r, 
I.- . . . 
FOURTEENTH CONGRESS OF THE 
) 
First Regular Session 
) ) 
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REPUBLIC OF THE PHILIPPINES 
S E N A T E  
s . B . N ~ .  870 
INTRODUCED BY SENATOR EDGARDO J. ANGARA 
EXPLANATORY NOTE 
One of the more important whereas clause in a resolution adopted by 
the International Civil Aviation Organization (ICAO) in its 32nd General 
Assembly Meeting is that of encouraging each member state to establish a 
single, centralized, and autonomous civil aviation authority to deal 
with all matters of civil aviation. 
Countries like the United Kingdom, New Zealand, Australia, Uganda, 
Jordan, Pakistan, Singapore, the Fiji Islands, Ireland, Romania, Jamaica, 
South Africa, Sri Lanka, and Trinidad and Tobago have all restructured their 
regulatory policies and framework and created a “stand-alone civil aviation 
authority” that had worked to their advantage in promoting their aviation 
industry thru reduced bureaucracy and inefficiency in meeting ICAO 
standards and recommended practices. 
The new Civil Aviation Authority of the Philippines (CAAP) will be 
responsible for the provision of safe and efficient management of all services 
permitting aviation access to and from the Philippines. The main object of 
this Act i s  to establish a regulatory framework for maintaining, enhancing 
and promoting domestic and international civil aviation in the country, with 
particular emphasis on aviation safety at all times. 
I urge my colleagues to support the CAAP bill with the certainty that 
this reform will spur the development of a more state-of-the art and dynamic 
civil aviation industry and consequently, tourism industry in our country. 
2Q# /A 
EDGA DO J. ANGARA 
Senator 


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FOURTEENTH CONGRESS OF THE 
1 
First Regular Session 
) 
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JLIL -3 Pt3:.’4 
REPUBLIC OF THE PHILIPPINES 
s . B . N ~ .  870 
INTRODUCED BY SENATOR EDGARDO J. ANGARA 
AN ACT CREATING THE CIVIL AVIATION AUTHORITY OF THE 
PHILIPPINES FOR THE REGULATION OF ALL CIVIL AVIATION 
ACTIVITIES AND INSTITUTION OF SAFETY REQUIREMENTS, 
DEFINING ITS POWERS AND FUNCTIONS, 
AND FOR OTHER PURPOSES. 
Be it enacted by the Senate and the House of Representatives of the 
Philippines in Congress duly assembled: 
ARTICLE I 
GENERAL PROVISIONS 
SECTION 1. Short Title. This Act shall be known as the “Civil 
Aviation Act of 2007.” 
SEC 2. Declaration of Policy. It is hereby declared the policy of the 
State to provide safe and efficient air transport and regulatory services in the 
Philippines by providing for the creation of a single, centralized civil aviation 
authority, with sole jurisdiction over the restructuring of aviation regulatory 
regime, and the promotion, development and regulation of the technical, 
economic, and aviation security functions. 
SEC 3. Definitions. For purposes of this Act, 
“Aircraft means any machine or craft that can derive support in the 
atmosphere from the reactions of the air, other than the reactions of 
the air against the earths surface; 
“Air route” means the navigable airspace between two points and the 
terrain beneath such airspace identified, to the extent necessary, for 
application of flight rules; 
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c) ‘Yir route and airway facilities” means facilities provided to 
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permit safe navigation of aircraft within the airspace of air routes and 
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airways, including: 
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(b) visual and non-visual aids to approach and landing at 
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aerodromes; 
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(c) communications services; 
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(d) meteorological observations; 
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d) “Aerodrome”means any area of land or water designed, equipped, set 
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apart or commonly used for affording facilities for the landing and 
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departure of aircraft and includes any area or space, whether on the 
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ground, on the roof of a building or elsewhere, which is designed, 
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equipped or set apart for affording facilities for the landing and 
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departure of aircraft capable of descending or climbing vertically, and 
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also includes an airport; 
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e) “Airman” means- 
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1. any individual who engages, as the person in command or as a 
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pilot, mechanic or member of the crew, or who navigates an 
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aircraft while the aircraft is underway; 
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2. any individual in charge of the inspection, maintenance, 
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overhauling or repair of aircraft, and any individual in charge of 
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the inspection, maintenance, overhauling, or repair of aircraft, 
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aircraft engines, propellers or appliances; or 
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any individual who serves in the capacity of flight operations 
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officer; 
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f) ‘‘Aircraft engine” means any engine used, or intended to be used, for 
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propulsion of aircraft and includes all parts, appurtenances and 
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accessories, other than propellers; 
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g) “Air navigation” means the practice of controlling, guiding and 
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operating aircraft from airport of departure to predetermined airport of 
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destination, including alternate airports. To ensure safety, regularity 
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and efficiency of civil aviation operations, standardization and common 
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understanding among all parties involved are essential in all matters 
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affecting the operation of aircraft and the numerous facilities and 
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services 
required 
in 
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support, 
such 
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aerodromes, 
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telecommunications, navigation aids, meteorology, air traffic services, 
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search and rescue, aeronautical information services and aeronautical 
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charts, in accordance with the procedures, rules and regulations 
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contained in the appropriate ICAO Annexes; 
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(a) visual and non-visual aids along the air routes and airways; 
(e) air traffic control services and facilities; and 
(0 flight service services and facilities. 
