DIRECTING THE RATIONALIZATION OF DUTY AND TAX EXEMPTION PRIVILEGES GRANTED TO GOVERNMENT-OWNED OR CONTROLLED CORPORATIONS AND ALL OTHER UNITS OF GOVERNMENT

WHEREAS, government-owned or controlled corporations as
well as entities performing quasi-governmental functions are still enjoying
exemptions from duties, taxes, fees, imposts and other charges despite the fact
that they are able to earn profits or pass on these duties and taxes to other
parties with whom they transact business;

WHEREAS, these duty and tax exemption privileges have
resulted in serious tax base erosion and distortions in the tax treatment of
similarly situated enterprises;

WHEREAS, such privileges make more difficult the
accomplishment of the overall program for economic development in general and
compete with private industries to a great extent, thus disturbing the equity
feature of the tax system;

WHEREAS, Presidential Decree No. 1177 has already expressly
repealed the grant of tax privileges to any government-owned or controlled
corporation and all other units of government; and

WHEREAS, there is need for government-owned or controlled
corporations and all other units of government enjoying tax privileges to share
in the requirements of development, fiscal or otherwise, by paying the duties,
taxes and other charges due from them.

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the
Republic of the Philippines, by virtue of the powers vested in me by the
Constitution, do hereby order and decree:

SECTION 1. The provisions of special or general law to the
contrary notwithstanding, all exemptions from the payment of duties, taxes,
fees, imposts and other charges heretofore granted in favor of government-owned
or controlled corporations including their subsidiaries, are hereby
withdraw.

SEC. The President of the Philippines and/or the Minister of
Finance, upon the recommendation of the Fiscal Incentives Review Board created
under Presidential Decree No. 776, is hereby empowered to restore, partially or
totally, the exemptions withdrawn by Section 1 above, or otherwise revise the
scope and coverage of any applicable tax and duty, taking into account, among
others, any or all of the following:

1. The effect on the relative price levels;
2. The relative contribution of the corporation to the revenue generation
   effort;
3. The nature of the activity in which, the corporation is engaged in; or
4. In general, the greater national interest to be served.

SEC. 3. The Ministry of Finance shall promulgate the
necessary rules and regulations to effectively implement the provisions of this
Decree.

SEC. 4. The provisions of this Decree are hereby declared to
be separable, and in the event one or more of such provisions are declared
unconstitutional, the validity of the other provisions shall not be
affected.

SEC. 5. The provisions of Presidential Decree No. 1177 as
well as all other laws, decrees, executive orders, administrative orders, rules,
regulations or parts thereof which are inconsistent with this
Decree are
hereby repealed, amended or modified accordingly.

SEC. 6. This Decree shall take effect immediately after
promulgation.

Done in the City of Manila, this 11th day of June in the Year of Our Lord,
Nineteen Hundred and Eighty-Four.