Establishing Civil Aviation Authority of PH

Key definitions for civil aviation

“Aerial work” means an aircraft operation using aircraft for specialized services such as agriculture, construction, photography, surveying, observation and patrol, search and rescue, aerial advertisement, etc.
“Aerodrome” means an airport and any defined area on land or water (including buildings, installations, and equipment) intended to be used for the arrival, departure, and surface movement of aircraft.
“Air carrier or operator” means a person who undertakes, directly or indirectly (including by lease or other arrangement), to engage in air transportation services or air commerce, whether as a Philippine air carrier or foreign air carrier depending on context.
“Aircraft” means a machine that can derive support in the atmosphere from the reactions of the air other than reactions against the earth’s surface; it covers civil aircraft only and excludes State or public aircraft.
“Aircraft accident” and “Aircraft incident” are defined by occurrence during the boarding-to-disembarkation period and by whether safety is endangered (accident) or endangered potential exists without meeting accident thresholds (incident).
“Aircraft piracy” means actual or attempted seizure or exercise of control by force or violence or other intimidation with wrongful intent of an aircraft within the Philippines’ jurisdiction.
“Airman” includes personnel in command or crew roles and those directly in charge of inspection/maintenance/repair, and includes aircraft dispatcher and air traffic control operator roles.
“Authority” refers to the Civil Aviation Authority of the Philippines (CAAP) created under the Act and includes the Board of Directors and/or Director General depending on context.

Authority structure and governance

Section 4 creates an independent regulatory body with quasi-judicial and quasi-legislative powers and corporate attributes named the Civil Aviation Authority of the Philippines (CAAP).
The Authority is attached to the Department of Transportation and Communications (DOTC) for policy coordination, and the Air Transportation Office created under Republic Act No. 776, as amended is abolished.
Section 4 preserves the Civil Aeronautics Board (CAB) powers and functions under Republic Act No. 776 as amended.
The Authority is headed by a Director General of Civil Aviation:
- Appointed by the President of the Philippines.
- Responsible for all civil aviation in the Philippines and administration of the Act.
- Serves a four (4) year tenure.
- Appointment may be extended for another non-extendible term of four (4) years.
- Removable for cause in accordance with rules of the Civil Service Commission.
- Has control over all Authority personnel and activities and is responsible for all powers and duties of the Authority.
Section 5 vests corporate powers in a Board of seven (7) members:
- The Secretary of DOTC acts as Chairman ex officio.
- The Director General is Vice-Chairman.
- The Secretary of Finance, Secretary of Foreign Affairs, Secretary of Justice, Secretary of the Interior and Local Government, and Secretary of Labor and Employment are ex officio members.
- If the member absent is among subsections (c) to (g), the concerned Secretary designates the next-in-rank officer to act.
Section 8 sets quorum at four (4) Board members and requires the majority vote of three (3) members in a meeting where quorum is present to adopt Board acts.
Section 10 provides that the Board meets regularly once a month and may call special meetings upon call of the Chairman or on initiative of four (4) members; internal procedures are set by the Board.

Eligibility, conflicts, and limits on employment

Section 6 prohibits any Board member and relatives within the fourth civil degree of consanguinity or affinity from holding any interest (as investor, stockholder, officer, or director) in any entity engaged in air commerce or providing support services to persons engaged in air commerce.
Board members must divest by sale or legal disposition upon assumption of office; violation subjects the member to removal for cause and administrative, civil or criminal prosecution under applicable laws.
Section 7 bars a Board member or any Authority employee from accepting employment or entering into a contract with an entity regulated by the Authority until the expiry of one (1) year from termination of appointment (whether by resignation, revocation, or otherwise).
Section 9 requires the Director General to be:
- A Filipino citizen,
- At least thirty-five (35) years of age,
- Of good moral character and unquestionable integrity,
- With recognized competence and a degree holder with at least five (5) years supervisory or management experience in the field of aviation.

Fiscal autonomy, capitalization, and exemptions

Section 14 sets the Authority’s authorized capital stock at Fifty Billion Pesos (PhP50,000,000,000.00), fully subscribed by the Republic of the Philippines.
The National Government subscription is paid through:
- Unexpended balances of appropriations in the current General Appropriations Act and other acts in force upon approval relating to, held or used by the ATO;
- The value of existing ATO assets determined by an independent and qualified appraiser or appraisers within six (6) months from effectivity of the Act, after deducting ATO loans and liabilities at takeover; and
- Amounts appropriated from time to time from National Treasury, including any outlay from the National Government infrastructure program.
Section 15 grants fiscal autonomy and provides that all moneys earned from fees/charges/dues/assessments and fines the Authority may collect/levy are used solely to fund Authority operations.
Utilization of funds from collection/levy is subject to examination by the Congressional Oversight Committee.
Section 16 exempts the Authority from taxes, customs, and tariff duties for imports of equipment, machineries, spare parts, accessories, and other materials including supplies and services used solely and exclusively in Authority operations and not obtainable locally.
Section 16 exempts obligations and income of the Authority (including those contracted with private international banking and financial institutions) from all taxes (principal and interest), including capital gains tax, documentary stamp tax, real property estate tax, and all other local government imposed taxes and fees.

