SIXTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
Second Regular Session 
SENATE 
S.B. No. 
2690 
P6 :40 
T.' 
111\R 11 
Introduced by Senator JOSEPH VICTOR G. EJERCITO 
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 
On June 20 1964, Republic Act No. 4156entitled, "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 which serves as the instrumentality of 
the government in providing a nation-wide railroad and transportation system. 
On June 16, 2014 or four days before the expiration of PNR's corporate 
life, Republic Act 10638 was approved, which extended PNR's corporate 
existence for another 50 years? However, despite the grant of extension on its 
corporate life, the PNR is said to run a "loss leader" operation, that is, the more 
trips the train runs, the more losses it incur. This can be attributed to its 
purely manual operations as well as its aged and obsolete train system 
equipment and facilities, resulting to poor operating potentials and high 
leakage rate. 
For instance, for the first half of 2014, PNR suffered a cash deficit of 
Php85,464,170.00 which translated to a monthly loss of PhpI3,244,028.00 
while 
transporting 
12,240,498 
passengers 
on 
its 
Tutuban 
to 
Sta. 
Rosa/Mamatic commuter line and Naga/Sipocot Commuter Line.! 
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. 
In view of the foregoing, passage of the bill is earnestly sought. 
, 
JOSEPH VICTOR EJERCITO 
IData from Philippine National Railways 


SIXTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
Second Regular Session 
SENATE 
S.B. No. 
2690 
·15 11m!1! 
P6:40 
Introduced by Senator JOSEPH VICTOR G. EJERCITO 
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 
1 
Be it enacted by the Senate and House of Representatives of the Philippines in 
2 
Congress assembled. 
3 
4 
SECTION 1. Section 3 of Republic Act Four thousand One Hundred Fifty Six, 
5 
as amended by Republic Act Six Thousand Six Hundred Sixty Six and 
6 
Presidential Decree Seven Hundred Forty One is hereby replaced to read as 
7 
follows: 
8 
9 
"SEC. 3. AUTHORIZED CAPITAL STOCK OF THE PHILIPPINE 
10 
NATIONAL RAILWAYS. THE AUTHORIZED CAPITAL STOCK OF 
11 
THE PHILIPPINE NATIONAL RAILWAYS SHALL BE FIFTY BILLION 
12 
PESOS 
DIVIDED 
INTO 
THREE 
MILLION 
ONE 
HUNDRED 
13 
THIRTEEN THOUSAND COMMON SHARES ALL WITH PAR VALUE 
14 
OF TWO HUNDRED PESOS EACH, WHICH SHALL INCLUDE THE 
15 
PRESENT AUTHORIZED CAPITALIZATION OF THE PHILIPPINE 
16 
NATIONAL RAILWAYS: PROVIDED, THAT THE INCREASE IN THE 
17 
AUTHORIZED CAPITAL SHALL BE FULLY SUBSCRIBED BY THE 
18 
GOVERNMENT: 
PROVIDED FURTHER, THAT ALL EXISTING 
19 
LONG TERM OBLIGATIONS OF THE PHILIPPINE NATIONAL 
20 
RAILWAYS 
TO 
THE 
GOVERNMENT 
OF THE 
PHILIPPINES 
21 
INCLUDING ITS AGENCIES OR INSTRUMENTALITIES AS WELL 
22 
AS ITS TAX OBLIGATION TO ANY LOCAL GOVERNMENT UNIT 
23 
SHALL BE CONVERTED INTO 
CAPITAL STOCKS OF THE 
24 
PHILIPPINE NATIONAL RAILWAYS AND MADE A PART OF THE 
25 
SUBSCRIPTION: 
PROVIDED, 
STILL 
FURTHER, 
THAT 
THE 
26 
INCREASE IN AUTHORIZED CAPITAL STOCK HEREIN PROVIDED 
27 
IS 
DISTINCT AND 
SHALL NOT PREJUDICE THE ANNUAL 
28 
APPROPRIATION PROVIDED IN THE YEARLY GAA. THE AMOUNT 
29 
RAISE BY VIRTUE OF THE INCREASE IN THE AUTHORIZED 
30 
CAPITAL STOCK, IN ADDITION TO THE EXISTING SINKING FUND 
31 
OF THE PNR ESTABLISHED FROM ITS EXISTENCE, SHALL BE 
32 
USED FOR THE CONSTRUCTION OF NEW RAILROAD LINE AND 
33 
WHENEVER ECONOMICALLY AND TECHNICALLY FEASIBLE, 
34 
THE REHABILITATION AND/OR MODERNIZATION OF MOST OF 
1 


1 
THE ENTIRE RAILWAY SYSTEM OF PNR THROUGHOUT THE 
2 
COUNTRY. 