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h) “Air navigation facility” means any facility used in, available for 
use in, or designed for use in aid of, air navigation, including airports, 
landing areas, lights, any apparatus or equipment for disseminating 
weather information, for signaling, for radio directional finding, or for 
radio or other electromagnetic communication, and any other structure 
or mechanism having a similar purpose for guiding or controlling flight 
in the air or in the landing and take-off of aircraft; 
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“Air navigation services” includes information, directions and other 
facilities furnished, issued or provided in connection with the 
navigation or movement of aircraft, and the control of movement of 
vehicles in any part of an aerodrome used for the movement of aircraft; 
“Air operator” means any organization which undertakes to engage 
in domestic commercial air transport or international commercial air 
transport, whether directly or indirectly or by a lease or any other 
arrangement; 
“Air Operator Certificate” means a certificate authorizing an 
operator to carry out specified commercial air transport operations; 
“Air transport service” means a service for the carriage by air of 
passengers or cargo; 
m) “Appliances” means instruments, equipment, apparatus, parts or 
accessories, of whatever description, which are used or are capable of 
being used, in the navigation, operation or control of aircraft, including 
parachutes, communications equipment and any other mechanisms 
installed in or attached to aircraft during flight, and which are not part 
or parts of aircraft, aircraft engines or propellers; 
“Authority” means the Civil Aviation Authority of the Philippines 
established under Section 4 of this Act; 
“Auiation” or Air Transport, refers to the activities surrounding 
mechanical flight and the aircraft industry; 
“Auiation document” means any license, certificate, or other 
document issued by the Authority in respect of any person, aircraft, 
aerodrome or aviation related service; 
“Board” means the Board of the Civil Aviation Authority of the 
Philippines established under section 7 of this Act; 
“Cargo” includes mail; 
“Chicago Convention” means the Convention on International Civil 
Aviation (ICAO) concluded at Chicago on 7th December, 1944 and 
includes any Protocol amending the Convention and any Annex to that 
Convention relating to international standards and recommended 
practices, being an Annex adopted in accordance with that Convention; 
“Commander” in relation to an aircraft, means the member of the 
crew designated for the time being as commander of that aircraft by 
the operator thereof, or, failing such a person, the person who for the 
time being is the pilot in command of the aircraft; 
“Contracting State”means a country which is a party to the Chicago 
Convention; 
“Corporate plan” means a plan prepared in accordance with section 
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w) “Dangerous goods” means articles or substances which are capable of 
posing significant risk to health, safety or property when transported 
by air; 
x) “Director General” means the Director General of Civil Aviation 
appointed under section 13; 
y) “Flight” means any period from the moment when all the external 
doors of an aircraft are closed following embarkation, until the moment 
when any of such doors are open for disembarkation; 
z) ‘cGAAZ”’ means Generally Accepted Accounting Practice; 
aa)“Loss or damage” includes, in relation to persons, loss of life and 
personal injury; 
bb)“Mernber”means a member of the Board; 
cc) “Navigation of aircraft” means a function which includes the 
piloting of aircraft; 
dd) “Operator” means- 
(a) a person, organization or enterprise, engaged in or offering to 
engage in, aircraft operations, and any person who causes or 
authorizes the operation of aircraft, in the capacity of owner, 
lessee or otherwise, whether with or without the control of the 
aircraft; and 
(b)who or which is deemed to be engaged in the operation of 
aircraft within the meaning of this Act; 
ee) “Propeller” includes all parts, appurtenances and accessories of a 
propeller; 
ff) “public aerodrome or airport” means an aerodrome or airport 
which is under the management of body corporate established or 
owned by the State; 
gg) “Rules of the Air” means those provisions for securing the safety of 
aircraft in flight and in movement on the surface and the safety of 
persons and property on the surface. 
