REPUBLIC ACT No.

9497 March 04, 2008

AN ACT CREATING THE CIVIL AVIATION AUTHORITY OF THE PHILIPPINES,

AUTHORIZING THE APPROPRIATION OF FUNDS THEREFOR, AND FOR OTHER
PURPOSES

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

assembled:

CHAPTER I
GENERAL PROVISIONS

SECTION 1. Short Title. – This Act shall be known as the Civil Aviation Authority Act of
2008.

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
civil aviation authority with jurisdiction over the restructuring of the civil aviation system, the
promotion, development and regulation of the technical, operational, safety, and aviation security
functions under the civil aviation authority.

SEC. 3. Definition of Terms. - For purposes of this Act, the terms:

(a) "Aerial work" refers to an aircraft operation in which an aircraft is used for
specialized services such as agriculture, construction, photography, surveying,
observation and patrol, search and rescue, aerial advertisement, etc.

(b) "Aerodrome" refers to an airport, a defined area on land or water (including any
building, installation and equipment) intended to be used either wholly or in part for the
arrival, departure and surface movement of aircraft.

(c) "Aeronautics or aviation" refers to the science and art of flight.

(d) "Aeronautical telecommunication" refers to and includes any telegraph or telephone

communication signs, signals, writings, images and sounds of any nature, by wire, radio
or other systems or processes of signaling, used in the aeronautical service.

(e) "Aeronautical telecommunication station" refers to any station operated to provide

telecommunications for aeronautical purposes.

(f) "Air carrier or operator" refers to a person who undertakes, whether directly or
indirectly, or by a lease or any other arrangements, to engage in air transportation
services or air commerce. The term may likewise refer to either a "Philippine air carrier"
or a "foreign air carrier" as indicated by the context.
(g) "Air commerce or commercial air transport operation" refers to and includes
scheduled or non-scheduled air transport services for pay or hire, the navigation of
aircraft in furtherance of a business, the navigation of aircraft from one place to another
for operation in the conduct of a business, or an aircraft operation involving the transport
of passengers, cargo or mail for remuneration or hire.

(h) "Aircraft" refers to any machine 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. The term
"aircraft", when used in this Act or in regulations issued under this Act, shall refer to civil
aircraft only, and will not include State or public aircraft.

(i) "Aircraft accident" refers to an occurrence associated with the operation of an aircraft
which takes place between the time any person boards the aircraft with the intention of
flight until such time as all such persons have disembarked, in which:

(1) Any person suffers death or serious injury as a result of being in or upon the
aircraft or by direct contact with the aircraft of anything attached thereto; or

(2) The aircraft receives substantial damage

(j) "Aircraft radio station" refers to a radio station on board any aircraft.

(k) "Aircraft engine" refers to any engine use, or intended to be used, for propulsion of
aircraft and includes all parts, appurtenances, and accessories thereof other than
propellers.

(l) "Aircraft incident" refers to the occurrence, other than an accident, which is associated
with the operation of an aircraft when the safety of the aircraft has been endangered, or is
a situation which could endanger an aircraft and if it occurred again in other
circumstances.

(m) "Aircraft piracy" refers to any actual or attempted seizure or exercise of control, by
force or violence, or by any other form of intimidation, with wrongful intent, of an
aircraft within the jurisdiction of the Philippines.

(n) "Airman" refers to any individual who engages, as the person in command or as pilot,
mechanic, aeronautical engineer, flight radio operator or member of the crew, in the
navigation of aircraft while under way and any individual who is directly in charge of
inspection, maintenance, overhauling, or repair of aircraft, aircraft engine, propellers, or
appliances and individual who serves in the capacity of aircraft dispatcher or air traffic
control operator.

(o) "Airman license" refers to a written authorization or permission issued to any person
for the exercise of the privileges of flying, maintaining, controlling, directing,
dispatching, instructing or any other civil aviation activity which is regulated and
supervised by the Authority.
(p) "Air navigation" refers to the practice of controlling, guiding and operating aircraft
from airport of departure to predetermined 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 airports, 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 Annexes to the Chicago Convention.

(q) "Air navigation facility" refers to 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 the
landing and take-off of aircraft.

(r) "Air navigation services" refers to and 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 airport used for the
movement of aircraft.

(s) "Air operator" refers to any organization which undertakes to engage in domestic
commercial air transport or international commercial air transport, whether directly or
indirectly, or by a lease or any other arrangement.

(t) "Air Operator Certificate (AOC)" refers to a certificate authorizing an operator to

carry out specified commercial air transport operations.

(u) "Air route" refers to the navigable airspace between two points and the terrain beneath
such airspace identified, to the extent necessary, for application of flight rules.

(v) "Air route and airway facilities" refers to facilities provided to permit safe navigation
of aircraft within the airspace of air routes and airways, including:

(1) Visual and non-visual aids along the air routes and airways

(2) Visual and non-visual aids to approach and landing at airports;

(3) Communication services;

(4) Meteorological observations;

(5) Air traffic control services and facilities and

(6) Flight services and facilities.

(w) "Airport" refers to any area of land or water designed, equipped, set apart or
commonly used for affording facilities 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.

(x) "Air transport" refers to the transportation of persons, property, mail or cargo by
aircraft.

(y) "Air transport service" refers to the act of transporting persons, property, mail cargo,
in whole or in part, by aircraft to points within or outside of the Philippines.

(z) "Airworthiness" means that an aircraft, its engines, propellers, and other components
and accessories, are of proper design and construction, and are safe for air navigation
purposes, such design and construction being consistent with accepted engineering
practice and in accordance with aerodynamic laws and aircraft science.

(aa) "Annexes to the Chicago Convention" refers to the documents issued by the
International Civil Aviation Organization (ICAO) containing the standards and
recommended practices applicable to civil aviation.

(bb) "Appliances" refers to instruments, equipment, apparatus, parts, appurtenances, or

accessories, of whatever description, which are used, or are capable of being or intended
to be used, in the navigation, operation, or control of aircraft in flight (including
parachutes and including communication equipment and any other mechanism or
mechanisms installed in or attached to aircraft during flight), and which are not part or
parts of aircraft, aircraft engines, or propellers.

(cc) "Authority" refers to the Philippine Civil Aviation Authority created pursuant to the
provisions of this Act and shall, as indicated by the context, include the Board of
Directors and/or Director General created pursuant thereto.

(dd) "Aviation certificate" means any airworthiness certificate, airman certificate, air
operator certificate, certificate authorizing the operation of an aviation school or
approved maintenance organization or other document issued by virtue of the provisions
of this Act in respect of any person, aircraft, airport or aviation-related service.

(ee) "Board of Directors" means the board of the civil aviation authority created under
this Act.

(ff) "Chicago Convention" refers to the international basis for civil aviation agreements.

(gg) "Citizen of the Philippines" refers to one of the following:

(i) An individual who is a citizen of the Philippines;

 (ii) A partnership of which each member is a citizen of the Philippines; or

(iii) A corporation or association created or organized and authorized under the

laws of the Philippines.

(hh) "Civil aircraft" refers to any aircraft other than a State or public aircraft. .

(ii) "Civil aviation" refers to the operation of any civil aircraft for the purpose of general
aviation operations, aerial work or commercial air transport operations.

(jj) "Crew member" refers to a person assigned to perform duties on an aircraft in flight.

(kk) "Dangerous goods" refers to articles or substances that are capable of posing
significant risks to health or safety of property when transported by air.

(ll) "Director General" refers to the Director General appointed under this Act.

(mm) "Domestic air commerce" means and includes air commerce within the limits of the
Philippine territory.

(nn) "Domestic air transport" means air transportation within the limits of the Philippine
territory.

(oo) "Foreign air carrier or foreign air operator" meane any operator, not being a
Philippine air operator, which undertakes, whether directly or indirectly or by lease or
any other arrangement, to engage in commercial air transport operations within borders
or airspace of the Philippines, whether on a scheduled or chartered basis.

(pp) "Foreign air transport" refers to air transportation between the Philippines and any
place outside it or wholly outside the Philippines.

(qq) "General aviation operation" refers to an aircraft operation of a civil aircraft for other
than a commercial air transport operation or aerial work operation.

(rr) "ICAO." Where used in this Act, refers to the abbreviation for the International Civil
Aviation Organization.

(ss) "International commercial air transport" refers to the carriage by aircraft of persons
or property for remuneration or hire or the carriage of mail between any two (2) or more
countries.

(tt) "Navigable airspace" refers to the airspace above the minimum altitudes of flight
prescribed by regulations under this Act and includes airspace needed to insure safety in
the take-off and landing of aircraft.

(uu) "Navigation of aircraft" refers to a function that includes the piloting of aircraft.
(vv) "Person" refers to any individual, firm, partnership, corporation, company,
association, joint-stock association, or body politic, and includes any trustee, receiver,
assignee, or other similar representative of these entities.

(ww) "Philippine air carrier" means an air carrier who is a citizen of the Philippines.

(xx) "Philippine aircraft" means an aircraft registered in the Philippines in accordance

with the requirements of this Act.

(yy) "Propeller" refers to an inclusive term for all parts, appurtenances, and accessories of
a propeller.

(zz) "Public aircraft" refers to an aircraft used exclusively in the service of any
government or of any political jurisdiction thereof, including the Government of the
Philippines, but not including any government-owned aircraft engaged in operations
which meet the definition of commercial air transport operations.

(aaa)"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:

(1) Lights and signals to be shown by aircraft;

(2) General, visual and instrument flight rules;

(3) Airport traffic rules; and

(4) Airport signals and markings

(bbb)"Spare parts" refers to any parts, appurtenances, and accessories of aircraft (other
than aircraft engines and propellers), aircraft engines (other than propellers), propellers,
and appliances, maintained for installation or use in an aircraft, aircraft engine, propeller,
or appliance, but which at the time are not installed therein or attached thereto.

(ccc) "Special aircraft jurisdiction of the Philippines." This includes:

(i) Civil aircraft of the Philippines; and

(ii) Any other aircraft within the jurisdiction of the Philippines, while the aircraft
is in flight, which is from the moment when all external doors are closed
following embarkation until the moment when one such door is opened for
disembarkation or, in case of a forced landing, until the competent authorities take
over the responsibility of the aircraft and the persons and property aboard.
 (ddd) "Validation" refers aboard to the written acceptance of an action of the civil
aviation authority of another country in lieu of an action that this Act assigns to the
Director General.

(eee) "Landing fees" refers to all charges for the use of any landing strip or runway by
any aircraft landing or taking off at an aerodrome.

(fff) "Terminal fees" refers to charges far parking at or near the ramp, terminal area, or
building, for purposes of loading or unloading passengers and/or cargo.

(ggg) "Royalties" refers to all charges based on gross business or sales, or gross or net
profit.

(hhh) "Supplies" includes any and all items of whatever nature or description which may
be necessary for, or incidental to, the operation of an aircraft.

CHAPTER II
ORGANIZATION OF AUTHORITY

SEC. 4. Creation of the Authority. - There is hereby created an independent regulatory body
with quasi-judicial and quasi-legislative powers and possessing corporate attributes to be known
as the Civil Aviation Authority of the Philippines (CAAP), hereinafter referred to as the
"Authority" attached to the Department of Transportation and Communications (DOTC) for the
purpose of policy coordination. For this purpose, the existing Air Transportation Office created
under the provisions of Republic Act No. 776, as amended, is hereby abolished.

Notwithstanding the foregoing, nothing in this Act shall diminish the powers and functions of the
Civil Aeronautics Board (CAB) as provided for under Republic Act. No. 776, also known as
"The Civil Aeronautics Act of the Philippines", as amended.

(a) Establishment of Authority Headed by a Director General - The Authority shall beheaded by
a Director General of Civil Aviation, referred to in this Act as the "Director General," who shall
be appointed by the President of the Philippines and shall be responsible for all civil aviation in
the Philippines and the administration of this Act. The Director General shall be appointed based
on the qualifications herein provided and shall have a tenure of office for a period of four (4)
years. His appointment may be extended for another non-extendible term of four (4) years and
shall only be removed for cause in accordance with the rules and regulations prescribed by the
Civil Service Commission.

(b) Responsibility of the Director General - The Director General shall be responsible for the
exercise of all powers and the discharge of all duties of the Authority and shall have control over
all personnel and activities of the Authority.

SEC. 5 . Composition of the Board Members. - The corporate powers of the Authority shall be
vested in a board, which is composed of seven (7) members:
 (a) The Secretary of the Department of Transportation and Communications shall act as
chairman ex officio;

(b) The Director General of Civil Aviation (DGCA) shall automatically be the vice
chairman of the Board;

(c) The Secretary of Finance;

(d) The Secretary of Foreign Affairs;

(e) The Secretary of Justice;

(f) The Secretary of the Interior and Local Government; and

(g) The Secretary of the Department of Labor and Employment.

The Directors listed under subsection (a) to (g) shall be ex officio members of the Board of
Directors: Provided, That, in the absence of the Director appointed in subsections (c) to (g), the
Director concerned shall designate the officer next in rank to him in his department or office to
act on his behalf as a Director.

SEC. 6. Prohibited Interests. - All members of the Board or any of their relatives within the
fourth civil degree of consanguinity or affinity, legitimate or common law, shall be prohibited
from holding any interest whatsoever, either as investor, stockholder, officer or director, in any
company or entity engaged in air commerce, whether scheduled or unscheduled, passenger or
cargo, domestic or international, or in any business providing support services to persons
engaged in air commerce (i.e. general sales agencies, travel agencies, cargo forwarders, ground
handling, catering, fuel servicing, aircraft maintenance, etc.) and must therefore divest, through
sale or legal disposition, of any and all interests in such undertakings upon the member's
assumption of office. Any violation of this section shall subject the member concerned to
removal from the Authority for cause as well as administrative, civil or criminal prosecution
under applicable laws.

SEC. 7. Limitation of Subsequent Employment. - No member of the Board or any employee of

the Authority shall accept employment or enter into a contract of service with an entity regulated
by the Authority until the expiry of one (1) year from the termination of his appointment,
whether by resignation or revocation or otherwise.

SEC. 8. Quorum. - The presence of at least four (4) members of the Board shall constitute a
quorum and the majority vote of three (3) members in a meeting where a quorum is present shall
be necessary for the adoption of any rule, ruling, order, resolution, decision or other act of the
Board in the exercise of its functions.

SEC. 9. Qualifications of Director General. - No person shall be appointed or designated as the

Director General unless he is a Filipino citizen, at least thirty-five (35) years of age, of good
moral character, unquestionable integrity, recognized competence and a degree holder with at
least five (5) years supervisory or management experience in the field of aviation.

SEC. 10. 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 upon the initiative of four (4)
members. Internal rules of procedure in the conduct of Board meetings shall be as prescribed by
the Board.

SEC. 11. Per Diems. - The members of the Board shall receive a per diem for each meeting
actually attended. The per diems of the members of the Board shall be determined pursuant to a
resolution adopted by the Board subject to compliance of the guidelines duly existing and
applicable by the Commission on Audit.

SEC. 12. Personnel. - Qualified existing personnel of the Air Transportation Office (ATO) shall
be given preference in the filling up of plantilla positions created in the Authority, subject to
existing civil service rules and regulations.

SEC. 13. Principal Office. - The Authority shall have its principal office in Metro Manila and
may hold hearings on any proceedings at such time and places within the Philippines, as it may
provide by order in writing.

SEC. 14. Capitalization. - The Authority shall have an authorized capital stock of Fifty billion
pesos (Php50,000,000,000.00) which 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
and other acts in force upon approval hereof, pertaining to, held or used by, the ATO,

(b) The value of existing assets of the ATO, which shall be determined by an independent
and qualified appraiser or appraisers within six (6) months from the effectivity of this
Act, and after deducting the loans and other liabilities of the ATO at the time of the
takeover of the assets and properties; and

(c) Such amounts as may be appropriated from time to time from the funds of the
National Treasury, including any outlay from the infrastructure program of the National
Government.

SEC. 15. Fiscal Autonomy. - The Authority shall enjoy fiscal autonomy. 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.

The utilization of any funds coming from the collection and/or levy of the Authority shall be
subject to the examination of the Congressional Oversight Committee.
SEC. 16. Exemption from Taxes, Customs and Tariff Duties. - (a) The importation of
equipment, machineries, spare parts, accessories and other materials including supplies and
services used solely and exclusively 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.

(b) All obligations entered into by the Authority and any income derived therefrom, including
those contracted with private international banking and financial institutions, shall be exempt
from all taxes, both principal and interest. The Authority is also exempt from the payment of
capital gains tax, documentary stamp tax, real property estate tax and all other local government-
imposed taxes and fees.

SEC. 17. Schedule of Fees and Charges. - The Authority shall adopt and publish its schedule of
fees and charges. The Authority shall hold such public hearings or consultative meetings with
stakeholders in the industry before adapting its schedule of fees and charges. The Authority shall
not revise its schedule of fees and fines more often than once every three (3) years.

SEC. 18. Compensation and Other Emoluments of Authority Personnel. - Within six (6)
months from the effectivity of this Act, the Board shall determine the new 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.

SEC. 19. Transfer of Properties. - The funds and appropriations, records, equipment and
property of the AT0 is hereby transferred to the Authority.

SEC. 20. Annual Report. - The Authority shall prepare and submit an annual report to the
President of the Philippines, to the Senate and to the House of Representatives on its
accomplishments at the close of each calendar year.

CHAPTER III
GENERAL POLICIES

SEC. 21. Policies. - In the exercise and performance of its powers and duties under this Act, the
Authority shall consider the following, among other things, as being in the public interest and in
accordance with the public convenience and necessity:

(a) The development and utilization of the air potential of the Philippines;

(b) The encouragement and development of an air transportation system properly adapted
to the present and future of foreign and domestic commerce of the Philippines;

(c) The regulation of air transportation in such manner as to support sound economic
condition in such transportation and to improve the relations between air carriers;
 (d) Ensuring the safety, quality, reliability, and affordability of air transport services for
the riding public; and

(e) The encouragement and development of a viable and globally competitive Philippine
aviation industry.

CHAPTER IV
POWERS OF THE AUTKORITY

SEC. 22. Powers and Functions. - The Authority shall have such powers as are granted to the
Board and the Director General under the provisions of this Act.

SEC. 23. Corporate Powers. - The Authority, acting through the Board, shall have the following
corporate powers:

(a) To succeed in its corporate name, to sue and be sued in such corporate name, and to
adopt, use and alter its corporate seal, which shall be judicially noticed;

(b) To adopt, amend or repeal its bylaws;

(c) 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;

(d) To raise money, contract loans, indebtedness, credit and issue commercial papers and
bonds, in any local or convertible foreign currency from any other international financial
institutions under terms and conditions prescribed by law, rules and regulations;

(e) To execute any deed of guarantee, mortgage, pledge, trust or assignment of any
property for the purpose of financing the programs and projects deemed vital for the
attainment of its goals and objectives;

(f) To construct, acquire, own, hold, operate, maintain, administer and lease personal and
real properties, including buildings, machinery, equipment, other infrastructure,
agricultural land, and its improvements, property rights, and interests 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: Provided, That no real property thus acquired and any
other real property shall be sold without the approval of the President of the Philippines;

(g) 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;
 (h) To invest its funds and other assets in such areas, ventures, and projects as it may
deem wise;

(i) To settle, under such terms and conditions most advantageous to it, any claim by or
against it;

(j) 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

(k) 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.

