FOURTEENTH CONGRESS OF THE REPUBLIC) 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
S E N A T E  
SENATE BILL N O . E 3 2  
Introduced bv 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 is less than 
desirable. 
Due to an antiquated legislation and a nearly obsolete institutional structure, 
Philippine civil aviation lags far behind its 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competitive, it suffers from technological backwardness and outdated regulatory and 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 io 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 over 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 airportls 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 its budget, In order to 
build highly competent personnel, the CAAP shall have the power to determine and fix 
the compensation and fringe benefits of its employees holding highly technical 
positions, 
Given the dual nature of CAAP, its 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 is 
earnestly requested. 


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FOURTEE,NTH CONGRESS OF THE REPUBLIC) 
i' 
K D  24 
i :i' ! 
) 
2-L 
OF THE PHILIPPINES 
First Regular Session 
/ 
SENATE 
\~~.~;E?\/F.!; wf : ,."./$.---*. 
SENATE BILL ~ 0 . 1 6  
3 
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 it enacted by the Senate and House of Representatives of fhe Philippines in Congress assembled: 
ARTICLE I 
GENERAL PROVISION 
SECTION 1, Title. - This Act shall be known as the "Civil Aviation Authority 
Act of 2007 
SEC. 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 II 
THE CIVIL AVIATION AUTHORITY 
SEC. 3. Creation ofthe Authortty. - There is hereby created a corporate body to 
be known as the Civil Aviation Authority of the Philippines (CAAP), hereinafter referred 
to as the "Authority," attached to the Department of Transportation and Communications 
for the purpose of policy coordination. It shall be composed of' a Soard of Directors to 
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be known as the CAAP Board 


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SEC. 4. Powers of Authority. - In addition to the powers provided under 
Republic Act No. 776, as amended, the Authority shall have the following powers and 
functions: 
(a) 
To provide safe and efficient air transport and regulatory services in the 
Philippines; 
‘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; 
(b) 
(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; 
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 
(d) 
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 International Airport (NAIA), 
Mactan-Cebu 
International Airport 
(MCIA), 
Diosdado 
Macapagal 
International Airport (DMIA), Subic Bay International Airport (SBIA), and 
other airport/s which may be created in the future; 
To provide for tariffs, fares, rates, charges, and fees, as it may deem 
necessary for air services, air traffics, navigational and other services, and 
(f) 
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(h) 
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SEC. 
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Authority sh 
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(a) 
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(b) 
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(c) 
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(d) 
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(e) 
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(f) 
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prescribe the manner of payment and collection, subject to(4h'provisions 
of this Act, notwithstanding any laws to the contrary; 
To exercise police powers and other law enforcement powers over areas 
under its jurisdiction and for this purpose, to coordinate with the Philippine 
National Police and other law enforcement agencies; and 
To adopt and promulgate such other rules and regulations to implement 
the provisions of this Act. 
5. Corporate Powers. - To carry out its purposes under this Act, the 
iall have the following corporate powers: 
To succeed in its corporate name, to sue and be sued in such corporate 
name, and to adopt, use all alter its corporate seal, which shall be 
judicially noticed; 
To adopt, amend or repeal its By-Laws; 
To enter into, make, perform, and carry out contracts of every class, kind 
and description, which are necessary or incidental to the realization of its 
purposes, with any person, domestic or foreign private firm, or 
corporation, local or national government office, agency, and with 
international institutions, or foreign government; 
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; 
To execute any deed or guarantee, mortgage, pledge, trust or assignment 
of any property for the purpose of financing the programs and projects 
deemed vital for the attainment of its goals and objectives; 
To construct, acquire, own, hold, operate, maintain, administer, and lease 
personal and real properties, including buildings, machinery, equipment, 
other infrastructure, agriculture lands, and its improvements, property 
right, and interest therein, and to encumber, mortgage, dispose, sell, or 
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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; 
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; 
To invest its funds and other assets in such areas, ventures, and projects 
as it may deem wise; 
To settle under such terms and conditions most advantageous to it, any 
claim by or against it; 
To determine and keep its own system of accounts following generally 
accepted principles of accounting, as well as the forms and contents of its 
contracts and other business documents; 
To enter into contracts for the sale or lease of pieces of equipment, 
facilities, installations, and aerodromes owned by the former ATO; 
To perform such other acts, and to do all things as may be necessary, 
proper, or convenient in connection with the performance of its functions, 
to carry out the purposes of this Act; and 
To exercise such other powers provided for by the Corporation not 
otherwise provided herein. 
SEC. 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. 
ARTlCLE 111 
BOARD OF DIRECTORS 
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SEC. 7. Board of Directors. - The powers and functions of the Authority shall be 
vested in and exercised by, a b a r d  of Directors: 
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 its 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 schemes; 
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. 
SEC. 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. 
SEC. 9 Composition. - 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; 
The Vice Chairman shall be elected among the members of the Board, 
provided that the Director General of Civil Aviation (DGCA) who shall 
automatically be a member of the Board, shall not be elected as Vice- 
Chairman; and 
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(c) 
Five Filipino citizens form 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 
is 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 shall 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 shall 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 transportation 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. 
SEC. 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 filed of aviation, five (5) years of which 
shall be in senior management position. 