These provisions include- 
(a) lights and signals to be shown by aircraft; 
(b) General, Visual and Instrument Flight Rules; 
(c) Aerodrome Traffic Rules; and 
(d) Aerodrome Signals and Markings; 
hh) “Philippine aircraft” means aircraft registered in the Philippines. 
ARTICLE I1 
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ESTABLISHMENT, POWERS AND FUNCTIONS OF 
THE CIVIL AVIATION AUTHORITY OF THE PHILIPPINES 
SEC 4. Creation of the Civil Aviation Authority of the 
Philippines. - All civil aviation affairs shall he administered by the 
Philippine Civil Aviation Authority, hereinafter referred to as the 
“Authority,” to replace the Air Transportation Office (ATO) and the Civil 
Aeronautics Board (CAB) organized under Republic Act 776, and is attached 
to the Department of Transportation and Communications for the purpose of 
policy coordination. 
SEC 5. -Powers and Functions of the Civil Aviation Authority of 
the Philippines. In addition to the powers provided for under Republic Act 
No. 776, as amended, the Authority shall: 
Maintain a standard of safety and efficiency in the civil aviation 
system that is at least equal to the standard of safety prescribed by the 
Chicago Convention and any other aviation convention, agreement or 
understanding to which the Philippines is a party thereto and 
consistent with national security policy; 
Formulate, coordinate and regulate the implementation of rules and 
regulations, governing the technical, economic, and security aspects of 
civil aviation; 
Control, supervise and regulate all civil aviation activities, including 
hut not limited to the transport of passengers, cargo, air services, 
aviation companies, and persons, firms, corporations engaged in 
providing air transportation services, and related services; 
Issue, renew, vary, extend and amend licenses and other aviation 
documents, and to collect fees in respect thereof; 
Carry out an investigation of any aircraft accident occurring in or over 
the Philippines or in relation to any Philippine aircraft; 
Use the property of the Authority in such a manner as may appear to 
the Authority to be requisite, advantageous or convenient with a view 
to making the best use of any of the property of the authority in 
relation to its functions under the Act; 
Undertake projects for the construction of civil airways, navigation 
facilities, offices, stations, aerodromes, airport-related facilities and 
equipment, throughout the Philippines for the purpose of carrying out 
its oversight and services functions, consistent with the Standards and 
Recommended Practices (SARPs) adopted by the International Civil 
Aviation Organization (ICAO); 
Exercise overall jurisdiction over governmental functions of civil 
aviation, including the supervision, control and regulations on 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-Cehu International Airport 
(MCIA), Diosdado Macapagal International Airport 
(DMIA), Subic 
Bay International Airport (SBIA), and other airport/s which maybe 
created in the future; 
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Determine, fix, and / or prescribe charges and / or rates pertinent to 
the operation of public air transportation and services; 
Exercise eminent domain over areas under its jurisdiction; 
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 
Perform other related functions necessary, or in connection with, or are 
required to achieve the objectives of the CAAP under this Act. 
In performing its functions and exercising its powers, the Authority 
shall have as its paramount consideration the safety of aviation. 
Subject to the preceding paragraph, the Authority shall perform its 
functions and exercise its powers in a manner that ensures, as far as 
practicable, that the environment is protected from any detrimental effects 
associated with the operation and use of aerodrome and aircraft and for this 
purpose the Authority shall observe the provisions of 
Philippine 
environmental laws. 