CHAPTER V
POWERS AND FUNCTIONS OF THE BOARD

SEC. 24. Powers of the Board. - The Board shall have the following general powers:

(a) Provide comprehensive policy guidance for the promotion and development of the
Philippine aviation industry, as provided for in this Act;

(b) Ensure that the Authority performs its functions in a proper, efficient and effective
manner;

(c) Decide the objectives, strategies and policies of the Authority in accordance with the
provisions of this Act;

(d) Determine the organizational structure of the Authority in accordance with the
provisions of this Act, establish a human resources management system based on merit
and fitness, and adopt a rational compensation and benefits scheme;

(e) Exercise appellate powers on any decisions, findings and rulings of the Director
General, to issue subpoena ad testificandum or subpoena duces tecum requiring the
attendance and testimony of witnesses in any matter or inquiry pending before the Board
and require the production of books, papers, contracts, agreements and all other
documents submitted for purposes of this section to be under oath and verified by the
person in custody thereof as to the truth and correctness of data appearing in such books,
papers, tariffs, contracts, agreements and all other documents;

(f) Exercise appellate powers to order the taking of depositions in any proceeding, or
investigation, pending before the Board at any stage of such proceeding or investigation;

(g) Use available services, equipment, personnel and facilities of other agencies of the
Philippine Government, on a reimbursable basis when appropriate and, on a similar basis,
to co-operate with those agencies in the establishment and use of services, equipment and
facilities of the Authority;
(h) Use the property of the Authority in such a manner as may appear to the Authority to
be requisite, advantageous or convenient with a view to making the best use of any of the
property of the Authority in relation to its functions under this Act;

(i) Invest such of the Authority's funds that are not immediately required for operating
expenses, or other immediate obligations in any business venture the Board may deem
appropriate, or in such secured note, government securities, and other negotiable
instruments that satisfy the guidelines prescribed by the Board. Funds of the Authority
shall be deposited in such commercial and universal banks as the Board may determine,
subject to the requirements of existing laws. The Board shall designate the officials
authorized to deposit in or withdraw funds from such depository banks;

(j) Promulgate rules and regulations as may be necessary in the interest of safety in air
commerce pertaining to the issuance of the airman's certificate including the licensing of
operating and mechanical personnel, type certificate for aircraft, aircraft engines,
propellers and appliances, airworthiness certificates, air carrier operating certificates, air
agency certificates, navigation facility and aerodrome certificates; air traffic routes; radio
and aeronautical telecommunications and air navigation aids; aircraft accident inquiries;
aerodromes, both public and private-owned; construction of obstructions to aerodromes;
height of buildings; antennae and other edifices; registration of aircrafts; search and
rescue; facilitation of air transports; operations of aircrafts, both for domestic and
international, including scheduled and non-scheduled; meteorology in relation to civil
aviation; rules of the air; air traffic services; rules for prevention of collision of aircrafts,
identification of aircraft; rules for safe altitudes of flight; and such other rules and
regulations, standards, governing other practices, methods and/or procedures as the
Director General may find necessary and appropriate to provide adequately for safety
regularity and efficiency in air commerce and air navigation;

(k) Impose and fix reasonable charges and fees for the use of government aerodromes or
air navigation facilities; for services rendered by the Authority in the rating of any
aerodrome or air navigation facilities, civil aviation schools and instructors, aircraft repair
stations, and aircraft radio and aeronautical telecommunications stations;

(l) Fix the reasonable charges to be imposed in the use of privately-owned air navigation
facilities and aerodromes;

(m) Adopt a system for the registration of aircraft as hereinafter provided;

(n) Determine and fix, landing fees, parking space 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, other royalties, fees or rentals for the use of any of
the property under its management and control;

(o) Approve the annual and supplementary budget plan and utilization of retained
revenue;
 (p) Exercise the corporate powers granted to the Authority;

(q) Upon its own initiative or the recommendation of the Director General or an
application of a private person, grant exemption from the requirements of observing rules
or regulations issued in accordance with this Act: Provided, That said grant of exemption
is not prejudicial to flight safety;

(r) Formulate rules and regulations concerning compliance of the carrier and the public
for the safe transport of goods and materials by air pursuant to international standards or
Annexes to the Chicago Convention; and

(s) In coordination with the appropriate government agency tasked to provide airport
security, shall:

(1) Prescribe reasonable regulation requiring that all passengers and all property
intended to be carried in the aircraft cabin in commercial air transport be screened
by weapon-detecting procedure or facilities employed or operated by employees
or agents of the air operator or foreign air operator prior to boarding the aircraft
for such transportation;

(2) Prescribe such other reasonable rules and regulations requiring such parties,
methods and procedures as the Director General may find necessary to protect
persons and property aboard aircraft operating in commercial air transport against
acts of criminal violence and aircraft piracy; and

(3) To the extent practicable, require uniform procedures for the inspection,
detention, and search of persons and property in domestic commercial air
transport and international commercial air transport to assure their safety and to
assure that they will receive courteous and efficient treatment by air operators and
their agents and employees.

SEC. 25. Issuance of Rules and Regulations. - The Board, in consultation with the Director
General, shall issue and provide for the enforcement of such orders, rules and regulations as may
be necessary to give effect to the provisions of this Act. All rules and regulations issued in
accordance with the provisions of this Act shall be formally promulgated and periodically
reviewed and updated in accordance with the requirements of the Administrative Code of the
Philippines or any amendment or successor thereto and the International Civil Aviation
Organization Standards and Recommended Practices. Pending the promulgation of such new
rules and regulations, the current rules and regulations of the AT0 shall continue to apply.

SEC. 26. Setting of Charges and Fees. - The Board, after consultation with the Director
General, and after public hearing, shall determine, fix, impose, collect or receive reasonable
charges, fees, dues or assessments in respect of aviation certificates, licenses and all other
authorizations or permissions authorized to be issued under this Act and all services performed
by the Authority. All charges and fees shall be formally promulgated in accordance with the
requirements of the Administrative Code of the Philippines or any amendment or successor
thereto. Pending the promulgation of such new schedule of charges and fees, the current charges
and fees of the AT0 shall continue to apply.

SEC. 27. Issuance of Rules of Procedure and Practice. - The Board may authorize the Director
General to issue or amend rules of procedures and practice as may be required to be issued
pursuant to the provisions of this Act or issue and adopt rules and regulations and other issuances
of the ICAO. Pending the promulgation of such new rules of procedures and practice, current
rules of procedures and practices of the AT0 shall continue to apply.

SEC. 28. Appellate Powers. - The Board, on an appeal properly taken by an interested party
from a decision, judgment or order of the Director General, shall have the power to:

(a) Review, confirm, modify, revise, amend or reverse, as the case may be, decisions,
judgments and/or orders of the Director General;

(b) Confirm, remit, mitigate, increase or compromise, as the case may be, fines imposed
by the Director General pursuant with the provisions of this Act; and

(c) Review, confirm, modify, revise, amend or reverse, as the case may be, impositions
by the Director General of liens on personal and real properties of entities, persons,
corporations or partnerships in default, or those who have failed to perform their
obligations pursuant to rules and regulations promulgated under this Act, or those who
shall have failed to pay the fines or other pecuniary penalties for violation thereof,

In no case that the Director General shall participate in the hearing and adjudication of an
appealed case before the Board where the subject of appeal is a judgment or decision rendered by
his office. In such case, it requires four (4) concurring votes of the members of the Board who
actively participated in the deliberation of the appealed case before the judgment or decision of
the Director General can be modified or reversed.

SEC. 29. Power to Administer Oaths. - The members of the Board, the Director General and
such other duly designated officers of the Authority shall have the authority to administer oaths
in the transaction and performance of their official duties.

SEC. 30. Annual Budget. - The Board shall adopt an annual budget to fund the operations of the
Authority.

SEC. 31. Delegation of Functions. - (a) Delegation to Officers, Employees and Administrative
Units of the Authority - The Director General may, subject to such regulations, supervision and
review as may be prescribed, authorize the performance by any officer, employee, or
administrative unit under the Director General's jurisdiction of any function under this Act.

(b) Delegation to Private Persons - The Director General, in accordance with the policy
guidelines prescribed by the Board, is authorized to delegate any assigned powers and duties to
any properly qualified private person subject to his continuing supervision, regulation, and
review as may be prescribed. However, the Director General shall ensure that such functions are
not delegated in such a way that air operators, aerial work or general aviation operators and
maintenance facilities, in effect, regulate themselves.

SEC. 32. Limitation of Powers. - The Board shall not exercise any power or function not
otherwise expressly granted to it under this Act, neither shall the Board exercise, in the first
instance, any power or function that properly falls within the authority, jurisdiction, powers or
functions of the Director General.

CHAPTER VI
THE AUTHORITY PROPER

SEC. 33. Organizational Structure of the Authority. - Within fifteen (15) days from the
appointment of and acceptance by all members of the Board and the Director General of their
respective appointments, the Board, in consultation with the Director General, 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.

In addition to the offices created under Sections 36 and 40 of this Act, the Board shall establish
the following permanent offices:

(a) Air Traffic Service;

(b) Air Navigation Service;

(c) Aerodrome Development and Management Service; and

(d) Administrative and Finance Service.

The Board may agree for the viability for the creation of additional offices and the finalization of
the organizational structure not later than six (6) months from the date of the effectivity of this
Act.

Notwithstanding the qualification standards as may be prescribed by the Board and the Civil
Service Commission, the selection and appointment of the heads of the foregoing offices shall be
limited from the rank and file employees of the concerned services.

SEC. 34. Training Schools. - (a) Authority to Operate - The Director General may conduct a
school or schools for the purpose of training employees of the Authority in those subjects
necessary for the proper performance of all authorized functions of the Authority. The Director
General may also authorize attendance of courses given in such schools by other governmental
personnel and personnel of foreign governments, or personnel of the aeronautical industry.

(b) Offset of Training Costs - The Director General is hereby authorized, where appropriate, to
require payment of appropriate consideration to offset the costs of training provided by such
school or schools.
 CHAPTER VII
THE DIRECTOR GENERAL

SEC. 35. Powers and Functions of the Director General. - The Director General shall be the
chief executive and operating officer of the Authority. He shall have the following powers, duties
and responsibilities:

(a) To carry out the purposes and policies established in this Act; to enforce the
provisions of the rules and regulations issued in pursuance to said Act; and he shall
primarily be vested with authority to take charge of the technical and operational phase of
civil aviation matters;

(b) To designate and establish civil airways, to acquire, control, operate and maintain
along such airways, navigation facilities and to chart such airways and arrange for their
publication including the aeronautical charts or maps required by the international
aeronautical agencies, by utilizing the equipment, supplies or assistance of existing
agencies of the government as far as practicable;

(c) To issue airman's certificate specifying the capacity in which the holder thereof is
authorized to serve as airman in connection with aircraft and shall be issued only upon
the finding that the applicant is properly qualified and physically able to perform the
duties of the position. The certificate shall contain such terms, conditions and limitations
as the Director General may determine to be necessary to assure safety in air commerce:
Provided, however, That the airman's license shall be issued only to qualified persons
who are citizens of the Philippines or qualified citizens of countries granting similar
rights and privileges to citizens of the Philippines;

(d) To issue airworthiness certificate for aircraft which shall prescribe the duration of
such certificate, the type of service for which the aircraft may be used, and such other
terms and conditions and limitations as are required;

(e) To issue air carrier operating certificate in accordance with the minimum safety
standards for the operation of the air carrier to whom such certificate is issued. The air
carrier operating certificate shall be issued only to aircrafts registered under the
provisions of this Act;

(f) To issue type certificate for aircraft, aircraft engine, propellers and appliances;

(g) To inspect, classify and rate any air navigation facilities and aerodromes available for
the use of aircraft as to its suitability for such use and to issue a certificate for such air
navigation facility and aerodrome; and to determine the suitability of foreign aerodromes,
air navigation facilities as well as air routes to be used prior to the operation of
Philippine-registered aircraft in foreign air transportation and from time to time thereafter
as may be required in the interest of safety in air commerce;
(h) To issue certificates of persons or civil aviation schools giving instruction in flying,
repair stations, and other air agencies and provide for the examination and rating thereof;

(i) To provide for the enforcement of the rules and regulations issued under the
provisions of this Act and to conduct investigation for violations thereto. In undertaking
such investigation, to require by subpoena ad testificandum or subpoena duces tecum, the
attendance and testimony of witnesses, the production of books, papers, documents,
exhibits matter, evidence, or the taking of depositions before any person authorized to
administer oath. Refusal to submit the reasonable requirements of the investigation
committee shall be punishable in accordance with the provisions of this Act;

(j) To collect and disseminate information relative to civil aeronautics and the
development of air commerce and the aeronautical industry; to exchange with foreign
governments, information pertaining to civil aeronautics; and to provide for direct
communication on all matters relating to the technical or operational phase of aeronautics
with international aeronautical agencies:

(k) To acquire and operate such aircraft as may be necessary to execute the duties and
functions of the Authority prescribed in this Act;

(l) To plan, design, acquire, establish, construct, operate, improve, maintain, and repair
necessary aerodromes and other air navigation facilities;

(m) To collect and receive charges and fees for the registration of aircraft and for the
issuance and/or renewal of licenses or certificates for aircraft, aircraft engines, propellers
and appliances, and airmen as provided in this Act;

(n) To impose fines and/or civil penalties in respect thereto;

(o) To participate actively with the largest possible degree in the development of
international standardization of practices in aviation matters important to safe,
expeditious, and easy navigation, and to implement as far as practicable the international
standards, recommended practices and policies adopted by appropriate international
aeronautical agencies;

(p) To exercise and perform its powers and duties under this Act consistent with any
obligation assumed by the Republic of the Philippines in any treaty, convention or
agreement on civil aviation matters;

(q) To cooperate, assist and coordinate with any research and technical agency of the
government on matters relating to research and technical studies on design, materials,
workmanship, construction, performance, maintenance and operation of aircraft, aircraft
engines, propellers, appliances, and air navigation facilities including aircraft fuel and oil:
Provided, That nothing in this Act shall be construed to authorize the duplication of the
laboratory research, activities or technical studies of any existing governmental agency;
 (r) To designate such prohibited and danger areas, in consonance with the requirements
of the international aeronautical agencies and national security;

(s) To issue, deny, suspend, cancel or revoke any certificate, license pertaining to aircraft,
airmen and air agencies: Provided, That any order denying, suspending, cancelling,
revoking the certificate or license may he appealed to the Board, whose decisions shall he
final within fifteen (15) days from the date of notification of such denial, cancellation or
revocation;

(t) To grant authorization to civil aircraft or persons to carry instruments or photographic

devices to be used for aerial photography or taking of pictures by photograph or
sketching of any part of the Philippines; and

(u) Pursuant to a board resolution, to enter into, make and execute contracts of any kind
with any person, firm, or public or private corporation.

SEC. 36. The Office of Enforcement and Legal Service. - To effectively implement the civil
aviation regulatory, supervisory and administrative mandates of the Director General under this
Act, a permanent office within the Authority to be known as the Enforcement and Legal Service,
to be composed of in-house counsels of the Authority and its necessary support staff shall be
established by the Board.

This office shall provide adequate legal assistance and support to the Director General and to the
Authority, as a whole, in the exercise of quasi-legislative and quasi-judicial power as provided
for under this Act.

The exercise of the function by the Director General to issue subpoena ad testificandum,
subpoenaduces tecum and the imposition of any administrative sanction shall be within the
exclusive determination and recommendation of the Enforcement and Legal Service.

SEC. 37. Orders. - (a) Effectiveness of Orders - Except in emergency situations, all orders, rules
and regulations of the Director General shall take effect within such reasonable times as the
Director General may prescribe, and shall continue in force until a further order, rule or
regulation, or for a specified period of time, as shall be prescribed in the order, rule or regulation.

(b) Emergencies - Whenever the Director General is of the opinion that an emergency requiring
immediate action exists with respect to safety in civil aviation, the Director General shall have
the power, either upon complaint or the Director General's initiative without complaint, at once,
if the Director General so orders, without answer or other form of pleading by the interested
person or persons, and with or without notice, hearing, or the making or filing of a report, to
make such just and reasonable orders, rules or regulations as may be essential in the interest of
safety in civil aviation to meet such emergency: Provided, That the Director General shall
immediately thereafter initiate proceedings relating to the matter giving rise to any such order,
rule or regulation.
(c) Suspension and Modification of Orders - The Director General shall have the power to
suspend or modify orders upon such notice and in such manner as the Director General shall find
proper.

(d) Public Compliance - It shall be the duty of every person (along with any agents and
employees thereof in the case of entities other than individuals), subject to this Act, to observe
and comply with any order, rule, regulation, or certificate issued by the Director General under
this Act, affecting such person so long as the same shall remain in effect.

SEC. 38. Right of Access for Inspection. - (a) The Director General or his authorized
representative shall be authorized access to civil aircraft, including aerodromes, without
restriction wherever they are operated within the Philippines for purposes of ensuring that those
aircraft are airworthy and being operated in accordance with this Act, regulations issued under
this Act, and applicable ICAO Annexes.

(b) The Director General or his authorized representative shall be authorized access to civil
aircraft registered in the Philippines without restriction wherever they are operated in the world
for the purposes of ensuring that these aircraft are airworthy and are being operated in
accordance with this Act and applicable regulations and directives.

(c) The Director General or his authorized representative shall be authorized access by the
Philippine air operators at any place and any time to conduct any tests or inspections in their
facility or offices in order to determine that those operations are conducted in accordance with
this Act and applicable regulations and directives.

(d) The Director General or his authorized representative shall be authorized access to any
aerodromes, whether privately or government-owned, to conduct inspections or evaluation of the
facilities therein in order to determine that its operations are conducted.

SEC. 39. Authority to Prevent Flight. - (a) The Director General is authorized to direct the
operator or airman of a civil aircraft that the aircraft is not to be operated in situations where:

(1) The aircraft may not be airworthy; or

(2) The airman may not be qualified or physically or mentally capable for the flight; or

(3) The operation would cause imminent danger to persons or property on the ground.

(b) The Director General may take such steps as are necessary to detain such aircraft or airmen.

SEC. 40. Creation of Flight Standards Inspectorate Service. - (a) The Board, other than the
offices it shall create in furtherance of this Act, shall establish a permanent office known as the
Flight Standards Inspectorate Service (FSIS) that will assist the Director General in carrying out
the responsibilities of his office for certification and ongoing inspections of aircraft, airmen and
air operators.
The FSIS shall perform the following functions:

(1) Airworthiness inspection;

(2) Flight operations inspection and evaluation; and

(3) Personnel licensing.

Furthermore, the Board shall create, but not limited to, the following offices which will provide
support to the functions of the FSIS, namely: Aircraft Registration, Aircraft Engineering and
Standards, Airmen Examination Board and Office of the Flight Surgeon.