The PresidentlDGCA shall be the Chief Executive and Operation Office of the 
Authority. He shall have the following powers, duties and responsibilities: 
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(a) 
To execute, administer, and implernent 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 to 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 transportations, 
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 
(b) 
(c) 
(d) 
(e) 
(f) 
(9) 
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exercise of these powers, he shall coordinate closely with the Philippine 
National Police and other law enforcement agencies of the government; 
To perform such powers, and duties provided for in this Act, or as may be 
delegated by the Boards; and 
To continue to exercise the powers provided for in Republic Act No. 776 
not inconsistent with this Act. 
(h) 
(i) 
SEC. 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. 
SEC. 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. 
SEC. 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 its maintenance and management to 
CAAP when said airports become operational. 
SEC. 14. Capitalizafion. - 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: 
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The values of the existing assets of the Civil Aeronautics Administration, 
the Bureau of Air Transportation, and its present successor, the Air 
Transportation Office (ATO), and the 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; 
Any surplus income accruing to the Authority upon its organization into a 
corporate body and its assumption of the assets and liabilities of the Air 
Transportation Office (ATO); and 
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 
(P4,900,000,000.00) is hereby authorized to be appropriated out of the 
National Treasury which shall be covered by preferred shares of the 
Authority retirable within five (5) years. 
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SEC. 15. Sources of Funds. - The following shall constitute the sources of 
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funds against which the operating expenses of the Authority may be drawn: 
All revenues from the aeronautical and allied services operated or 
rendered by the Authority, including remittances from foreign counterpart 
aeronautics administrations and authorities; 
Proceeds from sales of bonds, grants, donation, disposal 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 
Drawings upon the capital or surplus of the Authority. 
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SEC. 16. Refention of Moneys Collecfed and Dispositions Thereof. - Money 
collected by the Authority under the provisions of this Act shall be retained by the 
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Authority, which shall be disbursed as the Authority may deem necessary and 
appropriate, to carry out the objectives and policies of this Act. 
SEC. 17. Manayement of Funds. I The Authority may invest any of its funds not 
immediately required for operating expenses, or other immediate obligations in any 
business venture that it may deem appropriate, or in such secure 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 form 
such depository banks. 
SEC. 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: 
The outstanding liabilities and obligations, foreign and domestic, shall nto 
exceed, at any time, fifty percent (50%) of its net worth; 
The annual amortization on principal and interest shall not be more than 
twenty percent (20%) of the prior year's gross revenues; 
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; 
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 
Issuance of bonds or long term notes shall be with prior approval of or in 
accordance with the rules issued by the National Treasurer. 
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SEC. 19. Annual Budget - The Authority shall adopt an annual budget. Unless 
the Authority shall require subsidy andlor guarantee of its liability from the National 
Treasury, its 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. 
SEC. 20. Exempfion from Taxes, Cusfoms 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. 
SEC. 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. 
SEC. 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 its 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. 
SEC. 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 fall 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. 
SEC. 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. 
SEC. 25. Power to Regulate Height of Buildings and Installations that may 
endanger the safety of Flights. - 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 gadget of installations which shall interfere 
with or impair air navigation and may cause mishaps in the operations of aircraft. 
SEC. 26. Building Permits Subject to Prior Approval of Authority. - No building 
permit or other license or authority of nay kin 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 or navigation or flight, without the 
prior approval of the Authority. Should any conflict arise between the Authority and the 
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local government'hits 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. 
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. 
SEC. 27. Role of Departments, Bureaus, Offices and Other Agencies and 
lnsfrumenfalifies of the Government. - All Heads of the Departments, Bureaus, Offices, 
Agencies, and Instrumentalities 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. 
SEC. 28. Relationship with Local Governments. - Existing laws, rules and 
regulations to ihe 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. 
SEC. 29. P o k e  Authority. - The Authority shall have the power to exercise such 
police authority within its premises or area of operations as may be necessary to carry 
out its functions and attain its 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. 
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SEC. 30. Abolition of the Air Transporfafion Ofice and Civil Aeronaufics Board. 
- The Air Transportation Office (ATO) and the Civil Aeronautics Board (CAB) under the 
Department of Transportation and Communications are hereby abolished. 
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. 
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. 
SEC. 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 pension 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. 
SEC. 32. Organization of the Aufhorify. -Within sixty (60) days from effectivity 
of this Act, the Board of Directors of the Authority, or if none has been appointed, the 
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incumbent Director-General or Assistant Secretary of ATO, as the case may be, shall 
organize the Authority. 
SEC. 33. Appropriations. - The amount of Seven Billion Five Hundred Million 
Pesos (P750,000,000,~00.00) is hereby appropriated for the purpose of funding the 
gratuity to be distributed under Section 31 hereof. 
SEC. 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, 
cancelled, superseded, or set aside. 
SEC. 35. Injuncfion andResfraining 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. 
SEC. 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. 
SEC. 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. 
SEC. 38. lmplemenfing Rules and Regulations. - The Authority shall adopt 
rules and regulations to implement the provisions of this Act within sixty (60) days from 
its approval. 
SEC. 39. Separabilify 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. 
SEC. 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. 
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Approved, 
SEC. 41. Effectivity. - This Act shall take effect thirty (30) days after its approval 
and publication in the Official gazette and in a newspaper of general circulation. 
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