SEC. 6. Corporate Powers - The Authority shall have the following 
corporate powers: 
To succeed in its corporate name; 
To sue and be sued in its corporate name, and to adopt, use and 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 international financial institutions under terms and 
conditions prescribed by law, rules and regulations; 
To execute any deed of guarantee, mortgage, pledge, and 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, and other infrastructure, agricultural lands, and its 
improvements, property rights, and 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; 
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 for the purposes 
set forth in this Act; 
To invest its funds and other assets in such areas, ventures, and 
projects as it may deem wise; 
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j) To settle under such terms and conditions most advantageous to it, 
any claim by or against it; 
k) 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; and 
1) To perform such other acts, as are necessary or convenient in 
connection with the performance of its functions, to carry out the 
purposes of this Act. 
SEC. 7. Subsidiaries - The authority shall have the power to form, 
establish, organize, 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 and regulations promulgated 
by the Securities and Exchange Commission, unless otherwise provided for in 
this Act. 
ARTICLE I11 
COMPOSITION, POWERS, AND FUNCTIONS 
OF THE BOARD OF DIRECTORS 
SEC. 8. Board of Directors - The Board of Directors of the Authority 
shall exercise the following powers and functions: 
Provide comprehensive policy guidance for the promotion and 
development of the aviation industry as provided for in this Act; 
Decide 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 rationale compensation and benefits scheme; 
Approve the annual and supplementary budgets for submission to 
Congress; 
Approve the annual and supplementary budget plan for utilization of 
the retained revenue; and 
Submit an annual report on the accomplishments of the CAAP at the 
close of each calendar year, for submission to the President of the 
Philippines . 
SEC.9. Board Meetings. - The Board shall meet regularly once a 
month and may hold special meetings to consider urgent matters upon call of 
the Chairman or concurrence of at least three (3) members. 
The Board shall likewise prescribe the internal rules of procedure in 
the conduct of its meetings. 
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SEC. 10. Composition.- The seven-member Board shall be composed 
of the Secretary of the DOTC as ex-officio Chairman, a Vice-chairman to be 
elected among the members of the Board, the Director-General as a member, 
and four (4) members who shall from either the private sector or relevant 
government agencies. 
In no case shall the Director-General be elected as Vice-chairman. 
The regular members shall be appointed by the President for a term of 
five (5) years. Of the 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 are eligible for two (2) reappointments. 
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, probity, and 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 actual 
expenses, including traveling and subsistence, incurred by them in the 
performance of their duties. The per diems of the members of the Board shall 
be determined pursuant to a resolution to be adopted by the same, which 
shall be adjusted annually, based on the consumer price index as determined 
by the national government. 
No member of the Board shall have 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. 
SEC 11. Declaration of Interest. 
(I) Any member of the Board who was in any way, whether directly or 
indirectly, interested in a contract or proposed contract with or in any 
other matter concerning an entity regulated by the Authority, or any 
body corporate carrying on business with the Authority, shall, as soon 
as possible after the relevant facts have come to his knowledge, 
disclose the nature of his interest. 
(2) A disclosure under subsection (l), shall be recorded in the minutes of 
the Board. and the member- 
(a) shall not take part after the disclosure in any deliberation or 
decision of the Board with respect to that contract; and 
(b) shall be disregarded for the purpose of constituting a quorum of the 
Board. 
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(3) For purposes of this section, a person who or any nominee or relative of 
whom is a Director, a shareholder or partner in a company or other 
body of persons other than a statutory authority or who is an employee 
thereof shall be treated as having indirectly, a pecuniary interest in a 
contract or proposed contract or such other body of persons is a party 
to the contract or proposed contract or has a pecuniary interest in such 
other matter under consideration. 
SEC 12. Limitation on Subsequent Employment. No member or 
former member, shall accept employment or enter into a contract of service 
with an entity’regulated by the Authority, until the expiry of two years from 
the termination of his appointment whether by signature, revocation, or 
otherwise. 
ARTICLE IV 
PLANNING, MANAGEMENT AND FINANCE 
SEC 13. Corporate Plan. Upon effectivity of this Act, the Board shall 
prepare, a three year corporate plan (hereinafter referred to as “the Plan”), 
in respect of the programs or goals of the Authority. 
