Philippine National Railways (PNR) (1)

August 7, 2008 FIRB RESOLUTION NO. 009-08 SUBJECT MATTER : Philippine National Railways (PNR) (1) WHEREAS, Section 14 (c) of Republic Act No. 9498 otherwise known as the 2008 General Appropriations Act, provides that tax subsidies granted by the FIRB to government owned and/or controlled corporations (GOCCs), in accordance with E.O. No. 93, as amended, including those for tax obligations assumed by GOCCs pursuant to a valid agreement are deemed automatically appropriated; WHEREAS, the Philippine National Railways (PNR) is a state-owned railway system, organized under the Department of Transportation and Communications (DOTC) as an attached GOCC, and is also a part of the Strong Republic Transit System (SRTS) and the overall public transport system in the metropolis; TCcSDE WHEREAS, the PNR is mandated to link key cities within the Philippines, to serve as an instrument in national socio-economic development and as the backbone of all Metro Manila's regional rail services, which extend to the suburbs and provinces; WHEREAS, the PNR is implementing the NorthRail-SouthRail Linkage Project, Phase I, pursuant to a Loan Agreement extended by a mixed credit facility by the Economic Development Cooperation Funds (EDCF) of the Government of Korea and Export-Import Bank of Korea (KEXIM); WHEREAS, Part 8, Section 22, Paragraph (g) of the Loan Agreement signed on May 7, 2004 provides that all taxes, duties and levies imposed in the Philippines on the Supportable Goods shall be made exempt or borne by the borrower; WHEREAS, the PNR does not have the financial capacity to assume the taxes arising from the NorthRail-SouthRail Linkage Project, Phase I; NOW, THEREFORE, BE IT RESOLVED AS IT IS HEREBY RESOLVED, to approve the application for tax subsidy of the PNR in the amount of ONE HUNDRED FIFTEEN MILLION THREE HUNDRED NINETY ONE THOUSAND TWO HUNDRED TWENTY ONE AND 55/100 PESOS (P115,391,221.55) only, broken down as follows: Description Amount (in Php) A. Customs Duties 16,209,061.55 B. VAT 1. General Requirements 1,096,495.39 2. Earthworks 5,462,847.94 3. Drainage works 1,936,409.08 4. Bridge works 15,085,210.14 5. Track works 52,554,553.78 6. Buildings 19,784,835.55 7. Signaling 3,261,808.12 99,182,160.00 Total 115,391,221.55 ============ Provided, however, that the availment is subject to the following conditions: (a) the initial issuance of the Certificate of Entitlement to Subsidy (CES) shall be limited to the amount of P7,410,187.00 only representing taxes and duties due on importations [eight (8) shipments with billings from the Bureau of Customs (BOC)] that arrived from January-April 2008; (b) the subsequent CES shall be issued upon the submission by the PNR to the FIRB of the required billings and/or documents evidencing the importation; and (c) all materials and equipment for which tax subsidy is granted shall form part of the regular inventory of the PNR (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 PNR and its Project Station/Operating Area Manager, respectively: Provided, finally, that such availment shall be in accordance with the terms and conditions of Section 14 of the 2008 General Appropriations Act, 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. STIcEA (SGD.) GIL S. BELTRAN Undersecretary of Finance Presiding Officer FIRB Reference: Joint FIRB-Technical Committee Meeting dated August 7, 2008.