14"' Congress of the Republic 
) 
of the Philippines 
) 
First Regular Session 
1 
S E N A T E  
S. NO. . I164 
Introduced by Senator Aquilino Q. Pimentel, Jr. 
EXPLANATORY NOTE 
This bill seeks to create the Mindanao Railways Corporation as a means of 
hastening the development of the isfand. 
The experience of Japan, Canada, the United States and most of Europe 
shows how their railroad networks have speeded up the national development. 
In these nations, railroads opened up vast land areas, thereby making it possible 
for tremendous numbers of people to settle and huge volumes of goods to be 
transported there at the lowest cost. The influx of people into areas previously 
unsettled and the easy availability of goods needed for civilized life means 
higher productivity of the land. 
A railroad network crisscrossing Mindanao will considerably shorten the 
distance, for example, between Zamboanga and Cagayan de Oro or Davao and 
Cagayan de Oro. That will, in turn, mean a shortening of the travel time of the 
people of the goods whose end destination is the Visayas or Luzon or beyond 
our northern shores or vice versa. 
We must benefit from the experience of other lands whose railway 
systems up to today provide people and goods the cheapest and fastest way of 
moving in volume overland. 
Approval of this bill is thus, requested. 


14" Congress of the Republic 
) 
of the Philippines 
1 
1st Regular Session 
) 
S E N A T E  
S. No. 1164 
Introduced by Senator Aquilino Q. Pimentel, Jr. 
AN ACT 
CREATING THE MINDANAO RAILWAYS CORPORATION PRESCRIBING 
ITS POWERS, FUNCTIONS AND DUTIES, AND PROVIDING FOR THE 
NECESSARY FUNDS FOR ITS OPERATION 
Be i t  enacted by the Senate and House of Rearesentatives of the Philippines in 
Conpess 
- 
assembled: 
SECTION 1. Name, Duration and Domicile. - A Corporation to serve as 
the instrumentality of the Government of the PhiIippines in providing a railroad 
and transportation system for the whole island of Mindanao is hereby created, to 
be known as the Mindanao Railways Corporation, which purpose of this Act 
shall be called the Corporation. The Corporation shall exist for a term of fifty (50) 
years from the date of approval of this Act. It shall have its main office in 
Cagayan de Or0 City and shall have such branches and agencies within or 
outside the Philippines as may be necessary for the proper conduct of its 
business 
SECTION 2. Pumoses and Svecific Powers. - The Corporation shall have 
the following purposes and specific powers: 
a) 
To own or operate railroads, tramways, and other kinds of land 
transportation, vessels and pipelines, for the purpose of transporting for 


consideration, passengers, mails and property between any point in Mindanao; 
and 
6) 
As an auxiliary to its main purpose, to own and/or operate 
powerhouses, hotels, restaurants, terminals, warehouses, timber concessions, 
coal mines, iron and other mineral properties and to manufacture rolling stocks, 
equipment, tools and other appliances, to construct and operate in connection 
with its railroad lines, to11 viaducts, toll tunnels and the like. 
SECTION 3. General Powers. - The Corporation shall have the following 
general powers: 
a) To do all such other things and to transact all such business directly or 
indirectly necessary, incidental or conducive to the attainment of the purpose of 
the corporation; and 
b) Generally, to exercise all powers of a corporation under the 
Corporation Law;’ 
It shall also have the power of eminent domain. 
SECTION 4. Authorized Capital Stock of the Corporation. - The 
authorized capital stock of 
the Corporation shall be One Billion 
(~1,000,000,000.00) Pesos divided into Ten Million (10,000,000) shares at par 
value shares of One Hundred (P100.00) Pesos each, which shall be fully 
subscribed by the Philippine Government, twenty percent of which or Two 
Hundred Million (~200,000,000.00) Pesos shall be initially paid-up and the 
balance shall be paid from a continuing annual appropriation of not less than 


