THIRTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
SENATE 
INTRODUCED BY HON. MANUEL B. VILLAR JR. 
EXPLANATORY NOTE 
The emergence of growth centers in Mindanao like the BIMP-EAGA, the Socsargen 
Growth Quadrangle, the Cagayan-Iligan Corridor, and the Zamboanga Special Economic Zone 
have spurred the demand for efficient, globally competitive and reliable land transportation for 
passengers as well as. cargo. 
This bill seeks to establish the Mindanao Railways Corporation as a means to hasten and 
support development in the area. 
The experience of Japan, Canada, the United States and most of Europe shows how 
railroad networks have spurred national development. Railroads opened up traffic of passengers 
and cargo in vast land areas. Higher productivity resulted as economic activities are stimulated 
and sustained due to increased accessibility. 
The Philippines has about 478 kilometers of operating railroad tracks, a far cry from 
Indonesia which has 7,000 kilometers of railroad, Thailand with 3,900 kilometers and Malaysia 
with 2,200 kilometers. 
It is further recognized that rail transportation is capital-intensive and requires subsidy. 
However, the rail, as a mass transit system, should be pursued because of its high multiplier 
effect. It is therefore crucial that the project structure for a railway project is both 
sustainablehiable and, at the same time, allows risk sharing with private sector proponents. 
The intended project scheme is to establish a government-owned Mindanao Railways 
Corporation and allow/encourage private sector participation under BOT, BLT, BT, joint venture 
or other arrangements. The government’s participation may be in the provision of right-of-way 
and/or track infrastructure. 
The Mindanao Railways Corporation i s  envisioned as part of the overall program of 
laying down an integrated public transport system for Mindanao as well as for the whole 
country. 
Passage of this measure is strongly urged. 
MANUEL B. ILLAR, JR. 
1 


THIRTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
SENATE 
S. No. 
. .  
” 
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INTRODUCED BY HON. MANUEL B. VELAR JR. 
AN ACT CREATING THE MINDANAO RAILWAYS CORPORATION 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 
assem bled: 
SECTION 1. Name. Duration and Domicile. - A corporation to serve as the 
instrumentality of the Government 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 for purposes 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 such branches and 
agencies within or outside the Philippines as may be necessary for the proper conduct of its 
business. 
SECTION 2. Purpose and Specific 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, property and 
cargo between any point in Mindanao; and 
b) As an auxiliary to its main purpose, to own, lease and develop real estate and, where 
appropriate, operate powerhouses, hotels, restaurants, terminal, warehouses, timber concessions, 
coal mines, iron and other mineral properties; to manufacture rolling stocks, equipment, tools and 


other appliances, to construct and operate in connection with its railroad lines, toll viaducts, toll 
tunnels and the like. 
SEC. 3. General Powers. - The Corporation shall have the following general powers: 
a) To do all such other things and to transact all business directly necessary, incidental or 
conducive to the attainrrient of the purpose of the corporation; 
b) To establish subsidiary corporations or holding companies necessary for the efficient 
performance of its business and for the efficient operation of the Corporation; 
c) To exercise the power of eminent domain and effect just compensation for affected 
land, assets and property in the acquisition of right-of-way and in the clearing of land necessary 
for the operations and projects of the Corporation; and 
d) 
Generally, to exercise all powers of a corporation under the Corporation Law. 
SEC. 4. Authorized Capital Stock of the Corporation. - The authorized capital stock of 
the Corporation shall be Two Billion Pesos (P2,000,000,000.00) divided into Twenty Million 
(20,000,000) shares at par value shares of One Hundred Pesos (P100.00) each, which shall be 
subscribed by the government, twenty percent (25%) of which or Five Hundred Million Pesos 
(500,000,000.00) shall be initially paid-up and the balance shall be paid from a continuing annual 
appropriation of not less than Two Hundred Million Pesos (P200,000,000.00) which is hereby 
appropriated, out of any hnds in the National Treasury not otherwise appropriated. The said 
amount shall 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 
Corporation. 
SEC. 5. Loans. - 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 Two Hundred Million U.S. dolIars ($200,000,000) 
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 
specifying such terms and conditions. 
The President, through and upon recommendation of the Secretary of Finance, is hereby 
authorized to guarantee, absolutely and unconditionally as primary obligor and not as mere 
surety, 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 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 ufider this Act, shall be exempted from all taxes, import tariffs and duties, 
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. 
SEC. 6. Board of Directors, Composition and Appointment. - The corporate powers of 
the Corporation shall be vested in and exercised by a Board of Directors consisting of a 
chairman, vice chairman and nine (9) members who shall be appointed by the President with the 
consent of the Commission on Appointments. The members of the Board shall serve as 
designated by the 01 President in their appointments for the terms of six (6) 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 member shall receive a per diem of Five Thousand Pesos (P5,OOO.OO). The board 
meetings may not exceed four (4) times a month. 
SEC. 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 
thirty five (35) years of age at the time of their appointments and holders of degrees in the field 
of engineering, economics, business management, law and related courses. In addition, a Masters 
Degree in the same field andor experience in railway management and operations for at least 
five (5) years prior to the appointments-is required. 
SEC. 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 of 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 and to appoint and fix the 
compensation of the other officers of the Corporation subject to the approval of the President. 
The compensation structure of the Corporation shall be exempt from the Salary Standardization 
Law or any other law, rule or regulation restricting the compensation and benefits of government 
agencies, instrumentalities or corporations. The Board by a majority vote of all the members 
may, for cause, suspend and/or remove the General Manager; and 
c) To approve, the annual and/or such supplemental budgets of the Corporation which 
may be submitted to it by the General Manager from time to time. 
SEC. 9. Suspension and Removal of Directors. - Any member of the Board of Directors 
may for cause be suspended or removed by the President. 


