Republic of the Philippines
House of Representatives
Quezon City, Metro Manila

Seventeenth Congress
Second Regular Session

HOUSE BILL NO. 7306

Introduced by
REPRESENTATIVES PANTALEON D. ALVAREZ, RODOLFO C.
FARINAS, DANILO E. SUAREZ, CESAR V. SARMIENTO AND
AURELIO D. GONZALES, JR.

AN ACT
CREATING THE PHILIPPINE AIRPORT DEVELOPMENT
CORPORATION AND APPROPRIATING FUNDS THEREFOR

EXPLANATORY NOTE

This bill seeks to create the Philippine Airport Development
Corporation (“PADC”).

During the first State of the Nation Address of President Rodrigo
Duterte, he echoed his election campaign promises in his inaugural address
- law and order, economic development, and improved government
services. He called for streamlined processes to make the delivery of services
faster and simpler.

Airports significantly contribute to globalization. They connect
communities, cities and countries, fostering economic growth, generating
employment and encouraging international commerce and tourism.

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Currently, there are eighty-five (85) national airports operating in the
Philippines; eleven (11) of these are used for international flights. Of the 11
international airports, only seven (7) are owned and controlled by the Civil
Aviation Authority of the Philippines (“CAAP”), and four are operated and
administered by airport authorities, namely, the Manila International
Airport Authority (“MIAA”), the Mactan-Cebu International Airport
Authority (“MCIAA”), the Clark International Airport Corporation
(“CIAC’) and the Subic Bay International Airport Corporation (“SBIAC’).
Maintaining these separate corporate bodies runs counter to the objectives
of President Duterte to streamline processes. It is better for the government
to have only one body that will be responsible for the construction,
management administration and operation of all airports in the country.

This proposed measure seeks to create the PADC which will undertake
all manner of business and development projects for the establishment of a
reliable and more efficient airport industry, especially for the construction,
maintenance and operation of airports all over the country. The PADC will
be the sole body that will govern the planning, maintenance operation, and
improvement of all airports, and control and supervise the construction of
any structure or the rendition of any service within the airports. To allow the
PADC to exercise its functions effectively, it is necessary to abolish MIAA,
MCIAA, CIAC, and SBIAC.

In view of the foregoi

rovd} of this bill is earnestly
recommended.

PANTALEON D.

ra > Chice
nubian iS —— DANILO E. SUAREZ
VEE

CESAR V. SARMIENTO AU! ZALES, JR.

REZ

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Republic of the Philippines
House of Representatives
Quezon City, Metro Manila

Seventeenth Congress
Second Regular Session

HOUSE BILL NO. 7306

Introduced by
REPRESENTATIVES PANTALEON D. ALVAREZ, RODOLFO C.
FARINAS, DANILO E. SUAREZ, CESAR V. SARMIENTO AND
AURELIO D. GONZALES, JR.

AN ACT
CREATING THE PHILIPPINE AIRPORT DEVELOPMENT
CORPORATION AND APPROPRIATING FUNDS THEREFOR

Be it enacted by the Senate and House of Representatives of the Philippines in
Congress assembled:

SEC. I. Short title. - This Act shall be known as the "Philippine Airport
Development Corporation Act."

SEC. 2. Declaration of Policy. - It is the policy of the State to undertake a
comprehensive and reliable program to maximize the national utility of
the airport industry, and to enhance public utility and public service by
modernized flight and ground equipment and standardized airport
runways that allow safe and harmonious travel for all.

SEC. 3. Philippine Airport Development Corporation - To carry out the

policy mentioned in Section 2 of this Act, the Philippine Airport

Development Corporation (“PADC”) is hereby created, hereinafter

referred to as the “Corporation,” with principal office in Metro Manila.
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The Corporation shall exist for a period of fifty (50) years from the date of
the effectivity of this Act.