Two Hundred Million (~200,000,000.00) Pesos which is hereby appropriated, out 
of any funds in the National Treasury not otherwise appropriated. The said 
amount shall be programmed and released by the Budget Commission in 
accordance with the schedule of cash requirements to be prepared and submitted 
by the Mindanao Railways Corporation; Provided, that this continuing annual 
appropriation of Two Hundred Million (~200,000,000.00) Pesos and the 
programming and release thereof shall remain in force until the authorized 
capital subscribed by the Government shall have been paid in full. 
SECTION 5. w. 
- The Corporation is hereby authorized to contract 
loans, credits and indebtedness in any domestic or convertible foreign currency, 
or capital goods, from foreign governments, their agencies, instrumentalities or 
financial institutions, or any non-governmental national or international financial 
institutions or firms extending suppliers credit deferred payment arrangement or 
other fund sources, or to issue bonds, the total outstanding amount of which, 
exclusive of interests, shall not exceed Five Hundred Million ($500,000,000.00) 
United States dollars or the equivalent thereof in other currencies; on such terms 
and conditions as it shall deem appropriate for the accomplishment of its 
purpose and to enter into and execute documents and other documents 
specifying such terns 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 bond 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 section 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. Board of Directors, Composition and Appointment. - The 
corporate powers of the Corporation shall be vested in and exercised by the 
Board of Directors consisting of a chairman, vice-chairman and nine members 
who shall be appointed by the President of the Philippines with the consent of 
the Commission on Appointments. The members of the Board shall serve as 
designated by the President in their appointments for terms of six years from the 
date they qualify and assume office except that any person chosen to fill a 
vacancy shall serve only for the unexpired term of the member whom he 
succeeds. For actual attendance of Board Meetings, each such members shall 
receive a per diem of One Thousand (Sl,OOO.OO) Pesos. The Board meetings may 
not exceed four times a month. 


SECTION 7. 
Qualifications of Officials. - The Chairman, Vice- 
Chairman, members of the Board of Directors and the General Manager of the 
Corporation shall be Filipino citizens, at least 35 years of age at the time of their 
appointments and holders of degrees in the field of engineering, economics, 
business management and related courses. In addition, a masteral degree in the 
same field and/or experience in railway management and operations for at least 
five (5) years is preferable. All such officials must be residents of Mindanao for at 
least five (5) years prior to the appointments. 
SECTION 8. Powers and Duties of the Board of Directors. - The Board of 
Directors shall have the following powers and duties: 
a) 
To prescribe, amend and repeal by laws, rules and regulations 
governing the manner in which the general business and corporation may be 
exercised, including provisions for the formation of such committee or 
committees as the Board of Directors may deem necessary to facilitate its 
business. 
b) To appoint and fix the compensation of the General Manager, subject 
to the approval of the President of the Philippines and to appoint and fix the 
compensation of the other officers of the Corporation. The Board by a majority 
vote of all members may, for cause, suspend and/or remove the General 
Manager. 
c) To approve, the annual and/or such supplemental budgets of the 
Corporations which may be submitted to it by the General Manager from time to 
time. 


SECTION 9. Suspension and Removal of Directors. - Any member of the 
Board of Directors may for cause be suspended or removed by the President of 
the Philippines. 
SECTION 10. 
Prohibition for Board Members. - No Chairman or 
member of the Board of Directors of the Corporation shall at the same time serve 
in the Corporation in any capacity whatsoever other than as Chairman or 
member thereof, unless otherwise authorized by law. 
SECTION 11. Manacinc Head. - The management of the Corporation 
shall be vested in the General Manager. 
SECTION 12. Powers and Duties of the General Manacer. 
- 
- The General 
Manager shalI have the following powers and duties: 
a) To direct and manage the affairs and business of the Corporation on 
behalf of the Board of Directors, and subject to its control and supervision; 
b) To sit in all meetings of the Board of Directors, as Vice-chairman, and 
participate in its deliberations, with the right to vote, and to preside any 
meetings for or in the absence of the Chairman; 
c) To submit within sixty (60) days after the close of each fiscal year an 
annual report, through the Board of Directors, to the Office of the President of 
the Philippines and to the Congress of the Philippines; 