Fees, salaries, properties, and reporting

Section 17 requires the Authority to adopt and publish its schedule of fees and charges and to conduct public hearings or consultative meetings with stakeholders before adopting it.
The Authority cannot revise its schedule of fees and fines more often than once every three (3) years.
Section 18 requires that within six (6) months from effectivity the Board determines a new schedule of salaries of Authority employees subject to existing compensation laws; the Board also fixes compensation and fringe benefits for employees holding technical positions not common to other government agencies, as specified in Implementing Rules and Regulations.
Section 19 transfers to the Authority the funds and appropriations, records, equipment, and property of the ATO.
Section 20 requires an annual report to the President, Senate, and House of Representatives on accomplishments at the close of each calendar year.

General policies guiding regulation

Section 21 directs the Authority to consider, in public interest and in accordance with public convenience and necessity:
- Development and utilization of Philippine air potential;
- Encouragement and development of an air transportation system adapted to foreign and domestic commerce;
- Regulation supporting sound economic condition and improving relations between air carriers;
- Ensuring safety, quality, reliability, and affordability for the riding public; and
- Encouragement and development of a viable and globally competitive Philippine aviation industry.

Powers of the Authority and Board

Section 22 provides that the Authority has powers granted to the Board and Director General under the Act.
Section 23 gives the Authority (acting through the Board) corporate powers including:
- To sue and be sued in its corporate name and adopt/use/alter its corporate seal;
- To adopt, amend, or repeal bylaws;
- To enter and carry out necessary contracts with domestic/foreign persons, firms, corporations, government agencies, and international institutions;
- To raise money, contract loans, issue commercial papers and bonds in local or convertible foreign currency, subject to law, rules, and regulations;
- To execute guarantees, mortgages, pledges, trusts, or assignments to finance vital programs;
- To acquire/own/hold/operate/maintain/administer/lease properties (personal and real) and dispose at fair market value;
- To receive gifts, donations, grants, bequests, and services;
- To invest funds and assets in ventures/projects deemed wise;
- To settle claims; and
- To maintain a system of accounts under generally accepted accounting principles and prescribe contract/business document forms.
Section 24 lists Board powers including:
- Policy guidance and determining objectives, strategies, and policies;
- Ensuring proper, efficient, and effective performance;
- Appellate powers over decisions/findings/rulings of the Director General;
- Issuing subpoena ad testificandum or subpoena duces tecum and requiring sworn/verified production of books, papers, contracts, agreements, and documents;
- Ordering depositions at any stage;
- Using other government agencies’ services/equipment/personnel on reimbursable basis;
- Investing unneeded funds in business ventures, secured notes, government securities, and negotiable instruments consistent with Board guidelines, and depositing in commercial and universal banks designated by the Board;
- Promulgating safety-related rules covering certification, licensing, aircraft/airworthiness, aerodromes, obstructions, registration, search and rescue, facilitation, operations, meteorology, rules of the air, traffic services, rules to prevent collision, flight altitudes, and other safety/efficiency practices;
- Imposing and fixing reasonable charges for use of government aerodromes/air navigation facilities and related services;
- Fixing charges for privately owned air navigation facilities and aerodromes;
- Adopting a system for aircraft registration;
- Determining and fixing landing fees, parking space fees, and royalties on sales/deliveries and use of aviation gasoline, oil and lubricants, spare parts, accessories, supplies, tools, and rentals/fees for property under Authority management/control;
- Approving annual and supplementary budget plans and use of retained revenue;
- Granting exemptions from observing rules/regulations only when not prejudicial to flight safety;
- Prescribing aviation security regulation for passenger and property screening by weapon-detecting procedures/facilities before boarding;
- Prescribing additional security rules/methods/procedures to protect persons and property aboard aircraft against criminal violence and aircraft piracy, and requiring uniform inspection/detention/search procedures to ensure safety and courteous/efficient treatment.
Section 25 requires Board rules and regulations to be formally promulgated and periodically reviewed/updated under the Administrative Code and ICAO standards; until new rules are promulgated, existing ATO rules continue to apply.
Section 26 requires the schedule of charges and fees to be formally promulgated under the Administrative Code; until a new schedule is promulgated, existing ATO charges/fees continue to apply.
Section 27 allows the Board to authorize the Director General to issue or amend rules of procedure and practice; until new procedures are promulgated, existing ATO procedures continue to apply.
Section 28 provides appellate powers including:
- Review/confirm/modify/revise/amend/reverse Director General decisions/orders;
- Confirm/remit/mitigate/increase/compromise fines imposed by the Director General;
- Review/confirm/modify/revise/amend/reverse liens on properties imposed by the Director General in default for failure to perform obligations or pay fines/pecuniary penalties.
Section 28 also requires that the Director General does not participate in Board hearing/adjudication of appealed cases where his decision is the subject; modification or reversal requires four (4) concurring votes of members who actively participated in deliberation.
Section 29 authorizes Board members, the Director General, and duly designated officers to administer oaths.
Section 30 requires the Board to adopt an annual budget for Authority operations.
Section 31 permits delegation:
- The Director General may authorize officers/employees/administrative units to perform functions under his jurisdiction under regulations/supervision/review prescribed.
- The Director General may, under Board policy guidelines, delegate assigned powers/duties to properly qualified private persons subject to continuing supervision/regulation/review, but not in a way that air operators/aerial work/general aviation operators and maintenance facilities effectively regulate themselves.
Section 32 prohibits the Board from exercising powers/functions not expressly granted and prevents the Board from exercising in the first instance powers properly falling within the Director General’s authority.