SEC. 41. Validation. - The Director General is authorized, in the discharge of his certification
and inspection responsibilities, to validate the actions of the civil authority of another State in
lieu of taking the specific action, with the following restrictions:

(a) For actions on airman or airworthiness certificates, the other State must be a signatory
to the Chicago Convention and he fulfilling its obligations under the Chicago Convention
with respect to the issuance and currency of these certificates; and

(b) For actions applicable to air operators, the Director General must exercise discretion
and require supporting documents. The Director General should ensure that, when
validation is based on the actions of another civil aviation authority, there is no
information to indicate that the State does not meet its obligations under the Chicago
Convention regarding certification and ongoing validation of its air operators.

SEC. 42. Aircraft Accident Investigation and Inquiry Board. - Pending the establishment of an
independent and separate government agency created to conduct investigation of accidents on
land, air and water, the Director General shall organize an Aircraft Accident Investigation and
Inquiry Board (AAIIB), to be composed of personnel of the Authority specialized in the various
disciplines of civil aviation. The Board shall appoint the head of the AAIIB.

(a) Reporting of Accidents - The Board shall promulgate rules and regulations governing the
notification and the reporting of accidents and incidents involving aircraft.

(b) General Authority to Investigate - Except as provided in subsection c of this section, the
Director General shall have:

(1) The power to investigate, or arrange by contract or otherwise for the investigation of,
accidents involving aircraft occurring in the Philippines and civil aircraft registered in the
Fhilippines occurring outside the territory of any foreign country for the purpose of
determining the facts, conditions and circumstances relating to each accident and the
probable cause thereof; and

(2) The authority to participate in the investigation of accidents involving aircraft

registered in the Philippines occurring outside the territory of a foreign country,
 consistent with any treaty, convention, agreement, or other arrangemest between the
Philippines and the country in whose territory the accident occurred.

(c) Accident Prevention - The Director General shall take any corrective actions which, on the
basis of the findings of the accident investigations authorized under this section, that, in the
judgment of the Director General, will tend to prevent similar accidents in the future.

(d) Investigation of Accidents Within Military Sites - Notwithstanding any other provision of
this section, and, the investigation of an accident involving aircraft occurring within military
sites in the Philippines, or an accident involving solely an aircraft of the armed forces of any
foreign country occurring in the Philippines, shall be the responsibility of the military. For the
purpose of this subsection, the term 'military sites' means those areas within the Philippines
which are under the control of the military of the Philippines or the military of another country.

(e) Use as Evidence - No part of any report or reports of the Director General relating to any
accident, or the investigation thereof, shall be admitted as evidence or used in any suit or action
for damages arising out of any matter mentioned in such report or reports except when the
criminal liabilities/aspects of the accident is put into issue.

CHAPTER VIII
NATIONALITY AND OWNERSHIP OF AIRCRAFT

SEC. 43. Establishment of Registry. - The Authority shall:

(a) Establish and maintain a system for the national registration of aircraft in the
Philippines;

(b) Establish and maintain a system for the registration of liens, mortgages or other
interests in aircraft or aircraft engines; and

(c) Have sole authority to register aircraft and liens, mortgages or other interests in
aircraft or aircraft engines.

SEC. 44. Eligibility for Registration. - Except as otherwise provided in the Constitution and
existing treaty or treaties, no aircraft shall be eligible for registration unless it is owned by or
leased to a citizen or citizens of the Philippines or corporations or associations organized under
the laws of the Philippines at least sixty per centum (60%) of whose capital is owned by Filipino
citizens. That, under such rules and regulations to be promulgated by the Board, foreign-owned
or registered aircraft may be registered if utilized by members of aero clubs organized for
recreation, sport or the development of flying skills as a prerequisite to any aeronautical
activities of such clubs within the Philippine airspace. (R.A. 776, P.D. 1278, E.O. 546, and B.P.
504)

Such certificate shall be conclusive evidence of nationality for international purposes, but not in
any proceeding under the laws of the Republic of the Philippines.
The certificate of registration is conclusive evidence of ownership, except in a proceeding where
such ownership is, or may be, at issue.

SEC. 45. Application for Aircraft Registration. - Applications for certificate of registration shall
be made in writing, signed and sworn to by the owner or lessee of any aircraft or aircraft engine
eligible for registration. The application shall also state: (a) the date and place of filing; (b) the
specification, construction and technical description of the aircraft or aircraft engine; and (c)
such other information as may be required by the Authority in such manner and form as the
Authority may prescribe by regulation.

SEC. 46. Issuance of Certificate of Registration. - Should the Director General, upon
considering the application for registration, find the aircraft or aircraft engine eligible for
registration, such aircraft shall be registered under the provisions of this Act and the owner
thereof shall be issued a certificate of registration.

SEC. 47. Nationality. - An aircraft shall acquire Philippine nationality when registered pursuant
to this Act.

SEC. 48. Revocation. - Any certificate of registration may be revoked by the Authority for any
cause which renders the aircraft ineligible for registration.

SEC. 49. Conveyance to be Recorded. - No conveyance made or executed, which affects the
title to, or interest in, any aircraft of Philippine registry, or any portion thereof shall be valid in
respect to such aircraft or portion thereof against any person other than the person by whom the
conveyance is made or executed, his heirs, assignees, executors, administrators, devisees, or
successors in interest, and any person having actual notice thereof, until such conveyance is
recorded in the Authority. Every such conveyance so recorded shall be valid as against all
persons. Any instrument, recording of which is required by the provisions of this Act, shall take
effect from the date of its record in the books of the Authority, and not from the date of its
execution.

SEC. 50. Form of Conveyance. - No conveyance may be recorded under the provisions of this
Act unless it complies with the requirements for the registration of documents similar to the land
registration process. The conveyance to be recorded shall also state: (a) the interest in the aircraft
of the person by whom such conveyance is made or executed or, in the case of a contract of
conditional sale, the interest of the vendor; and (b) the interest transferred by the conveyance.

SEC. 51. Establishment of System of Recording. - The Authority shall establish a national
system for recording documents that affect the title to or any interest in any aircraft registered in
accordance with this Act and in any aircraft engine, propeller, appliance or spare parts intended
for use on any such aircraft.

SEC. 52. Method of Recording. - The Authority shall record conveyances delivered to it in the
order of their receipt, in files kept for that purpose, indexed to show:

(a) The identifying description of the aircraft;

 (b) The names of the parties to the conveyance;

(c) The date of the instrument and the date and time it is recorded;

(d) The interest in the aircraft transferred by the conveyance;

(e) If such conveyance is made as security for indebtedness, the amount and date of
maturity of such indebtedness; and

(f) All particular estates, mortgages, liens, leases, orders and other encumbrances and all
decrees, instruments, attachments or entries affecting aircraft and other matters properly
determined under this Act.

SEC. 53. Validity Before Filing. - Upon the establishment of a recording system in accordance
with the provisions of this Act, no document affecting the title to or any interest in such
registered aircraft, aircraft engines, propellers, appliances, or spare parts shall be valid except as
between the parties thereto, unless the document is registered in such recording system.

SEC. 54. Previously Unrecorded Ownership. - Applications for the issuance or renewal of an
airworthiness certificate for aircraft whose ownership has not been recorded as provided in this
Act shall contain such information with respect to the ownership of the aircraft as the Director
General shall deem necessary to show who have property interests in such aircraft and the nature
and extent of such interest.

CHAPTER IX
AVIATION SAFETY POWERS AND FUNCTIONS

SEC. 55. General Powers and Functions. - (a) Promoting Safety - The Director General shall
have the pawer and duty to promote safety of flight of civil aircraft in civil aviation by
prescribing and revising from time to time as necessary:

(1) Reasonable rules and regulations implementing, at minimum, all standards of the
Annexes to the Chicago Convention; and

(2) Such other reasonable rules, regulations, or minimum standards governing other
practices, methods, and procedures as the Director General may find necessary to provide
adequately for safety in civil aviation.

(b) Considerations in the Regulation of Air Operators - In prescribing standards, rules and
regulations, and in issuing certificates under this Act, the Director General shall take into
consideration the obligation of air operators to perform their services with the highest possible
degree of safety pursuant to public interest.

SEC. 56. Form of Applications. - Applications for certificates issued by virtue of this chapter
shall be in such form, contain such information, and be filed and served in such manner as the
Authority may prescribe and shall be under oath or affirmation whenever the Authority so
requires.

A. Certification of Airmen

SEC. 57. Authority to Certificate Airmen. - The Director General is authorized to issue airmen
certificates specifying the capacity in which the holders thereof are authorized to serve as airman
in connection with an aircraft.

SEC. 58. Application and Issuance. - Any individual may file with the Director General an
application for an airman certificate. If the Director General finds, after due investigation, that
such individual possesses the proper qualifications for, and is physically able to, perform the
duties pertaining to the position for which the airman certificate is sought, the Director General
shall issue such certificate.

SEC. 59. Terms and Conditions. - The airman certificate shall contain such terms, conditions
and tests of physical fitness, and other matters as may be necessary to assure safety in civil
aviation.

SEC. 60. Contents. - Each airman certificate shall:

(a) Be numbered and recorded by the Authority;

(b) State the name and address of, and contain a description of the individual to whom the
airman certificate is issued; and

(c) Be titled with the designation of the airman and its authorized privileges.

B. Airworthiness Certificate

SEC. 61. Authority to Issue Airworthiness Certificates. - The owner of any aircraft registered in
accordance with this Act may file with the Director General an application for an airworthiness
certificate for such aircraft.

SEC. 62. Issuance. - If it is found that the aircraft conforms to the appropriate type of certificate
and, after inspection, finds that the aircraft is in a condition allowing for safe operation, an
airworthiness certificate shall be issued by the Director General.

SEC. 63. Terms and Conditions. the Director General shall prescribe in the airworthiness
certificate the duration of such certificate, the types of service for which the aircraft may be used,
and such other terms, conditions, limitations and information as are required in the interest of
safety. Each airworthiness certificate issued by the Director General shall be recorded by it.

SEC. 64. Airworthiness Approvals. - The Director General may prescribe the terms under which
additional airworthiness approvals, for purposes of modification, may be made.
 C. Air Operator Certificate

SEC. 65. Authority to Certificate Carriers and Establish Safety Standards. - The Director
General is authorized to issue air operator certificates and to establish minimum safety standards
for the operation of the air carrier to which any such certificate is issued.

SEC. 66. Application and Issuance. - Any air carrier who is a citizen of the Philippines may file
with the Director General an application for an air operator certificate. If the Director General
finds, after thorough investigation, that such air carrier is properly and adequately equipped and
has demonstrated the ability to conduct a safe operation in accordance with the requirements of
this Act and the rules, regulations and standards issued pursuant thereto, the Director General
shall issue an air operator certificate to such air carrier: Provided, however, That in no event shall
the Director General issue an air operator certificate to an air carrier that does not possess a valid
Certificate of Public Convenience and Necessity (CPCN) issued pursuant to this Act and its
implementing rules.

D. Aviation Schools and Approved Maintenance Organizations

SEC. 67. Examination and Rating. - The Director General is authorized to provide for the
examination and rating of:

(a) The adequacy of the course of instruction, the suitability and airworthiness of the
equipment and the competency of the instructors of civilian schools providing instruction
in flying or in the repair, alteration, maintenance, and overhaul of aircraft, aircraft
engines, propellers and appliances; and

(b) The adequacy and suitability of the equipment, facilities and materials for, and
methods of, repair and overhaul, and the competency of those engaged in the work or
giving any instruction in accredited maintenance organizations or shops engaged in the
repair, alteration, maintenance and overhaul of aircraft engines, propellers and
appliances.

SEC. 68. Air Navigation Facility Safety Standards. - (a) Minimum Safety Standards -The
Director General shall have the power to prescribe and revise, from time to time as necessary,
minimum safety standards for the operation of air navigation facilities located in the Philippines.

(b) Certification of Airports - (1) The Director General is empowered to issue airport certificates
to, and to establish minimum safety standards for the operation of, airports that serve any
scheduled or unscheduled passenger operations of air operator or foreign air operator aircraft.

(2) Any person desiring to operate an airport that is described in this section and that is
required hy the Director General, by rule, to be certified may file with the Director
General an application for an airport operating certificate. If the Director General finds,
after investigation, that such person is properly and adequately equipped and able to
conduct a safe operation in accordance with the requirements of this Act and the rules
and regulations, and standards prescribed thereunder, the Director General shall issue an
 airport operating certificate to such person. Each airport operating certificate shall
prescribe such terms, conditions and limitations as are reasonably necessary to assure
safety in commercial air transport. Unless the Director General determines that it would
be contrary to public interest, such terms, conditions and limitations shall include, but not
limited to, terms and conditions, relating to:

(i) The operation and maintenance of adequate safety equipment, including fire
fighting and rescue equipment capable of rapid access to any portion of the airport
used for landing, takeoff, or surface maneuvering of aircraft; and

(ii) The condition and maintenance of primary and secondary runways as the
Director General determines to be necessary.

SEC. 69. Duties and Operations of Airmen. - It shall be the duty of:

(a) Each air carrier to make or cause to be made, such inspection, maintenance, overhaul
and repair of all equipment used in air transport and to ensure that the operations
conducted are in accordance with the provisions of this Act and the rules, regulations,
directives and orders issued by virtue of this Act;

(b) Each air carrier holding an air operator certificate to ensure that the maintenance of
aircraft and operations thereof are conducted in the public interest and in accordance with
the requirements of this Act and the rules, regulations, directives and orders issued by
virtue of this Act;

(c) Each holder of an airman certificate to observe and comply with the authority and
limitations of that certificate, the requirements of this Act and the rules, regulations,
directives and orders issued by virtue of this Act;

(d) Every person performing duties in air transportation to observe and comply with the
requirements of this Act and the rules, regulations, directives and orders issued by virtue
of this Act; and

(e) Every person who offers or accepts shipments, cargo or baggage in air commerce to
offer or accept such shipments, cargo or baggage in accordance with the provisions of
Annex 18 ofthe Chicago Convention and the ICA0 Technical Instructions for the Safe
Transport of Dangerous Goods by Air.

SEC. 70. Authority to Inspect. - (a) Authority to Inspect Equipment - The Director General shall
have the power and duty to:

(1) Make such inspections of aircraft, aircraft engines, propellers and appliances used by
an operator of civil aircraft as may be necessary to determine that the operators are
maintaining the safe condition for the operation in which they are used; and

(2) Advise each operator in the inspection and maintenance of these items.
(b) Unsafe Aircraft, Engines, Propellers and Appliances - When the Director General finds that
any aircraft, aircraft engine, propeller or appliance, used or intended to be used by any operator
in civil aviation, is not in a condition for safe operation, the Director General shall notify the
operator. Such aircraft, aircraft engine, propeller or appliance then shall not be used in civil
aviation or in such manner also to endanger civil aviation, unless found by the Director General
to be in a condition for safe operation.

SEC. 71. Amendment, Modifications, Suspension and Revocation of Certificates. - (a) Re-
inspection and Reexamination - The Director General may, from time to time, for any reason,
reinspect or reexamine any civil aircraft, aircraft engine, propeller, appliance, air operator,
school, with approved maintenance organization, or any civil airman holding a certificate issued
under this Act.

(b) Actions of the Director General - If, as a result of any such re-inspection or reexamination, or
if, as a result of any other investigation made by the Director General, the Director General
determines that safety in civil aviation or commercial air transport and the public interest
requires, the Director General may issue an order amending, modifying, suspending or revoking,
in whole or in part, any airworthiness certificate, airman certificate, air operator certificate or
certificate for any airport, school, or approved maintenance organization issued under this Act.

(c) Notice to Certificate Holders and Opportunity to Answer - Prior to amending, modifying,
suspending or revoking any of the foregoing certificates, the Director General shall advise the
holder thereof as to any charge or reason relied upon by the Director General for the proposed
action and, except in cases of emergency, shall provide the holder of such certificate opportunity
to answer any charges and be heard as to why such certificate should not be amended, modified,
suspended or revoked.

(d) Appeals - Any person whose certificate is affected by such an order of the Director General
under this section may file his motion for reconsideration within five (5) days from receipt
thereof and in case of denial shall, within ten (IO) days, file his appeal to the Board.

(e) Effectiveness of Orders Pending Appeal - The filing of motion for reconsideration or appeal
as provided for under this Act shall not stay the effectiveness of the Director General's order
except through an injunctive relief duly issued by a court of competent jurisdiction.

SEC. 72. Prohibitions. - (a) It shall be unlawful for any person to:

(1) Operate in civil aviation any civil aircraft which there is not currently in effect a
certificate of airworthiness and registration, or in violation of the terms of any such
certificate and operation of the aircraft in a careless and reckless manner and operation of
aircraft in contravention of its approved operating limitations and manual;

(2) Serve in any capacity as an airman in connection with any civil aircraft, aircraft
engine, propeller or appliance used or intended for use in civil aviation without an airman
certificate authorizing that person to serve in such capacity, or in violation of any term,
 condition or limitation of his certificate, or in violation of any order, rule or regulation
issued under this Act:

(3) Employ for service in connection with any civil aircraft used in civil aviation an
airman who does not have an airman certificate authorizing that person to serve in the
capacity for which the person is employed;

(4) Operate as an air operator without an air operator certificate or in violation of the
terms of any such certificate;

(5) Operate aircraft in civil aviation in violation of any rule, regulation, or certificate
issued by the Director General under this Act; and

(6) While holding a certificate issued to a school or approved maintenance organization

as provided in this Act, to violate any term, condition or limitation thereof, to violate any
order, rule or regulation made under this Act relating to the holder of such certificate.

(b) Considering that the aircraft operation is impressed with public interest, the Director General
may prescribe exemptions of the foregoing provisions for foreign aircraft and airmen.

CHAPTER X
OTHER POWERS

SEC. 73. Statutory Lien. - The Director General, after complying with the required legal
formalities provided by law, shall have the power to impose lien on aircraft and machinery:

(a) If the charges and other fees are not paid in full on due date or any part of the charges
or the late payment penalty thereto remains unpaid; and

(b) Failure to pay administrative fines arising from violation of any rules and regulations
promulgated by the Authority.

SEC. 74. Lien on Personal and Real Properties. - The Director General shall have the power to
impose lien on personal and real properties, and other assets of persons, corporations,
partnerships, and such other entities that shall be in default, or fail to perform their obligations,
or 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 may be sold and the proceeds thereof shall be applied to the
satisfaction of the obligation after due notice and hearing.

SEC. 75. Police Authority. - The Director General shall have the power to exercise such police
authority as may be necessary within the premises of airports under its jurisdiction to carry out
its functions and attain its purposes and objectives. The grant of such powers shall be in
conformity with the functions exclusively provided by law to be exercised by the Philippine
National Police and other concerned government agencies: Provided, That the Authority may
request the assistance of other law enforcement agencies, including request for deputization as
may be required. Such police authority shall be exercised in connection with the following:

(a) Maintenance of security to passengers, cargoes, aircraft, airport equipment, structures,

facilities, personnel, funds and documents;

(b) Regulating the entry to, exit from and movement within an airport;

(c) Maintenance of peace and order within the premises of an airport in coordination with
local police authorities and other authorized peace-keeping entities within an airport;

(d) Regulation and supervision of private security agencies operating within an airport;
and

(e) Enforcement of rules and regulations promulgated by the Board pursuant to the
authority granted under this Act.

