HOUSE OF REPRESENTATIVES
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Quezon City, Metro Mani a
SEVENTEENTH CONGRESS) = FY. ae

First Regular Session

2037

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Rreresea TON UNIT
BILLS AN + Au X SERVICE

House No.

Introduced by Rep. CESAR V. SARMIENTO

EXPLANATORY NOTE

On 13 September 1931, the first train to the Bicol Region was put into
operation. From then on, the trains of the Philippine National Railways (the
“PNR’) served as bridge in bringing central government services and commerce
to the Bicol Region. Known as the “Bicol Express”, PNR’s train service to Bicol
provided a link between the progressive Metro Manila and the region. Inarguably,
the “Bicol Express” was instrumental to the movements of goods and people
across regions and provided growth to the Bicol region's economy, tourism,
competitiveness and quality of life. Notably, the PNR is the only franchisee in the
Philippines that owns seven hundred fifty kilometers (750 km) of continuous right
of way into the Region's territory.

For the past few years however, the quality of PNR's service has
deteriorated due to years of wear-and-tear, damage from neglect and
devastation caused by natural calamities. As a result, the full operations of PNR.
to the Bicol region has stopped. Worse, while the operations of PNR's train line in
Metro Manila continue, the same have been met by accidents such as derailment
of the trains which have occurred more frequently in the recent years.

In view of the foregoing, and further to Republic Act No. 10638 which
granted a fifty (50) year extension to the franchise of PNR, the proposed
legislation aims to modernize the PNR as the solution to the debilitating traffic
congestion faced by Metro Manila and to the challenges faced by the slow
movements of goods and passengers in Luzon and in the Bicol Region

An efficient, organized, reliable and safe train system is the formidable

answer to the transportation woe's of the Philippines. Let this bill be the start of a
“railway renaissance” in the Philippines. It is on this note that —_

passage of this bill is sincerely sought. _—

CESAR V. SARMIENTO



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

SEVENTEENTH CONGRESS
First Regular Session

2037

House Bill No.

Introduced by Rep. CESAR V. SARMIENTO

AN ACT
AMENDING REPUBLIC ACT NO. 4156, ENTITLED “AN ACT CREATING THE
PHILIPPINE NATIONAL RAILWAYS PRESCRIBING ITS POWERS,
FUNCTIONS AND DUTIES

Be it enacted by the Senate and House of Representatives of the Philippines in
Congress assembled:

Section 1. Section 1 of Republic Act No. 4156, as amended, is hereby further
amended to read as follows

“SECTION 1. Name, Duration and Domicile. — A corporation to serve as
the instrumentality of the Government of the Philippines in providing a nationwide
railroad and transportation system, is hereby created to be known as the
Philippine National Railways, which shall exist for a term of fifty (60) years from
the date of approval of this Act and shall be extended for another fifty (50) years,
commencing on 20 June 2014. It shall have its main office in the City of Manila,
and shall have such branches and agencies within the Philippines as may be
necessary for the proper conduct of its business. This Corporation shall be under
the Department of Transportation.”

Section 2. Section 3 of Republic Act 4156, as amended, is hereby amended as
follows:

“SECTION 3. Authorized Capital Stock of the Philippine National
Railways. The authorized capital stock of the Philippine National Railways shall
be One Hundred Billion Pesos (P'100,000.000,000.00) divided into Five Hundred
Million (500,000,000.00) common shares all with par value at Two Hundred
Pesos (P200.00), which shall include the present authorized capitalization of One
Billion Five Hundred Million Pesos (P1,500,000,000.00); Provided, that the


increase in the authorized capital shall be subscribed up to at least 51% by the
National Government and other government institutions, corporations,
instrumentalities, and agencies, whether national or local, within the framework of
their respective charters, with the remaining 49% to be opened to subscription
and investment by the private sector in accordance with Section 1 above;
Provided further, that all the obligations of the Philippine National Railways to the
National Government and its instrumentalities, including but not limited, the
Bureau of Internal Revenue and the Government Service Insurance System, as
of the date of the approval of this Act, as recommended by the Board of Directors
of the Philippine National Railways and determined and agreed upon by the
Department of Transportation, shall be converted into capital stocks of the
Philippine National Railways and made a part of the subscription; Provided
further that the authorized capital can be increased from time to time as may be
needed, as recommended by the Board of Directors of the Philippine National
Railways and determined and agreed upon by the Department of Transportation
and approved by the President of the Philippines, to be placed on behalf of the
National Government under the name of a government entity, as may be legally
practicable, such as, but not limited to, the Bureau of Treasury.

