EIGHTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES 
)
First Regular Session 
)
S E N A T E  
S. No. 
687
. (S>K n d( • s3*rfrdisrj>
’19 JUL 22 P3 :35
Introduced by Senator Aquilino “Koko” Pimentel III
AN ACT
CREATING THE MINDANAO RAILWAYS CORPORATION 
PRESCRIBING ITS POWERS, FUNCTIONS, AND DUTIES, AND 
PROVIDING NECESSARY FUNDS FOR ITS OPERATION
EXPLANATORY NOTE
This bill seeks to create the Mindanao Railways Corporation as a 
means to hasten the development of Mindanao.
The collective experiences of Japan, Canada, the United States of 
America and most of Europe show how railroad networks have spurred 
and sped up national development. In these places, railroads opened up 
vast land areas for human settlement and made it possible to transport 
massive number of people and huge volume of goods at the lowest cost. 
The influx of people into areas previously unsettled, the easy mobility of 
the populace, and the availability of goods needed for civilized life mean 
higher productivity of the land and its people.
A railroad network crisscrossing Mindanao will considerably 
shorten the travel time between Zamboanga and my hometown, Cagayan 
de Oro, or Davao and Cagayan de Oro. That will, in turn, mean a reduction


of the transportation cost of goods and travel cost for people whose end 
destination is the Visayas or Luzon, and vice versa.
Considering all the foregoing, approval of this bill is earnestly
sought.
\  V— %A
AQUiLmO ‘'KOKO” PIMENTEL 111


EIGHTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES 
)
First Regular Session 
)
S E N A T E  
S. No. 
687
.1 r<( 
<6> i!  t.'ii i’
22.
22 PV35
Introduced by Senator Aquiliuo “Koko” PijLuentel HI 
^
AN ACT
CREATING THE MINDANAO RAILWAYS CORPORATION 
PRESCRIBING ITS POWERS, FUNCTIONS, AND DUTIES, AND 
PROVIDING NECESSARY FUNDS FOR ITS OPERATION
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Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled:
SECTION 1. Statement of Policy. -  The Mindanao Railways 
Corporation, being a factor for socio-economic development and growth, 
shall be part of the infrastructure program of the government and as such, 
shall remain in and under government ownership during its corporate 
existence. The Mindanao Railways Corporation must be administered 
with the view of serving the interests of the public by providing them the 
maximum of service. While aiming at its greatest utility by the public, the 
viability of its operation must be ensured so that services can be rendered 
at the minimum passenger and freight prices possible.
SEC. 2. Name, Duration, and Domicile. — A corporation to be 
known 
as 
the 
Mindanao 
Railways 
Corporation 
(hereinafter, 
“Corporation”) is hereby created to serve as the instrumentality of the 
Philippine government in providing a railroad and transportation system


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for the whole island of Mindanao. It shall have its main office in Cagayan 
de Oro and shall have such branches and agencies within the Philippines 
as may be necessary for the proper conduct of its business. This 
Corporation shall exist for a term of fifty (50) years from the date of 
approval of this Act and shall be an attached agency of the Department of 
Transportation (DOTr).
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SEC. 3. 
General Powers. -  The Corporation shall have the
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following general powers:
a) To exercise the right of eminent domain whenever necessary for the 
attainment of its objectives;
b) To borrow money and contract loans, credits, or indebtedness from 
domestic or foreign sources for the furtherance of its goals and 
objectives;
c) 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
d) Generally, to exercise all powers of a corporation under Batas 
Pambansa Big. 68 otherwise known as “The Corporation Code of 
the Philippines,” as amended.
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SEC. 4. Purposes and Specific Powers. -  The Corporation shall
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have the following purposes and specific powers:
a) To own or operate railroad trainways, subways, bus lines, trucklines, 
or 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