The Plan shall include details of the following: 
(a) the Authority’s operational environment; 
(b) the strategies of the Authority; 
(c) performance measures of the Authority; 
(d) review of performance against previous Plans; 
(e) analysis of risk factors likely to affect aviation safety in the aviation 
(f) human resource management system based on merit and fitness; 
(g) industrial relations strategies 
The Plan shall also cover any other matters required by the Secretary 
of the DOTC to be covered, which may include further details about the 
matters referred to in the preceding paragraph subsection (2). 
industry; and 
and 
The Plan may be revised at least once a year and up to sixty days 
before the end of the first year of the Plan. 
The Board shall keep the Secretary of Department of Transportation 
and Communication informed about the (a) significant changes to the Plan; 
and (b) matters that arise that could significantly affect the objectives of the 
Plan. 
ARTICLE V 
BOARD OFFICERS 
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SEC. 14 The President. - The President of the authority shall be 
known as the Director General of Civil Aviation (DGCA) and must be an 
airman or must have been an airman, with at least ten (10) years of 
experience in the field of aviation, five (5) years of which shall be in a senior 
management position. 
The President IDGCA, as the Chief Executive and Operating Officer of 
the Authority, shall: 
a) Execute, administer and implement the objectives, policies and 
programs approved by the Board; enforce decisions, orders, rules and 
regulations approved or prescribed by the Board; 
b) Direct, supervise the management, operations and administration of 
the Authority; 
c) 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; 
d) Provide for rules and regulations, as maybe required, covering (i) air 
transport 
services, (ii) air navigation services including the 
establishment, 
administration, 
registrations, 
inspections, 
classification, ratings, issuance, denial, revocation, cancellation, 
modification, investigations, of civil airways navigation radio and 
telecommunication facilities, appliances, aerodromes, repair stations, 
training schools, and other air agencies installations, (iii) licenses, 
permits, certificates, type certificates of all kinds classes and nature, 
(iv) aircraft accidents; and (v) such other rules regulations, standards, 
practices, methods, procedures as the Director General may determine, 
enforce the same, 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 
treatise, connections and agreements; 
e) 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 
government; 
f) Exercise the powers provided for in Republic Act No. 776, not 
inconsistent with this Act, nor otherwise repealed, until declared null 
and void by the Authority in relation to the duties and responsibilities 
of his office, and to the purpose and objectives and of the Authority; 
and 
g) Perform such powers, and duties provided for in this Act, or as may be 
delegated by the Board. 
SEC. 15. Exemption from Rules and Regulations of the 
Compensation a,nd Position Classification Board. - The Authority shall 
have the power to determine and fix the compensation and fringe benefits of 
employees holding technical positions that is not common to the other 
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agencies of the government which 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. 16. 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. 
ARTICLE VI 
CAPITAL AND FISCAL ADMINISTRATION 
Sec. 17. Capitalization. - 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: 
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Appropriations Act, Executive Order No. 132 and other acts in force 
upon approval hereof, pertaining to, held or used by, or the Air 
Transportation Office, of the Department of Transportation and 
Communications; 
The values of all existing assets of the Civil Aeronautics 
Administration, the Bureau of Air Transportation, and its present 
successor, the Air Transportation office, 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 180 days 
upon effectivity of this Act; 
Any surplus income that may have accrued to or be derived from 
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 not otherwise appropriated, 
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 
(P1,900,000,000.00) is hereby authorized to be appropriated out of 
any funds of the National Treasury not otherwise appropriated 
which shall be covered by preferred shares of the Authority and 
which shall be retirable within five (5) years. 
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SEC 18. Civil Aviation Authority of the Philippines’ Fund. - 
There is hereby established a fund to be known as the “Civil Aviation 
Authority of the Philippines Fund (hereinafter referred to as “the CAAP 
Fund”). 
The operating expenses shall be drawn against: 
All revenues from the aeronautical and allied services operated or 
rendered by the Authority; 
Such sums as are provided by foreign states, international 
organizations, multilateral or bilateral lending agencies, corporations 
or private individuals for the exercise of any of the functions of the 
Authority; or 
Proceeds from sales of bonds, grants, donations, disposals of assets and 
sales of disposable assets, loans and other forms of indebtedness 
entered in to by 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. 