Director General powers, enforcement, and operational controls

Section 35 makes the Director General the chief executive and operating officer and vests primary authority over the technical and operational phase of civil aviation.
The Director General enforces Act rules/regulations and carries out purposes and policies.
The Director General may:
- Designate and establish civil airways; acquire/control/operate/maintain navigation facilities and chart airways and arrange publication of aeronautical charts/maps;
- Issue airman’s certificates (with terms/conditions/limitations ensuring safety), issued only upon finding the applicant is qualified and physically able; airman’s licenses issued only to qualified persons who are citizens of the Philippines or citizens of countries granting similar rights/privileges;
- Issue airworthiness certificates specifying duration, type of service permitted, and terms/conditions/limitations;
- Issue air carrier operating certificates according to minimum safety standards, issued only for aircraft registered under the Act;
- Issue type certificates for aircraft, aircraft engines, propellers, and appliances;
- Inspect/classify/rate air navigation facilities and aerodromes and issue corresponding certificates; determine suitability of foreign aerodromes, facilities, and air routes prior to Philippine-registered aircraft operations and thereafter as required for safety;
- Issue certificates of persons/civil aviation schools giving flight instruction, repair stations, and other air agencies, including providing examination and rating;
- Enforce rules/regulations and conduct investigations using subpoenas, requiring production of evidence and taking depositions; refusal to comply with reasonable investigation requirements is punishable under the Act;
- Collect and disseminate civil aeronautics information; exchange with foreign governments; provide direct communication on technical/operational matters with international aeronautical agencies;
- Acquire and operate aircraft necessary to execute Authority duties;
- Plan/design/acquire/establish/construct/operate/improve/maintain/repair aerodromes and air navigation facilities;
- Collect charges and fees for registration and for issuance/renewal of licenses/certificates;
- Impose fines and/or civil penalties;
- Participate in international standardization and implement ICAO standards as practicable;
- Perform powers consistent with treaty/convention obligations;
- Cooperate with government research/technical agencies without duplicating existing laboratory research/activities/technical studies;
- Designate prohibited and danger areas in consonance with international and national security requirements;
- Issue, deny, suspend, cancel, or revoke certificates/licenses pertaining to aircraft, airmen, and air agencies, subject to appeal to the Board; Board decisions are final within fifteen (15) days from notification of denial/cancellation/revocation;
- Grant authorization for civil aircraft/persons to carry instruments or photographic devices for aerial photography or sketching of parts of the Philippines;
- Enter into contracts pursuant to a Board resolution.
Section 36 requires creation of a permanent Office of Enforcement and Legal Service composed of in-house counsels and support staff to provide legal assistance/support; it provides adequate legal support to the Director General and the Authority.
Section 36 reserves for the Enforcement and Legal Service the exclusive determination and recommendation for:
- Issuing subpoenas, and
- Imposing administrative sanctions.
Section 37 sets order effectiveness and emergency powers:
- Director General orders/rules/regulations take effect within reasonable times he prescribes and continue until replaced or for specified periods.
- In emergencies for civil aviation safety, the Director General may issue just and reasonable orders/rules/regulations immediately upon complaint or initiative without answer or other pleading and with or without notice/hearing/report, provided he immediately initiates proceedings on the matter.
- The Director General may suspend or modify orders with notice in manner he finds proper.
- It is the duty of every person (and agents/employees for entities) subject to the Act to observe/completely comply with Director General orders/rules/regulations/certificates while in effect.
Section 38 authorizes the Director General or representatives to access, without restriction within the Philippines, civil aircraft (including aerodromes) to ensure airworthiness and compliance; access also extends worldwide for Philippine-registered civil aircraft.
Section 38 further authorizes access to air operators’ facilities for tests/inspections at any place and any time and access to aerodromes (public/private) for inspection/evaluation.
Section 39 authorizes the Director General to direct operators/airmen not to operate a civil aircraft when:
- The aircraft may not be airworthy; or
- The airman may not be qualified or physically or mentally capable; or
- Operation would cause imminent danger to persons or property on the ground.
Section 39 authorizes steps necessary to detain such aircraft or airmen.
Section 40 requires the Board to establish permanent Flight Standards Inspectorate Service (FSIS) to assist the Director General for certification and ongoing inspections of aircraft, airmen, and air operators; FSIS performs:
- Airworthiness inspection;
- Flight operations inspection and evaluation; and
- Personnel licensing.
Section 40 also directs that the Board create support offices including Aircraft Registration, Aircraft Engineering and Standards, Airmen Examination Board, and Office of the Flight Surgeon to support FSIS functions.
Section 41 allows the Director General to validate actions of another State’s civil authority in lieu of taking specific action, with restrictions:
- For airman or airworthiness certificate actions: the other State must be a signatory to the Chicago Convention and fulfilling its obligations on issuance and currency.
- For air operator actions: the Director General must exercise discretion and require supporting documents and ensure no information indicates the State does not meet Chicago Convention obligations on certification and ongoing validation.
Section 42 creates, pending establishment of a separate independent accident investigation agency:
- An Aircraft Accident Investigation and Inquiry Board (AAIIB) organized by the Director General and composed of Authority specialized personnel, with the Board appointing the head.
Section 42 mandates the Board promulgate rules on accident and incident notification/reporting.
Section 42 gives the Director General general authority to investigate or arrange investigations of accidents in the Philippines or involving Philippine-registered civil aircraft outside foreign territories for determining facts, conditions, circumstances, and probable cause, and to participate in investigations abroad consistent with treaties/arrangements.
Section 42 requires corrective actions to prevent similar accidents based on findings.
Section 42 assigns investigation of accidents within military sites in the Philippines (or involving solely foreign armed forces aircraft in the Philippines) to the military, defining “military sites” as areas under the military of the Philippines or another country’s control.
Section 42 bars admissibility/use in damages suits of any part of Director General accident reports (and investigations), except when criminal liabilities/aspects are put into issue.