SEC. 76. Regulation of Building Heights. - The Board shall have the power to regulate the
height of buildings, towers, antennae, and other edifices, situated within the vicinity of or in
close proximity to airports estimated to endanger the flight of aircrafts. It shall also have the
power to prohibit or regulate the establishment and operations of electrical, electronics, sound,
magnetic, laser, or other electronic gadgets, equipment or installations which will tend to
interfere with or impair air navigation in accordance with the international standards and
recommended practices on airports, as recommended by the ICAO.

SEC. 77. Authority Respecting the Transportation of Dangerous Goods by Air. - The Director
General shall monitor and enforce compliance of the rules and regulations concerning the
carriage of goods by air in relation to Annex 18 of the Chicago Convention and the ICAO
Technical Instructions for the Safe Transport of Dangerous Goods by Air.

SEC. 78. Development of New Airports. - The Board 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) The suitability of a proposed site in terms of terrain and proximity to population
center(s);

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

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

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

(f) 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;

(g) ICAO best practices and recommendations concerning the development of airports;
and

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

CHAPTER XI
PENALTIES

SEC. 79. Power of the Authority to Investigate Violations. - Correlative to the provisions of
Section 36 of this Act, the Director General at his own volition, or at the instance of a private
person, or upon the initiative of the Board, may conduct investigations based on the procedures
that the Board may prescribe and using the Rules of Court as its suppletory guidelines.

SEC. 80. Power to Direct an Immediate Halt to an Offending Practice. - The Director General,
after due investigation conducted, may issue a cease and desist order directing an air carrier(s) to
immediately cease any practice found to be in violation of the provisions of this Act. Such order
shall be without prejudice to the civil or criminal prosecution of persons or individuals found to
be involved in practices prohibited under Chapter XI of this Act.

SEC. 81. Penalties. - (a) The Director General, after due notice and hearing, is authorized to
impose the following fines and penalties for each violation of this Act:

(1) Any person who operates any aircraft without the current airworthiness certificate, in
violation of my rule, regulation or order issued by the Director General relating to
aeronautical safety standards or practices or procedures shall be punished by a fine
ranging from Twenty thousand pesos (Php20,000.00) to Fifty thousand pesos
(Php50,000.00) for the 1st offense, suspension of the license for three (3) months for the
2nd offense and revocation or cancellation of such license for the 3rd offense;

(2) Any person serving in any capacity as an airman in connection with any civil aircraft
in violation of the terms, conditions or limitations of any such airman license or
certificate, or in excess of the rating of such certificate, shall be punished by a fine
ranging from Twenty thousand pesos (Php20,000.00) to Fifty thousand pesos
(Php50,000.00) for the 1st offense, suspension of the license for three (3) months for the
2nd offense and revocation or cancellation of such license for the 3rd offense. The
repetition of this offense shall be sufficient cause for the revocation of the airman's
certificate;

(3) Any person who employs in connection with any aircraft used in air commerce an
airman who does not have an airman's certificate authorizing him to serve in the capacity
for which he is employed shall be punished by a fine ranging from Fifty thousand pesos
(Php50,000.00) to One hundred thousand pesos (Php100,000.00), as determined by the
Director General in the exercise of his reasonable discretion. A repetition of the offense
shall be sufficient cause for revocation of such person's certificate authorizing it to
engage in air carrier operation;

(4) Any person who was issued by the Director General relating to air carrier operation,
aviation school, aircraft maintenance, and other civil aviation regulated activity which are
being certificated and regulated by the Director General who have been found to have
violated any term, condition or limitation thereof, or violates any order, rule or regulation
issued by virtue of this Act relating to the holder of such certificate shall be punished by a
fine ranging from Three hundred thousand pesos (Php300,000.00) to Five hundred
thousand pesos (Php500,000.00), as determined by the Director General in the exercise of
his reasonable discretion. The repetition of this offense shall be sufficient cause for the
revocation of such person's certificate.

(5) No person shall interfere, obstruct, hinder, or delay the Director General or any
person duly delegated by the Director General, in the performance of his duties pursuant
to public interest. A fine ranging from Twenty thousand pesos (Php20,000.00) but not
exceeding One hundred thousand pesos (Php100,000.00), as determined by the Director
General in the exercise of his reasonable discretion, shall be imposed upon anyone who:

(i) With intent to interfere in the performance of the duties of the Director General
or any person duly delegated by the Director General, shall knowingly or willfully
alter, falsify, mutilate any report, accounts, records, books, papers, contracts,
agreement and all other documents; or

(ii) Shall knowingly and willfully fail or refuse: (a) to make and/or submit aircraft
maintenance or flight logbooks, contracts, manuals, technical reports and all other
documents required to be submitted by him for consideration before the Director
General or his duly authorized representative; or (b) to keep or preserve records,
reports, papers and all other documents required by the Director General or his
duly authorized representative; or

(iii) Is guilty of misconduct in the presence of the Director General or his duly
authorized representative, or to any member of the Board in the performance of
their quasi-judicial and quasi-legislative functions or so near as to obstruct or
interrupt the hearing or session or any proceedings before the Director General or
any of his duly authorized representative; or shall orally or in writing
disrespectfully offend or insult any of the above-named bodies or persons on the
occasion of or in the performance of their official duties or during any hearing,
 session, or investigation held by the Director General or his duly authorized
representative; or

(iv) Refuses to be sworn in as a witness or to answer as such when lawfully

required to do so: Provided, That the Director General or his duly authorized
representative shall, if necessary, be entitled to the assistance of law enforcement
officials for the execution of any order to compel a witness to be present or to
testify; or

(v) Neglects or refuses to attend and/or testify and/or to answer any lawful inquiry
or to produce books, papers or documents, if in his power to do so, in obedience
to the subpoena or lawful requirement of the Director General or his duly
authorized representative; or

(vi) Testifies falsely or makes false affidavits or both before the Director General
or his duly authorized representative.

(b) The following penalties may only be imposed by a court of competent jurisdiction after the
filing of a proper criminal complaint therein by the Director General and a finding of guilt:

(1) Any person who operates any aircraft without a valid or current license or ratings or
in violation of rule, regulation or order issued by the Director General relating to
aeronautical safety standards or practices or procedures shall be punished by
imprisonment for not more than three (3) years or a fine ranging from Fifty thousand
pesos (Php50,000.00) but not exceeding Two hundred thousand pesos (Php200,000.00),
or both, at the discretion of the court;

(2) Any person who knowingly and willfully forges, counterfeits, alters or falsifies any
certificate or aviation certificate authorized to be issued pursuant to the provisions of this
Act, or knowingly uses or attempts to use any such fraudulent certificate or aviation
certificate, and any person who knowingly and willfully displays or causes to be
displayed on any aircraft any marks that are false or misleading as to the nationality or
registration of the aircraft shall be punished by imprisonment ranging from three (3)
years to six (6) years or a fine of not less than One hundred thousand pesos
(php100,000.00) but not exceeding Five hundred thousand pesos (Php500,000.00), or
both, as determined by the court;

(3) Any person who shall use for flight operation an unregistered aircraft or engaged in
the operation of aviation school, aircraft maintenance facilities, aircraft material
distributorship, air carrier operations or any other civil aviation regulated activities
without the required air agency certificate issued by the Director General shall be
punished by imprisonment ranging from three (3) years to seven (7) years or a fine of not
less than One hundred thousand pesos (Php100,000.00) but not exceeding Five hundred
thousand pesos (Php500,000.00), or both, as determined by the court;
(4) Any person found guilty of violating the conditions attendant to the issuance of the
airworthiness certificate of the aircraft shall be subjected to imprisonment ranging from
three (3) years to seven (7) years or a fine of not less than One hundred thousand pesos
(Php100,000.00) but not exceeding Five hundred thousand pesos (Php500,000.00), or
both, as determined by the court;

(5) Any person who destroys or seriously damages the facilities of an airport or disrupts
the services of an airport shall be subjected to imprisonment ranging from one (1) year to
three (3) years or a fine of not less than Fifty thousand pesos (Php50,000.00) but not
exceeding Five hundred thousand pesos (Php500,000.00), or both, as determined by the
court; and

(6) No person shall interfere with air navigation. An imprisonment for not more than
three (3) years or a fine of not less than Fifty thousand pesos (Php50,000.00) but not
exceeding Five hundred thousand pesos (Php500,000.00), or both, as determined by the
court, shall be imposed upon any person who:

(i) With intent to interfere with air navigation within the Philippines, exhibits
within the Philippines any light or signal at such place or in such manner that it is
likely to be mistaken for a true light or signal established pursuant to this Act or
for a true light or signal in connection with an airport or other air navigation
facility; or

(ii) After due warning by the Director General, of his duly authorized
representative, continues to maintain any misleading light or signal; or

(iii) Knowingly removes, extinguishes, or interferes with the operation of any true
light or signal;

(7) Any person who destroys or damages air navigation facilities or interferes with their
operation shall be subjected to imprisonment from one (1) year to three (3) years or a fine
of not less than Fifty thousand pesos (Php50,000.00) but not exceeding Five hundred
thousand pesos (Php500,000.00), or both, as determined by the court. If such act
endangers the safety of air navigation, the court may impose an increased penalty of
imprisonment from three (3) years to six (6) years or a fine ranging from Five hundred
thousand pesos (Php500,000.00) to One million pesos (Php1,000,000.00) [Convention for
Suppression of Unlawful Acts Against the Safety of Civil Aviation, signed at Montreal,
23 September 1971, Art. 1(d)];

(8) Any person who, whether on board or on the ground, communicates false information
to an aircraft and thereby endangering the safety of an aircraft in flight shall be subjected
to imprisonment from one (1) year to three (3) years or a fine of not less than Fifty
thousand pesos (Php50,000.00) but not exceeding Five hundred thousand pesos
(Php500,000.00), or both, as determined by the court. [Convention for Suppression of
Unlawful Acts Against the Safety of Civil Aviation, signed at Montreal, 23 September
1971, Art. 1(e)];
(9) Any person who, while on board an aircraft, interferes with a crewmember's or flight
attendant's performance of their duties, assaults, intimidates, or threatens any
crewmember or flight attendant, shall be subjected to imprisonment from one (1) year to
three (3) years or a fine of not less than Fifty thousand pesos (Php50,000.00) but not
exceeding Five hundred thousand pesos (Php500,000.00), or both, as determined by the
court;

(10) Any person who, while on board or while attempting to board, any aircraft in or
intended for operation in commercial air transport, has, on or about his person or his
property, a concealed deadly or dangerous weapon which is, or would be accessible to
such person in flight, or any person who has on or about his person, or who has placed, or
attempted to place aboard such aircraft any bomb or similar explosive or incendiary
device, shall be subjected to imprisonment from three (3) years to six (6) years or a fine
of not less than One hundred thousand pesos (Php100,000.00) but not exceeding Five
hundred thousand pesos (Php500,000.00), or both, as determined by the court.

This subsection shall not apply to persons duly authorized by the Director General to
carry deadly or dangerous weapons in commercial air transport nor shall it apply to other
persons transporting weapons contained in baggage that is not accessible to passengers in
flight if the presence of such weapons has been declared to the air carrier and duIy
approved by the proper authority;

(11) Any person who imparts or conveys or causes to be imparted or conveyed false
information, knowing the information to be false, concerning an attempt or alleged
attempt being made or to be made to do an act which would be a crime prohibited by
clauses (8), (9) and (10) of this section, shall be subjected to imprisonment from one (1)
year to three (3) years or a fine of not less than Fifty thousand pesos (Php50,000.00) but
not exceeding Five hundred thousand pesos (Php500,000.00), or both, as determined by
the court. [Convention for Suppression of Unlawful Acts Against the Safety of Civil
Aviation, signed at Montreal, 23 September 1971, Art. 1(e)];

(12) Any person who, while on board an aircraft, commits any other act not otherwise
expressly covered under clauses (8), (9), (10) and (11) above which jeopardizes the safety
of the aircraft or of persons or property therein, or which jeopardizes good order and
discipline on board such aircraft shall be subjected to imprisonment from six (6) months
to three (3) years or a fine of not less than Fifty thousand pesos (Php50,000.00) but not
exceeding Five hundred thousand pesos (Php500,000.00), or both, as determined by the
court. [Convention on Offenses and Certain Other Acts Committed on Board Aircraft,
signed at Tokyo, 14 September 1963, Art. 1(b)];

(13) Any person who knowingly and without authority removes, conceals or withholds
any part of an aircraft involved in an aircraft accident or any property on board such
aircraft at the time of th e aircraft accident shall be subjected to imprisonment from three
(3) years to six (6) years or a fine of not less than One hundred thousand pesos
(Php100,000.00) but not exceeding Five hundred thousand pesos (Php500,000.00), or
both, as determined by the court: and
 (14) Any person who willfully delivers or causes to be delivered to an air carrier for air
transport, or if that person recklessly causes the transportation in air transport, of any
shipment, cargo, baggage or other property in violation of the provisions of Annex 18 of
the Chicago Convention and the ICAO Technical Instruction for the Safe Transport of
Dangerous Goods by Air, or the corresponding rules and regulations issued by the
Authority shall be subjected to imprisonment from one (1) year to three (3) years or a fine
of not less than One hundred thousand pesos (Php100,000.00) but not exceeding Five
hundred thousand pesos (Php500,000.00), or both, as determined by the court.

The provisions of paragraph (b), clauses (9), (10), (11) and (12) above shall apply to any aircraft
located within the special jurisdiction of the Philippines. Exercise by the Director General of the
powers granted to him under paragraph (a) above shall not be a bar to a subsequent criminal
prosecution in court for the same act pursuant to the provisiom of paragraph (b).

SEC. 82. 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 license
issued under this Act for which no penalty is expressly provided shall be punished by a fine
ranging from Twenty thousand pesos (Php20,000.00) to One hundred thousand pesos
(Php100,000.00) for each violation.

SEC. 83. Penalty Considerations. - In determining the amount of any such penalty, the Director
General shall take into account the nature, circumstances, extent and gravity of the violation and,
with respect to the person found to have committed the violation, the degree of culpability,
history of prior offenses, ability to pay, effect on ability to continue to do business, and such
other matters as justice may require.

SEC. 84. Inflation Adjustment to Civil Penalties. - The Director General shall adjust the
monetary level of the penalties, as may be authorized by the Board to impose, at least once every
four (4) years: Provided, That the Board shall promulgate such revised penalties in accordance
with the Administrative Code of the Philippines and economic/monetary index provided by the
Monetary Board, including any revision or successor thereto.

CHAPTER XII
TRANSITORY PROVISIONS

SEC. 85. Abolition of the Air Transportation Office. - The Air Transportation Office (ATO)
created under Republic Act No. 776, a sectoral office of the Department of Transportation and
Communications (DOTC), is hereby abolished.

All powers, duties and rights vested by law and exercised by the AT0 is hereby transferred to the
Authority.

All assets, real and personal properties, funds and revenues owned by or vested in the different
offices of the AT0 are transferred to the Authority. All contracts, records and documents relating
to the operations of the abolished agency and its offices and branches are likewise transferred to
the Authority. Any real property owned by the national government or government-owned
corporation or authority which is being used and utilized as office or facility by the AT0 shall be
transferred and titled in favor of the Authority.

SEC. 86. Transfer of Personnel of Air Tramportation Office. - 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 in accordance with this Act. However, affected officials and personnel, with
appointments attested by the Civil Service Commission, whether hired on a permanent or
temporary basis, who would opt to retire or to be separated from the service, and those hired on a
casual or contractual basis, if qualified, shall be given the option to avail themselves of any of
the following, whichever is beneficial to them:

(a) Retirement gratuity provided under Republic Act No. 1616, as amended, plus the
refund of retirement premiums payable by the Government Service Insurance System
(GSIS), without the incentive herein provided;

(b) Retirement benefit under Republic Act No. 660 or applicable retirement, separation or
unemployment benefit provided under Republic Act No. 8291, if qualified, plus the
following applicable incentives:

(1) One half (1/2) month of the present basic salary for every year of government
service and a fraction thereof, for those who have rendered twenty (20) years of
service and below;

(2) Three-fourth (3/4) month of the present basic salary for every year of
government service and a fraction thereof, computed starting from the 1st year, for
those who have rendered twenty-one (21) to thirty (30) years of service; and

(3) One (1) month of the present basic salary for every year of government service
and a fraction thereof, computed starting from the lst year, for those who have
rendered thirty-one (31) years of service and above: Provided, That the GSIS
shall pay, on the day of separation, the retirement/separation/unemployment
benefits to which an affected employee may be entitled to under Republic Act No.
660 or Republic Act No. 8291 and whenever there is an option, the one which the
affected employee has chosen as the most beneficial to him/her: Provided,
further, That for the purpose of complying with the required number of years of
service under Republic Act No. 8291, the portability scheme under Republic Act
No. 7699 may be applied, subject to existing policies and guidelines; and

(c) Those with less than three (3) years of government service may opt to avail of the
separation gratuity under Republic Act No. 6656, plus the appropriate incentive provided
under paragraph (b) of this section.

No affected employee who opted for retirement/separation shall receive less than an aggregate of
Fifty thousand pesos (Php50,000.00) as his retirement/separation gratuity from both the national
government and the GSIS.
SEC. 87. Organization of the Authority. - Any officer/employee who availed the benefits of the
foregoing provisions shall not qualify for reemployment to the Authority within seven (7) years
from the date of retirement/resignation.

SEC. 88. Saving Clause. - Unless otherwise provided in this Act, rights or privileges vested or
acquired under the provisions of Republic Act No. 776, as amended, its rules and regulations
prior to the effectivity of this Act shall remain in full force and effect.

SEC. 89. Legal Counsel. - The Office of the Government Corporate Counsel shall act as the
external legal counsel of the Authority before any court of law or any quasi-judicial bodies of the
government without prejudice of any deputation or designation that it may issue in favor of the
in-house counsel of the Authority.

SEC. 90. Implementing Rules and Regulations. - The Authority shall adopt rules and
regulations to implement the provisions of this Act within sixty (60) days from the date of its
approval.

SEC. 91. Congressional Oversight Committee. - A Congressional Oversight Committee,

hereinafter referred to as the "Committee", is hereby constituted in accordance with the
provisions of this Act. The Committee shall be composed of the Chairman of the Senate
Committee on Public Services and Chairman of the House Committee on Transportation and
four (4) additional members from each House to be designated by the Senate President and the
Speaker of the House of Representatives, respectively. The Committee shall, among others, in
aid of legislation:

(a) Monitor and ensure the proper implementation of this Act;

(b) Review the collection performance of the Authority;

(c) Review the proper implementation of the programs of the Authority and the use of its
collected fund.

In furtherance of the hereinabove cited ohjectives, the Committee is empowered to require the
Authority to submit all pertinent information including, but not limited to, its collection
performance data and its annual audited financial statements certified by the Commission on
Audit.

The Congressional Oversight Committee shall be in existence for a period of five (5) years, and
thereafter, its oversight functions shall be exercised by the Senate Committee on Public Services
and the House Committee on Transportation acting separately.