SEC 19 Application of Fund. - The money in the Fund shall be 
applied in defraying the following expenditure: 
(a)Acquisition of property by the Authority in the performance of its 
(b) Remuneration and allowances of members of the Board; 
(c) Remuneration, allowances, advances, loans, pensions and gratuities 
(d) Capital and operating expenses, including maintenance and insurance 
(e) Any other expenditure authorized by the Authority in the performance 
functions or exercise of its powers; 
payable or made to employees; 
of the property of the Authority; and 
of its functions. 
SEC 20. Accounts and Audit. - The Authority shall keep proper 
books of accounts and records in accordance with GAAP, of all moneys 
received and expended and shall record the matters in respect of which such 
sums were received and expended. 
Within three months after the end of each financial year, the Authority 
shall cause to be prepared, in respect of that year- 
(a) A report setting out the activities of the Authority; and 
@) Financial statements prepared in accordance with GAAP and any 
other statement as required by the Minister with responsibility for 
Finance. 
For purposes of this Act, the term “financial year” shall be for a 
period of twelve months beginning the first day of April in any year to the 
thirtieth day of March in every year. The Authority may vary its financial 
year. 
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SEC. 21. Retention of Earnings Collected and Dispositions 
Thereof. - Eighty percent (80%) of the total earnings collected by the 
Authority under the provisions of this Act shall be retained and utilized as it 
may deem necessary and appropriate, to carry out the objectives and policies 
of this Act. 
SEC. 22. Munugement of Funds. - 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 secured notes, 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. 
SEC 23. Obligations. Upon approval of the President, with 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, however: 
a) That the outstanding liabilities and obligations, foreign and domestic, 
shall not exceed, at any time, fifty percent (50%) of its net worth; 
b) That the annual amortization on principal and interest shall not be 
more than twenty percent (20%) of the prior year’s gross revenues; 
c) That where the obligations incurred from private sources of capital 
may be secured by suitable assets or backed by priority claims against 
property of the Authority; 
d) That the obligation 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 
of bonds or long term notes shall be with prior 
approval of or in accordance with the rules issued by the National 
Treasurer. 
e) That the issuance 
SEC 24. Aanual Budget. The Authority shall adopt an annual 
budget. Unless the Authority shall require subsidy and I or a guarantee of its 
liability from the National Treasury, its budget for the year need not be 
submitted to Congress for approval and inclusion in the General 
Appropriations Act. Supplementary estimates may be prepared and adopted 
at any of the Board meeting called for that purpose. 
SEC 25. 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 
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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. 
ARTICLE VI1 
REGULATION OF AIR NAVIGATION 
SEC 26. Regulation of Air Navigation. For the purpose of carrying 
out and giving effect to the Chicago Convention, and any other related 
Protocols, the Authority shall establish rules and regulations for- 
(a) the licensing, inspection and regulation of navigation aerodromes; 
(b) a system for the registration of the national aircraft; 
(c) the issuing of certificates of airworthiness and for prohibiting aircraft 
from flying unless such certificates, whether issued or validated are in 
force; 
(d) the certification of air operators; 
(e) the certification of airmen; 
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certification 
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schools, 
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organizations and repair stat,ions; 
(g) the conditions under which passengers may be carried by air and 
under which aircraft may be used for other commercial, industrial or 
gainful purposes; 
(h) the conditions under which goods may be carried by air; 
(i) securing the efficiency and regularity of the operations of air 
navigation and the safety of aircraft and of persons and property 
carried thereon, and of persons and property on the ground; 
0') prohibiting the carriage by air, such goods as may be specified by the 
Regulations; 
(k) conferring on such persons as may be specified, powers relating to the 
enforcement of any such condition or prohibition including powers to 
examine, take samples of, seize and detain any goods, powers to open 
any baggage or packages containing goods after obtaining from a 
magistrate a warrant to do so or to require them to be opened and 
powers to require the production of any documents; 
(1) prescribing the fees to be paid in respect of the issue, validation, 
renewal, extension or variation of any aviation document or the 
undergoing of any examination or test required by, or in pursuance of 
the Regulations, or in respect of any other matter for which it appears 
to the Minister to be expedient to charge fees; 
ensuring that foreign air carriers operating in Trinidad and 
Tobago comply with the safety and security requirements of the 
Chicago Convention; 
(m) 
(n) registration of mortgages and any other liens on aircraft; 
(0) giving effect to the Rules of the Air; and 
(p) for any other matters required by or necessary to implement this Act. 
