Introduced By Senator Francis N. Pangilinan 
EXPLANATORY NOTE 
The phenomenon of globalization continues to reduce the distance 
between countries, almost unifying their territorial lines. 
As boundaries are 
dissolved, interstate traffic steadily increases. 
Meanwhile, inter-region 
business and tourism ventures within the country are gaining momentum. 
Heightened business as well as political activity across borders, both within and 
without the country, underscores the importance of a basic requirement for, as 
well as 
indication of, 
progress-transportation, 
more particularly, 
air 
transportation. Unfortunately, the state of our civil aviation i s  less than 
desirable. 
Due to an antiquated legislation and a nearly obsolete institutional 
structure, Philippine civil aviation lags far behind i t s  foreign counterparts. Far 
from being competitive, it suffers from technological backwardness and 
outdated regulatory and organizational structure. Republic Act No. 776, which 
created the Civil Aeronautics Administration (Air Transportation Office) and the 
Civil Aeronautics Board, having been passed 52 years ago, no longer covers 
many important aspects of civil aviation. Clearly, there is a need to introduce 
substantial regulatory and institutional changes to propel the industry to 
modernization. As civil aviation is a dynamic and primarily service-oriented 
industry that has a catalytic effect to the economy, it should be flexible 
enough to adapt itself and respond to the developing requirements of the 
country. 
In the 32nd International Civil Aviation Organization (ICAO) General 
Assembly Meeting, a resolution was adopted encouraging each member state to 
establish a single unified body or an autonomous civil aviation authority to deal 
with matters of civil aviation. In this way, bureaucracy problems and difficulty 
in meeting ICAO standards and recommended practices may be avoided. 
To 
implement said resolution, this bill creates the Civil Aviation Authority of the 
Philippines (CAAP), a government corporation attached to the Department of 
Transportation and Communications. It shall absorb the functions of the Air 
Transportation Office and the Civil Aeronautics Board and merge the technical 
and economic functions in a single entity. 
The CAAP shall exercise overall jurisdiction w e r  civil aviation, including 
supervision, control, and regulation on matters relating to safety and security 
of aircraft, airport facilities and installations, whether government or privately 
owned, including the Ninoy Aquino International Airport, Diosdado Macapagal 
International Airport (DMIA), Subic Bay International Airport (SBIA), and other 
airport/s which may be created in the future. 


The CAAP shall be vested with corporate powers and shall be financially 
self-sufficient, with an authorized capital of Seventy-Five Billion Pesos 
(P75,000,000,000.00) 
fully subscribed by the Republic of the Philippines. It 
shall adopt an annual budget and shall endeavor to refrain from relying on the 
National Treasury for i t s  budget. In order to build highly competent personnel, 
the CAAP shall have the power to determine and fix the compensation and 
fringe benefits of i t s  employees holding highly technical positions. 
Given the dual nature of CAAP, i t s  creation would reap the benefits of 
an autonomous corporate authority while regulating an important industry. As 
it relieves the national government of the burden of heavy capital investment, 
it advances the country’s civil aviation which would ultimately result in 
economic progress. 
In view of the paramount interests advanced herein, passage of this bill 
i s  earnestly requested. 
L 


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THIRTEENTH CONGRESS OF THE REPUBLIC ) 
OF THE PHILIPPINES 
) 
5 JijJ 15 fill .y 
FIRST REGULAR SESSION 
) 
(’. 
Introduced By Senator Francis N. Pangilinan 
AN ACT 
CREATING 
THE 
CIVIL 
AVIATION 
AUTHORITY 
OF 
THE 
PHILIPPINES, 
AUTHORIZING THE APPROPRIATION OF FUNDS THEREFOR, AND FOR OTHER 
PURPOSES 
Be enacted by the Senate and House of Representatives of the 
Philippines in Congress assembled: 
ARTICLE I 
GENERAL PROVISIONS 
Section 1. Title. - This Act shall be known as the Civil Aviation 
Authority Act of 2005. 
Section 2. Declaration of Policy. - It is hereby declared the policy of 
the Government to provide safe and efficient air transport and regulatory 
services in the Philippines by providing for the creation of the unified 
civil aviation authority, with sole jurisdiction over the restructuring of 
aviation regulatory regime, the promotion, development and regulation 
of the technical, economic, and aviation security functions, and the 
unification of the oversight functions of government under one agency. 
ARTICLE 111 
THE CIVIL AVIATION AUTHORITY 
Section 3. Creation of the Authority. - There i s  hereby created a 
corporate body to be known as the Civil Aviation Authority of the 
Philimines (CAAP), hereinafter referred to as the “Authority,” attached 
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to &e 
Department of Transportation and Communications for the 