SEC. 4. Purposes. -The Corporation shall have the following purposes:

a) To undertake all manner of business and development projects
for the establishment of a reliable and efficient airport industry,
especially for the construction and maintenance of airports all
over the country;

b) To encourage, promote and develop international and domestic
air traffic in the Philippines in order to make the Philippines a
center of international trade and tourism, and accelerate the
development of instruments of transportation and
communication in the country;

c) To upgrade the best services and facilities of the airports and to
comply with internationally acceptable standards of airport
accommodation and services; and

d) To bid-out airport concessions, whether of existing or of
greenfield airports, including, but not limited to the construction,
expansion, upgrading and maintenance, to __ private
concessionaires, as it deems fit and necessary.

SEC. 5. Powers and functions. - The Corporation shall have the following
powers and functions:

a) To formulate a comprehensive and integrated development
policy and program for the airports and to implement, review

and update such policy and program periodically;

b)

To control, supervise, construct, maintain, operate and provide
such facilities or services as shall be necessary for the efficient
functioning of the airports;

c) To promulgate rules and regulations in complying with the
parameters set by the appropriate regulatory body, governing
the planning, development, maintenance operation and

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improvement of the airports, and to control and supervise the
construction of any structure of the rendition of any service
within the airports;

d) To enter into joint venture with other corporations as needed;

e)

To exercise all the powers of a corporation under the
Corporation Code of the Philippines, insofar as those powers are
not inconsistent with the Provisions of this Act;

f) To acquire, purchase, own, administer, lease, mortgage, sell or
otherwise dispose of any land, building, airport facility, or
property of whatever kind and nature, whether movable or
immovable, or any interest therein: Provided, that any asset
located in any of the airports in the Philippines owned and
controlled by Civil Aviation Authority of the Philippines
(“CAAP”) shall be transferred to PADC;

g) To determine and fix, landing fees, parking space fees, tacking
fees, royalties on sales or deliveries, direct or indirect, to any
aircraft for its use of aviation gasoline, oil and lubricants, spare
parts, accessories and supplies, tools, and other royalties, fees or
rentals for the use of any of the property under its management
and control;

h) To exercise the power of eminent domain in the exercise of its
purpose and function as determined under this Act;

i) To cause the reclamation of any land needed for airport
development;

j) Tosupervise and control private security agencies operating in
the airports; and

j) To enforce rules and regulations promulgated by the Corporation
pursuant to law.

SEC. 7. Board of Directors. - The corporate powers of the Corporation

shall be exercised by and vested in a Board of Directors, hereinafter

referred to as the Board, composed of a Chairperson a Vice-Chairperson
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and seven (7) members. The Secretary of Transportation and the General
Manager of the Corporation shall be the ex officio Chairperson and Vice-
Chairperson of the Board, respectively. Representatives from the
following executive departments shall be ex officio members, to wit: the
Department of Finance, the Department of Foreign Affairs, and the
Department of Tourism. In addition, two (2) members from the private
sector shall be appointed to the Board by the President of the Philippines
for a term of four (4) years. The Board shall promulgate its rules relative
to meetings, quorum requirements and compensation or allowances of its
members.

SEC. 8. Functions, Powers and Duties of the Board. - In addition to the
Powers vested in the Board under this Act, the Board shall have the
following Administrative functions, powers and duties:

a) To define and approve the programs, plans, policies, procedures
and guidelines of the Corporation for the development and
operation of airports;

b) To appoint the General Manager of the Corporation who shall be
the Chief Executive Officer of the Corporation;

c) To approve the Corporation's organizational and administrative
structure, staffing pattern, operating and capital expenditures,
and financial budgets, upon recommendation of the General
Manager, subject to existing law, rules and regulations;

d) To approve salary ranges, benefits and other terms and
conditions of service for all officers and employees of the
Corporation, upon recommendation of the General Manager,
which shall, as far as practicable, be competitive with those
offered in the private sector, subject to existing laws, rules and
regulations;

e) To fix the dues, charges, fees or assessments for the use of airport
premises, works, appliances, facilities, concession, services and
other fees and charges related to the activities of the airports,
upon recommendation of the General Manager; and

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f) To exercise all the functions and powers necessary or incidental

to attain the purposes and objectives of this Act.

