Question & AnswerQ&A (PRESIDENTIAL DECREE NO. 894)
The main objective of Presidential Decree No. 894 is to require government offices, agencies, instrumentalities, and government-owned or controlled corporations, as well as persons and entities enjoying tax exemption, incentive or subsidy from the government, to utilize the services of the Philippine flag air carrier and shipping lines in international transportation to conserve foreign exchange reserves.
The entities covered include government branches, departments, agencies, instrumentalities, offices including local governments, corporations and institutions owned or controlled by the government, and persons, partnerships, associations, or corporations granted tax exemptions, subsidies, incentives, loans, government guarantees, or awarded government contracts.
The Decree applies to transportation of persons or property by air or water between the Philippines and a place outside thereof, or between two places both outside the Philippines, where payment is made directly or indirectly from government funds or by entities enjoying government benefits.
Government agencies must take steps to assure that transportation is provided by the Philippine flag air carrier or shipping lines to the maximum extent that such service is available.
Such persons or entities must cause their international air or water transportation to be provided by the Philippine flag air carrier or shipping lines to the maximum extent available. They may only use foreign carriers if services by the Philippine flag carriers are not available and only upon prior certification by the Civil Aeronautics Board or the Board of Transportation.
The Civil Aeronautics Board or the Board of Transportation, as applicable, must provide prior certification that Philippine flag carrier services are unavailable.
Section 3 provides that the Auditor General shall disallow any expenditure from appropriated government funds for passenger or cargo transportation on foreign flag carriers in the absence of satisfactory proof of clear necessity.
Violating Section 2 can result in withdrawal, revocation, cancellation, or acceleration of payment of the tax exemptions, subsidies, incentives, loans, guarantees, or government contracts of the violating entity.
All laws, decrees, orders, rules, and regulations or parts thereof inconsistent with this Decree are repealed or modified accordingly.
The Decree took effect immediately upon its signing on February 26, 1976.