SEC. 92. Separability Clause. - If any part or provision of this Act shall be declared
unconstitutional, the other parts or provisions hereof which are not affected thereby, shall
continue in full force and effect.
SEC. 93. Repealing Clause. - All laws, decrees, executive orders, rules and regulations or parts
thereof inconsistent with the provisions of this Act are hereby repealed or modified accordingly,
including provisions of any law, decrees, executive orders, rules and regulations or part thereof
which provides exemptions to any air carrier, organization or entity from payment of any Civil
Aviation Authority of the Philippines imposed fees and charges, relating to, but not limited to,
navigation, communication, concession, license and permit.

Notwithstanding the foregoing, nothing in this Act shall diminish the powers and functions of the
Manila International Airport Authority created by virtue of Executive Order No. 903, series of
1983; Subic Bay Metropolitan Authority as regards the Subic Bay International Airport created
by virtue of Republic Act No. 7227; Clark International Airport Corporation as regards the
Diosdado Macapagal International Airport Authority, created by virtue of Executive Order No.
193, series of 2003; and the Mactan-Cebu International Airport Authority created by virtue of
Republic Act No. 6958.

SEC. 94. Effectivity. - This Act shall take effect fifteen (15) days after its complete publication
in at least newspapers of general circulation.
EXECUTIVE ORDER NO. 125 January 30, 1987

REORGANIZING THE MINISTRY OF TRANSPORTATION AND

COMMUNICATIONS DEFINING ITS POWERS AND FUNCTIONS AND FOR OTHER
PURPOSES.

RECALLING that the reorganization of the government is mandated expressly in Article II,
Section 1 (a), and Article III of the Freedom Constitution;

HAVING IN MIND that pursuant to Executive Order No. 5 (1986), it is directed that necessary
and proper changes in the organizational and functional structures of the government, its
agencies and instrumentalities, be effected in order to promote efficiency and effectiveness in the
delivery of public services;

CONSIDERING that viable and dependable transportation and communications networks are
necessary tools for economic recovery;

CONSIDERING further that rapid technological advances in communication facilities require a

distinct response to the peculiar problems of this field;

REALIZING that the growing complexity of the transportation sector has necessitated its
division into various sub-sectors to facilitate the regulation and promotion of the sector as a
whole; and

REALIZING further that the State needs to regulate these networks and promote their
continuous upgrading in order to preserve their viability and enhance their dependability;

NOW, THEREFORE, I, CORAZON C. AQUINO, President of the Philippines, by virtue of the

powers vested in me by the sovereign will of the Filipino people and the Freedom Constitution,
do hereby order:

Sec. 1. Title. This Executive Order shall otherwise be known as the Reorganization Act of the
Ministry of Transportation and Communications.

Sec. 2. Reorganization. The Ministry of Transportation and Communications is hereby

reorganized, structurally and functionally, in accordance with the provisions of this Executive
Order.

Sec. 3. Declaration of Policy. The State is committed to the maintenance and expansion of
viable, efficient and dependable transportation and communications systems as effective
instruments for national recovery and economic progress. It shall not complete as a matter of
policy with private enterprise and shall operate transportation and communications facilities only
in those areas where private initiatives are inadequate or non-existent.

Sec. 4. Mandate. The Ministry shall be the primary policy, planning, programming, coordinating,
implementing, regulating and administrative entity of the Executive Branch of the government in
the promotion, development and regulation of dependable and coordinated networks of
transportation and communication systems as well as in the fast, safe, efficient and reliable
postal, transportation and communications services.

To accomplish such mandate, the Ministry shall have the following objectives:

(a) Promote the development of dependable and coordinated networks of transportation

and communications systems;

(b) Guide government and private investment in the development of the country's
intermodal transportation and communications systems in a most practical, expeditious,
and orderly fashion for maximum safety, service, and cost effectiveness;

(c) Impose appropriate measures to that technical, economic and other conditions for the
continuing economic viability of the transportation and communications entities are not
jeopardized and do not encourage inefficiency and distortion of traffic patronage;

(d) Develop an integrated plan for a nationwide transmission system in accordance with
national and international telecommunications service requirements including, among
others, radio and television broadcast relaying, leased channel services and data
transmission;

(e) Guide government and private investments in the establishment, operation and
maintenance of an international switching system for incoming and outgoing
telecommunications services;

(f) Encourage the development of a domestic telecommunications industry in

coordination with the concerned entities particularly, the manufacture of
communications/electronics equipment and components to complete and support, as
much as possible, the expansion, development, operation and maintenance of the
nationwide telecommunications network;

(g) Provide for a safe, reliable and efficient postal system for the country.

Sec. 5. Powers and Functions. To accomplish its mandate, the Ministry shall have the following
powers and functions:

(a) Formulate and recommend national policies and guidelines for the preparation and
implementation of integrated and comprehensive transportation and communications
systems at the national, regional and local levels;

(b) Establish and administer comprehensive and integrated programs for transportation
and communications, and for this purpose, may call on any agency, corporation, or
organization, whether public or private, whose development programs include
transportation and communications as an integral part thereof, to participate and assist in
the preparation and implementation of such programs;
 (c) Assess, review and provide direction to transportation and communications research
and development programs of the government in coordination with other institutions
concerned;

(d) Administer all laws, rules and regulations in the field of transportation and
communications;

(e) Coordinate with the Ministry of Public Works and Highways in the design,
development, rehabilitation, improvement, construction, maintenance and repair of
telecommunications, ports, airports and railways projects and facilities including
navigational aids and implement its development works through competitive bidding,
negotiated contracts of other methods as the President may authorize;

(f) Establish operate and maintain a nationwide postal system that shall include mail
processing, delivery services, and money order services and promote the art of philately;

(g) Sub-allocate series of frequencies of bands allocated by the International

Telecommunications Union to the specific services;

(h) Accredit foreign aircraft manufacturer and/or international organizations for aircraft
certification in accordance with procedures and standards established by the Bureau of
Air Transportation;

(i) Deputize the Philippine Airlines and/or the Airline Pilots Association of the
Philippines for licensing of pilots in accordance with rules, procedures and standards
established by the Bureau of Air Transportation;

(j) Perform such other powers and functions as may be prescribed by law.

Sec. 6. Authority and Responsibility. The authority and responsibility for the exercise of the
mandate of the Ministry and for the discharge of its powers and functions shall be vested in the
Minister of Transportation and Communications, hereinafter referred to as the Minister, who
shall have supervision and control over the Ministry and shall be appointed by the President.

Sec. 7. Office of the Minister. The Office of the Minister shall consist of the Minister and his
immediate staff.

Sec. 8. Deputy Ministers. The Minister shall be assisted by four (4) Deputy Ministers appointed
by the President upon the recommendation of the Minister, one to be responsible for Attached
Agencies and Corporations, one for Transportation, one for Communications and one for
Ministry Regional Offices.

Sec. 9. Assistant Ministers. The Minister shall also be assisted by seven (7) Assistant Ministers
appointed by the President upon the recommendation of the Minister, each of whom shall head
each of the following:
 (a) Administrative and Legal Service;

(b) Finance and Management Service;

(c) Planning and Research Service;

(d) Technical Service;

(e) Luzon Regional Offices;

(f) Visayas Regional Offices;

(g) Mindanao Regional Offices.

Sec. 10. Structural organization. The Ministry, side from the Minister Proper which is comprised
of the Offices of the Minister, Deputy and Assistant Ministers, shall be composed of the Bureaus
and Ministry Regional Offices.

There shall be four (4) Bureaus, namely: Bureau of Land Transportation, Bureau of Air
Transportation, Bureau of Posts, and Bureau of Telecommunications.

The Office of the Minister shall have direct line supervision and control over the Bureaus and
Ministry Regional Offices. The Ministry Proper shall be responsible for developing and
implementing policies, plans, programs and projects for the Ministry.

The Bureaus shall be essentially staff in character.

Sec. 11. Ministry Regional Offices. The Ministry shall have two (2) Ministry Regional Offices in
each of the administrative regions of the country: The Ministry Regional Office for
Transportation and the Ministry Regional Office for Communications. The present Regional
Offices of the Bureau of Air Transportation and Land Transportation Commission are hereby
abolished and their functions are transferred to the respective Ministry Regional Offices for
Transportation. A Ministry Regional Office for Transportation shall be headed by a Ministry
Regional Director assisted by two (2) Assistant Ministry Regional Directors responsible for air
and land affairs, respectively. The present Regional Offices of the Bureau of Posts and Bureau of
Telecommunications are hereby abolished and their functions are transferred to respective
Ministry Regional Office for Communications. A Ministry Regional Office for Communications
shall be headed by a Ministry Regional Director assisted by two (2) Assistant Ministry Regional
Directors for telecommunications and postal services, respectively. The abolition of the herein
Regional Offices and the transfer of their functions shall be governed by the provisions of
Section 19 (b) hereof.

The Ministry Regional Offices shall be under the direct supervision of the Deputy Minister for
Regional Offices. The Ministry Regional Offices shall be essentially line in character and shall
be responsible for the delivery of all front line Services of the Ministry.
For such purposes, a Ministry Regional Office shall have, within its administrative region, the
following functions:

(a) Implement laws, and policies, plans, programs, projects, rules and regulations of the
Ministry;

(b) Provide efficient, and effective service to the people;

(c) Coordinate with regional offices of other ministries, offices and agencies;

(d) Coordinate with local government units;

(e) Perform such other functions as may be provided by law.

Sec. 12. Bureau of Air Transportation. The Bureau of Air Transportation, as reorganized herein,
shall have the functions of developing, formulating and recommending plans, policies, programs,
projects, standards, specifications and guidelines related to air transportation including air space
utilization, air traffic control and aeronautics communications and information services, aircraft
and air navigational facilities, services, maintenance and operations. For such purposes, it shall,
with the approval of the Minister:

(a) Establish and prescribe rules and regulations for the inspection and registration of
aircrafts;

(b) Establish and prescribe rules and regulations for the issuance of license to qualified
airmen;

(c) Establish and prescribe rules and regulations for the enforcement of laws governing
air transportation, including the penalties for violations thereof, and for the deputization
of appropriate law enforcement agencies in pursuance thereof;

(d) Determine, fix and/or prescribe charges and/or rates pertinent to the operation of
public air utility facilities and services except in cases where charges or rates are
established by international bodies or associations of which the Philippines is a
participating member or by bodies or associations recognized by the Philippine
Government as the proper arbiter of such charges or rates;

(e) Administer and operate the Civil Aeronautics Training Center;

(f) Perform such other functions as may be provided by law.

Sec. 13. Bureau of Land Transportation. The Bureau of Land Transportation is hereby created
and shall have the functions of developing, formulating and recommending plans, programs,
policies, standards, specifications and guidelines pertaining to land transportation. For such
purposes, it shall, with the approval of the Minister:
 (a) Establish and prescribe rules and regulations for routes, zones and/or areas of
operations of particular operators of public land services;

(b) Establish and prescribe rules and regulations for the issuance of certificates of public
convenience for the operation of public and land transportation utilities and services such
as motor vehicles, trimobiles, and railroad lines;

(c) Establish and prescribe rules and regulations for the inspection and registration of
public and land transportation facilities such as motor vehicles, trimobiles and railroad
lines:

(d) Establish and prescribe rules and regulations for the issuance of license to qualified
motor vehicle drivers, trimobile drivers, motor vehicle conductors, train engineers and
train conductors;

(e) Establish and prescribe the corresponding rules and regulations for the enforcement of
laws governing land transportation, including the penalties for violation thereof, and for
the deputization of appropriate law enforcement agencies in pursuance thereof;

(f) Determine, fix and/or prescribe charges and/or rates pertinent to the operation of
public and land utility facilities and services except in cases where charges or rates are
established by international bodies or associations of which the Philippines is a
participating member or by bodies or associations recognized by the Philippine
Government as the proper arbiter of such charges or rates;

(g) Establish and prescribe the rules, regulations, procedure and standards for the
accreditation of driving schools;

(h) Perform such other functions as may be provided by law.

Sec. 14. Maritime Industry Authority. The Maritime Industry Authority is hereby retained and
shall have the following functions:

(a) Develop and formulate, plans, policies, programs, projects, standards, specifications
and guidelines geared toward the promotion and development of the maritime industry,
the growth and effective regulation of shipping enterprises, and for the national security
objectives of the country;

(b) Establish, prescribe and regulate routes, zones and/or areas of operation of particular
operators of public water services;

(c) Issue Certificates of Public Convenience for the operation of domestic and overseas
water carriers;

(d) Register vessels as well as issue certificates, licenses or documents necessary or

incident thereto;
 (e) Undertake the safety regulatory functions pertaining to vessel construction and
operation including the determination of manning levels and issuance of certificates of
competency to seamen;

(f) Enforce laws, prescribe and enforce rules and regulations, including penalties for
violation thereof, governing water transportation and the Philippine Merchant Marine
with the aid of other law enforcement agencies;

(g) Undertake the issuance of licenses to qualified seamen and harbor, bay and river
pilots;

(h) Determine, fix and/or prescribed charges and/or rates pertinent to the operation of
public water transport utilities, facilitate all services except in cases where charges or
rates are established by international bodies or associations of which the Philippines is a
participating member or by bodies or associations recognized by the Philippine
Government as the proper arbiter if such charges or rates;

(i) Accredit marine surveyors and maritime enterprises engaged in shipbuilding,

shiprepair, shipbreaking, domestic and overseas shipping, ship management and agency;

(j) Supervise the Philippine Merchant Marine Academy as reorganized herein in

accordance with its charter, the provisions hereof and applicable laws, rules and
regulations under the chairmanship of the maritime administrator;

(k) Issue and register the continuous Discharge Book of Pilipino Seamen;

(l) Establish and prescribes rules and regulations, standards and procedures for the
efficient and effective discharge of the above functions;

(m) Perform such other functions as may now or hereafter be provided by law.

Sec. 15. Bureau of Telecommunications. The Bureau of Telecommunications, as recognized

herein, shall develop, formulate and recommend plans, policies, programs, standards,
specifications and guidelines to provide telecommunications facilities, including
telecommunications systems for purposes of augmenting limited or inadequate existing private
telecommunications service; provide telecommunications services in areas where no such
services are available; and assist the private sector engaged in telecommunication services. For
such purposes, it shall, with the approval of the Minister:

(a) Establish and prescribe rules and regulations for the operation and maintenance of
such telecommunications facilities in areas not adequately served by the private sector in
order to render such domestic and overseas services that are necessary or proper with due
consideration for advances in technology;

(b) Administer and operate the Telecommunications Training Institute;

 (c) Perform such other functions as may be provided by law.

Sec. 16. Bureau of Posts. The Bureau of Posts, presently existing, shall have the functions of
developing, formulating and recommending plans, policies, programs, standards, specifications
and guidelines to provide safe, fast, reliable and efficient postal service in the country. For such
purposes, it shall, with the approval of the Minister:

(a) Establish and prescribe rules and regulations for the enforcement of laws governing
postal services, including the penalties for violation thereof and for the deputization of
appropriate law enforcement agencies in pursuance thereof;

(b) Determine, fix, and/or prescribe charges and/or rates for postal services except in
cases where charges or rates are established by international bodies or associations of
which the Philippines is a participating member or by bodies of associations recognized
by the Philippine Government as the proper arbiter of such charges or rates;

(c) Establish and prescribe rules and regulations for the operation and maintenance of a
nationwide postal system that shall include mail processing, delivery services and money
order services, and the promotion of philately;

(d) Perform such other functions as may be provided by law.

Sec. 17. Abolition/Transfer/Consolidation.

(a) The Land Transportation Commission is hereby abolished and its staff functions are
transferred to the Bureau of Land Transportation as provided in Section 13 herein and its
line functions are transferred to the Ministry Regional Offices as provided in Section 11
herein. Such transfer of functions is subject to the provisions of Section 19 (b) hereof.

(b) PNL Leasing Inc. is hereby abolished and its functions are transferred to Philippine
National Lines, Inc. subject to the provisions of Section 19 (b) hereof.

(c) The National Aero Manufacturing Inc. and the Philippine Aero Systems, Inc. are
hereby abolished in accordance with the provisions of Section 19 (a) hereof.

(d) The Civil Aeronautics Board is hereby transferred from the Ministry as an attached
agency in accordance with the provisions of Section 19 (a) hereof.

Sec. 18. Attached Agencies and Corporations.

(a) The following agencies and corporations are attached to the Ministry; the Philippine
National Railways, the Maritime Industry Authority, the Philippine National Lines,
Philippine Aerospace Development Corporation, the Metro Manila Transit Corporation,
the Office of Transport Cooperatives, the Philippine Ports Authority, the Philippine
Merchant Marine Academy, the Toll Regulatory Board, the Light Rail Transit Authority,
 the Transport Training Center, the Civil Aeronautics Board, the National
Telecommunications Commissions and the Manila International Airport Authority.

(b) An Airport Security Center is hereby created within the Manila International Airport
Authority, to plan, supervise, control, coordinate, integrate and direct intelligence and
operational activities of all police and military units, security and safety service units,
government monitoring and intelligence units and other security operating units
employed by government entities and/or by private agencies in the Manila International
Airport. The Center is under the direct supervision and control of the MIAA General
Manager. Moreover, the Authority shall be authorized to organize a Manila International
Airport Police Force with all the police powers necessary to implement the objectives of
the Center.

The exercise of supervision and control by the Airport Security Center does not include
the transfer of appropriation, equipment and personnel to the said Authority;
PROVIDED, that the Airport Security Center may cause the development of equipment
and personnel in such manner it deems necessary in the discharge of its functions.

Sec. 19. Transitory Provisions. In accomplishing the acts, of reorganization herein prescribed,
the following transitory provisions shall be implied with, unless otherwise provided elsewhere in
this Executive Order.

(a) The transfer of a government unit shall include the functions, appropriations, funds,
records, equipment, facilities, choses in action, rights, other assets, and liabilities, if any,
of the transferred unit as well as the personnel thereof, as may be necessary, who shall, in
a hold over capacity, continue to perform their respective duties and responsibilities and
receive the corresponding salaries and benefits unless in the meantime they are separated
from government service pursuant to Executive Order No. 17 (1986) or Article III of the
Freedom Constitution. Those personnel of the transferred unit whose positions are not
included in the Ministry's new position structure and staffing pattern approved and
prescribed by the Minister or who are not reappointed shall be deemed separated from the
service and shall be entitled to the benefits provided in the second paragraph of Section
20 hereof.

(b) The transfer of functions which results in the abolition of the government unit that has
exercised them shall include the appropriations, funds, records, equipment, facilities,
choses in action, rights, other assets and personnel as may be necessary to the proper
discharge of the transferred functions. The abolished unit's remaining appropriations and
funds, if any, shall revert to the General Fund and its remaining assets, if any, shall be
allocated to such appropriate units as the Minister shall determine or shall otherwise be
disposed in accordance with the Government Auditing Code and other pertinent laws,
rules and regulations. Its liabilities, if any, shall likewise be treated in accordance with
the Government Auditing Code and other pertinent laws, rules and regulations. Its
personnel shall, in a hold-over capacity, continue to perform their duties and
responsibilities and receive the corresponding salaries and benefits unless in the
meantime they are separated from the service pursuant to Executive Order No. 17 (1986)
or Article III of the Freedom Constitution. Its personnel, whose positions are not included
in the Ministry's new position structure and staffing pattern approved and prescribed by
the Minister under Section 20 hereof or who are not reappointed, shall be deemed
separated from the service and shall be entitled to the benefits provided in the second
paragraph of the same Section 20.

