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THIRTEENTH CONGRESS OF THE 
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Second Regular Session 
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REPUBLIC OF THE PHILIPPINES 
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s. B. NO. a
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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 is 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 ststa-af.tha, are and dynamla aivll 
ayiation industry and consequently, tourism industry in our country, 
J%/ 
/& 
EDGARDO J. ANGARA 
Senator 


THIRTEENTH CONGRESS OF THE 
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Second Regular Session 
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REPUBLIC OF THE PHILIPPINES 
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5 wq 21 P i  2 6  
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: 
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GENERAL PROVISIONS 
SECTION 1. Short TitZe. This Act shall be known as the ”Civil Aviation 
Act of2005.” 
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, 
“Aircraj? 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 earth‘s surface; 
a) 
b) “Air route“ means the navigable airspace between two points and the 
terrain beneath such airspace identified, to the eytent: necessary, for 
application of flight rules; 
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c) "Air route and airway facilities" means facilities provided to permit safe 
navigation of aircraft within the airspace of air routes and airways, 
including: 
(a) visual and non-visual aids along the air routes and airways; 
(b) visual and non-visual aids to approach and landing at aerodromes; 
(c) communications services; 
(d) meteorological observations; 
(e) air traffic control services and facilities; and 
(f) flight service services and facilities. 
d) "Awodvome" means any area of land or water designed, equipped, set 
apart or commonly used for affording facilities for the landing and 
departure of aircraft and includes any area or space, whether on the 
ground, on the roof of a building or elsewhere, which is designed, 
equipped or set apart for affording facilities for the landing and departure 
of aircraft capable of descending or climbing vertically, and also includes 
an airport; 
e) "Airman" means - 
1. any individual who engages, as the person in command or as a 
pilot, mechanic or member of the crew, or who navigates an aircraft 
whiIe the aircraft is underway; 
2. any individual in charge of 
the inspection, maintenance, 
overhauling or repair of aircraft, and any individual in charge of 
the inspection, maintenance, overhauling, or repair of aircraft, 
aircraft engines, propellers or appliances; or 
3. any individual who serves in the capacity of flight operations 
officer; 
f )  "Aircraft engine" means any engine used, or intended to be used, for 
propulsion of aircraft and includes all parts, appurtenances and 
accessories, other than propellers; 
g) "Air navigation" means the practice of controlling, guiding and operating 
aircraft from airport of departure to firedetermined airport of destination, 
including alternate airports. To ensure safety, regularity and efficiency of 
civil aviation operations, standardization and common understanding 
among all parties involved are essential in all matters affecting the 
operation of aircraft and the numerous facilities and services required in 
their support, such as aerodromes, telecommunications, navigation aids, 
meteorology, air traffic services, search and rescue, aeronautical 
information services and aeronautical charts, in accordance with the 
procedures, rules and regulations contained in the appropriate ICAO 
Annexes; 
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 organizqtion 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 Operatov 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; 
n) "Authority" means the Civil Aviation Authority of the Philippines 
established under Section 4 of this Act; 
0) "Aviation" or Air Transport, refers to the activities surrounding 
mechanical flight and the aircraft industry; 
p) "Aviation document" means any license, certificate, or other document 
issued by the Authority in respect of any person, aircraft, aerodrome or 
aviation related service; 
4) "Board" means the Board of the Civil Aviation Authority of Me 
Philippines established under section 7 of this Act; 
r) 'Targo" includes mail; 
s) "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; 
t) "CommanderN 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 pereon, the person who for the time 
being is the pilot in command of the aircraft; 
u) Tontracting State" means a country which is a party to the Chicago 
Convention; 
v) "Corporate plan" means a plan prepared in accordance with section 15; 
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w) “Dangerous goods” means articles or sub stances which are capable of 
posing significant risk to health, safety or property when transported by 
air; 
x) ”Director GelzeraZ” means the Director General of Civil Aviation 
appointed under section 13; 
y) ”FZight” 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) ”GAAP” means Generally Accepted Accounting Practice; 
aa) “Loss or damage” includes, in relation to persons, loss of life and personal 
injury; 
bb)”Member”means a member of the Board; 
cc) “Navigation of aircraft” means a function which includes the piloting of 
aircraft; 
“Operator” means- 
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 
who or which is deemed to be engaged in the operation of aircraft 
within the meaning of this Act; 
ee) ”PropelZer” 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 - 
(Q) 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. 