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The Authority in considering the grant of a license in relation to an 
aerodrome shall take into account in addition to other things, the need to 
minimize so far as is reasonably practicable- 
(a) any adverse effects on the environment; and 
(6) any disturbance to the public, from noise, vibration, atmospheric 
pollution or any other cause attributable to the use of aircraft for 
the purpose of civil aviation. 
ARTICLE VI11 
MISCELLANEOUS AND GENERAL PROVISIONS 
SEC 27. Authority to Administer Oaths. The Director General shall 
have the authority to administer oaths in the transaction and performance of 
official business. 
SEC 28. Statutory Lien on Aircraft, Equipment, and Machinery. 
The Authority shall have the power to impose lien on any aircraft, 
equipment, machinery, Provided, howeuer: 
a) IF the charges and other fees are not paid in full on the due date for 
payment, or any part of the charge, or the late payment, penalty 
thereto remains unpaid; 
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. 
Aircraft levied upon pursuant to this Section shall be in custody of the 
Authority, and its clearance shall be withheld until the fines imposed shall be 
fully paid; of the same levied --- upon which aircraft may be sold after notice 
to the owners and the proceeds of the sale shall be applied to the payments of 
the fines and penalties and other obligations that are due and payable. 
SEC 29. Lien on Real and Personal Properties. The Authority 
shall have the power to impose lien on the personal and real properties, and 
other assets of persons, corporations, partnerships, and such other entities 
that shall be in default, or shall fail to perform their obligations, pursuant to 
regulations promulgated by the Authority, or shall fail to pay the fines and 
other penalties imposed for violations of the law, rules, and regulations of the 
Authority. 
Properties and assets levied upon, after due notice and hearing to the 
owner /s thereof, may be sold and the proceeds thereof applied to the 
satisfaction of the obligation, as the Authority may determine. 
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SEC 30. 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 punished by a fine to be determined by 
the Authority. 
SEC 31. 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 buildings, towers, antennae, 
and other edifices, situated within the vicinity of or in close proximity to 
airports which may endanger flights of aircrafts. 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 installations which shall 
interfere with air navigation and cause mishaps in the operations of the 
aircraft, 
SEC 32. 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 
aforecited 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 its rules and regulations, which may include removal of the 
obstructions to the safety of flight, including the seizure of personal 
properties that directly or indirectly may cause danger to the safety of 
navigation or flight. 
SEC 33. Role of Departments, Bureaus, Offices and Other 
Agencies and Instrumentalities of the Government. All Heads of 
Departments, Bureaus, Offices, Agencies, and instrumentalities of the 
Government 
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institutionalization and restructuring program of civil aviation, and to 
cooperate and coordinate with the Authority to facilitate and expedite the 
transaction. 
SEC 34. Interlinkages with Local Government Units. Provisions 
with existing laws, rules, and regulations to the contrary notwithstanding, 
the Authority shall exercise administrative and regulatory powers over land, 
buildings, 
installations 
and 
appurtenances 
thereto,, including 
the 
construction of any building, roads, towers, within the territorial areas, the 
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airspace above the zones, including the navigable airspaces. Coordination 
with local governments units must be effected. 
SEC 35. Police Authority. The Authority shall have the power to 
exercise such police authority, as it may deem necessary, within its premises 
or areas of operation, to carry out its functions and attain its purposes and 
objectives: Provided, however, That the Authority may request the assistance 
of any law enforcement agency, including request for deputation as may be 
required. Such police authority shall be exercised in relation to the following: 
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. 
ARTICLE M 
TRANSITORY PROVISIONS 
SEC 36. Abolition of Existing Offices. The Air Transportation Office 
(ATO) and the Civil Aeronautics Board (CAB) under the Department of 
Transportation and Communications, are hereby abolished. 
Any arrangement or contract, aviation documents or resolution 
prepared, made, executed or approved by or on behalf of the AT0 and CAB 
shall continue and be deemed to have been prepared, made, executed or 
approved by the Authority pursuant to this Act. 
All obligations and liabilities of the AT0 and the CAB immediately 
before the commencement of this Act shall from that date be the obligations 
and liabilities of the Authority and the Authority shall have all the necessary 
powers to discharge them. 