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following powers and functions: 
purpose of policy coordination. It shall be composed of a Board of 
Directors to be known as the CAAP Board. 
Section 4. Powers of Authority. - In addition to the powers provided 
under Republic Act No. 776, as amended, the Authority shall have the 
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(a) To provide safe and efficient air transport and regukatory 
services in the Philippines; 
(b) To promulgate rules and regulations governing the technical, 
economic, and security aspects of civil aviation, as the 
Authority may find necessary and proper, for the safety, 
benefit, and interest of the public, consistent with the purposes 
of this Act; 
(c) To exercise supervision, control, and regulation over civil 
aviation, including but not limited to the air transportation of 
passengers, cargo, mail, air services, aviation companies, and 
persons, 
firms, 
corporations engaged 
in providing 
air 
transportation services, and related services; 
(d) To provide civil airways, navigation facilities and equipment, 
throughout the Philippines for the purpose of carrying out 
oversight functions, 
consistent with the Standards and 
Recommended Practices (SARPs) adopted by the International 
Civil Aviation Organization (ICAO) and contained in eighteen 
(18) Annexes to the ICAO Convention of 1994; 
(e) To exercise overall jurisdiction over governmental functions of 
civil aviation, including supervision, control and regulation of 
matters relating to safety and security of aircraft, airport 
facilities and installations, whether government or privately 
owned, as well as the supervision and regulation of safety and 
security in the Ninoy Aquino Internationat Airport (NAIA), 
Mactan-Cebu International Airport (MCIA), Diosdado Macapagal 
International Airport (DMIA), Subic Bay International Airport 
(SBIA), and other airportls which may be created in the future; 
(f) To provide for tariffs, fares, rates, charges, and fees, as it may 
deem necessary for air services, air traffics, navigational and 
other services, and prescribe the manner of payment and 


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collection, subject to the provisions of this Act, notwithstanding 
any laws to the contrary; 
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(g) To exercise police powers and other law enforcement powers 
over areas under i t s  jurisdiction 
and for this purpose, to 
coordinate with the Philippine National Police and other law 
enforcement agencies; and 
(h) To adopt and promulgate such other rules and regulations to 
implement the provisions of this Act. 
Section 5. Corporate Powers. - To carry out i t s  purposes under this 
the Authority shall have the following corporate powers: 
(a) To succeed in i t s  corporate name, to sue and be sued in such 
corporate name, and to adopt, use and alter i t s  corporate seal, 
which shall be judicially noticed; 
(b) To adopt, amend or repeal i t s  By-Laws; 
(c) To enter into, make, perform, and carry out contracts of every 
class, kind and description, which are necessary or incidental to 
the realization of i t s  purposes, with any person, domestic or 
foreign private firm, 
or corporation, 
local or national 
government office, agency, and with internationa( institutions, 
or foreign government; 
(d) To raise money, contract loans, indebtedness, credit and issue 
commercial papers and bonds, in any local or convertible 
foreign currency from any other international financial 
institutions under terms and conditions prescribed by law, rules, 
and regulations; 
(e) To execute any deed of guarantee, mortgage, pledge, trust or 
assignment of any property for the purpose of financing the 
programs and projects deemed vital for the attainment of i t s  
goals and objectives; 
(f) To 
construct, 
acquire, 
own, 
hold, 
operate, 
maintain, 
administer, and lease personal and real properties, including 
buildings, 
machinery, 
equipment, 
other 
infrastructure, 
agriculture lands, and i t s  improvements, property right, and 


