GRANTING AN INCENTIVE FOR THE RESUMPTION OF OPERATIONS OF FORECLOSED INDUSTRIAL FACILITIES AND OTHER ASSETS

WHEREAS, the properties and other assets of several
industrial corporations have been foreclosed, particularly by creditor
government financial institutions, to partially satisfy the said corporations’
outstanding obligations to the Government;

WHEREAS, foreclosure has left the debtor corporations with
virtually no equity and operating assets;

WHEREAS, thousands of industrial workers and their families
have been dislocated and unemployed for a long time as a result of the shutdown
of operations occasioned by the default of the borrower corporations and toe
subsequent foreclosure of their mortgaged properties;

WHEREAS, it is essential to the national economic recovery
in general and to the general welfare of displaced industrial workers in
particular that the operations of foreclosed industrial facilities and other
assets should be resumed:

WHEREAS, certain government financial institutions have
actually been able to resume the operation and management of the foreclosed
properties of borrower corporations, but are now saddled with huge tax
obligations to the Government relative to the ownership, operation, foreclosure
and transfer of the defaulting borrowers’ assets;

WHEREAS, these creditor institutions and borrower
corporations are presently not in a position to pay their tax obligations in
full to the Government;

WHEREAS, the general welfare of thousands of industrial
workers and ultimately the success of the national economic recovery efforts,
would be jeopardized if the Government does not support the viability of the
entities concerned;

WHEREAS, one way of ensuring the viability of entities who
resume the operation and management of foreclosed properties, would be to forego
the tax obligations of the creditor institutions and the borrower corporations
to the Governments;

WHEREAS, in the view of the present economic emergency,
there is a need to act expeditiously to preserve and promote the general welfare
of thousands of industrial workers and to ensure national economic recovery;

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

SECTION 1. Government financial institution who are able,
directly or through a subsidiary or subsidiaries, to resume the operation and
management of the foreclosed properties of borrower industrial corporations,
shall be exempt from the payment of all taxes, fees and charges of whatever kind
and nature, whether national or local, that are due by reason of the foreclosure
and transfer to the said institutions of the assets of the defaulting borrower,
as well as the subsequent transfer of the same assets to the said institutions’
subsidiary or subsidiaries.

SEC. 2. All taxes, fees, charges and royalties due as of
December 31, 1985 and payable to the Government by borrowers —corporations whose
properties have been foreclosed and subsequently operated and managed by
creditor government financial institutions, directly or through a subsidiary or
subsidiaries, are hereby condoned; Provided, however, That the
condonation herein granted shall not in any manner be interpreted to include any
further and outstanding liability of the borrowers to the government financial
institutions concerned for loan, guarantee or credit accomodations extended to
the said borrowers.

SEC. 3. All laws, executive, or parts, rules and
regulations, and other enactments, or parts thereof, inconsistent with the
provisions of this Decree, are hereby repealed, amended or modified
accordingly.

SEC. 4. This Decree shall take effect immediately.

DONE in the City of Manila, this 31st day of October, in the year of Our
Lord, nineteen hundred and eighty-five.