North Luzon Railways Corporation (2)

December 4, 2007 FIRB RESOLUTION NO. 017-07 SUBJECT MATTER : North Luzon Railways Corporation (2) 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; IDAaCc 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 and Section 2 covering Malolos, Bulacan to Clark, Pampanga; WHEREAS, to effectively implement the Project, the NorthRail has contracted a loan agreement with Barclays Capital Bank, PLC of England; aEACcS WHEREAS, Section 2.4 of the Credit Facility Agreement, states that "Any and all taxes due on the loan agreement shall be for the account of the Borrower (NorthRail)"; WHEREAS, Section 5.1 "Tax gross-up" item (a) of the said loan agreement provides that "All sums payable by the Borrower to any Finance Party hereunder, whether of principal, interests, penalties or other sums shall be paid in full, without set-off or counterclaim, free and clear of any deductions or withholding imposed by the Republic of the Philippines or any political subdivision or taxing authority thereof, all of which deduction or withholding shall be for the account of the Borrower and paid by it when due"; TEHIaD NOW, THEREFORE, BE IT RESOLVED, AS IT IS HEREBY RESOLVED, to allow the NorthRail to realign the tax subsidy previously granted to it, cover the taxes incurred by it from its Credit Facility Agreement with Barclays Capital Bank, PLC of England in the amount of 21,774,193.55 only: Provided, however, that: (a) the Certificate of Entitlement to Subsidy (CES) shall be issued only upon submission by the NorthRail to the FIRB of required assessment and/or documents from the Bureau of Internal Revenue (BIR) validating and confirming the tax liabilities incurred on the loan agreement; and (b) the tax subsidy granted shall be taken against the tax subsidy already granted to the NorthRail per FIRB Resolution No. 5-07. Provided, finally, that the grant of such subsidy shall be in accordance with the terms and conditions of Section 14 of the 2007 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. ScTaEA (SGD.) GIL S. BELTRAN Undersecretary of Finance Presiding Officer FIRB Reference: Joint FIRB-Technical Committee Meeting dated December 4, 2007.