SEC. 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. 
SEC. 11. Managing Head. - The management of the Corporation shall be vested in the 
General Manager 
SEC. 12. Powers and Duties of the General Manager. - The General Manager shall 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 yeas- an annual report, 
through the Board of Directors, to the Office of the President and to the Congress; 
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. 
SEC. 13. Appointment and Promotion of Personnel. - In the appointment and promotion 
of officers and employees of the Corporation, merit and efficiency shall serve as basis, and no 
political test or qualification shall be prescribed and considered for such appointments or 
promotions. 


SEC. 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, franchise, right of way, earnings, and all other property owned 
and operated by it and all duties on all railway materials, supplies and equipment imported to 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 construction or equipment may bear 
to the tonnage of the entire cargo of the vessel. 
SEC. 15. Private Sector Participation. -- Upon recommendation of the Secretary of 
Finance, the President of the Philippines shall approve the structure for the Mindanao railway 
project to be undertaken by the Corporation under the following parameters: 
a) Where necessary, the Philippine Government, through the Mindanao Railway 
Corporation, may provide the resources for the acquisition of the right-of-way and the provision 
and financing of track infrastructure; 
b) The private sector shall be allowed and encouraged to be actively involved in the 
project in areas such as but not limited to planning, construction, development, financing, 
management and operation of the railway; various schemes like the Build-Operate-Transfer 
(BOT), Build-Lease-Transfer (BLT), Build-Transfer (BT), joint venture and the like shall be 
considered in active private sector participation in the project; 
c) A project structure and plan for private sector participation shall first be prepared in 
consultation with the government of the Autonomous Region for Muslim Mindanao, the 
Southern Philippines Council for Peace and Development (SPCPD) and/or any other body 
responsible for the development of Mindanao or any part thereof; thereafter, it shall be approved 
by the President of the Philippines; 
d) The project structure and plan for private sector participation shall be to the best 
advantage of the government and clients of the Corporation; and 


e) The selection of the private proponent shall be undertaken in a transparent process with 
clear rules and guidelines. 
SEC. 16. 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 whose decision shall be final. Said 
salaries 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 applicable to commercial corporate 
transactions. A report of audit for each fiscal year, by the representative of the Commission on 
Audit, through the latter, to the Board of Directors of the Corporation, and copies thereof shall be 
furnished the President, the Secretary of Transportation and Communications and the Presiding 
Officers of the two (2) 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 audit, which 
in the opinion of the Auditor, has been carried on or made without authority of law. 
SEC. 17. Legal Counsel. - The Corporation shall have its own legal department, the chief 
and members of which shall be appointed by the Board of Directors. 


SEC. 18. Exemption fiom the Land Transportation Office. - The Corporation shall not be 
subject to the authority and supervision of the Land Transportation Office. The Corporation shall 
be attached to, report directly to and be under the supervision and control of the Office of the 
President. It shall closely coordinate with the Department of Transportation and 
Communications, the government of the Autonomous Region for Muslim Mindanao and 
Southern Philippines Council Peace and Development (SPCPD) or any such body or agency 
responsible for the development of Mindanao or any part thereof. 
SEC. 19. 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 (3) years after the time of its dissolution 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 is 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. 
SEC. 20. Strikes during the National Emergency. - The provisions of law to the contrary 
notwithstanding, in casp of national emergency, or when in the opinion of the President, the 
national security or interest is in 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. 
SEC. 21. 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. " 
SEC. 22. Applicability 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. 


SEC. 23. Repeal or Modification. - The provisions of Republic Act No. 4156, as 
amended, creating the Philippine National Railways and all Acts, executive orders, 
administrative orders, and proclamations or parts thereof inconsistent with any of the provisions 
of this Act, are hereby repealed or modified accordingly. 
SEC. 24. reparability Clause. - In the event any provision of this Act of 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. 
SEC. 25. - Effectivity. - This Act shall take effect upon its approval. 
Approved,