Preamble
WHEREAS, the ownership, control, and management of Philippine Airlines, Inc. have been acquired by the Government; WHEREAS, there is an urgent need to assist and support our National Flag Carrier in improving and expanding the domestic and international services it provides the general public and to make its operations financially sound and economically viable to effect the desired social and economic development of our country; WHEREAS, because of the high cost of modern aircraft and other equipment which are necessary to adequately cope with the increasing domestic and international traffic demand and the inadequacy of domestic capital resources, Philippine Airlines, Inc. has to avail of foreign loans for the acquisition of such aircraft, machineries and equipment; WHEREAS, the foreign lenders of such foreign loans invariably require Philippine Airlines, Inc. to assume payment of the corresponding tax on interests and charges on such loans; WHEREAS, because of the high cost of modern flight equipment and inadequacy of local capital sources, the National Flag Carrier has to resort to leases of such flight equipment at prohibitive costs due to the imposition of the withholding and other taxes on the rentals payable to foreign lessors which invariably require Philippine Airlines to absorb and assume the payment of such taxes; WHEREAS, it is a common practice in the international airline industry for airline companies to lease flight and other equipment; WHEREAS, in order to assist the National Flag Carrier in maintaining a favorable competitive position vis-a-vis foreign airlines in the international routes, and to adequately meet the increasing demand of domestic and international traffic in line with the tourism program of the Government, it is necessary to make available to the National Flag Carrier foreign loans at the lowest possible cost and it becomes imperative that modern aircraft and other equipment be made available to Philippine Airlines, Inc. by reducing the cost of acquiring such aircraft and other equipment through lease arrangements. NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers in me vested by the Constitution, do hereby decree and order the following: