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

SIXTEENTH CONGRESS
Second Regular Session

House Bill No. 5850

Introduced by HON. CESAR V. SARMIENTO

EXPLANATORY NOTE

On June 20 1964, Republic Act No. 4156 entitled, “An Act Creating the
Philippine National Railways, Prescribing its Powers, Functions and Duties, and
providing for the Necessary Funds for its Operation’ was approved.

Since the 1960's, the Philippine National Railways ("PNR") has been the only
operator of a railway link from Luzon to the Bicol Region. PNR’s operations to the
Bicol region is presently under rehabilitation but its operations in Luzon are well-
patronized and provide a relatively fast commute in and around the Metro Manila
area.

The PNR however is in need of massive rail reforms. Its system is obsolete
and results to losses in revenue potential. More importantly, the aged railway system
may one day pose a threat to the safety of its riders.

Thus, the great need for rail reform in PNR was seen by the country's
legislators. On June 16, 2014, Republic Act 10638 was approved and extended
PNR's corporate existence for another fifty (50) years. This was merely the first step
towards a better railway system for the PNR

Going beyond what was achieved by RA 10638, this bill seeks to amend
certain provisions of Republic Act No. 4156 in order to adopt with the country's
present circumstances by introducing reforms that will rehabilitate and modernize the
railway system operated by PNR and give the said operator the necessary powers
and resources to do just this

In view of the foregoing, passage of the bill is earnestly sought.

ESO

CESAR V. SARMIENTO.



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

SIXTEENTH CONGRESS
Second Regular Session

House Bill No, 0850

Introduced by HON. CESAR V. SARMIENTO

AN ACT PROMOTING RAIL REFORMS IN THE PHILIPPINE NATIONAL
RAILWAYS, AMENDING FOR THE PURPOSE CERTAIN PROVISIONS OF R.A.
NO. 4156 ENTITLED “AN ACT CREATING THE PHILIPPINE NATIONAL
RAILWAYS, PRESCRIBING ITS POWERS, FUNCTIONS AND DUTIES, AND
PROVIDING FOR THE NECESSARY FUNDS FOR ITS OPERATION

Be it enacted by the House of Representatives of the Philippines in Congress
assembled.

SECTION 1. Section 3 of Republic Act Four thousand One Hundred Fifty Six,
as amended by Republic Act Six Thousand Six Hundred Sixty Six and Presidential
Decree Seven Hundred Forty One is hereby replaced to read as follows:

"SEC. 3. AUTHORIZED CAPITAL STOCK OF THE PHILIPPINE
NATIONAL RAILWAYS. THE AUTHORIZED CAPITAL STOCK OF
THE PHILIPPINE NATIONAL RAILWAYS SHALL BE FIFTY BILLION
PESOS DIVIDED INTO THREE MILLION ONE HUNDRED THIRTEEN
THOUSAND COMMON SHARES ALL WITH PAR VALUE OF TWO
HUNDRED PESOS EACH, WHICH SHALL INCLUDE THE PRESENT
AUTHORIZED CAPITALIZATION OF THE PHILIPPINE NATIONAL
RAILWAYS: PROVIDED, THAT THE INCREASE IN THE
AUTHORIZED CAPITAL SHALL BE FULLY SUBSCRIBED BY THE
GOVERNMENT: PROVIDED FURTHER, THAT ALL EXISTING LONG
TERM OBLIGATIONS OF THE PHILIPPINE NATIONAL RAILWAYS
TO THE GOVERNMENT OF THE PHILIPPINES INCLUDING ITS
AGENCIES OR INSTRUMENTALITIES AS WELL AS ITS TAX
OBLIGATION TO ANY LOCAL GOVERNMENT UNIT SHALL BE
CONVERTED INTO CAPITAL STOCKS OF THE PHILIPPINE
NATIONAL RAILWAYS AND MADE A_ PART OF THE
SUBSCRIPTION: PROVIDED, STILL FURTHER, THAT THE
INCREASE IN AUTHORIZED CAPITAL STOCK HEREIN PROVIDED
IS DISTINCT AND SHALL NOT PREJUDICE THE ANNUAL
APPROPRIATION PROVIDED IN THE YEARLY GAA. THE AMOUNT
RAISE BY VIRTUE OF THE INCREASE IN THE AUTHORIZED


CAPITAL STOCK, IN ADDITION TO THE EXISTING SINKING FUND
OF THE PNR ESTABLISHED FROM ITS EXISTENCE, SHALL BE
USED FOR THE CONSTRUCTION OF NEW RAILROAD LINE AND.
WHENEVER ECONOMICALLY AND TECHNICALLY FEASIBLE, THE
REHABILITATION AND/OR MODERNIZATION OF MOST OF THE
ENTIRE RAILWAY SYSTEM OF PNR THROUGHOUT THE
COUNTRY.

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.”

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 CURRENCYOR 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 7.Section 12 of Republic Act Four thousand One hundred Fifty Six,
as amended is hereby amended to read as follows:

Sec. 12. Exemption from taxes, duties, [and] port charges or dues AND
customs bonds [and port charges]. The PHILIPPINE NATIONAL
RAILWAYS [Corporation] is hereby exempt from payment of all taxes of
any kind [every name] and nature. INCLUDING THOSE IMPOSED BY
municipal, city, provincial or national upon its capital stock, franchise,
right of way, earnings, and all property owned or operated by it and all
import duties on all railway materials, rolling stocks, spare parts,


supplies and equipment imported in the Philippines for and/or by the
said corporation, and this exemption shall extend to wharfage dues,
storage charges, arrastre, and shipside charges, and special duties on
such importations, and other port charges upon the carrying vessels
whose entire cargo consists of materials for the construction of its
projects and rehabilitation of its lines, facilities and to such proportion of
the prescribed port charges on other vessels as the tonnage of
materials for such constructions or equipment may bear to the tonnage
of the entire cargo of the vessel; and such exemption shall further
extend to the filing of general importers and general documentary
bonds and warehouse bonds for the operation of its warehouses,
whether general bonded warehouses or general order store.

NOTWITHSTANDING THE PROVISIONS OF ANY OTHER LAWS TO
THE CONTRARY, THE EXEMPTION FROM TAXES, DUTIES AND
PORT CHARGES OR DUES, CUSTOMS BONDS PORT CHARGES
ENJOYED BY THE PHILIPPINE NATIONAL RAILWAYS AS
PROVIDED FOR IN SECTION 12 OF REPUBLIC ACT FOUR
THOUSAND ONE HUNDRED FIFTY SIX AS AMENDED BY RA 6366
AND PD 741 IS HEREBY REAFFIRMED

SECTION 8. Separability Clause. - If any portion or provision of this Act is
declared unconstitutional or invalid, the other provisions hereof not affected thereby
shall remain valid and effective.

SECTION 9. Repealing Clause. — All |aws, executive orders, presidential
decrees, presidential proclamations, rules and regulations or parts thereof
inconsistent with the provisions of this Act are hereby repealed or modified
accordingly.

SECTION 10. Effectivity. — This Act shall take effect fifteen (15) days after its
publication in the Official Gazette or in a newspaper of general circulation

Approved,