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b) 
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, toll 
viaducts, toll tunnels, and the like.
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SEC. 5. 
Authorized Capital Stock of the Corporation. -  The
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authorized capital stock of the Corporation shall be One hundred billion
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pesos (PhP 100,000,000,000.00) divided into Five hundred million
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(500,000,000) common shares all with par value of Two hundred pesos
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(PhP 200.00), which shall be fully subscribed by the National
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Government 
and 
other 
government 
institutions, 
corporations,
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instrumentalities, and agencies, whether national or local, within the
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framework of their respective charters, twenty-five percent (25%) of
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which or Twenty-five billion pesos (PhP 25,000,000,000.00) shall be
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initially paid-up and the balance shall be paid from a continuing annual
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appropriation of not less than Two billion pesos (PhP 2,000,000,000.00).
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The said amount shall be programmed and released by the Department of
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Budget and Management (DBM) in accordance with the schedule of cash
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requirements to be prepared and submitted by the Corporation; Provided,
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That this continuing annual appropriation of Two billion pesos (PhP
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2,000,000,000.00) and the programming and release thereof shall remain
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in force until the authorized capital subscribed by the Government shall
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have been paid in full.
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SEC. 6. Loans. -  The Corporation is hereby authorized to contract
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loans, credits and indebtedness in any domestic or convertible foreign
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currency, from foreign governments, their agencies, instrumentalities or
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financial institutions, or any non-governmental national or international
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financial institutions or firms extending suppliers credit deferred payment
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arrangement or other fund sources, or to issue bonds, on such terms and
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conditions as it shall deem appropriate for the accomplishment of its
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purpose and to enter into and execute documents and other documents
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specifying such terms and conditions.
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The President of the Philippines, through the Secretary of Finance,
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is hereby authorized to guarantee, absolutely and unconditionally, as
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primary obligor and not merely as surety, in the name and on behalf of the
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Republic of the Philippines, the payment of the loans, credits,
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indebtedness and bond issued, which shall be over and above the amount
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which the President of the Philippines is authorized to guarantee under
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Republic Act No. 4860, as amended by Republic Act No. 6142, as well as
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the performance of all or any of the obligations undertaken by the
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Corporation in the territory of the Republic of the Philippines pursuant to
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loan agreements entered into with foreign governments or any
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international financial institutions or fund sources.
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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 ineurred 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.
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SEC. 7. Board of Directors, Composition, and Appointment. -  The
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corporate powers of the Corporation shall be vested in and exercised by


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the Board of Directors, hereinafter referred to as the “Board”, composed
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of:
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a. A Chairman to be appointed by the President;
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b. The General Manager of the Corporation who shall be its Vice-
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Chairman;
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c. The Undersecretary of Planning and Infrastructure Projects of the
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DOTr;
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d. An Undersecretary of the Department of Finance;
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e. The Deputy Director-General for Investment Programming of the
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National Economic and Development Authority (NEDA);
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f. An Undersecretary of the Office of the Executive Secretary, Office
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of the President; and
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g. Three (3) other members to be appointed by the President.
The Chairman and the three appointive members of the Board as 
stated in Sec. 7 (g) shall serve for a period of six (6) years; Provided, That 
of the three appointive members, one member shall be appointed for a 
term of two (2) years, one member for four (4) years, and one member for 
six (6) years; Provided, further, That their successors shall be appointed 
for a term of six (6) years except that any person appointed to fill a 
vacancy shall only serve for the unexpired term of the member succeeded.
The officials next in rank to the members of the Board listed in Sec.
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7 (c), (d), (e) and (f), as designated by them, shall serve as alternate
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members. The alternate members shall attend the meetings of the Board


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whenever their principals are absent or the said positions are vacant, and
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shall receive the same benefits and privileges as their principals.
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For actual attendance of Regular or Special Board meetings, or 
Board Committee meetings, the members of the Board shall receive a per 
diem, to be determined by the Governance Commission for Government 
Owned or Controlled Corporations (GCG).
All necessary expenses of the members of the Board to attend 
meetings and to discharge their official duties, within the limits allowable 
by the GCG, shall be paid directly by the Corporation in the form of cash 
advance or reimbursement.
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SEC. 8. Qualifications of Appointive Members of the Board. -  The
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appointive members of the Board of Directors shall be Filipino citizens,
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at least thirty-five (35) years of age at the time of their appointments,
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persons of good moral character and holders of degrees in the field of
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transport planning, engineering, economics, management, finance,
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marketing, law, or related courses, with preference for those with masteral
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degrees in such fields or experience in railway management and
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operations for at least five (5) years. All such officials must be residents
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of Mindanao for at least five (5) years prior to their respective
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appointments.
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SEC. 9. Powers and Duties of the Board of Directors. -  The Board
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of Directors shall have the following powers and duties:
a) To prescribe rules and regulations, or policies governing the 
manner in which the general business of the Corporation may be 
exercised;
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b) To recommend amendments of, or the repeal of by-laws;


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c) To fix the compensation of the General Manager and Assistant 
General Managers, subject to the approval of the GCG, and to 
appoint and fix the compensation of the other officers of the 
Corporation;
d) To approve, the annual and/or such supplemental budgets of the 
Corporation;
e) By a two-thirds vote of all members, to recommend to the 
President the suspension or removal for cause of the General 
Manager or Assistant General Manager(s);
f) Upon recommendation of the General Manager, to approve the 
appointment of all officials of the Corporation from the rank of 
division head and above;
g) Subject to the provisions of applicable laws and regulations, and 
upon recommendation of the General Manager, to reorganize the 
Corporation, detennine its staffing pattern, or define the 
functions and duties of organization units and personnel; and
h) To expropriate, with just compensation, the necessary “right of 
way” needed by the Corporation to acquire, maintain, and/or 
expand its track lines.
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SEC. 10. Suspension and Removal of Directors. -  Any member of
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the Board may, for cause, be suspended or removed by the President of
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the Philippines.
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SEC. 11. 
Prohibition for Board Members. -  No Chairman or
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member of the Board of Directors of the Corporation shall at the same