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interest therein, and to encumber, mortgage, dispose, sell, or 
alienate or otherwise dispose the same at the fair market value 
it may deem appropriate; to lease its plant, machinery, 
equipment or goods not immediately required by it; 
(9) To receive gifts, 
donations, 
grants, 
bequests, 
services, 
properties, whether personal or real, and assistance of all 
kinds, from private and public sources, firms, institutions, 
domestic 
and 
foreign 
governments, 
and 
international 
institutions, and utilize the same; 
(h) To invest i t s  funds and other assets in such areas, ventures, and 
projects as it may deem wise; 
(i) To settle under such terms and conditions most advantageous to 
it, any claim by or against it; 
(j) To determine and keep its own system of accounts following 
generally accepted principles of accounting, as 
welt as the 
forms and contents of i t s  contracts and other business 
documents; 
(k) To enter into contracts for the sale or lease of pieces of 
equipment, facilities, installations, and aerodromes owned by 
the former ATO; 
(l) To perform such other acts, and to do all things as may be 
necessary, proper, or convenient in connection with the 
performance of i t s  functions, to carry out the purposes of this 
Act; and 
(m) To exercise such other powers provided for by the Corporation 
Section 6. Subsidiaries. - The Authority shall have the power to 
form, establish, organize, incorporate and maintain corporation or 
corporations. Such subsidiary or subsidiaries shall be formed in 
accordance with the Corporation Code of the Philippines and the existing 
rules promulgated by the Securities and Exchange Commission, unless 
otherwise provided in this Act. 
not otherwise provided herein. 


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ARTICLE 111 
2 
BOARD OF DIRECTORS 
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Section 7. Board of Directors. - The powers and functions of the 
Authority shall be vested in and exercised by, a Board of Directors: 
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(g) 
Provide comprehensive policy guidance for the promotion and 
development of the aviation industry as provided in this Act; 
Formulate the objectives, strategies, and policies to be 
followed by the Authority; 
Ensure that the Authority performs i t s  functions in a proper, 
efficient, and effective manner; 
Determine the organizational structure of the Authority, 
establish a human resources management system based on 
merit and fitness, and adopt a rational compensation and 
benefits scheme; 
Approve the annual and supplementary budget for submission 
to the Congress of the Philippines; 
Approve the annual and supplementary budget plan for 
utilization of the retained revenue; and 
Submit an annual report to the President of the Philippines. 
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Section 8. Meetings. - The Board shall meet regularly once a month 
and may hold special meetings to consider urgent matters upon call of 
the Chairman or any three (3) members. Internal rules of procedure in 
the conduct of Board meetings shall be as prescribed by the Board. 
Section 9. €omposition. - The Board shall be composed of seven (7) 
members who shall be appointed by the President of the Philippines: 
(a) The Secretary of the Department of Transportation and 
Communications shall act as Chairman ex-officio; 
(b) The Vice Chairman shall be elected among the members of the 
Board, provided that the Director General of Civil Aviation 


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< 
(DGCA) who shall automatically be a member of the Board, shall 
not be elected as Vice-chairman: and 
(c) Five Filipino citizens from the private sector or relevant 
government agencies as members. 
The appointed members of the Board shall have a term of five (5) 
years. Of the initial members of the Board, the Vice-chairman and the 
DGCA shall be appointed for a term of five (5) years; two (2) shall be 
appointed for a term of four (4) years; and two (2) for a term of three (3) 
years. In case of vacancy, the appointee shall serve the unexpired term 
of the predecessor. 
Members of the Board shall be eligible for 
reappointment. 
No person shall be appointed or designated as a member of the 
Board unless he i s  a Filipino citizen, of good moral character, 
unquestionable integrity and recognized competence in the field of 
aviation, 
aeronautical engineering, 
economics, 
law and internal 
relations, and management in related fields. 
Members of the Board shaU be reimbursed by the Authority for 
necessary expenses incurred in the performance of their duties. They 
shall also be entitled to per diem the amount of which shall be 
determined pursuant to a resolution adopted by the Board, which shail 
be adjusted annually based on the consumer price index as determined 
by the National Government. 
No member of the Board shall have financial or pecuniary interest, 
directly or indirectly, in any business contract or transaction entered into 
by the Authority or in any privilege granted by it. Neither shall a member 
have any interest, financial or otherwise, in any undertaking or business 
with an inherent conflict of interest with the Authority. 
Section I O .  The President. - The President of the Authority shall be 
known as the Director General of Civil Aviation and must be an airman or 
must have been an airman, with at least ten (IO) years experience in the 
field of aviation, five (5) years of which shall be in senior management 
position. 
The President/DGCA shall be the Chief Executive and Operating 
Officer of the Authority. He shall have the following powers, duties and 
responsibilities: 