(c) The transfer of functions which does not result in the abolition of the government unit
that has exercised them shall include the appropriations, funds, records, equipment,
facilities, choses in action, right, other assets and personnel as may be necessary to the
proper discharge of the transferred functions. The liabilities, if any, that may have been
incurred in connection with the discharge of the transferred functions, shall be treated in
accordance with the Government Auditing Code and other pertinent laws, rules and
regulations. Such personnel shall, in a hold-over capacity, continue to perform their
respective duties and responsibilities and receive the corresponding salaries and benefits
unless in the meantime they are separated from the service pursuant to Executive Order
No. 17 (1986) or Article III of the Freedom Constitution. Personnel, whose positions are
not included in the Ministry's new position structure and staffing pattern approved and
prescribed by the Minister under Section 20 hereof or who have not been reappointed,
shall be deemed separated from the service and shall be entitled to the benefits provided
in the second paragraph of the same Section 20.

(d) In case of the abolition of a government unit which does not result in the transfer of
its functions to another unit, the appropriations and funds of the abolished unit shall
revert to the General Fund, while the records, equipment, facilities, choses in action,
rights, and other assets, thereof shall be allocated to such appropriate units as the Minister
shall determine or shall otherwise be disposed in accordance with the Government
Auditing Code and other pertinent laws, rules and regulations. The liabilities of the
abolished unit shall be treated in accordance with the Government Auditing Code and
other pertinent laws, rules and regulations, while the personnel thereof, whose positions
are not included in the Ministry's new position structure and staffing pattern approved
and prescribed by the Minister under Section 20 hereof or who have not been
reappointed, shall be deemed separated from the service and shall be entitled to the
benefits provided in the second paragraph of the same Section 20.

(e) In case of merger or consolidation of government units, the new or surviving unit
shall exercise the functions (subject to the reorganization herein prescribed and the laws,
rules and regulations pertinent to the exercise of such functions) and shall acquire the
appropriations, funds, records, equipment, facilities, choses in action, rights, other assets,
liabilities if any, and personnel, as may be necessary, of (1) the units that compose the
merger unit or (2) the absorbed unit, as the case may be. Such personnel shall, in a hold
over capacity, continue to perform their respective duties responsibilities and receive the
corresponding salaries and benefits unless in the meantime they are separated from the
service pursuant to Executive Order No. 17 (1986) or Article III of the Freedom
Constitution. Any such personnel, whose positions is not included in the Ministry's new
position structure and staffing pattern approved and prescribed by the Minister under
Section 20 hereof or who is not reappointed, shall be deemed separated from the service
 and shall be entitled to the benefits provided in the second paragraph of the same Section
20.

(f) In case of termination of a function which does not result in the abolition of the
government unit which has performed such function, the appropriations and funds
intended to finance the discharge of such function shall revert to the General Fund, while
the records, equipment, facilities, choses in action, rights and other assets used in
connection with the discharge of such function shall be allocated to the appropriate units
as the Minister shall determine or shall otherwise be disposed in accordance with the
Governing Auditing Code and other pertinent laws, rules and regulations. The liabilities,
if any, that may have been incurred in connection with the discharge of such functions
shall likewise be treated in accordance with the Government Auditing Code and other
pertinent laws, rules and regulations. The personnel who have performed such function,
whose position are not included in the Ministry's new position structure and staffing
pattern approved and prescribed by the Minister under Section 20 hereof or who have not
been reappointed, shall be deemed separated from the service and shall be entitled to the
benefits provided in the second paragraph of the same Section 20.

Sec. 20. New Structure and Pattern. Upon approval of this Executive Order, the officers
(the term "officer" as used in this Executive Order is intended to be within the meaning of
the term "official as used in the Freedom Constitution) and employees of the Ministry
shall, in a hold over capacity, continue to perform their respective duties and
responsibilities and receive the corresponding salaries and benefits unless in the
meantime they are separated from government service pursuant to Executive Order No.
17 (1986) or Article III of the Freedom Constitution.

The new position structure and staffing pattern of the Ministry shall be approved and
prescribed by the Minister, for the Ministry, within one hundred twenty (120) days from
the approval of this Executive Order and the authorized positions created thereunder shall
be filled with regular appointments by him or by the President as the case may be. Those
incumbents whose positions are not included therein or who are not reappointed shall be
deemed separated from the service. Those separated from the service shall receive the
retirement benefits to which they may be entitled under existing laws, rules and
regulations. Otherwise, they shall be paid the equivalent of one month basic salary for
every year of service, or the equivalent nearest fraction thereof favorable to them on the
basis of the highest salary received, but in no case shall such payment exceed the
equivalent of 12 months salary.

No court or administrative body shall issue any writ or preliminary injunction or

restraining order to enjoin the separation/replacement of any officer or employee effected
under this Executive Order.

Sec. 21. Prohibition Against Changes. No change in the reorganization herein prescribed shall be
valid except upon prior approval of the President for the purposes of promoting efficiency and
effectiveness in the delivery of public services.
Sec. 22. Implementing Authority of Minister. The Minister shall issue such orders, rules,
regulations and other issuances as may be necessary to ensure the effective implementation of
the provisions of this Executive Order.

Sec. 23. Notice or Consent Requirements. If any reorganizational change herein authorized is of
such substance or materiality as to prejudice third persons with rights recognized by law or
conduct such that notice to or consent of creditors is required to be made or obtained pursuant to
any agreement entered into with any of such creditors, such notice or consent requirement shall
be complied with prior to the implementation of such reorganizational change.

Sec. 24. Funding. Funds needed to carry out the provisions of this Executive order shall be taken
from funds available in the Ministry.

Sec. 25. Change of Nomenclature. In the event of the adoption of a new Constitution which
provides for a presidential form of government, the Ministry shall be called Department of
Transportation and Communications and the titles of Minister, Deputy Minister, and Assistant
Minister shall be changed to Secretary, Undersecretary and Assistant Secretary, respectively.

Sec. 26. Separability. Any portion or provision of this Executive Order that may be declared
unconstitutional shall not have the effect of nullifying other portions or provisions hereof, as
long as such remaining portions or provisions can still subsist and be given effect in their
entirety.

Sec. 27. Repealing Clause. Presidential Decree No. 890 and Letters of Instruction Nos. 263 and
371 are hereby repealed. All laws, ordinances, rules, regulations, other issuances or parts thereof,
which are inconsistent with this Executive Order, are hereby repealed or modified accordingly.

Sec. 28. Effectivity. This Executive Order shall take effect immediately upon its approval.

APPROVED in the City of Manila, Philippines, this 30th day of January, in the year of Our
Lord, nineteen hundred and eighty-seven.
EXECUTIVE ORDER NO. 125-A April 13, 1987

AMENDING EXECUTIVE ORDER NO. 125, ENTITLED "REORGANIZING THE

MINISTRY OF TRANSPORTATION AND COMMUNICATIONS. DEFINING ITS
POWERS AND FUNCTIONS, AND FOR OTHER PURPOSES."

WHEREAS, considering the peculiar situation obtaining in the Department of Transportation

and Communications (DOTC), there is a compelling need to clarify and/or modify structural and
functional organization of the Department as provided under Executive Order No. 125 in order to
ensure compliance with its mandate and the attainment of the corresponding objectives as
specified in Section 4 of said Executive Order.

NOW, THEREFORE, I, CORAZON C. AQUINO, President of the Republic of the Philippines,

by virtue of the powers vested in me by the Constitution, do hereby order:

Sec. 1. Sections 5, 8, 9, 10 and 11 of Executive Order No. 125, otherwise known as the
Reorganization Act of the Ministry of Transportation and Communications, are hereby amended
to read as follows:

"Sec. 5. Powers and Functions. To accomplish its mandate, the Department shall have the
following powers and functions:

(a) Formulate and recommend national policies and guidelines for the preparation
and implementation of integrated and comprehensive transportation and
communications systems at the national, regional and local levels;

(b) Establish and administer comprehensive and integrated programs for

transportation and communications, and for this purpose, may call on any agency,
corporation, or organization, whether public or private, whose development
programs include transportation and communications as an integral part thereof,
to participate and assist in the preparation and implementation of such program;

(c) Assess, review and provide direction to transportation and communication

research and development programs of the government in coordination with other
institutions concerned;

(d) Administer and enforce all laws, rules and regulations in the field of
transportation and communications;

(e) Coordinate with the Department of Public Works and Highways in the design,
location, development, rehabilitation, improvement, construction, maintenance
and repair of all infrastructure projects and facilities of the Department. However,
government corporate entities attached to the Department shall be authorized to
undertake specialized telecommunications, ports, airports and railways projects
and facilities as directed by the President of the Philippines or as provided by law;
(f) Establish, operate and maintain a nationwide postal system that shall include
mail processing, delivery services, and money order services and promote the art
of philately;

(g) Issue certificates of public convenience for the operation of public land and
rail transportation utilities and services;

(h) Accredit foreign aircraft manufacturers and/or international organizations for

aircraft certification in accordance with established procedures and standards;

(i) Establish and prescribe rules and regulations for identification of routes, zones
and/or areas of operations of particular operators of public land services;

(j) Establish and prescribe rules and regulations for the establishment, operation
and maintenance of such telecommunications facilities in areas not adequately
served by the private sector in order to render such domestic and overseas
services that are necessary with due consideration for advances in technology;

(k) Establish and prescribe rules and regulations for the operation and
maintenance of a nationwide postal system that shall include mail processing,
delivery services, money order services and promotion of philately;

(l) Establish and prescribe rules and regulations for issuance of certificates of
public convenience for public land transportation utilities, such as motor vehicles,
trimobiles and railways;

(m) Establish and prescribe rules and regulations for the inspection and
registration of air and land transportation facilities, such as motor vehicles,
trimobiles, railways and aircrafts;

(n) Establish and prescribe rules and regulations for the issuance of licenses to
qualified motor vehicle drivers, conductors, and airmen;

(o) Establish and prescribe the corresponding rules and regulations for the
enforcement of laws governing land transportation, air transportation and postal
services, including the penalties for violations thereof, and for the deputation of
appropriate law enforcement agencies in pursuance thereof;

(p) Determine, fix and/or prescribe charges and/or rates pertinent to the operation
of public air and land transportation utility facilities and services, except such
rates and/or charges as may be prescribed by the Civil Aeronautics Board under
its charter, and, in cases where charges or rates are established by international
bodies or associations of which the Philippines is a participating member or by
bodies or associations recognized by the Philippine government as the proper
arbiter of such charges or rates;
 (q) Establish and prescribe the rules, regulations, procedures and standards for the
accreditation of driving schools;

(r) Administer and operate the Civil Aviation Training Center (CATC) and the
National Telecommunications Training Institute (NTTI); and

(s) Perform such other powers and functions as may be prescribed by law, or as
may be necessary, incidental, or proper to its mandate or as may be assigned from
time to time by the President of the Republic of the Philippines."

"Sec. 8. Undersecretaries. The Secretary shall be assisted by four (4) Undersecretaries

Appointed by the President upon the recommendation of the Secretary.

"Sec. 9. Assistant Secretaries and Service Chiefs. The Secretary shall also be assisted by
eight (8) Assistant Secretaries appointed by the President upon the recommendation of
the Secretary, each of whom shall respectively be responsible for the following four (4)
staff offices composed of eight (8) services and four (4) line offices, and shall report to
the respective Undersecretaries assigned by the Secretary, which Undersecretary shall
have control and supervision over said respective services and offices:

(a) Office of the Assistant Secretary for Administrative and Legal Affairs;

1) Administrative Service, and

2) Legal Service

(b) Office of the Assistant Secretary for Finance and Comptrollership;

1) Finance and Management Service, and

2) Comptrollership Service

c) Office of the Assistant Secretary for Planning and Project Development;

1) Planning Service, and

2) Project Development Service

(d) Office of the Assistant Secretary for Management Information Service and
Project Management;

1) Management Information Service, and

2) Project Management Service

e) Office of the Assistant Secretary for Land Transportation;

 (f) Office of the Assistant Secretary for Postal Services;

(g) Office of the Assistant Secretary for Telecommunications;

(h) Office of the Assistant Secretary for Air Transportation.

Each of the above-named services shall be headed by a service chief appointed by the
President upon the recommendation of the Secretary."

Sec. 10. Structural Organization. The Department, aside from the Department proper
which is comprised of the Offices of the Secretary, Undersecretary and Assistant
Secretaries shall include the Department regional offices and the attached agencies and
corporations referred to in Section 14 hereof.

The Office of the Secretary shall have direct line supervision and control over the
Department regional offices. The Department proper shall be responsible for developing
and implementing policies, plans, programs and projects for the Department."

"Sec. 11. Department Regional Offices. The Department shall have three (3) Department
Regional Offices in each of the administrative regions of the country: the Department
Regional Office for land Transportation, the Department Regional Office for
Telecommunications and the Department Regional Office for Postal Services. The
present Regional Offices of the Land Transportation Commission are hereby abolished
and their functions are transferred to the respective Department Regional Offices for
Land Transportation. The present Regional Offices of the Bureau of Telecommunications
are hereby abolished and their functions are transferred to the respective Department
Regional Offices for Telecommunications. The present Regional Offices of the Bureau of
Posts are hereby abolished and their functions are transferred to the corresponding
Department Regional Offices for Postal Services. Each Department Regional Office shall
be headed by a Department Regional Director and assisted by a Department Assistant
Regional Director. The present Airport Offices of the Bureau of Air Transportation are
hereby abolished and their functions are transferred to the Department Airport Offices.
The abolition of the herein Regional Offices and the transfer of their functions shall be
governed by the provisions of Section 15 (b) hereof.

The Department Regional Offices shall essentially be line in character and shall be
responsible for the delivery of all front line services of the Department.

For such purposes, the Department Regional Offices shall have within their respective
administrative regions, the following functions:

(a) Implement laws, and policies, plans, programs, projects, rules and regulations
of the Department;

(b) Provide efficient, and effective service to the people;

 (c) Coordinate with regional offices of other departments, offices and agencies;

(d) Coordinate with local government units;

(e) Perform such other functions as may be provided by law."

Sec. 2. Sections 12, 13, 15 and 16 of said Executive Order are hereby deleted.

Sec. 3. Section 14 of said Executive Order is hereby renumbered as Section 12 and amended to
read as follows:

"Sec. 12. Maritime Industry Authority. The Maritime Industry Authority is hereby
retained and shall have the following functions:

(a) Develop and formulate plans, policies, programs, projects, standards,

specifications and guidelines geared toward the promotion and development of
the maritime industry, the growth and effective regulation of shipping enterprises,
and for the national security objectives of the country;

(b) Establish, prescribe and regulate routes, zones and/or areas of operation of
particular operators of public water services;

(c) Issue Certificates of Public Convenience for the operation of domestic and
overseas water carriers;

(d) Register vessels as well as issue certificates, licenses or documents necessary

or incident thereto;

(e) Undertake the safety regulatory functions pertaining to vessel construction and
operation including the determination of manning levels and issuance of
certificates of competency to seamen;

(f) Enforce laws, prescribe and enforce rules and regulations, including penalties
for violations thereof, governing water transportation and the Philippine merchant
marine, and deputize the Philippine Coast Guard and other law enforcement
agencies to effectively discharge these functions;

(g) Undertake the issuance of licenses to qualified seamen and harbor, bay and
river pilots;

(h) Determine, fix and/or prescribe charges and/or rates pertinent to the operation
of public water transport utilities, facilities and services except in cases where
charges or rates are established by international bodies or associations of which
the Philippines is a participating member or by bodies or associations recognized
by the Philippine Government as the proper arbiter of such charges or rates.
 (i) Accredit marine surveyors and maritime enterprises engaged in shipbuilding,
shiprepair, shipbreaking, domestic and overseas shipping ship management and
agency;

(j) Issue and register the continuous discharge book of Filipino seamen;

(k) Establish and prescribe rules and regulations, standards and procedures for the
efficient and effective discharge of the above functions;

(l) Perform such other functions as may now or hereafter be provided by law."

Sec. 4. Section 17 of Executive Order No. 125 is hereby renumbered as Section 13 and amended
to read as follows:

"Sec. 13. Abolition/Transfer/Consolidation:

(a) The Land Transportation Commission is hereby abolished and its staff
functions are transferred to the service offices of the Department Proper and its
line functions are transferred to the Department Regional Offices for Land
Transportation as provided in Section 11 herein. Such transfer of functions is
subject to the provisions of Section 15 (b) hereof. The quasi-judicial powers and
functions of the Commission are transferred to the Department. The
corresponding position structure and staffing pattern shall be approved and
prescribed by the Secretary pursuant to Section 16 hereof.

(b) PNL Leasing, Inc. is hereby abolished and its functions are transferred to
Philippine National Lines, Inc. subject to the provisions of Section 15 (b) hereof.
The Secretary of Transportation and Communications or his designated
representative shall be the Chairman of the Board.

(c) The National Aero Manufacturing, Inc. and the Philippine Aero Systems, Inc.
are hereby abolished in accordance with the provisions of Section 15 (a) hereof.

(d) The Civil Aeronautics Board is hereby transferred from the Department of
Tourism to the Department as an attached agency in accordance with the
provision of Section 15 (a) hereof. The Secretary of Transportation and
Communications or his designated representative shall be the Chairman of the
Board.

(e) The Maritime Training Council's function of issuing certificates of

competency to seamen under LOI 1404 is hereby transferred to the Maritime
Industry Authority."

Sec. 5. Sections 18, 19, 20, 21, 22, 23, 24, 25 and 26 of said Executive Order are hereby
renumbered as Sections 14, 15, 16, 17, 18, 19, 20, 21 and 22, respectively.
Sec. 6. Section 27 of said Executive Order is hereby renumbered as Section 23 and amended as
follows;

"Sec. 23. Repealing Clause. Presidential Decree No. 890, Letter of Instruction Nos. 263
and 371 Executive Order No. 1011 dated March 20, 1985 are hereby repealed. All laws
ordinances, rules, regulations, other issuances or parts thereof which are inconsistent with
this Executive Order are hereby repealed or modified accordingly."

Sec. 7. Section 28 of said Executive Order is hereby renumbered as Section 24.

Sec. 8. This Executive Order shall take effect immediately upon its approval.

Done in the City of Manila, Philippines, this 13th day of April, in the year, of Our Lord, nineteen
hundred and eighty-seven.
ADMIN CODE

Title XV

TRANSPORTATION AND COMMUNICATIONS

CHAPTER 1
GENERAL PROVISIONS

Section 1. Declaration of Policy. - The State is committed to the maintenance and expansion of
viable, efficient, fast, safe and dependable transportation and communications systems as
effective instruments for national recovery and economic progress. It shall not compete as a
matter of policy with private enterprise and shall operate transportation and communications
facilities only in those areas where private initiatives are inadequate or non-existent.

Section 2. Mandate. - The Department of Transportation and Communications shall be the

primary policy, planning, programming, coordinating, implementing, regulating and
administrative entity of the Executive Branch of the government in the promotion, development
and regulation of dependable and coordinated networks of transportation and communications
systems as well as in the fast, safe, efficient and reliable postal, transportation and
communications services.

