REQUIRING GOVERNMENT OFFICES, AGENCIES, INSTRUMENTALITIES AND GOVERNMENT OWNED OR CONTROLLED CORPORATIONS, PERSONS AND ENTITIES ENJOYING TAX EXEMPTION, INCENTIVE OR SUBSIDY FROM THE GOVERNMENT TO UTILIZE IN INTERNATIONAL TRANSPORTATION THE SERVICES OF THE PHILIPPINE FLAG AIR CARRIER AND SHIPPING LINES AND FOR OTHER PURPOSES.

• Number: Presidential Decree No. 894
• Sections: 7

Preamble

WHEREAS, it is necessary for our national economic

development that every effort is exerted by all to save and conserve our

foreign exchange reserves;

WHEREAS, payment of transportation fares to foreign airlines

and shipping lines, even if made in Philippine Currency, constitutes a

heavy drain to our foreign exchange reserves in view of the fact that

such foreign airlines and shipping lines remit abroad their receipts in

excess of their local expenses;

WHEREAS, the Philippine flag air carrier and shipping lines

operating international transportation perform transportation services

of vital importance to the foreign commerce and trade of the Philippines

including its balance of payments, to the Postal Service, and to the

national security and defense;

WHEREAS, in most countries of the World, the policy and

practice of granting preference to the national flag air carrier and

shipping lines over foreign air carriers and shipping lines with respect

to transportation of Government financed passengers and property has

either been adopted and implemented or is in the process of being

adopted and implemented;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the

Philippines, by virtue of the powers vested in me by the Constitution,

do hereby order and decree as follows ;

Section 1

SECTION 1. Whenever any branch, department, agency,

instrumentality or office of the Government including local governments

and corporations and institutions owned and controlled by the

Government, shall procure, contract for, or otherwise obtain, directly

or indirectly, any transportation of persons or property by air or water

between the Philippines and a place outside thereof or between two

places both of which are outside the Philippines, the payment for which

is made directly or indirectly from funds of the Republic of the

Philippines, the appropriate agency or agencies and public officials

concerned shall take such steps as may be necessary to assure that such

transportation is provided by the Philippine flag air carrier or

shipping lines to the maximum extent service by such carrier and

shipping lines is available.

Section 2

SEC. 2. Any person, partnership, association or

corporation, contractor and subcontractor, granted and enjoying any tax

exemption, subsidy or incentive from the Government, or with an

outstanding loan from or whose existing obligation is guaranteed by the

Government or by any Government owned or controlled corporation and

financial institution, or awarded any contract by the Government or any

of its agencies and instrumentalities, requiring any transportation of

persons and property by air or water between the Philippines and a place

outside thereof or between two places both of which are outside the

Philippines, the payment for which is made directly or indirectly from

the funds of such person, partnership, association, corporation,

contractor or subcontractor, shall cause such air or water

transportation to be provided by the Philippine flag air carrier or

shipping lines to the maximum extent service by such air carrier or

shipping lines is available: Provided, That, any such person,

partnership, association, corporation, contractor or subcontractor may

procure the services of foreign air carriers or shipping lines to the

extent that services by the Philippine flag air carrier or shipping

lines is not available, only upon prior certification by the Civil

Aeronautics Board or by the Board of Transportation, as the case may be.

Section 3

SEC. 3. The Auditor General shall disallow any

expenditure from appropriated funds of the Government for payment of

passenger or cargo transportation on foreign flag air carriers and

shipping lines in the absence of satisfactory proof of the clear

necessity therefor.

Section 4

SEC. 4. Any violation of the provisions of Section 2

shall cause the withdrawal, revocation, cancellation, or acceleration of

payment, as the case may be, of the tax exemption, subsidy, incentive,

loan, guarantee and contract of such person, partnership, association or

corporation.

Section 5

SEC. 5. All laws, decrees, orders, rules and regulations

or part thereof inconsistent with this Decree are hereby repealed or

modified accordingly.

Section 6

SEC. 6. This Decree shall take effect immediately.

Done in the City of Manila, this 26th day of February, in the

year of Our Lord, nineteen hundred and seventy-six.

(Sgd.)

FERDINAND E. MARCOS

President

Republic of the Philippines

By the President:

(Sgd.)

JUAN C. TUVERA

Presidential Assistant