Whatever balance remaining of the authorized capital of the Philippine
National Railways shall be paid using a continuing annual appropriation of any
funds in the National Treasury, to be programmed and released by the
Department of Budget and Management in accordance with the schedule of cash
requirements to be prepared and submitted by the Philippine National Railways
specially insofar as capital expenditures are concerned, such as, but not limited
to, maintenance and rehabilitation of railways, to improve and/or increase its
track lines; Provided, that this continuing annual appropriation shall remain in
force until the authorized capital stock subscribed by the Government shall have
been paid in full.”

SECTION 2. A new subsection, Section 2-E, shall be inserted to read as follows:

“SEC. 2-E. THE PHILIPPINE NATIONAL RAILWAYS SHALL BE
ALLOWED TO ENTER INTO A JOINT VENTURE WITH A
QUALIFIED PRIVATE SECTOR PARTNER, PARTICULARLY AND
EXCLUSIVELY FOR THE PURPOSE OF OPERATIONS AND
MAINTENANCE SUBJECT TO THE APPROVAL OF THE BOARD,
WITH AT LEAST TWO-THIRDS (2/3) VOTE, IN A MEETING
CALLED FOR THE PURPOSE. PROVIDED, THAT SUCH PLANS
AND/PROGRAMS OF ENTERING TO A JOINT VENTURE WERE
CONSISTENT WITH THE OVERALL OBJECTIVES OF THE
CORPORATION AS RECOMMENDED BY THE GENERAL
MANAGER, PROVIDED FINALLY, THAT THE PROCUREMENT
PROCEDURE SHALL COMPLY WITH THE EXISTING
GOVERNMENT PROCUREMENT LAW. IN ANY EVENT THAT
INCREASE IN FARE RESULTED BY REASON OF THE


PRIVATIZATION OF PNR’S OPERATIONS AND MAINTENANCE,
THE INCREMENTAL INCREASE IN VALUE BETWEEN THE
REAL FARE AND NOMINAL FARE SHALL BE SUBSIDIZED AND.
PAID FOR BY THE PHILIPPINE GOVERNMENT AND SHALL BE
COVERED BY YEARLY AUTOMATIC APPROPRIATIONS
PROVIDED IN THE GENERAL APPROPRIATIONS ACT.”

SECTION 3. A new subsection, Section 2-F, shall be inserted to read as
follows:

“SEC. 2-F. TO DEPUTIZE AND/OR OBLIGATE LGU'S TO
ENFORCE AND IMPLEMENT, IN COLLABORATION WITH THE
GOVERNMENT CORPORATE COUNCIL (GCC), THE
RESTORATION OF PNR'S RIGHT-OF-WAY SO AS TO RETURN
THE LAND AROUND THE STATIONS AND RESTORATION OF
PNR’S RIGHTS TO USE. IN PROCESS, REWARDING THE
LGU'’S FOR THEIR EFFORT AND PENALIZING LGU'S FOR
THEIR REFUSAL OR INABILITY TO IMPLEMENT THE
RESTORATION OF PNR'S RIGHTFUL USE AND POSSESSION
OF LAND ON THE RIGHT-OF-WAY AND AROUND STATIONS
SHALL BE THE BASIC POLICY FOR ENFORCEMENT.”

SECTION 4. A new subsection, Section 2-G, shall be inserted to read as
follows:

“SEC 2-G. TO PENALIZE CRIMINALLY AND/OR CIVILLY ANY
PERSON(S)’ INTERFERENCE WITH THE FREE FLOW,
UNHAMPERED USE, AND PASSAGE OF PNR TRAINS ALONG
THEIR LEGAL RIGHT OF WAY (TRACKS, BRIDGES,
TURNOUTS, INTERCONNECTIONS, AND ALL ASSOCIATED
LINKAGES), SUCH AS DISREGARDING SIGNALS AND TRAIN
CROSSINGS DANGEROUSLY ON THE PATH OF ONCOMING
TRAINS, PLACING DEAD BODIES ALONG OR ON TOP OF THE
TRACKS AND ITS LINKAGES, WHETHER AS A CONSEQUENCE
OF A CRIME OR NOT, SLEEPING, PLAYING ON, IDLING ON
RAILROAD TRACKS AND ITS LINKAGES, PLACING BOULDERS
OR OBJECTS THAT OBSTRUCT, THROWING OBJECTS AT
PASSING TRAINS, AND SIMILAR ACTS OF DESTRUCTION AND
OBSTRUCTION. COMMITTING OR ATTEMPTING TO COMMIT
SUICIDE ALONG THE RAILROAD TRACKS AND ITS LINKAGES,
BUILDING STRUCTURES-PERMANENT OR OTHERWISE
ALONG THE PNR LEGAL RIGHT-OF-WAY AND/OR REFUSING
TO VACATE THE SAME UPON DEMAND. IF SUCH ACT(S)
CAUSES OR HAS POTENTIAL TO CAUSE, OR RESULT IN
DEATH OR INJURY TO PERSONS AND/OR DAMAGE TO
PROPERTY/IES SUCH PARTY/IES WHO, WITH INTENT TO


CAUSE, OR ACTUALLY CAUSED SUCH INTERFERENCE,
OBSTRUCTION, WHETHER OR NOT RESULTING IN INJURY
OR DEATH, DAMAGE TO PNR TRAINS, TRACKS, LINKAGES,
AND/OR PNR PROPERTY, SHALL BE HELD CRIMINALLY AND
CIVILLY LIABLE BY PNR. DEVOID OF ANY EVIDENCE TO THE
CONTRARY, PNR IS PRESUMPTIVELY ABSOLVED FROM
CRIMINAL AND CIVIL LIABILITY.”