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To execute, administer, and implement the objectives, policies 
and programs approved by the Board; enforce the decisions, 
orders, rules, and regulations approved or prescribed by the 
Board; 
To direct and supervise the management, operations and 
administration of the Authority; 
To represent the Authority in all dealings with offices, agencies 
and instrumentality of the Government, and with all persons, 
firms and institutions, public and private, domestic and foreign, 
including the International Civil Aviation Organization, other 
international agencies, and institutions; to act as the primary 
government 
representative 
in 
all 
matters 
relating 
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international aviation, bilateral, multilateral consultations, 
conferences, negotiations, and the like; 
To provide for rules and regulations, as may be required, 
covering (i) air traffic services; (ii) air navigation services 
including the establishment, 
administration, 
registration, 
inspection, classification, rating, issuance, denial, revocation, 
cancellation, modification, and investigation of civil airways 
navigation radio and telecommunication facilities, aerodromes, 
repair stations, training schools, and other air agencies and 
installations; (iii) licenses, permits, and certificates; 
(iv) 
aircraft accidents; and (v) such other rules, regulations, 
standards, practices, methods, procedures as the Director 
General may determine; 
To enforce the rules and regulations and impose fines, penalties 
and similar sanctions for any violations thereof; 
To ensure the safety, effectiveness and efficiency of air 
transportation, consistent with national objectives, and existing 
treaties, connections and agreements; 
To exercise police powers in all areas within the jurisdiction of 
the Authority, enforce all laws, regulations and rules relating 
thereto in the exercise of these powers, he shall coordinate 
closely with the Philippine National Police and other law 
enforcement agencies of the government; 


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(h) To perform such powers, and duties provided for in this Act, or 
as may be delegated by the Board; and 
(i) To continue to exercise the powers provided for in Republic Act 
No. 776 not inconsistent with this Act. 
Section 11. Management Officials and Employees; Merit System. . 
The Authority shall establish a human resources management system 
which shall base promotions and appointments on merit and fitness and 
will promote professionalism at all levels of the Authority in accordance 
with the sound principles of management. 
Section 12. Exemption from Rules and Regulations of the 
Compensation and Position Classification Board. - The Authority shall 
have the power to determine and fix the compensation and fringe 
benefits of the employees holding technical positions not common to 
other agencies of the government. Detailed employment benefits and 
package shall be specified in the implementing Rules and Regulations. 
The Authority shall be exempted from coverage of the rules and 
regulations of the Compensation and Position Classification Board. 
Section 13. Development of Airports and Other Ancillaries. - The 
development and construction of national airports will be under the 
Department of Transportation and Communications (DOTC) subject to the 
transfer of i t s  maintenance and management to CAAP when said airports 
become operational. 
Section 14. Capitakzation. - The Authority shall have an authorized 
capital stock of Seventy-Five Billion Pesos (P75,000,000,000.00) and shall 
be fully subscribed by the Republic of the Philippines. 
The subscription of the National Government shall be paid as 
follows: 
(a) The unexpended balances of appropriations in the current 
General Appropriations Act, Executive Order No. 132 and other 
acts in force upon approval hereof, pertaining to, held or used 
by, the Air Transportation Office; 
(b) The values of the existing assets of the Civil Aeronautics 
Administration, the Bureau of Air Transportation, and i t s  
present successor, the Air Transportation Office (ATO), and the 