3 
4 
SECTION 2. A new subsection, Section 2-E, shall be inserted to read as 
5 
follows: 
6 
7 
"SEC. 2-E. THE PHILIPPINE NATIONAL RAILWAYS SHALL BE 
8 
ALLOWED TO 
ENTER INTO 
A JOINT VENTURE WITH 
A 
9 
QUALIFIED PRIVATE SECTOR PARTNER, PARTICULARLY AND 
10 
EXCLUSIVELY FOR THE PURPOSE OF OPERATIONS 
AND 
11 
MAINTENANCE SUBJECT TO THE APPROVAL OF THE BOARD, 
12 
WITH AT LEAST TWO-THIRDS (2/3) VOTE, IN A MEETING 
13 
CALLED FOR THE PURPOSE. PROVIDED, THAT SUCH PLANS 
14 
AND/PROGRAMS OF ENTERING TO A JOINT VENTURE WERE 
15 
CONSISTENT WITH 
THE 
OVERALL OBJECTIVES 
OF THE 
16 
CORPORATION 
AS 
RECOMMENDED 
BY 
THE 
GENERAL 
17 
MANAGER, PROVIDED FINALLY, THAT THE PROCUREMENT 
18 
PROCEDURE 
SHALL 
COMPLY 
WITH 
THE 
EXISTING 
19 
GOVERNMENT PROCUREMENT LAW. 
IN ANY EVENT THAT 
20 
INCREASE 
IN 
FARE 
RESULTED 
BY 
REASON 
OF 
THE 
21 
PRIVATIZATION OF PNR'S OPERATIONS AND MAINTENANCE, 
22 
THE INCREMENTAL INCREASE IN VALUE BETWEEN THE REAL 
23 
FARE AND NOMINAL FARE SHALL BE SUBSIDIZED AND PAID 
24 
FOR BY THE PHILIPPINE GOVERNMENT AND 
SHALL BE 
25 
COVERED BY YEARLY AUTOMATIC APPROPRIATIONS PROVIDED 
26 
IN THE GENERAL APPROPRIATIONS ACT." 
27 
28 
SECTION 3. A new subsection, Section 2-F, shall be inserted to read as 
29 
follows: 
30 
31 
"SEC. 
2-F. 
TO 
DEPUTIZE AND/OR OBLIGATE 
LGU'S TO 
32 
ENFORCE AND IMPLEMENT, IN COLLABORATION WITH THE 
33 
GOVERNMENT CORPORATE COUNCIL (GCC), THE RESTORATION 
34 
OF PNR'S RIGHT-OF-WAY SO AS TO RETURN THE LAND 
35 
AROUND THE STATIONS AND RESTORATION OF PNR'S RIGHTS 
36 
TO USE. IN PROCESS, REWARDING THE LGU'S FOR THEIR 
37 
EFFORT AND PENALIZING LGU'S FOR THEIR REFUSAL OR 
38 
INABILITY 
TO 
IMPLEMENT THE RESTORATION 
OF PNR'S 
39 
RIGHTFUL USE AND POSSESSION OF LAND ON THE RIGHT-OF-
40 
WAY AND AROUND STATIONS SHALL BE THE BASIC POLICY 
41 
FOR ENFORCEMENT." 
