Philippine National Railways (PNR) (2)

December 9, 2008 FIRB RESOLUTION NO. 018-08 SUBJECT MATTER : Philippine National Railways (PNR) (2) 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; IaHAcT 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 was previously granted tax subsidy in the amount of P115,391,221.55, per FIRB Resolution No. 9-08, covering the taxes and duties on its 2008 importations on account of the Contract Agreement implementing the NorthRail and SouthRail Linkage Project, Phase I; WHEREAS, the PNR is requesting for additional tax subsidy in the amount of P28,271,907.00, to cover the taxes and duties on the importations of three (3) units of track maintenance machines fully funded by a soft loan of EURO 2,536,050.00 extended by the Raiffeisen Zentralbank Oesterreich Aktiengesellschaft (RZB) through a Credit Facility Agreement between the PNR and the RZB; WHEREAS, Section 6.4 of the Credit Facility Agreement between the PNR and RZB provides that all payments to be made by the Borrower under the Agreement shall be made without set-off or counterclaim and free and clear of, and without deduction for or on account of, any present or future Philippine tax, duties, deduction, withholding or other charges of whatsoever nature unless the Borrower is required by law to make such deduction; ADHaTC WHEREAS, the PNR does not have the financial capacity to assume the taxes arising from the Credit Facility Agreement; NOW, THEREFORE, BE IT RESOLVED AS IT IS HEREBY RESOLVED, to approve the application for tax subsidy of the PNR in the amount of TWENTY EIGHT MILLION TWO HUNDRED SEVENTY ONE THOUSAND NINE HUNDRED SEVEN AND 55/100 PESOS (P28,271,907.00) * only. Provided, however, that the availment is subject to the following conditions: (a) the issuance of the Certificate of Entitlement to Subsidy (CES) shall be limited to the amount of P28,271,907.00 only representing taxes and duties due on the importation [one (1) shipment with billing from the Bureau of Customs (BOC)] that arrived August 1, 2008; and (b) all 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. TADcCS (SGD.) GIL S. BELTRAN Undersecretary of Finance Presiding Officer FIRB Reference: Joint FIRB-Technical Committee Meeting dated December 9, 2008.