SEC. 9. Development of New Airports. - In addition to those enumerated
under the preceding section, the Corporation shall be responsible for the
planning, development, construction, operation, maintenance, or the
expansion of airports. In planning and developing new airports, the
Board shall consider:

a)

b)

9°)

d)

e)

8)

h)

The suitability of a proposed site in terms of terrain and
proximity to population center(s);

The projected size of the market to be served by a proposed
airport;

The ability of a proposed airport to generate sufficient revenue
to cover costs of operation and maintenance;

The availability of funding from both local and foreign sources
for the construction of a new airport or expansion of an existing
one;

The proximity of other airports to a proposed new airport and
the capability of such other airport to handle traffic projected
to be handled by the new proposed airport;

The government's public service obligations, more particularly
the government's duty to ensure the availability of air transport
infrastructure for remote areas far from major population
centers and that are not otherwise easily accessible by
transportation via land or sea. In such cases, the Board shall
take reasonable steps to ensure that funding will be available
for the operation and maintenance of such airports;

The International Civil Aviation Organization's (“ICAO”) best
practices and recommendations concerning the development
of airports; and

Such other considerations as the Board, in the exercise of its
reasonable discretion, may consider relevant or important.

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SEC. 10. Functions, Powers and Duties of the General Manager. - The
General Manager shall be directly responsible to the Board and shall
exercise the following functions, powers and duties:

a) Todirect and supervise the day-to-day management, operation
and administration of the airports;

b) To implement and enforce decisions, orders, rules and
regulations issued, prescribed or adopted by the Board;

c) To undertake researches, studies, investigations and other
activities related to the present operations and future
improvement of the airports, and to submit comprehensive
reports and appropriate recommendations to the Board for
proper action;

d) To appoint, transfer, suspend, remove or otherwise discipline
any subordinate officer or employee of the Corporation, subject
to the approval of the Board and in accordance with the existing
rules and regulations of the Civil Service Commission;

e) To execute contracts, incur obligations, acquire and dispose of
assets and to deliver documents on behalf of the Corporation
within the limits of the authority delegated by the Board;

To grant permits or concessions to do business within the
fois |
airports in accordance with such rules and regulations to be
promulgated by the Corporation; and

g) To perform such other duties as the Board may delegate or
assign, and such act as may be necessary and proper to
implement this Act.

SEC. 11. Authorized Capital Stock. - The Corporation shall have an
authorized capital stock equal to and consisting of:

a) The value of fixed assets, including airport facilities, runways
and equipment and such other properties, movable and

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immovable, currently administered by or belonging to the
airports as valued on the date of the effectivity of this Act;

b) The value of such real estate owned or administered by the
airports; and government contribution in such amount as may
be deemed an appropriate initial balance.

Such initial amount, as approved by the President of the Philippines,
which shall be more or less equivalent to six (6) months working capital
requirement of the Corporation, is hereby authorized to be appropriated
in the General Appropriations Act of the year following this enactment.

SEC. 12. Fiscal Autonomy. - The Authority shall enjoy fiscal autonomy.
NOTWITHSTANDING ANY LAW TO THE CONTRARY, especially the
pertinent provisions of Republic Act No. 7656, all moneys earned _ by the
Authority from the collection/levy of any and all such fees, charges, dues,
assessments and fines it is empowered to collect/levy under this Act shall
be used solely to fund the operations of the Authority.

This Section may only be modified, amended, or repealed expressly by a
law that specifically modifies, amends, or repeals this section or a portion
hereof.

SEC. 13. Philippine Airport Development Corporation's Fund. - There is
hereby established a fund to be known as the Philippine Airport
Development Corporation’s Fund, hereinafter referred to as “the PADC
fund.” The operating expenses shall be drawn against:

a) All revenues from the aeronautical and allied services operated
or rendered by the Corporation;

b) Such sums as may be remitted by foreign states, international
organizations, multilateral or bilateral lending agencies,
corporations or private individuals for the exercise of any of the
functions of the Corporation;

c) Proceeds from sales of bonds, grants, donations, disposal of
assets and sales of disposable assets, loans and other forms of
indebtedness entered into by the Corporation;

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d) Interests which may be earned on investments or on idle cash
by the Corporation; and

e) Drawings upon the capital surplus of the Corporation.