42 
43 
SECTION 4. A new subsection, Section 2-G, shall be inserted to read as 
44 
follows: 
45 
46 
"SEC 2-G. TO PENALIZE CRIMINALLY AND/OR CIVILLY ANY 
47 
PERSON(S)' 
INTERFERENCE 
WITH 
THE 
FREE 
FLOW, 
48 
UNHAMPERED USE, AND PASSAGE OF PNR TRAINS ALONG 
49 
THEIR LEGAL RIGHT OF WAY (TRACKS, BRIDGES, TURNOUTS, 
50 
INTERCONNECTIONS, AND ALL ASSOCIATED LINKAGES), SUCH 
51 
AS 
DISREGARDING 
SIGNALS 
AND 
TRAIN 
CROSSINGS 
52 
DANGEROUSLY ON THE PATH OF ONCOMING TRAINS, PLACING 
53 
DEAD BODIES ALONG OR ON TOP OF THE TRACKS AND ITS 
54 
LINKAGES, WHETHER AS A CONSEQUENCE OF A CRIME OR 
55 
NOT, SLEEPING, PLAYING ON, IDLING ON RAILROAD TRACKS 
56 
AND ITS LINKAGES, PLACING BOULDERS OR OBJECTS THAT 
2 


1 
OBSTRUCT, THROWING OBJECTS AT PASSING TRAINS, AND 
2 
SIMILAR 
ACTS 
OF 
DESTRUCTION 
AND 
OBSTRUCTION. 
3 
COMMITTING OR ATTEMPTING TO COMMIT SUICIDE ALONG 
4 
THE 
RAILROAD 
TRACKS 
AND 
ITS 
LINKAGES, 
BUILDING 
5 
STRUCTURES-PERMANENT OR OTHERWISE ALONG THE PNR 
6 
LEGAL RIGHT-OF-WAY AND/OR REFUSING TO VACATE THE 
7 
SAME UPON DEMAND. IF SUCH ACT(S) CAUSES OR HAS 
8 
POTENTIAL TO CAUSE, OR RESULT IN DEATH OR INJURY TO 
9 
PERSONS 
AND/OR 
DAMAGE 
TO 
PROPERTY/IES 
SUCH 
10 
PARTY /IES WHO, WITH INTENT TO CAUSE, OR ACTUALLY 
11 
CAUSED SUCH INTERFERENCE, OBSTRUCTION, WHETHER OR 
12 
NOT RESULTING IN INJURY OR DEATH, DAMAGE TO PNR 
13 
TRAINS, TRACKS, LINKAGES, AND/OR PNR PROPERTY, SHALL 
14 
BE HELD CRIMINALLY AND CIVILLY LIABLE BY PNR. DEVOID OF 
15 
ANY EVIDENCE TO THE CONTRARY, PNR IS PRESUMPTIVELY 
16 
ABSOLVED FROM CRIMINAL AND CIVIL LIABILITY." 
17 
18 
SECTION 5. Section 3-A of Republic Act Four thousand One hundred Fifty Six, 
19 
as amended is hereby amended to read as follows: 
20 
21 
Sec. 
3-A. 
Foreign Loans. The PHILIPPINE 
NATIONAL 
22 
RAILWAYS [Corporation] 
is hereby authorized to contract loans, 
23 
credits and indebtedness IN DOMESTIC CURRENCYOR in any 
24 
convertible foreign currency, or capital goods from foreign 
25 
governments, 
their 
agencies 
instrumentalities 
or 
financial 
26 
institutions, or any governmental national or international 
27 
financial institutions or firms extending supplier's credit, deferred 
28 
payment arrangements or other funds sources, or to issue bonds, 
29 
[the total outstanding amounts of which, exclusive of interests, 
30 
shall not exceed two hundred million United States dollars or the 
31 
equivalent thereof and other currencies,] 
on such terms and 
32 
conditions as it shall deem appropriate for the accomplishment of 
33 
its purposes and to enter into and execute agreements and other 
34 
documents specifying such terms and conditions. 
35 
36 
The President of the Philippines, through the Secretary of 
37 
Finance, is hereby authorized to guarantee, absolutely and 
38 
unconditionally, as primary obligor and not as surety merely, in 
39 
the name and on behalf of the Republic of the Philippines, the 
40 
payment of the loans, credits, indebtedness and bonds issued [up 
41 
to the amount herein authorized,]which shall be over and above 
42 
the amount which the President of the Philippines is authorized to 
43 
guarantee under Republic Act Numbered Sixty-One Hundred and 
44 
Forty-Two as amended, as well as the performance of all or any of 
45 
the obligations undertaken by the Corporation in the territory of 
46 
the Republic of the Philippines pursuant to loan agreements 
47 
entered into with foreign governments or any international 
48 
financial institutions or fund sources. 