The penalty of prision mayor shall be imposed on any person who
commits any of the acts enumerated above that do not result in
death to a person or damage to PNR property,

The penalty of reclusion temporal shall be imposed on any person
who acquires, takes, steals, disposes, or sells property which he
knows, or should be known to him, are PNR property that are
needed for the free flow of PNR trains.

The penalty of reclusion perpetua shall be imposed on any person
who commits any of the acts enumerated above that result in death
to a person or damage to PNR property.

SECTION 5. Section 3-A of Republic Act Four thousand One hundred
Fifty Six, as amended is hereby amended to read as follows:

Sec. 3-A, Foreign Loans. The Philippine National Railways
[Corporation] is hereby authorized to contract loans, credits and
indebtedness in domestic currency or in any convertible foreign
currency, or capital goods from foreign governments, their agencies
instrumentalities or financial institutions, or any governmental
national or international financial institutions or firms extending
supplier's credit, deferred payment arrangements or other funds
sources, or to issue bonds, the total outstanding amounts of which,
exclusive of interests, shall not exceed two hundred million United
States dollars or the equivalent thereof and other currencies, on
such terms and conditions as it shall deem appropriate for the
accomplishment of its purposes and to enter into and execute
agreements and other documents specifying such terms and
conditions.

The President of the Philippines, through the Secretary of
Finance, is hereby authorized to guarantee, absolutely and
unconditionally, as primary obligor and not as surety merely, in the
name and on behalf of the Republic of the Philippines, the payment
of the loans, credits, indebtedness and bonds issued up to the
amount herein authorized which shall be over and above the
amount which the President of the Philippines is authorized to


guarantee under Republic Act Numbered Sixty-One Hundred and
Forty-Two as amended, as well as the performance of all or any of
the obligations undertaken by the Corporation in the territory of the
Republic of the Philippines pursuant to loan agreements entered
into with foreign governments or any international financial
institutions or fund sources.

The loans, credits and indebtedness contracted under this
subsection and the payment of the principal, interest and other
charges thereon, as well as the importation of machinery,
equipment, materials, supplies and services, by the Corporation,
paid from the proceeds of any loan, credit or indebtedness incurred
under this Act, shall also be exempted from all charges and
restrictions previously and presently imposed, and to be imposed
by the Republic of the Philippines, or any of its agencies and
political subdivisions.

SECTION 6. Section 9 of Republic Act Numbered Four thousand One
Hundred and Fifty-Six as amended by Republic Act Numbered Sixty-Three
Hundred and Sixty-Six and PD 741 is hereby amended to read as follows:

"Sec. 9. Managing Head. The Management of the Corporation shall
be vested in the General Manager who shall be appointed by the
President of the Philippines. He shall possess technical
competence in management preferably in railroad transport
management, have demonstrated executive ability, and be of good
moral character. He shall hold office for a term of SIX (6) [eight (8)]
years.

In the performance of his functions, he shall be assisted by
Assistant General Managers who shall be appointed by him with
the approval of the Board of Directors and the President.

Section 3. Section 12 of Republic Act 4156, as amended, is hereby amended as
follows:

"SECTION 12. Exemption from taxes, duties and port charges or dues,
customs bonds and port charges. All revenues and assets of the government-
owned shares of the Philippine National Railways used directly and indirectly by
it in relation to its principal purpose of providing a nation-wide railroad and
transportation system shall be exempt from taxes. The Philippine National
Railways shall also be exempt from all import duties on all railway materials,
rolling stocks, spare parts, supplies and equipment imported in the Philippines for
and/or by the Philippine National Railways in order to reduce the cost of
maintaining and improving train service and operations for the benefit of the
public.”


Section 7. Separability Clause. — If any provision of this Act or the application
thereof to any person or circumstance is held to be void, or unconstitutional, any
other provision not affected thereby shalll remain in full force and effect.

Section 8. Repealing Clause. — All laws or parts thereof, which are inconsistent
with the provisions of this Act are hereby repealed or modified accordingly except
Republic Act No. 10149, otherwise known as the “GOCC Governance Act of
2011”.

Section 9. Effectivity. - This Act shall take effect upon approval.

Approved.