Section 3. Powers and Functions.- To accomplish its mandate, the Department shall:

(1) Formulate and recommend national policies and guidelines for the preparation and
implementation of integrated and comprehensive transportation and communications
systems at the national, regional and local levels;

(2) Establish and administer comprehensive and integrated programs for transportation
and communications, and for this purpose, it may call on any agency, corporation or
organization, whether public or private, whose development programs include
transportation and communications as integral parts thereof, to participate and assist in
the preparation and implementation of such programs;

(3) Assess, review and provide direction to transportation and communications research
and development programs of the government in coordination with other institutions
concerned;

(4) Administer and enforce all laws, rules and regulations in the field of transportation
and communications;

(5) Coordinate with the Department of Public Works and Highways in the design,
location, development, rehabilitation, improvement, construction, maintenance and repair
of all infrastructure projects and facilities of the Department. However, government
corporate entities attached to the Department shall be authorized to undertake specialized
telecommunications, ports, airports and railways projects and facilities as directed by the
President of the Philippines or as provided by law;

(6) Establish, operate and maintain a nationwide postal system that shall include mail
processing, delivery services and money order services and promote the art of philately;

(7) Issue certificates of public convenience for the operation of public land and rail
transportation utilities and services;

(8) Accredit foreign aircraft manufacturers or international organizations for aircraft

certification in accordance with established procedures and standards;

(9) Establish and prescribe rules and regulations for identification of routes, zones or
areas of operation of particular operators of public land services;

(10) Establish and prescribe rules and regulations for the establishment, operation and
maintenance of such telecommunications facilities in areas not adequately served by the
private sector in order to render such domestic and overseas services that are necessary
with due consideration for advances in technology;

(11) Establish and prescribe rules and regulations for the issuance of certificates of public
convenience for public land transportation utilities, such as motor vehicles, trimobiles
and railways;

(12) Establish and prescribe rules and regulations for the inspection and registration of air
and land transportation facilities, such as motor vehicles, trimobiles, railways and
aircraft;

(13) Establish and prescribe rules and regulations for the issuance of licenses to qualified
motor vehicle drivers, conductors and airmen;

(14) Establish and prescribe the corresponding rules and regulations for enforcement of
laws governing land transportation, air transportation and postal services, including the
penalties for violations thereof, and for the deputation of appropriate law enforcement
agencies in pursuance thereof;

(15) Determine, fix or prescribe charges or rates pertinent to postal services and to the
operation of public air and land transportation utility facilities and services, except such
rates or charges as may be prescribed by the Civil Aeronautics Board under its charter
and, in cases where charges or rates are established by international bodies or
associations of which the Philippines is a participating member or by bodies or
associations recognized by the Philippine government as the proper arbiter of such
charges or rates;

(16) Establish and prescribe the rules, regulations, procedures and standards for the
accreditation of driving schools;
 (17) Administer and operate the Civil Aviation Training Center (CATC) and the National
Telecommunications Training Institute (NTTI); and

(18) Perform such other powers and functions as may be provided by law.

Section 4. Organizational Structure. - The Department shall consist of the Department Proper,
the Department Regional Offices, the Land Transportation Franchising and Regulatory Board,
and the Attached Agencies.

CHAPTER 2
DEPARTMENT PROPER

Section 5. Office of the Secretary. - The Office of the Secretary shall consist of the Secretary, his
immediate staff, the Franchising Review Staff and the Investigation, Security and Law
Enforcement Staff.

The Franchising Review Staff shall be headed by a Review Staff Director with the same rank,
salary and privileges of a Department Regional Director who shall be appointed by the President
upon the recommendation of the Secretary. The Franchising Review Staff shall assist the
Secretary in the review of cases and matters pertaining to, among others, grants of franchises and
the regulation thereof.

The Investigation, Security and Law Enforcement Staff shall be headed by a Staff Director with
the same rank, salary and privileges of a Department Service Chief. The Investigation, Security
and Law Enforcement Staff shall be responsible for: (a) providing security and intelligence for
the Department; (b) coordinating security and intelligence activities of security units of its
offices and attached agencies; and (c) undertaking law enforcement, functions and activities
relating to land transportation.

Section 6. Undersecretaries. - The Secretary shall be assisted by four (4) Undersecretaries. Each
Undersecretary shall have control and supervision over the respective offices and services
assigned to him by the Secretary.

Section 7. Assistant Secretaries. - The Secretary shall also be assisted by eight (8) Assistant
Secretaries each of whom shall be responsible for the four (4) staff offices and four (4) line
offices. Each Assistant Secretary shall report to the respective Undersecretary to whom he is
assigned by the President.

Section 8. Staff Offices. - The Department shall have the following staff offices:

(1) The Office of the Assistant Secretary for Administrative and Legal Affairs composed
of the Administrative Service and the Legal Service;

(2) The Office of the Assistant Secretary for Finance and Comptrollership composed of
the Finance and Management Service and the Comptrollership Service;
 (3) The Office of the Assistant Secretary for Planning and Project Development
composed of the Planning Service and the Project Development Service; and

(4) The Office of the Assistant Secretary for Management Information and Project
Management composed of the Management Information Service and the Project
Management Service.

Section 9. Line Offices. - The Department shall have the following line offices:

(1) The Office of the Assistant Secretary for Land Transportation;

(2) The Office of the Assistant Secretary for Postal Services;

(3) The Office of the Assistant Secretary for Telecommunications; and

(4) The Office of the Assistant Secretary for Air Transportation.

The line offices shall each have an Executive Director who shall assist the respective Assistant
Secretary in the implementation and enforcement of the policies, programs and projects, and the
pertinent laws on their respective areas of responsibilities.

CHAPTER 5

Regulatory Board

SECTION 15. Land Transportation Franchising and Regulatory Board.—The quasi-judicial

powers and functions with respect to land transportation shall be exercised through the Land
Transportation and Regulatory Board, hereinafter referred to as the “Board”.

SECTION 16. Composition of the Board.—The Board shall be composed of a Chairman and two
(2) members with the rank, salary and privileges of an Assistant Secretary, all of whom shall be
appointed by the President of the Philippines upon recommendation of the Secretary of
Transportation and Communications. One (1) member of the Board shall be a member of the Bar
and shall have been engaged in the practice of law in the Philippines for at least five (5) years,
another a holder of a degree in civil engineering, and the other a holder of a degree in economics,
finance or management both with the same number of years of experience and practice.

SECTION 17. Executive Director and Support Staff of the Board.—The Board shall have an
Executive Director who shall also be appointed by the President of the Philippines upon the
recommendation of the Secretary of Transportation and Communications. He shall have the rank,
salary and privileges of a Department Service Chief. He shall assist the Board in the performance
of its powers and functions.

The Board shall be supported by the Technical Evaluation Division, Legal Division, Management
Information Division, Administrative Division and Finance Division.
SECTION 18. Supervision and Control Over the Board.—The Secretary of Transportation and
Communications, through his duly designated Undersecretary, shall exercise administrative
supervision and control over the Land Transportation Franchising and Regulatory Board.

SECTION 19. Powers and Functions of the Land Transportation Franchising and Regulatory
Board.—The Board shall:

(1) Prescribe and regulate routes, economically viable capacities, and zones or areas of operation
of public land transportation services provided by motorized vehicles in accordance with the public
land transportation development plans and programs approved by the Department of
Transportation and Communications;

(2) Issue, amend, revise, suspend or cancel Certificates of Public Convenience or permits
authorizing the operation of public land transportation services provided by motorized vehicles,
and prescribe the appropriate terms and conditions therefor;

(3) Determine, prescribe, approve and periodically review and adjust reasonable fares, rates and
other related charges, relative to the operation of public land transportation services provided by
motorized vehicles;

(4) Issue preliminary or permanent injunction, whether prohibitory or mandatory, in all cases in
which it has jurisdiction and in which cases the pertinent provisions of the Rules of Court shall
apply;

(5) Punish for contempt of the Board, both direct and indirect, in accordance with the pertinent
provisions of, and the penalties prescribed by, the Rules of Court;

(6) Issue subpoena and subpoena duces tecum and to summon witnesses appear in any proceedings
of the Board, to administer oaths and affirmations, and, in appropriate cases, to order the search
and seizure of all vehicles and documents, upon probable cause and as may be necessary for the
proper disposition of the cases before it;

(7) Conduct investigations and hearings of complaints for violation of the public service laws on
land transportation and of the Board’s rules and regulations, orders, decisions or rulings and to
impose fines or penalties for such violations;

(8) Review motu proprio the decisions/actions of the Regional Franchising and Regulatory
Offices;

(9) Promulgate rules and regulations governing proceedings before the Board and the Regional
Franchising and Regulatory Office. However, except with respect to paragraphs 4, 5, 6 and 7
hereof, the rules of procedure and evidence prevailing in the courts of law should not be controlling
but rather the spirit and intention of said rules. The Board and the Regional Franchising and
Regulatory Offices shall use every and all reasonable means to ascertain facts in each case speedily
and objectively and without regard to technicalities of law and procedures, all in the interest of due
process;
(10) Fix, impose and collect, and periodically review and adjust, reasonable fees and other related
charges for services rendered;

(11) Formulate, promulgate, administer, implement and enforce rules and regulations on land
transportation public utilities, standards of measurements or design, and rules and regulations
requiring operators of any public land transportation service to equip, install and provide in their
utilities and in their stations such devices, equipment, facilities and operating procedures and
techniques as may promote safety, protection, comfort and convenience to persons and property
in their charges as well as the safety of persons and property within their areas of operation;

(12) Coordinate and cooperate with other government agencies and entities concerned with any
aspect involving public land transportation services with the end in view of effecting continuing
improvement of such services; and

(13) Perform such other functions and duties as may be provided by law, or as may be necessary,
or proper or incidental to the purposes and objectives of the Department;

SECTION 20. Decisions of the Board; Appeals therefrom or Review Thereof.—The Board, in the
exercise of its powers and functions, shall sit and render its decision en banc. Every such decision,
order, or resolution of the Board must bear the concurrence and signature of at least two (2)
members thereof.

The decision, order or resolution of the Board shall be appealable to the Secretary within thirty
(30) days from receipt of the decision. However, the Secretary may motu proprio review any
decision or action of the Board before the same becomes final.

SECTION 21. Regional Franchising and Regulatory Offices.—There shall be a Regional

Franchising and Regulatory Office in each of the administrative regions of the country which shall
be headed by a Regional Director having the rank, salary and privileges of a Department Assistant
Regional Director. The Regional Franchising and Regulatory Offices shall hear and decide
uncontested applications/petitions for routes, within their respective administrative regions but that
applications/petitions for routes extending beyond their respective territorial jurisdiction shall be
heard and decided by the Board.

SECTION 22. Appeals.—The decisions, orders or resolutions of the Regional Franchising and
Regulatory Offices shall be appealable to the Board within thirty (30) days from receipt of the
decision.
 EXECUTIVE ORDER NO. 202
CREATING THE LAND TRANSPORTATION FRANCHISING AND
REGULATORY BOARD

WHEREAS, the Department of Transportation and Communications is

vested with, among others, quasi – judicial powers and functions pursuant to
Executive Order No. 125, as amended;

NOW, THEREFORE, I, CORAZON C. AQUINO, President of the

Philippines do hereby order:

SECTION 1. Creation of the Land Transportation Franchising and

Regulatory Board. – There is hereby created in the Department of
Transportation and Communications, the Land Transportation Franchising
and Regulatory Board, hereinafter referred to as the “Board”.

SECTION. 2. Composition of the Board – The Board shall be composed

of a Chairman and two (2) members with the same rank, salary and
privileges of an Assistant Secretary, all of whom shall be appointed by the
President of the Philippines upon recommendation of the Secretary of
Transportation and Communications. One (1) member of the Board shall be a
member of the Bar and shall have engaged in the practice of law in the
Philippines for at least five (5) years, another a holder of a degree in civil
engineering , and the other a holder of a degree in economics, finance or
management both with the same number of years of experience and
practice.

SECTION 3. Executive Director and Support Staff of the Board. – The

Board shall have an Executive Director who shall also be appointed by the
President of the Philippines upon the recommendation of the Secretary of
Transportation and Communications. He shall have the rank, salary and
privileges of a Department Service Chief. He shall assist the Board in the
performance of its powers and functions.

The Board shall be supported by the Technical Evaluation Division,

Legal Division, Management Information Division, Administrative Division and
Finance Division.

SECTION 4. Supervision and Control over the Board. – The Secretary of

Transportation and Communications, through his duly designated
Undersecretary, shall exercise administrative supervision and control over
the Land Transportation Franchising and Regulatory Board.
 SEC. 5. Powers and Functions of the Land Transportation
Franchising and Regulatory Board. – The Board shall have the following
powers and functions :

a. To prescribe and regulate routes of service, economically viable

capacities and zones or areas of operation of public land
transportation services provided by motorized vehicles in
accordance with the public land transportation development plans
and programs approved by the Department of Transportation and
Communications;

b. To issue , amend, revise, suspend or cancel Certificates of Public

Convenience or permits authorizing the operation of public Land
Transportation services provided by motorized vehicles, and to
prescribe the appropriate terms and conditions therefore;

c. To determine, prescribe and approve and periodically review and

adjust, reasonable fares, rates and other related charges, relative to the operation
of public land transportation services provided by motorized
vehicles;

d. To issue preliminary or permanent injunctions, whether prohibitory or

Mandatory, in all cases in which it has jurisdiction, and in which
cases the pertinent provisions of the Rules of Court shall apply;

e. To punish for contempt of the Board, both direct and indirect, in

accordance with the pertinent provisions of, and the penalties
prescribe by, the Rules of Court;

f. To issue subpoena and subpoena duces tecum and to summon

witnesses to appear in any proceedings of the Board, to administer
oaths and affirmations;

g. To conduct investigations and hearings of complaints for violation

of the public service laws on land transportation and of the
Board’s rules and regulations, orders, decisions and/ or ruling and to
impose fines and/ or penalties for such violations;

h. To review motu propio the decisions/actions of the Regional

Franchising and Regulatory Office herein created;

i. To promulgate rules and regulations governing proceedings before

the Board and the Regional Franchising and Regulatory Office: Provided,
That except with respect to paragraphs d,e,f and g hereof, the rules of
procedure and evidence prevailing in the courts of law should not
be controlling and it is the spirit and intention of said rules that the
 Board and the Regional Franchising and Regulatory Offices shall
use every and all reasonable means to ascertain facts in its case
speedily and objectively and without regard to technicalities of law
and procedures, all in the interest of due process;

j. To fix, impose and collect, and periodically review and adjust,

reasonable fees and other related charges for services rendered;

k. To formulate. Promulgate, administer, implement and enforce rules and

Regulations on land transportation public utilities, standard of
measurements and/ or design, and rules and regulations requiring
operators of any public land transportation service to equip, install
and provide in their stations such devices, equipment facilities and
operating procedures and techniques as may promote safety,
protection, comfort and convenience to persons and property in their
charges as well as the safety of persons and property within their areas of operations;

l. To coordinate and cooperate with other government agencies and entities

Concerned with any aspect involving public land transportation
services with the end in view of effecting continuing improvement
of such services; and

m. To perform such other functions and duties as may be provided by

law, as may be provided by law, as may be necessary, or proper or incidental
to the purposes and objectives of this Executive Order.

SECTION 6 . Decision of the Board; Appeals Therefrom and / or Review

Thereof. – The Board, in the exercise of its powers and functions, shall sit
and render its decision en banc. Every such decision, order, or resolution of
the Board must bear the concurrence and signature of at least tow (2) members thereof.

The decision, order or resolution of the Board shall be appealable

to the Secretary within thirty (30) days from receipt of the decision:
Provided, That the Secretary may motu propio review any decision or
action or the Board before the same becomes final.

SECTION 7. Creation of Regional Franchising and Regulatory Offices. –

There shall be a Regional Franchising and Regulatory Office in each of the
administrative regions of the country which shall be headed by a Board
Regional Manager having the rank, salary and privileges of a Department
Assistant Regional Director. The Regional Franchising and Regulatory
Offices shall hear and decide uncontested application/ petitions for routes,
within their respective administrative regions: Provided, That
applications/petitions for routes, extending their respective territorial
jurisdictions shall be heard and decided by the Board.
 SECTION 8. Appeals. – The decisions, orders and resolutions of the
Regional Franchising and Regulatory Offices shall be appealable to the
Board within thirty (30) days from receipt of the decision.

SECTION 9. Appropriations. – Funds needed to carry out the provisions

of this Executive Order shall be taken from the funds available in the
Department of Transportation and Communications. Thereafter, the approved
budget of the Board shall be included in the General Appropriations Act.

SECTION 10. Effectivity. – This Executive Order shall take effect immediately.

Done in the City of Manila, this 19th day of June, in the year of
Our Lord, nineteen hundred and eighty – seven.
Republic Act No. 9295 May 03, 2004

AN ACT PROMOTING THE DEVELOPMENT OF PHILIPPINE DOMESTIC

SHIPPING, SHIPBUILDING, SHIP REPAIR AND SHIP BREAKING, ORDAINING
REFORMS IN GOVERNMENT POLICIES TOWARDS SHIPPING IN THE
PHILIPPINES AND FOR OTHER PURPOSES.

Be it enacted by the Senate and House of Representatives of the Philippine Congress Assembled:

CHAPTER I
GENERAL PROVISIONS

SECTION 1. Short Title. - This Act shall be known as the "Domestic Shipping Development
Act of 2004."

SEC. 2. Declaration of Policy. - The State recognize that shipping is a necessary infrastructure,
which is vital to the economic development of our country.

The Philippines needs a strong and competitive domestic merchant fleet owned and controlled by
Filipinos or by corporations at least sixty percent (60%) of the capital of which is owned by
Filipinos and manned by qualified Filipino officers and crew which shall: (a) bridge our islands
by ensuring safe, reliable, efficient, adequate and economic passenger and cargo services; (b)
encourage the dispersal of industry and the economic development of our regional communities
by ensuring the availability of regular, reliable and efficient shipping services; (c) ensure the
growth of exports by providing necessary, competitive and economical domestic sea linkage; (d)
serve as a naval and military auxiliary in times of war and other national emergencies; and (e)
function as an employment support base for our Filipino seafarers.

To attain these objectives, it is hereby declared to the policy of the State to; (a) promote Filipino
ownership of vessels operated under the Philippine flag; (b) attract private capital to invest in the
shipping industry by creating a healthy and competitive investment and operating environment;
(c) provide necessary assistance and incentives for the continued growth of the Philippine
domestic merchant marine fleet; (d) encourage the improvement and upgrading of the existing
domestic merchant marine fleet and Filipino crew to meet international standards; (e) ensure the
continued viability of domestic shipping operations; and (f) encourage the development of a
viable shipbuilding and ship repair industry to support the expansion and modernization of the
Philippine domestic merchant marine fleet and its strict adherence to safety standards which will
ensure the seaworthiness of all sea-borne structures.