49 
50 
The loans, credits and indebtedness contracted under this 
51 
subsection and the payment of the principal, interest and other 
52 
charges thereon, as well as the importation of machinery, 
53 
equipment, materials, supplies and services, by the Corporation, 
54 
paid from the proceeds of any loan, credit or indebtedness incurred 
55 
under this Act, shall also be exempted from all charges and 
56 
restrictions previously and presently imposed, and to be imposed 
3 


1 
by the Republic of the Philippines, or any of its agencies and 
2 
political subdivisions. 
3 
4 
SECTION 6. Section 9 of Republic Act Numbered Four thousand One Hundred 
5 
and Fifty-Six as amended by Republic Act Numbered Sixty-Three Hundred and 
6 
Sixty-Six and PD 741 is hereby amended to read as follows: 
7 
8 
"Sec. 9. Managing Head. The Management of the Corporation shall 
9 
be vested in the General Manager who shall be appointed by the 
10 
President of the Philippines. He shall possess technical competence 
11 
in management preferably in railroad transport management, have 
12 
demonstrated executive ability, and be of good moral character. He 
13 
shall hold office for a term of SIX (6) [eight (8)] years. 
14 
15 
In the performance of his functions, he shall be assisted by 
16 
Assistant General Managers who shall be appointed by him with 
17 
the approval of the Board of Directors and the President. 
18 
19 
SECTION 7.Section 12 of Republic Act Four thousand One hundred Fifty Six, 
20 
as amended is hereby amended to read as follows: 
21 
22 
Sec. 12. Exemption from taxes, duties, [and] port charges or dues 
23 
AND 
customs bonds [and port charges]. The 
PHILIPPINE 
24 
NATIONAL 
RAILWAYS 
[Corporation] is hereby exempt from 
25 
payment of all taxes of any kind [every name] and nature. 
26 
INCLUDING THOSE IMPOSED BY municipal, city, provincial or 
27 
national upon its capital stock, franchise, right of way, earnings, 
28 
and all property owned or operated by it and all import duties on 
29 
all railway materials, rolling stocks, spare parts, supplies and 
30 
equipment imported in the Philippines for and/or by the said 
31 
corporation, and this exemption shall extend to wharfage dues, 
32 
storage charges, arrastre, and shipside charges, and special duties 
33 
on such importations, and other port charges upon the carrying 
34 
vessels whose entire 
cargo consists of materials for the 
35 
construction of its projects and rehabilitation of its lines, facilities 
36 
and to such proportion of the prescribed port charges on other 
37 
vessels as the tonnage of materials for such constructions or 
38 
equipment may bear to the tonnage of the entire cargo of the 
39 
vessel; and such exemption shall further extend to the filing of 
40 
general importer's and general documentary bonds and warehouse 
41 
bonds for the operation of its warehouses, whether general bonded 
42 
warehouses or general order store. 
43 
44 
NOTWITHSTANDING THE PROVISIONS OF ANY OTHER LAWS TO 
45 
THE CONTRARY, THE EXEMPTION FROM TAXES, DUTIES AND 
46 
PORT CHARGES OR DUES, CUSTOMS BONDS PORT CHARGES 
47 
ENJOYED 
BY 
THE 
PHILIPPINE 
NATIONAL 
RAILWAYS 
AS 
48 
PROVIDED FOR IN SECTION 12 OF REPUBLIC ACT FOUR 
49 
THOUSAND ONE HUNDRED FIFTY SIX AS AMENDED BY RA 6366 
50 
AND PD 741 IS HEREBY REAFFIRMED 
51 
52 
SECTION 8.Separability Clause. - If any portion or provision of this Act is 
53 
declared unconstitutional or invalid, the other provisions hereof not affected 
54 
thereby shall remain valid and effective. 
55 
4 


1 
SECTION 9.Repealing Clause. -
All laws, executive orders, presidential 
2 
decrees, presidential proclamations, rules and regulations or parts thereof 
3 
inconsistent with the provisions of this Act are hereby repealed or modified 
4 
accordingly. 
5 
6 
SECTION lO.Effectivity. - This Act shall take effect fifteen (15) days after its 
7 
publication in the Official Gazette or in a newspaper of general circulation. 
8 
9 
10 
11 
Approved, 
5