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various aeronautical facilities throughout the country owned by 
the aforementioned offices or agencies, which shall be 
determined by an independent and qualified appraiser or 
appraisers within a year from the effectivity of this Act; 
(c) Any surplus income accruing to the Authority upon i t s  
organization into a corporate body and i t s  assumption of the 
assets and liabilities of the Air Transportation Office (ATO); and 
(d) Such amount as may be appropriated from time to time from 
the funds of the National Treasury, including any outlay from 
the infrastructure program of the National Government. The 
initial operating capital for the Authority in the amount of One 
Billion Nine Hundred Million Pesos (PI ,900,000,000.00) i s  hereby 
authorized to be appropriated out of the Nations( Treasury 
which shall be covered by preferred shares of the Authority 
retirable within five (5) years. 
Section 15. Sources of Funds. - The following shall constitute the 
sources of funds against which the operating expenses of the Authority 
may be drawn: 
(a) 
All revenues from the aeronautical and allied services operated 
or rendered by the Authority, including remittances from 
foreign counterpart aeronautics administrations and authorities; 
(b) Proceeds from sales of bonds, grants, donation, disposals of 
assets and sales of disposable assets, loans and other forms of 
indebtedness entered into by the Authority; 
Interests which may be earned on investments or on idle cash of 
the Authority; and 
(c) 
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Section 16. 
Retention of Moneys Collected and Dispositions 
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Thereof. - Moneys collected by the Authority under the provisions of this 
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Act shall be retained by the Authority, which shall be disbursed as the 
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Authority may deem necessary and appropriate, to carry out the 
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objectives and policies of this Act. 
(d) Drawings upon the capital or surplus of the Authority. 
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Section 17. Management of Funds. - The Authority may invest any of 
i t s  funds not immediately required for operating expenses, or other 
immediate obligations in any business venture that it may deem 
appropriate, or in such secured note, government securities, and other 
negotiable instruments that satisfy the guidelines prescribed by the 
Board. 
Funds of the Authority shall be deposited in such commercial and 
universal banks as the Authority may determine, subject to the 
requirements of existing laws. The Board shall designate the officials 
authorized to deposit in or withdraw funds from such depository banks. 
Section 18. Obligations. - Upon approval of the President with the 
prior concurrence of the Monetary Board, the Authority shall be 
authorized to secure or contract domestic or foreign loans, credits and 
other indebtedness, and to issue bonds, notes, debentures, securities and 
other instruments of indebtedness, as it may deem necessary to carry out 
the purposes of this Act, Provided that: 
(a) The outstanding liabilities and obligations, foreign and 
domestic, shall not exceed, at any time, fifty percent (50%) of 
i t s  net worth; 
(b) The annual amortization on principal and interest shall not be 
more than twenty percent (20%) of the prior year’s gross 
revenues; 
(c) Where appropriate, obligations incurred from private sources of 
capital may be secured by suitable assets or backed by priority 
claims against property of the Authority; 
(d) Obligations shall be considered the sole liability of the 
Authority, unless otherwise guaranteed by the Republic of the 
Philippines upon approval of the President with the prior 
concurrence of the Monetary Board; and 
(e) Issuance of bonds or long term notes shall be with prior 
approval of or in accordance with the rules issued by the 
National Treasurer. 
Section 19. Annual Budget. - The Authority shall adopt an annual 
budget. Unless the Authority shall require subsidy and/or a guarantee of 


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its liability from the National Treasury, i t s  budget for the year need not 
to be submitted to Congress for approval and inclusion in the General 
Appropriations Act. Supplementary estimates may be prepared or 
adopted in any of the Board meetings called for that purpose. 
Section 20. Exemption from Taxes, Customs and Tariff Duties. - The 
importation of equipment, machineries, spare parts, accessories, and 
other materials, including supplies and services used in the operations of 
the Authority, not obtainable locally, shall be exempt from all direct and 
indirect taxes, wharfage fees and other charges and restrictions, the 
existence of pertinent laws to the contrary notwithstanding. 
All obligations entered into by the Authority and any income derived 
therefrom, including those contracted with private international banking 
and financial institutions shall be exempt from all taxes on both principal 
and interest. 
The Authority is also exempt from the payment of capital gains tax, 
local government imposts and fees upon the effectivity of this Act. 
Section 21. The Authority of Officers to Administer Oaths. - The 
Director General and such other duly designated officers of the Authority 
shall have the authority to administer oaths in the transaction and 
performance of official business. 
Section 22. Statutory Lien on Aircraft, Equipment, Machinery. - The 
Authority shall have the power to impose lien on any aircraft, 
equipment, and machinery: 
(a) If the charges and other fees are not paid in full on due date for 
payment, or any part of the charges or the late payment 
penalty thereto remains unpaid; and 
(b) For serious and gross violation of the rules and regulations 
promulgated by the Authority in connection with its oversight 
functions, involving safety of navigation, within the various 
territories of the Authority, such as, aerodrome zones, the 
airspace above said zones, including the landing approaches 
and 
departures 
therefrom, 
and 
relevant 
navigation 
requirement. 