All duties and functions carried out by the AT0 and the CAB 
immediately before the commencement of the former Act, and which were 
carried out by the former Authority, shall from the date of commencement of 
this Act, be undertaken by the Authority. 
All real and personal property now held by or vested in any person for 
the use and benefit of the Civil Aviation Division and the former Authority is 
hereby transferred to and vested in the Authority. 
In any written law and in any document, unless the context otherwise 
requires, any reference to the Civil Aviation Division and the former 
Authority shall be construed as a reference to the Authority. 
SEC 37. Transfer of Personnel of the Air Transportation, Office 
and the Civil Aeronautics Board. To ensure smooth transition into a 
corporate structure, the incumbent Assistant Secretary of the AT0 shall 
continue to hold office and assume the powers of the Director-General until 
his successor shall have been appointed and inducted into office. 
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Officials and employees of the AT0 and CAB shall be absorbed into the 
Authority on the basis of merit and fitness: Provided, however, That officials 
and employees who shall be laid-off during the first two (2) years of the 
effectivity of this Act and as a result of the organization of the Authority, 
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 retirement law. Retirement gratuities of officials and 
employees who shall not be retained by the Authority shall be for the account 
of and reimbursed by the National Government. 
Any of such officers and employees who may be later 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 38. Organization of the Authority. Within sixty (60) days upon 
the effectivity of this Act, the Board of Directors of the Authority, or if none 
are as yet appointed, the incumbent Director-General or Assistant Secretary 
of ATO, as the case may be, shall organize the Authority. 
SEC 39. Appropriations. To provide for any extraordinary expenses 
of the Authority upon its organization, unavailed portion of the excess of 
actual operating income over the estimated expenses of the AT0 and CAB, if 
any, at the time of the passage of this Act is hereby appropriated for purposes 
that the Board may approve. This shall be considered as part of the paid-up 
capital. 
For the purpose of funding the gratuity aforementioned, the amount of 
Seven Billion Five Hundred Million Pesos (P 7,500,000,000.00), inclusive of 
the amount referred to above, is hereby appropriated out of any funds 
available and not otherwise appropriated in the National Treasury. 
SEC 40. Sauings Clause. All orders, rules, regulations, permits, 
certificates, licenses, and privileges which have been made, issued, granted, 
or allowed to become effective by the former AT0 or its predecessors or by the 
CAB, respectively, shall continue to be in effect according to their terms, until 
modified, amended, revoked, cancelled, superseded, or otherwise set aside. 
Causes of action, suits or other proceedings may be asserted by or 
against the Authority or such official of the Authority, and its predecessors, 
or the CAB, as may be appropriate. 
ARTICLE X 
FINAL PROVISIONS 
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SEC 41. Limited Liability. Unless otherwise declared and mutually 
agreed upon at the time of posting, the liability of the Authority with respect 
to its contractual obligations shall be limited to existing rules and regulations 
of these matters. 
SEC 42. Injunction and Restraining Order. The implementation of 
the projects for the institutionalization and restructuring of the aviation 
industry are urgent and necessary and shall not be restrained or enjoined 
except by an order issued by the Supreme Court of the Philippines. 
SEC 43. Legal Cou.n.sel. Without prejudice to the appointment of the 
Corporate Counsel by the Board, the Government Corporate Counsel shall be 
the ex-officio counsel of the Authority. 
SEC 44. Auditor. The Commission on Audit shall appoint a 
representative who shall be the fuII-time auditor of the Authority, and such 
personnel as may be necessary to assist said representative in the 
performance of his duties. 
SEC 45. Separability Clause. If any provision of this Act or an 
application thereof to any person or circumstance is held to be invalid, the 
other provisions of this Act, and the application of such provision to other 
persons or circumstances, shall not be affected thereby. 
SEC 46. Repealing Clause. All existing laws, orders, rules and 
regulations or parts thereof deemed inconsistent with the provisions of this 
Act are hereby repealed or modified accordingly. 
SEC 47 Effectivity. This Act shall take effect fifteen (15) days 
following the date of i.ts publication in the Official Gazette or in at least two 
(2) newspapers of general circulation, whichever comes first. 
Approved, 
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