16 CONGRESS OF THE REPUBLIC OF THE PHILIPPINES

THIRD REGULAR SESSION

House of Representatives
HOUSE BILL NO.

Introduced by HONORABLE GUS S. TAMBUNTING

AN ACT PROMOTING THE REVITALIZATION, REHABILITATION AND
MODERNIZATION OF 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

EXPLANATORY NOTE

Aneffective and systematic mass transportation program provides a significant positive
economic impact. It creates transit investment on jobs and business revenues and
affirms a variety of broader indirect benefits

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, The said law described PNR as a
corporation to serve as the instrumentality of the Government of the Philippines in
providing a nation-wide railroad and transportation system.

This bill seeks to amend certain provisions of Republic Act No. 4156 in order to adopt
with the country’s present circumstances by institutionalizing the revitalization,
rehabilitation and modernization of the Philippine National Railways.

Republic Act 10638 was approved, the law provides for the extension of PNR’s
corporate existence for another 50 years.

However, despite of the abovementioned grant of extension on its corporate life, the
PNR is said to run a “loss leader” operation, which means, the more trips the train runs,
the more losses it incur. This condition can be charged to its purely manual operations


as well as its aged and obsolete train system equipment and facilities resulting to a poor
operating potentials and high leakage rate,

Having said that, by continuing the operation of the PNR, without its charter being
amended, so as to adopt with the present condition of the economy, would probably
result to an end of PNR, which is believed to be one of the country’s viable solutions
to curtail massive congestion in the country. As a consequence, lost of the mass
transportation of the lowest economic class of commuters may soon perish.

In view of the fone6Git@) pasSage of the bill is eamestly sought.



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16 CONGRESS OF THE REPUBLIC OF THE PHILIPPINES
THIRD REGULAR SESSION

House of Representatives
HOUSE BILL NO.

Introduced by HONORABLE

3US S. TAMBUNTING

AN ACT PROMOTING THE REVITALIZATION, REHABILITATION AND
MODERNIZATION OF 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 Senate and 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 follow:

"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
GOVERNI ‘T OF THE PHILIPPIN! 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



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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 INCREM! ‘AL 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 1 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,


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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 RESUL
IN DEATH OR INJURY TO PERSONS AND/OR DAMAGE TO PROPERTY/
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 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-
‘Lwo 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 importer’s 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. ~ \f 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 laws, 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.


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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,

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