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time serve in the Corporation in any capacity whatsoever other than as
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Chairman or member thereof, unless otherwise authorized by law.
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SEC. 12. Managing Head. -  The management of the Corporation 
shall be vested in the General Manager who shall be appointed by the 
President of the Philippines upon the recommendation of the Board. 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) years.
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In the perfonnance of his functions, he shall be assisted by Assistant
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General Managers who shall be appointed by him with the approval of the
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Board and the President.
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SEC. 13. Powers and Duties of the General Manager. -  The
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General Manager shall have the following powers and duties:
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a) To direct and manage the affairs and business of the Corporation on
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behalf of the Board, subject to the policies, rules, and regulations
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established by the Board;
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b) To sit in all meetings of the Board as Vice-Chairman, and participate
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in its deliberations, with the right to vote, and to preside in any
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meeting for or in the absence of the Chairman;
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c) To recommend to the Board short-and-long range plans and
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programs consistent with the overall objectives of the Corporation;
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d) To submit and recommend consolidated annual budget and propose
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capital and other supplemental budgets to the Board;
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e) To appoint officials and employees below the rank of a division head
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and to suspend or otherwise discipline for cause, all subordinate


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officials and employees of the Coqioration; Provided, however, 
That in the case of removal for cause, approval of the Board shall be 
necessary;
f) To recommend to the Board such changes in the organizational 
structure and staffing pattern of the Corporation as may be necessary 
to carry out its functions effectively;
g) To submit to the Office of the President and to the Congress of the 
Philippines, through the Board of Directors, within sixty (60) days 
after the close of each fiscal year, an annual report on the operations 
of the Corporation or such other reports as may be required; and
h) To perform such other duties as may be assigned to him by the Board 
of Directors from time to time.
SECTION 14. 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.
SECTION 15. Exemption from Taxes, Duties, Port Charges or 
Dues, and Customs Bonds. -  The Corporation is hereby exempt from 
payment of all taxes of any kind and nature, including those imposed by 
municipal, city, provincial, or national governments, upon its capital 
stock, franchise, right of way, earnings, and all other property owned or 
operated by it in relation to its principal and auxiliary purposes, and all 
import duties on all railways 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


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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 or 
rehabilitation of its lines, facilities, and to such proportion 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; 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. These exemptions shall extend to the Value-Added 
Tax (VAT), Expanded Value-Added Tax (E-VAT), or any subsequent 
VAT laws.
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SECTION 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 of the Philippines 
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. The representative shall submit a report of audit of each 
fiscal year to the Board of Directors of the Corporation, and copies
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thereof shall be furnished the President of the Philippines, the 
Secretary of Transportation 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 17. Legal Department. -  Any provisions of law or 
executive order to the contrary notwithstanding, the Corporation shall 
have its own Legal Department, which shall handle all legal matters 
affecting the Corporation; Provided, That the Office of the Government 
Corporate Counsel shall provide assistance and supervision in the 
handling of court cases of the Corporation.
SECTION 18. Exemption from Regulation. -  The Corporation 
shall not be subject to the authority and supervision of the Land 
Transportation Franchising and Regulatory Board (LTFRB) or any 
similar regulatory body.
SECTION 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 years after the 
time of its dissolution for the purpose of prosecuting and defending suits
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by or against it and of enabling it to gradually settle and close its affairs, 
to dispose of and 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.
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SECTION 20. Reversion of General Funds. — All funds resulting
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from dissolution and liquidation of the Corporation as herein provided
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shall revert to the general funds of the Government.
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SECTION 21. Separability Clause. -  In the event any provision of
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this Act or the application of such provision to any person or
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circumstances is declared unconstitutional, the remainder of this Act or
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the application of said provision to other persons or circumstances shall
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not be affected thereby.
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SECTION 22. Repealing Clause. -  The provisions of Republic Act
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No. 4156, as amended, creating the Philippine National Railways and all
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Acts, Executive Orders, and Proclamations or parts thereof inconsistent
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with any of the provisions of this Act, are hereby repealed or modified
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accordingly.
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SECTION 23. Effectivity. -  This Act shall take effect upon its
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publication in a newspaper of general circulation.
Approved,
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