement shall terminate twelve (12) months after the date of receipt of the notice by the other Contracting Party, unless the notice to terminate is withdrawn by agreement before the expiry of this period. In the absence of acknowledgement of receipt by the other Contracting Party, notice shall be deemed to have been received fourteen (14) days after the receipt of the notice by the International Civil Aviation Organization.

ARTICLE 18 REGISTRATION WITH ICAO

This Agreement and any Exchange of Notes relative thereto shall be registered with the International Civil Aviation Organization.

ARTICLE 19 ENTRY INTO FORCE

This Agreement shall be approved by each Contracting Party in compliance with its legal procedures and shall enter into force on the day of the Exchange of Diplomatic Notes confirming such approval.

In witness whereof the undersigned plenipotentiaries, being duly authorized thereto by their respective Governments, have signed this Agreement.

Done at Bandar Seri Begawan, Brunei Darussalam, this 24th day of August 1987 in duplicate in the English and Malay languages, both texts being equally authentic, but, in the event of any inconsistency or conflict, the English text shall prevail.

SCHEDULE

1. Route to be operated in both directions by the designated airline of the Republic of Philippines:

2. Route to be operated in both directions by the designated airline of Brunei Darussalam:

3. The agreed services provided by the designated airline of either Contracting Party shall begin at a point in the territory of that Contracting Party, but, except where otherwise provided, other points on the specified route may at the option of the designated airline be omitted on any or all flights.