SEC. 13-A. Application of Fund. - The money in the fund shall be applied
in defraying the following expenditure:

a) Acquisition of property by the Corporationinthe performance
of its functions or exercise of its powers;

b) Remuneration and allowances of members of the Board;

c) Remuneration, allowances, advances, loans, pensions
and gratuities payable or made to employees;

d) Capital and operating expenses, including maintenance and
insurance of the property of the Corporation; and

e) Any other expenditure authorized by the Corporation in the
performance of its functions.”

SEC. 13-B, Retention of Earnings Collected and Dispositions thereof. -
Earnings collected by the corporation under this Act shall be retained by
the Corporation which shall be disbursed, as the Corporation may deem
necessary and appropriate, to carry out the objectives of this Act.

SEC. 14. Compensation and Other Emoluments of the Corporation’s
Personnel. - Within six (6) months from the effectivity of this Act, the
Board shall determine the schedule of salaries of the employees of the
Authority subject to the compliance with the existing compensation
laws: Provided, That the Board shall determine and fix the compensation
and fringe benefits of employees holding technical positions that are not
common to the other agencies of the government which shall be specified
in the Implementing Rules and Regulations. The personnel of the
authority shall be exempt from the coverage of the salary standardization
law.

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This Section may only be modified, amended, or repealed expressly
by a law that specifically modifies, amends, or repeals this section or a
portion hereof.

SEC. 15. Annual Budget. - The Board shall adopt an annual budget to fund
the operations of the Corporation. The annual budget of the Corporation
shall be prepared and submitted by the General Manager for approval of
the Board and shall not be subject to any restriction and limitation by any
government agency except by the Commission on Audit.

Unless the Corporation shall require subsidy and/or 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 budget may be prepared and
adopted at a board meeting called for that purpose.

SEC. 16. Organizational Structure of the Corporation. - Within fifteen
(15) days from the appointment of and acceptance by all members of the
Board and the General Manager of their respective appointments, the
Board, in consultation with the General Manager, shall meet to draw-up
the Authority's organizational structure. The Board shall agree on the
Authority's final organizational structure not later than six (6) months
from the date of the effectivity of this Act.

SEC. 17. Transfer of Airport Screeners Function from the Office for
Transportation Security to the Corporation. - Notwithstanding the
preceding section, there shall hereby be created an Office for Airport
Security, hereinafter referred to as OAS, tasked to ensure the protection
and safety of passengers, crew, ground personnel, the general public,
aircraft and facilities of all airports servicing civil aviation in the
Philippines, against acts of unlawful interference perpetrated on the
ground.

The OAS shall perform the following functions:
(1) Formulate, implement and maintain a national airport security

program to deal with any threat to the security of any airport within
the jurisdiction of the corporation;

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(2) Hereinafter assume and exercise responsibility for airport security
operations, including, but not limited to, security screening of
passengers, baggage and cargo, and training and employment of
security screening personnel which are performed by the Office for
Transportation security prior to this Act;

(3) Ensure that airport security services at international airports are
provided with the necessary supporting facilities, including office
space, telecommunications equipment, and appropriate security
equipment and training facilities; and

(4) Ensure that architectural and infrastructure-related requirements
necessary for the optimum implementation of international aviation
security measures are integrated into the design and construction of
new facilities and alterations to existing facilities at international
airports.

For this purpose, the functions of the Office for Transportation
Security pertaining to civil aviation security operations mentioned above,
and as maybe pertinent and related to the above enumerations, shall be
transferred to the OAS.

SEC. 18. Auditor. - The Commission on Audit (“COA”) shall appoint an
auditor of the Corporation, together with the necessary personnel to assist
the auditor in performance of its duties. The number and salaries of the
auditor and personnel shall be determined by the Chairperson of the
COA, subject to the rules and regulations of the COA.