Orders, access, and accident evidence controls

Section 37 makes compliance with Director General orders, rules, regulations, and certificates mandatory for all persons subject to the Act while the instruments remain in effect.
Section 38 authorizes warrantless/unrestricted inspection access by the Director General or representative for airworthiness and operational compliance purposes.
Section 39 establishes a preventive operational safety power to stop flights to avoid airworthiness, qualification, or imminent ground danger risks.
Section 42 excludes Director General accident investigation reports from being admitted or used in damages suits arising from matters in such reports, except when criminal liabilities/aspects are placed in issue.

Aircraft nationality, registry, and recording of conveyances

Section 43 requires the Authority to establish and maintain:
- A national system for registration of aircraft in the Philippines;
- A system for registration of liens, mortgages, or other interests in aircraft or aircraft engines; and
- Sale authority to register aircraft and those interests.
Section 44 provides eligibility for registration:
- No aircraft is eligible unless owned by or leased to a Philippine citizen/citizens or corporations/associations organized under Philippine laws with at least sixty per centum (60%) Filipino capital.
- Foreign-owned/registered aircraft may be registered if utilized by members of aero clubs organized for recreation, sport, or development of flying skills as a prerequisite to aeronautical activities within Philippine airspace, under rules/regulations of the Board.
Section 44 states the certificate of registration is conclusive evidence of nationality for international purposes, but not conclusive in proceedings under Republic of the Philippines laws.
Section 44 also states the certificate of registration is conclusive evidence of ownership, except in a proceeding where ownership is or may be at issue.
Section 45 requires applications for aircraft registration to be:
- In writing,
- Signed and sworn by the owner or lessee, and
- Stating the date and place of filing, aircraft/engine specification, construction and technical description, and other information required by the Authority by regulation.
Section 46 requires the Director General, upon finding the aircraft or engine eligible, to register the aircraft and issue the certificate of registration.
Section 47 provides that an aircraft acquires Philippine nationality when registered under the Act.
Section 48 authorizes revocation by the Authority of any certificate of registration for any cause rendering the aircraft ineligible for registration.
Section 49 provides recording rules:
- Conveyances affecting title or interests in aircraft of Philippine registry are valid against the world only after being recorded in the Authority.
- A recorded conveyance is valid against all persons.
- Any required-instrument recording takes effect from the date of record in the Authority’s books, not from execution.
Section 50 requires that no conveyance may be recorded unless it complies with document registration requirements similar to the land registration process, and the conveyance must state:
- The interest in the aircraft of the person making the conveyance (or in conditional sale, the vendor’s interest).