North Luzon Railways Corporation (1)

August 8, 2006 FIRB RESOLUTION NO. 007-06 SUBJECT : North Luzon Railways Corporation (1) WHEREAS, the North Luzon Railways Corporation (NorthRail) is mandated to develop, construct, operate and manage a railroad system to serve Metro Manila, Central and Northern Luzon; WHEREAS, the NorthRail is currently implementing the NorthRail Project Phase 1 Section 1 covering the alignment of a rail line from Caloocan City to Malolos, Bulacan; WHEREAS, Section 7.1 of the Credit Loan Agreement executed by the Republic of the Philippines (RP) through the Department of Finance (DOF) and the People's Republic of China (PROC) through the Export-Import Bank of China for the financing of the NorthRail Project Phase 1 Section 1 provides that "All taxes, duties and other charges levied by the Government of the Philippines shall be borne by the employer," and NorthRail is the employer under the said agreement; WHEREAS, Section 7.2 of the said Credit Loan Agreement provides that "The employer shall pay the customs duties, VAT or any other taxes/charges"; WHEREAS, the NorthRail does not have the financial capacity to assume the taxes and duties arising from the implementation of the NorthRail Project Phase 1 Section 1; NOW, THEREFORE, BE IT RESOLVED, AS IT IS HEREBY RESOLVED, to approve in principle the application for tax subsidy of the NorthRail in the amount of P1,177,600,000.00 : Provided, however , that: (a) the amount of tax subsidy to be granted to it shall be based on the submission of actual details of taxes and duties incurred by it on its importations of materials and equipment for the exclusive use of the NorthRail Project Phase 1 Section 1; (b) the Certificate of Entitlement to Subsidy (CES) shall be issued only upon the submission by the NorthRail to the FIRB of required billings and/or documents evidencing the importations; and (c) all materials and equipment for which tax subsidy is granted shall form part of the regular inventory of the NorthRail (in the case of materials and movable equipment) and/or be located in their designated project stations/operating areas (in the case of immovable equipment) as certified to by the resident Commission on Audit (COA) auditor of the NorthRail and its Project Station/Operating Area Manager, respectively. Provided. finally , that the grant of such subsidy shall be in accordance with the terms and conditions of Section 14 of the 2005 General Appropriations Act, as reenacted, subject to the availability of funds therefor, pursuant to the terms and conditions of the Rules and Regulations to Implement the Subsidy Provision Under Executive Order No. 93. AHDTIE (SGD.) GIL S. BELTRAN Undersecretary of Finance Presiding Officer-FIRB Reference: Joint FIRB-Technical Committee Meeting dated August 8, 2006.