The payment of the loans or other indebtedness of the Corporation
may be guaranteed by the National Government subject to the approval
of the President of the Philippines.

SEC.19. Tax Exemptions. - The Corporation shall be exempt from taxes
imposed by the National Government or any of its political subdivisions,
agencies and instrumentalities: Provided, that no tax exemption herein
granted shall extend to any subsidiary which may be organized by the
Corporation or any other entities.

SEC. 20. Transfer of Existing Facilities and Intangible Assets. - All

existing public airport facilities, runway, lands, buildings and other

properties, movable or immovable, belonging to or presently
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administered by the airports, and all assets, powers, rights, interest and
privileges relating to airport works or air operations, including all
equipment which are necessary for the operation of air navigation,
aerodrome control towers, crash, fire, and rescue facilities are hereby
transferred to the Corporation: Provided, however, that the operational
control of all equipment necessary for the operation of radio, aids to air
navigation, airways communication, approach control office, and area
control center under the Air Traffic Service (“ATS”) and Air Navigation
Service (“ANS”), shall be retained by the CAAP. No equipment, however,
shall be removed by the CAAP from any of the airports without the
concurrence of the Corporation. The Corporation may assist in the
maintenance of the CAAP equipment.

SEC. 21. Projects in Progress. - All ongoing projects relating to the
construction of airport facilities and the supply of equipment shall be
administered and undertaken by the Corporation.

SEC. 22. Assumption of Liabilities and Debts. - Upon the transfer to
and acceptance by the Corporation of the existing physical facilities,
intangible assets and completed projects referred to in the preceding
sections, all debts, liabilities, and obligations of government agencies or
entities concerned in respect of such physical facilities, tangible assets and
completed projects within the airports shall likewise be assumed by the
Corporation.

SEC. 23. Abolition. - The MIAA, MCIAA, CIAC and the SBIAC are
hereby abolished. The airport general manager of all airports shall
continue in office and shall perform all powers and functions of the
Corporation until such time as the general manager of the Corporation is
appointed for the smooth transfer of responsibility from the abolished
entities to the Corporation, as well as the determination of personnel to
be retained: Provided, That all officials and employees whose services are
terminated shall, if not eligible for retirement, be given gratuities
equivalent to one (1) month salary for every year of continuous
satisfactory service on the basis of the highest salary received in addition
to other benefits accorded to them by existing laws;

SEC. 24. Repealing Clause. - Section 78 of Republic Act No. 9497,
otherwise known as the Civil Aviation Authority Act of 2008, Presidential
Decree No. 206, otherwise known as the Philippine Aerospace

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Development Corporation, Executive Order No. 778, otherwise known as
the MIAA Charter, Republic Act No. 6958, otherwise known MCIAA
Charter, and Executive Order No. 192, otherwise known as the CIAC
Charter, Section 13(b) of Republic Act 7227, otherwise known as Bases
Conversion and Development Act of 1992 are hereby repealed; Provided,
however, that the abolition of MCIAA and the transfer of airport control
from CAAP to PADC shall not affect the concession rights granted to
GMR-MEGAWIDE for the modernization and expansion of the Mactan-
Cebu International Airport and shall in no way change or modify the
existing concession agreement granted to TransAire for the expansion of
the Caticlan Airport. Provided further that GMR-MEGAWIDE and
TransAire shall hereafter be subjected to the authority of the PADC. All
other laws, executive orders, rules and regulations, or provisions thereof
which are inconsistent with the provisions of this Act are hereby repealed,
amended or modified accordingly.

SEC. 25. Separability Clause. - If any portion hereof shall be held invalid
or unconstitutional, such invalidity or unconstitutionality shall not affect
the other provisions which shall remain in full force and effect.

SEC. 26. Effectivity. - This Act shall take effect fifteen (15) days after its
publication in the Official Gazette or in a newspaper of general circulation.

Approved,

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