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ARTICLE I1 
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 be 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: 
a) 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; 
b) Formulate, coordinate and regulate the implementation of rules and 
regulations, governing the technical, economic, and security aspects of 
civil aviation; 
c) Control, supervise and regulate all civil aviation activities, including but 
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; 
d) Issue, renew, vary, extend and amend licenses and other aviation 
documents, and to collect fees in respect thereof; 
e) Carry out an investigation of any aircraft accident occurring in or over the 
Philippines or in relation to any Philippine aircraft; 
f )  Use the property of the Authority in such a manner as may appear to the 
Authority to be requisite, advantageous or conveni ent with a view to 
making the best use of any of the property of the authority in relation to 
its functions under the Act; 
g) 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 (SARI’S) adopted by the International Civil 
Aviation Organization (ICAO); 
h) 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-Cebu International Airport (MCIA), Diosdado Macapagal 
International Airport (DMIA), Subic Bay International Airport (SBIA), 
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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; 
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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; 
g) 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; 
h) 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; 
i) To invest its fund8 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: 
a) Provide comprehensive policy guidance for the promotion and 
development of the aviation industry as provided for in this Act; 
b) Decide the objectives, strategies, and policies to be followed by the 
Authority; 
c) Ensure that the Authority performs its functions in a proper, efficient, and 
effective manner; 
d) 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; 
e) Approve the annual and supplementary budgets for submission to 
Congress; 
f) Approve the annual and supplementary budget plan for utilization of the 
retained revenue; and 
g) 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 Baslrd shall likewise prescribe the intcrnal rules of procedure in the 
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SEC. 10. Composition.- The seven-member Board shall be composed of 
the Secretary of the DOTC as ex-@io 
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 Merest. 
(1) 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; and 
(g) industrial relations strategies 
The Plan shall also cover any other matters required by the Secretary of 
the DOTC to be covered, which may inclwde further details about the matters 
referred to in the preceding paragraph subsection (2). 
industry; 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 @) 
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 /DGCA, 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 and 
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 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 regulatbns of the 
Compensation and Position Classification Board. 
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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: 
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, or the Air 
Transportation Office, of the Department of Transportation and 
Communications; 
b) 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; 
c) 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 
d) 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. 
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"). 
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The operating expenses shall be drawn against: 
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a) All revenues from the aeronautical and allied services operated or 
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b) Such sums as are provided by foreign states, international organizations, 
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individuals for the exercise of any of the functions of the Authority; or 
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c) Proceeds from sales of bonds, grants, donations, disposals of assets and 
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sales of disposable assets, loans and other forms of indebtedness entered 
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d) Interests which may be earned on investments or on idle cash of the 
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e) Drawings upon the capital or surplus of the Authority. 
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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 of 
(e) Any other expenditure authorized by the Authority in the performance of 
functions or exercise of its powers; 
payable or made to employees; 
the property of the Authority; and 
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 
(b) 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 thirtbth day af 
March in every year. The Authority may vary its financial year. 
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. Management 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 pay deem appropriate, or in such 
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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 
e) That the issuance of bonds or long term notes shall be with prior approval 
of or in accordance with the rules issued by the National Treasurer. 
SEC 24. Annual Budget. The Authority shall adopt an annual budget. 
Unless the Authority shall require subsidy and / 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 
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 internatianal 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. 
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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; 
(f) the certification of aviation schools, approved maintenance organizations 
and repair stations; 
(8) 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; 
(j) 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 inchding 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; 
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(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. 
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 
(b) 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. 
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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 Aircrafl, Equipment, and Machinery. The 
Authority shall have the power to impose lien on any aircraft, equipment, 
machinery, Provided, however: 
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; 
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. 
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 
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within the vicinity of or in close proximity to airports which may endanger 
Bights 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 P i o r  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 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 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 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 
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ARTICLE IX 
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 bedeemed 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. 
Officials and employees of the AT0 and CAB shall be absorbed into the 
Authority on the basis of merit and fitness: Puovided, howeveu, 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, 
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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. Savings 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 
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 Counsel. 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, 
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SEC 44. 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 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 its publication in the Official Gazette or in at least two (2) newspapers of 
general circulation, whichever comes first. 
Approved, 
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