d) To appoint and fix the number and the salaries, with the approval of 
the Board of Directors of such subordinate personnel as may be necessary for the 
proper discharge of the duties and functions of the Corporation, and with the 
approval of the Board of Directors, to remove, suspend, or otherwise discipline, 
for cause, any subordinate employee of the Corporation; and 
e) To perform such other duties as may be assigned to him by the Board 
of Directors from time to time. 
SECTION 13. Amointment and Promotion of Personnel. - In the 
appointment and promotion of officers and employees of the MRC merit and 
efficiency shall serve as basis, and no political test or qualification shall be 
prescribed and considered for such appointments or promotions. 
SECTION 14. Exemption from Taxes, Duties and Port Charges. 
- 
- The 
Corporation is hereby exempt from payment of all taxes of every name and 
nature - municipal, city, provincial, or national - upon its capital stock, 
franchises, right of way, earnings, and all other property owned or operated by it 
and all duties on all railways materials, supplies and equipment imported in the 
Philippines for and/or by the said Corporation and this exemption shall extend 
to port charges upon vessels whose entire cargo consists of materials for the 
construction 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. 
SECTION 15. Audit Personnel and Report. - 


a) Personnel - The Commission on Audit shall appoint a representative 
who shall be the Auditor of the Corporation, and the necessary personnel to 
assist said representative in the performance of his duties. The number and 
salaries of the Auditor and said personnel shall be determined by the 
Commission on Audit, subject to appropriation by the Board of Directors, In case 
of disagreement, the matter shall be submitted to the President of the Philippines 
whose decision shall be final. Said saIaries and all other expenses of maintaining 
the Auditor’s office shall be paid by the Corporation. 
b) Report - The financial transactions of the Corporation shall be audited 
in accordance with law, administrative regulations and the principles and 
procedures applicabIe to commercial corporate transactions. A report of audit of 
each fiscal year, by the representative of the Commission on Audit, through the 
latter, to be Board of Directors of the Corporation, and copies thereof shall be 
furnished the President of the Philippines, the Secretary of Transportation and 
Communications and the Presiding Officers of the two Houses of Congress. The 
report shall set forth the scope of the audit and shall include a statement of assets 
and liabilities, capital and surplus or deficit; a statement and surplus or deficit 
analysis; statement of income and expenses; a statement of sources and 
application of funds; and such comments and information as may be necessary, 
together with such recommendations with respect thereto as may be advisable, 
including a report of any impairment of capital noted in the audit. The report 
also shows specifically any program, expenditures or other financial transaction 
or undertaking observed in the course of the audit, which in the opinion of the 
Auditor, has been carried on or made without authority of law. 


SECTION 16. Legal Counsel. - The Corporation shall have its own legal 
department, the chief and members of which shall be appointed by the Board of 
Directors. 
SECTION 17. Exemvtion.from the Land Transportation Commission Act. 
- The Corporation shall not be subject to the authority and supervision of the 
Land Transportation Commission. 
SECTION 18. Liquidation. - When its term or period of existence has 
expired in accordance with the provision of this Act. The Corporation shall 
nevertheless, continue as a body corporate for three years after the time o its 
dissohtion for the purpose of prosecuting and defending suits by or against it 
and of enabling it gradually to settle and close its affairs, to dispose of any 
convey its properties, but not for the purpose of continuing the business for 
which it was established. In order to carry out its liquidation, upon the 
dissolution of the Corporation, a Board of Liquidators shall be appointed by the 
President to take charge of winding up its corporate affairs and effecting its 
liquidation. 
SECTION 19. Strikes Durinp 
- National Emergency. - The provisions of 
law to the contrary notwithstanding, in cases of national emergency, or when in 
the opinion of the President of the Philippines, the national security or interest in 
its imminent danger, employees and laborers of the corporation shall not strike 
for the purpose of securing changes or modification in their terms and conditions 
of employment during said period of emergency. 


SECTION 20. Reversion Of General Funds. - All funds resulting from 
dissolution and liquidation of the Corporation as herein provided shall revert to 
the general funds of the Government. 
SECTION 21. AvplicabiIitu of the Corporation Law. - The provisions of 
the Corporation Law which are not inconsistent with the provisions of this Act, 
shall be applicable to the corporation created hereby. 
SECTION 22. Reveal or Modifications. - The provisions of Republic Act 
No. 4156, as amended, creating the Philippine National Railways and all Acts, 
Executive Orders, and Proclamations or parts thereof inconsistent with any of the 
provisions of this Act, are hereby repealed or modified accordingly. 
SECTION 23. Sevarubility Clause. - In the event any provision of this act 
or the application of such provision to any person or circumstances is declared 
unconstitutional, the remainder of this Act or the application of said provision to 
other persons or circumstances shall not be affected thereby. 
SECTION 24. Effectivity. - This Act shall take effect upon its approval. 
Approved,