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Aircraft levied upon pursuant to this Section shall be in the custody 
of the Authority, and i t s  clearance shall be withheld until the fines 
imposed are fully paid. Such aircraft may be sold after notice to the 
owners and the proceeds of the sale shall be applied to the payment of 
the fines and penalties and other obligations that are due and payable. 
Section 23. Lien on Real, Personal Properties. - The Authority shall 
have the power to impose lien on personal and real properties, and other 
assets of persons, corporations, partnerships, and such other entities 
that shall be in default, or fail to perform their obligations, or fail to pay 
the fines and other penalties imposed for violations of the law, rules and 
regulations of the Authority. 
Properties, moneys, and assets Levied upon may be sold and the 
proceeds thereof applied to the satisfaction of the obligation after due 
notice and hearing. 
Section 24. General Penalty. - Any violation of the provisions of this 
Act, or any order, rule or regulation issued thereunder, or any term, 
condition or limitation of any certificate or permit issued under this Act 
for which no penalty is expressly provided shall be subject to fine as 
determined in the Implementing Rules and Regulations of this Act. 
Section 25. Power to Regulate Height of Buildings and Installations 
that may endanger the safety of Nights. - The Authority shall have the 
power to regulate the height of the buildings, towers, antennae, and 
other edifices, situated within the vicinity of, or in close proximity to, 
airports which shall endanger flights of aircraft. It shall also have the 
power to prohibit or regulate the establishment and operations of 
electrical, electronics, sound, magnetic, laser, or other gadgets or 
installations which shall interfere with or impair air navigation and may 
cause mishaps in the operations of aircraft. 
Section 26. Building Permits Subject to Prior Approval of Authority. 
- No building permit or other License, or authority of any kind or nature 
shall be granted by local authorities with respect to buildings and 
installations covered by the preceding section, or for any other activity 
that may endanger the safety of navigation or flight, without the prior 
approval of the Authority. Should any conflict arise between the 
Authority and the local government units concerned on matters affecting 
the safety of navigation as cited above, or other matters within the 
jurisdiction of the Authority, the decision of the Authority shall prevail. 


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For this purpose, the Authority may call upon any law enforcement 
agency, other instrumentality of the government, or local government, 
to enforce rules and regulations, which may include removal of the 
obstructions to the safety of flight, including the seizure of personal 
properties that may directly or indirectly cause danger to the safety of 
navigation or flight. 
Section 27. Role of Departments, Bureaus, Offices and Other 
Agencies and lnstrumentalities of the Government. - All Heads of the 
Departments, Bureaus, Offices, Agencies, and lnstrumentalities of the 
Government are hereby directed to give full support to the 
institutionalization and restructuring program of civil aviation, and to 
cooperate and coordinate with the Authority to facilitate and expedite 
the transition. 
Section 28. Relationship with Local Governments. - Existing laws, 
rules and regulations to the contrary, notwithstanding, the Authority 
shall, in coordination with the local government units, exercise 
administrative and regulatory powers over any land, building, installation 
and appurtenances thereto, including constructions of any building, road, 
tower, within the territorial areas, the airspace above the zones, 
including the navigable airspaces. 
Section 29. Police Authority. - The Authority shall have the power to 
exercise such police authority within i t s  premises or area of operations as 
may be necessary to carry out its functions and attain i t s  purposes and 
objectives provided, that the Authority may request the assistance and 
deputation of any law enforcement agency. Such police authority shall 
be exercised in providing public safety; maintaining peace and order; 
ensuring the security of passengers, crew, cargo and aircraft, buildings, 
installations, equipment and machinery; regulating and controlling entry 
into, and exit from, and movement within controlled areas; supervising 
private security guards, and enforcing rules and regulations of the 
Authority. 
Section 30. Abolition of the Air Transportation Office and Civil 
Aeronautics Board. - The Air Transportation Office (ATO) and the Civil 
Aeronautics Board (CAB) under the Department of Transportation and 
Communications are hereby abolished. 