SEC. 3. Definition of Terms. - As used in and for purposes of this Act, the following terms,
whether in singular or plural are hereby defined as follows:

(a) "Domestic shipping" shall mean the transport of passenger or cargo, or both, by ships
duly registered and licensed under Philippine law to engage in trade and commerce
between Philippine ports and within Philippine territorial or internal waters, for hire or
compensation, with general or limited clientele, whether permanent occasional or
incidental, with or without fixed routes, and done for contractual or commercial purposes;

(b) "Domestic trade" shall mean the sale, barter or exchange of goods, materials or
products within the Philippines;

(c) "Domestic Ship Operator" or "Domestic Ship Owner" may be used interchangeably
and shall mean a citizen of the Philippines, or a commercial partnership wholly owned by
Filipinos, or a corporation at least sixty percent (60%) of the capital of which is owned by
Filipinos, which is duly authorized by the Maritime Industry Authority (MARINA) to
engage in the business of domestic shipping;

(d) "Shipper" shall mean any person, partnership or corporation who shall procure for
itself the services of a domestic ship operator for the carriage of its cargo in the domestic
trade upon payment of proper compensation;

(e) "MARINA" shall mean the Maritime Industry Authority;

(f) "Ship" or "Vessel" may be used interchangeably and shall mean any kind, class or
type of craft or artificial contrivance capable of floating in water, designed to be used, or
capable of being used as a means of water transport in the domestic trade for the carriage
of passengers or cargo, or both, utilizing its own motive power or that of another;

(g) "Importation" shall mean the direct purchase, lease or charter of newly constructed or
previously owned ships, or the purchase of ship's spare parts from foreign sources or
from registered enterprises operating in special economic zones as this terms is defined in
Republic Act No. 7916 entitled, "The Special Economic Zone Act of 1995,"

(h) "Spare parts" shall mean the replacement parts or components of vessel, including but
not limited to its hull, engines, machineries, equipment, appurtenances, necessaries
accessories, article, supplies, materials, steelplates, aluminum plates, other metal plates,
communications, equipment, and other parts or components thereof, installed abroad the
ships necessary for its safe and efficient navigation and operation;

(i) "Certificate of Public Convenience' shall mean the license on authority issued by
MARINA to a domestic ship operator to engage in domestic shipping;

(j) "Cargo handling equipment' shall mean any machinery, gear or equipment used by the
ship operator or a duly authorized and licensed port operator to service or handle cargo,
on board the vessel at the port or in the terminal or container yard such as, but not limited
to cranes, forklifts, top lifts, stackers, tractor heads, containers, pallet boards and the like,
including all spare parts, replacement parts, appurtenances accessories, articles, supplies
and materials thereof;

(k) "Shipbuilding" shall mean the design, construction, launching and outfitting of all
types of ships and watercraft;
 (l) "Ship repair" shall mean the overhaul, refurbishment renovation improvement, or
alteration of the hull, machineries, equipment, outfits and components of all types of
ships;

(m) "Shipyard" shall mean the shipbuilding or repair facilities which have the capability
to lift vessels above the waterline in order to effect ship work on vessels, appendages,
structure, machinery and equipment; and

(n) "Shipbuilder" or "Ship repairer" shall mean a citizen of the Philippines, or a

commercial partnership owned by majority of Filipinos or a corporation incorporated
under the laws of the Philippines, the capital of which is owned or controlled in any
proportion by Filipinos or by foreign nationals, or by both such Filipinos or foreign
nationals, or by corporations whether Filipino or foreign-owned, which is duly authorized
by the MARINA to engage in the business of shipbuilding or ship repair or to otherwise
operate a shipyard, graving dock or marine repair yard.

CHAPTER II
INVESTMENT INCENTIVES

SEC. 4. Investment Incentives. - To insure the continued viability of domestic shipping, and to
encourage investments in the domestic shipping industry, the following incentives shall be
granted to qualified domestic ship operators:

(a) Exemption from value-added tax on the importation and local purchase of passenger
and/or cargo vessels of one hundred fifty (150) tons and above, including engine and
spare parts of said vessels: Provided: That the vessels to be imported shall comply with
the age limit requirement at the time of acquisition counted from the date of the vessels,
original commissioning, as follows; 1) For passenger and/or cargo vessels, the age limit
is fifteen (15) years old, 2) For tankers, the age limit is ten (10) years old, and 3) For
high-speed passenger crafts, the age limit is five (5) years old; and

(b) Exemption from value-added tax on the importation of life saving equipment , safety
and rescue equipment and communication and navigational safety equipment, steel plates
and other metal plates including marine-grade aluminum plates, used for transport
operations.

The importation of the articles under Section 4(a) and (b) of the Act shall be granted
exemption from value-added tax subject to the following conditions: (1) That said articles
are not manufactured domestically in sufficient quantity, of comparable quality and at
reasonable prices; (2) That said articles are directly imported by a MARINA-registered
domestic shipping operator; (3) That said articles are reasonably-needed and will be used
exclusively by the registered domestic shipping operator in its transport operations; (4)
That the approval of MARINA was obtained prior to the importation of said articles; and
(5) That exemption from value-added tax on the importation of said articles shall be
granted to all domestic shipping operators within a period of ten (10) years from the
effectivity of this Act.
 Any sale, transfer or disposition of articles covered under Section 4 (a) and (b) within ten
(10) years from the effectivity of this Act to another registered shipping operator
enjoying similar incentive shall require prior approval of MARINA. If the sale, transfer
or disposition was made without prior approval of MARINA, both the vendor and the
transferee or assignee shall be liable to pay twice the amount of value-added tax
exemption given him: Provided, further, That if the sale transfer or disposition was made
to nonexempt entity or to a party other than a registered domestic ship operator within ten
(10) years from the effectivity of this Act, both the vendor and the transferee or assignee
shall be solidarily liable to pay twice the amount of the value-added tax waived:
Provided, finally. That the sale, transfer or disposition made after ten (10) years from the
effectivity of this Act shall be made by informing MARINA in writing. The purchasers,
transferees, or recipients shall be considered the importers thereof, who shall be liable for
any internal revenue tax on such importation. The tax due on such importation shall
constitute a lien on the article itself, and such lien shall be superior to all charges or liens
on the goods, irrespective of the possessor thereof. The Bureau of Internal Revenue (BIR)
shall be furnished with notice of actions taken by the MARINA.

(c) Net operating loss carry over. A net operating loss in any taxable year immediately
preceding the current taxable year, which had not been previously offset as a deduction
from gross income shall be carried over for the next three (3) consecutive taxable years
immediately following the year of such loss subject to the pertinent provisions of the
National Internal Revenue Code of 1997, as amended.

(d) Accelerated depreciation. Fixed assets my be depreciated as follows:

(i) To the extent of not more than twice as fast as the normal rate of depreciation
or depreciated at normal rate of depreciation if the expected life is ten (100 years
or less; or

(ii) Depreciation over any number of years between five (5) years and the
expected life if the latter is more than ten (10) years, and the depreciation thereon
allowed as deduction from taxable Income: Provided, That the domestic shipping
operator notifies the BIR at the beginning of the depreciation period which
depreciation rate allowed by this section will be used.

CHAPTER III
DEREGULATION OF THE DOMESTIC SHIPPING INDUSTRY-AUTHORITY
OF THE MARITIME INDUSTRY AUTHORITY

SEC. 5. Authority to Operate. - No franchise, certificate or any other form authorization for the
carriage of cargo or passenger, or both in the domestic trade, shall be granted except of domestic
ship owners or operators.

SEC. 6. Foreign Vessels Engaged in Trade and Commerce in the Philippines Territorial
Waters. - No foreign vessel shall be allowed to transport passengers or cargo between ports or
place within the Philippine territorial waters, except upon the grant Special Permit by the
MARINA when no domestic vessels is available or suitable to provide the needed shipping
service and public interest warrants the same.

SEC. 7. Issuance of Authority to operate. - the MARINA shall have the power and authority to
issue certificates of public convenience to qualified domestic ship operators, taking into
consideration the economic and beneficial effect which the proposed services shall have to the
port province or region which it proposes to serve, and the financial capacity of the domestic
ship operator to provide and sustain safe, reliable, adequate, efficient and economic service in
accordance with the standards set by the government regulation.

Every domestic ship operator shall state in its application the route it proposes to serve, and the
service it proposes to offer. Domestic ship operators who do not intend to operate in a fixed route
shall nevertheless state in its application the service it proposes to offer.

SEC. 8. Deregulation of the Domestic Shipping Industry. - In order to encourage investments

in the domestic shipping industry by existing domestic ship operators and attract new investment
from new operators and investors, domestic ship operators are hereby authorized to establish
their own domestic shipping rates: Provided, That effective competition is fostered and public
interest is served.

The MARINA shall monitor all shipping operations and exercise regulatory intervention where it
is established after due process that public interest needs to be protected and safeguarded.

SEC. 9. Safety Standards. - All vessels operate by domestic ship operators shall at all times be
in seaworthy condition properly equipped with adequate life-saving, communication, safety and
other equipment operated and maintained in accordance with the standards set by MARINA, and
manned by duly licensed and competent vessel crew.

The MARINA shall have the power to inspect vessels and all equipment on board to ensure
compliance with safety standards.

SEC. 10. Jurisdiction; Power; and Duties of MARINA. - The MARINA shall have the power
and authority to:

(1) Register vessels;

(2) Issue certificates of public convenience or any extensions or amendments thereto,

authorizing the operation of all kinds. Classes and types of vessels in domestic shipping:
Provided, That no such certificate shall be valid for a period of more than twenty-five
(25) years;

(3) Modify, suspend or revoke at any time upon notice and hearing, any certificate,
license or accreditation it may have issued to any domestic ship operator;

(4) Establish and prescribe routes, zones or areas of operations of domestic ship
operators;
(5) Require any domestic ship operator to provide shipping services to any coastal area,
island or region in the country where such services are necessary for the development of
the area, to meet emergency sealift requirements, or when public interest so requires;

(6) Set safety standards for vessels in accordance with applicable conventions and
regulations;

(7) Require all domestic ship operators to comply with operational and safety standards
for vessels set by applicable conventions and regulations, maintain its vessels in safe and
serviceable conditions, meet the standards of safety of life at sea and safe manning
requirements, and furnish safe, adequate, efficient, reliable and proper service at all
times;

(8) Inspect all vessels to ensure and enforce compliance with safety standards and other
regulations;

(9) Ensure that all domestic ship operators shall have the financial capacity to provide
and sustain safe, reliable, efficient and economic passenger or cargo service, or both;

(10) Determine the impact which any new service shall have to the locality it will serve;

(11) Adopt and enforce such rules and regulations which will ensure compliance by every
domestic ship operator with required safety standards and other rules and regulations on
vessel safety;

(12) Adopt such rules and regulations which ensure the reasonable stability of passengers
and freight rates and, if necessary, to intervene in order to protect public interest;

(13) Hear and adjudicate any complaint made in writing involving any violation of this
law or the rules and regulations of the Authority;

(14) Impose such fines and penalties on, including the revocations of licenses of any
domestic ship operator who shall fail to maintain its vessels in safe and serviceable
condition, or who shall violate or fail to comply with safety regulations;

(15) Investigate any complaint made in writing against any domestic ship operator, or any
shipper, or any group of shippers regarding any matter involving violations of the
provisions of this Act;

(16) Upon notice and hearing, impose such fines, suspend or revoke certificates of public
convenience or other license issued, or otherwise penalize any ship operator, shipper or
group of shippers found violating the provisions of this Act; and

(17) Issue such rules and regulations necessary to implement the provisions of this Act:
Provided, That such rules and regulations cannot change or in any way amend or be
contrary to the intent and purposes of this Act.
 CHAPTER IV
RATES

SEC. 11. Rates. - Every domestic ship operator shall have the right to fix its own passenger pr
cargo rates, or both.
 REPUBLIC ACT NO. 10635

AN ACT ESTABLISHING THE MARITIME INDUSTRY AUTHORITY (MARINA) AS

THE SINGLE MARITIME ADMINISTRATION RESPONSIBLE FOR THE
IMPLEMENTATION AND ENFORCEMENT OF THE 1978 INTERNATIONAL
CONVENTION ON STANDARDS OF TRAINING, CERTIFICATION AND
WATCHKEEPING FOR SEAFARERS, AS AMENDED, AND INTERNATIONAL
AGREEMENTS OR COVENANTS RELATED THERETO

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

assembled:

Section 1. Declaration of Policy.—The following are hereby declared to be the policies of the
State:

(a) The State shall ensure compliance with the 1978 International Convention on
Standards of Training, Certification and Watchkeeping for Seafarers (STCW
Convention), as amended; all international agreements implementing or applying the
STCW Convention; and other international maritime safety conventions or agreements
that the STCW Convention seeks to promote compliance with;

(b) The State recognizes the vital contribution of the seafarers to the national economy.
Toward this end, the State shall establish systems and mechanisms for the promotion and
protection of the well-being of the seafarers to ensure their professionalism and
competitiveness, both in local and international trade, consistent with existing local labor
laws and applicable international laws;

(c) The State shall create a single maritime administrative system and structure that shall
provide an enabling environment for the business of Philippine seafaring; establish
appropriate institutional arrangements with other agencies of government; and create an
effective regulatory framework conducive to the efficiency, transparency and
competitiveness of the Philippine seafaring industry consistent with the STCW
Convention; and

(d) The State shall harmonize all legal and administrative measures which are taken and
provided for by government regulatory agencies and ensure that such measures are
appropriate and consistent with the STCW Convention.

Section 2. Definition of Terms.—As used in this Act, the following terms shall mean:

(a) Certificate of competency—a certificate issued to masters, officers and Global

Maritime Distress and Safety System (GMDSS) radio operators in accordance with the
provisions of Chapters II, III, IV or VII of the Annex to the STCW Convention entitling
the lawful holder to serve and perform the functions involved at the level of responsibility
specified therein.
 (b) Certificate of endorsement—an attestation of the maritime administration as to the
authenticity and validity of the certificates, incorporated in the format of the certificates
issued to masters and officers, stating that the issuance of the relevant certificate is in
compliance with the requirements of the STCW Convention.

(c) Certificate of proficiency—a certificate other than a certificate of competency issued

to a seafarer, stating that the relevant requirements of training competencies or seagoing
service under the STCW Convention have been met.

(d) Documentary evidence—all the documentation, other than a certificate of competency

or certificate of proficiency, used to establish that the relevant requirements of the STCW
Convention have been met.

(e) Maritime administration or single maritime administration—the Maritime Industry

Authority (MARINA), as the single government agency mandated to ensure complete
and effective implementation of the STCW Convention.

(f) Seafarer—any person who is employed, engaged or works onboard seagoing ships,
whether or not such ships are engaged in the domestic or overseas trade, and to whom the
STCW Convention applies.

(g) STCW Convention—the 1978 International Convention on Standards of Training,

Certification and Watchkeeping for Seafarers, and its subsequent amendments.

Section 3. MARINA as the Single Maritime Administration.—The MARINA, created under

Presidential Decree. No. 474, as amended, shall be the single maritime administration mandated
to implement and enforce the 1978 International Convention on Standards of Training,
Certification and Watchkeeping for Seafarers. It shall carry out an effective regulatory
framework conducive to the efficiency, transparency and competitiveness of the Philippine
seafaring industry.

Section 4. Powers and Functions of the MARINA.—In addition to the mandate of the MARINA
under Presidential Decree No. 474, as amended, and in order to carry out the provisions of this
Act, the MARINA shall exercise the following powers and functions:

(a) Act as the single and central maritime administration for all purposes relating to
compliance with the STCW Convention.

(b) Administer and ensure the effective implementation of the STCW Convention;
including all international conventions or agreements implementing or applying the same,
as well as international maritime safety conventions or agreements that it seeks to
promote compliance with.

(c) Assume all powers and functions of the Professional Regulation Commission (PRC),
the Commission on Higher Education (CHED), the Technical Education and Skills
Development Authority (TESDA), the Department of Health (DOH) and the National
Telecommunications Commission (NTC) relative to the issuance, validation, verification,
correction, revocation or cancellation of certificates of competency, endorsement,
proficiency and documentary evidence required of all seafarers and all such other matters
pertaining to the implementation of the STCW Convention, subject to the following:

(1) The MARINA shall ensure that the examination, licensing and certification
system for marine deck and engine officers are in accordance with the
requirements prescribed under the STCW Convention. All powers, duties and
functions of the PRC on examination, licensing and certification system for
marine deck and engine officers as provided in Republic Act No. 8544, otherwise
known as "The Philippine Merchant Marine Officers Act of 1998", shall
henceforth be exercised by the MARINA. The compensation and allowances of
the Board of Marine Deck Officers and Marine Engine Officers under Article TV,
Section 8 of Republic Act No. 8544 shall, however, be comparable to the
compensation and allowances being received by the chairpersons and members of
other existing regulatory boards under the PRC and as provided in the General
Appropriations Act.

(2) The MARINA shall adopt rules and regulations, in accordance with the
STCW Convention, governing able-bodied deck and engine ratings including:

(i) Monitoring and verification of compliance with the standards of

ratings;

(ii) Harmonization of the procedures for periodic evaluation, assessment

and monitoring activities undertaken by accredited institutions with
registered programs for ratings; and

(iii) Issuance of certificates of proficiency to ratings.

(3) The MARINA shall ensure that all legal and administrative measures relative
to the issuance of certificates of competency of GMDSS radio operators are in
accordance with the STCW Convention. For this purpose, the MARINA shall
assess, revalidate and issue GMDSS radio operator’s certificate in accordance
with the provisions under the STCW Convention.

(4) The MARINA shall ensure that all maritime education, including the curricula
and training programs, are structured and delivered in accordance with the written
programs, methods and media of delivery, procedures, and course materials
compliant with international standards as prescribed under the STCW
Convention. For this purpose, the MARINA shall:

(i) Chair the Technical Panel on Maritime Education (TPME) of the

CHED; the TPME shall among others, formulate, review and recommend
to the CHED en banc all policies, standards, and guidelines for maritime
education, including curricula, facilities and guidelines;
 (ii) Monitor and verify, in coordination with the CHED, compliance with
the policies, standards, and guidelines of maritime education in the
conduct of maritime education and training programs;-

(iii) Review and harmonize the procedures for periodic evaluation,

assessment and monitoring of all maritime education and training
institutions in accordance with the standards of the CHED and other
recognized international organizations;

(iv) Develop, formulate and recommend for implementation, strict quality

assurance mechanisms and relevant typology for maritime education
programs and institutions;

(v) Recommend to the CHED en banc the closure/phase-out of

substandard maritime education institutions, in accordance with the rules
and regulations, as well as recommend alternative schemes or options for
the affected maritime educational institution;

(vi) Maintain an updated list of compliant and phased-out maritime

education and training programs, publish such lists in appropriate media,
and provide the public with a clear understanding of the consequences of
enrolling in a phased-out program;

(5) The MARINA shall coordinate with the DOH to ensure that the medical
standards established to ascertain the medical fitness of seafarers are in
accordance with the international conventions/treaties and existing laws. For this
purpose, the MARINA shall:

(i) Ensure that the medical examinations and issuance of medical

certificates by the DOH accredited hospitals, medical clinics, and
laboratories, including medical practitioners are in accordance with the
standards prescribed by the STCW Convention; and

(ii) Ensure that medical certificates are issued by a duly-qualified medical

practitioner recognized by and accredited with the DOH, and for this
purpose, a register of recognized medical practitioners shall be maintained
and made available to seafarers, shipping companies and State parties to
the STCW Convention,