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All powers, duties, and rights vested by the Law and exercised by the 
Air Transportation Office (ATO) and the Civil Aeronautics Board (CAB) are 
hereby transferred to the Authority. 
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All assets, real and personal properties, funds and revenues owned 
by or vested in the different offices of the ATO, CAB and of the 
aforementioned agencies, are transferred to the Authority. All contracts, 
records and documents relating to the operations of the abolished 
agencies and their offices and branches are likewise transferred to the 
Authority. 
Section 31. Transfer of Personnel of Air Transportation Office and 
the Civil Aeronautics Board. - To ensure smooth transition into a 
corporate structure, the incumbent Assistant Secretary of the Air 
Transportation Office shall continue to hold office and assume the 
powers of the Director-General until his successor shall have been 
appointed and inducted into office in accordance with this Act. Officials 
and employees of the AT0 and CAB shall be absorbed into the Authority 
on the basis of merit and fitness; Provided, that officials and employees 
who shall be laid-off during the first two years of the effectivity of this 
Act and as a result of this reorganization, shall be entitled to gratuity at 
the rate equivalent to two (2) months salary for every year of continuous 
and satisfactory service rendered of the equivalent nearest fraction 
thereof favorable to them on the basis of the highest salary received, in 
addition to the retirement benefits or pensions under existing law. 
Such officers and employees who may later be reinstated in the 
Authority, or who shall be rehired in any government office or 
instrumentality, shall refund the unearned portion of gratuity received 
from the Authority before he shall be reinstated or rehired. 
Section 32. Organization of the Authority. - Within sixty (60) days 
from effectivity of this Act, the Board of Directors of the Authority, or if 
none has been appointed, the incumbent Director-General or Assistant 
Secretary of ATO, as the case may be, shall organize the Authority. 
Section 33. Appropriations. -The amount of Seven Billion Five 
Hundred Million Pesos (P750,000,000,000.00) i s  hereby appropriated for 
the purpose of funding the gratuity to be distributed under Section 31 
hereof. 


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Section 34. Saving Clause.- All orders, determinations, rules, 
regulations, permits, certificates, Licenses and privileges which have 
been issued, made, granted, or allowed to become effective by the ATO, 
its predecessors, and by the CAB shall continue to be in effect according 
to their terms until modified, amended, revoked, canceled, superseded, 
or set aside. 
Section 35. lnjunction and Restraining Order. - The implementation 
of the projects for the institutionalization and restructuring of the 
aviation industry shall not be restrained or enjoined except by an order 
issued by the Supreme Court of the Philippines. 
Section 36. Legal Counsel. - Without prejudice to the appointment 
of Corporate Counsel by the Board, the Government Corporate Counsel 
shall be the ex-officio counsel of the Authority. 
Section 37. Auditor. - The Commission on Audit shall appoint a 
representative who shall be the full-time auditor of the Authority, and 
such personnel as may be necessary to assist said representative in the 
performance of his duties. 
Section 38. Implementing Rules and Regulations. - The Authority 
shall adopt rules and regulations to implement the provisions of this Act 
within sixty (60) days from its approval. 
Section 39. Separability Clause. - If for any reason, any section or 
provision of this Act shall be declared unconstitutional or invalid, the 
other sections or provisions hereof which are not affected thereby, shall 
continue in full force and effect. 
Section 40. Repealing Clause. - All acts, decrees, orders, executive 
orders, instructions, rules and regulations or parts thereof inconsistent 
with the provisions of this Act are repealed or modified accordingly. 
Section 41. Effectivity. - This Act shall take effect thirty (30) days 
after i t s  approval and publication in the Official gazette and in a 
newspaper of general circulation. 
Approved,