Republic of the Philippines
HOUSE OF REPRESENTATIVES
Constitution Hills, Quezon City

EIGHTEENTH CONGRESS
First Regular Session

2
HOUSE BILL NO. Fea

Introduced by
REPRESENTATIVE PANTALEON D. ALVAREZ

AN ACT
RESTRUCTURING THE PHILIPPINE NATIONAL RAILWAY SYSTEM,
CREATING THE PHILIPPINE RAILWAY AUTHORITY, THE
PHILIPPINE RAILWAY CORPORATIONS, APPROPRIATING FUNDS
THEREFOR AND FOR OTHER PURPOSES

EXPLANATORY NOTE

The national railway system is essential to the development of a
country. An efficient, reliable and convenient railway system provides the
necessary mobility and efficiency to its passengers. It also facilitates the
movement and trade of goods and services.

Although the Philippines has operating railways - in terms of tracks
covered in kilometers, the number of working trains coaches, and the areas
reached by the railway system - the country falls far behind in contrast to its
neighbors. Further, the deficiency is made worse by the fact that there is
regulatory chaos since there is no central authority regulating the Philippine
railway system.

The current regulatory framework, or the lack thereof, has not
addressed the daily problems of the train system of the country. To date,
Light Rail Transit (“LRT”) 1, LRT 2 and Metro Rail Transit (“MRT”) 3


operations have not successfully regulated the existing railway systems in
ensuring that they are efficient, safe, and comfortable modes of
transportation. The PNR is in a worse situation as it desperately needs
modernization.

As for Visayas and Mindanao, there is no railway system in place
which can render necessary services in the transport of goods and people
around these areas. Consequently, the absence of functioning railways and
trains in these areas of the country have hampered the potential for economic
growth and development.

Thus, the passage of this bill is Ce),

PANTALEON D. ALVAREZ


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Constitution Hills, Quezon City

EIGHTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. BAS?

Introduced by
REPRESENTATIVE PANTALEON D. ALVAREZ

AN ACT
RESTRUCTURING THE PHILIPPINE NATIONAL RAILWAY
SYSTEM, CREATING THE PHILIPPINE RAILWAY AUTHORITY,
THE PHILIPPINE RAILWAY CORPORATIONS, APPROPRIATING
FUNDS THEREFOR AND FOR OTHER PURPOSES

Be it enacted by the Senate and the House of Representatives of the
Philippine in Congress assembled:

ARTICLEI
GENERAL PROVISIONS

SECTION 1. Title. - This Act shall be known as the “Philippine
National Railway Restructuring Act.”

Sec. 2. Declaration of Policy. - It is the policy of the State to utilize
railway systems as an instrument for national progress and prosperity.
Toward this end, it shall establish a nationwide railway system that is
cost-effective, safe, reliable, efficient, state-of-the-art, accessible,
sustainable and compliant with international standards.

ARTICLE II
PHILIPPINE NATIONAL RAILWAY DEVELOPMENT AUTHORITY

Sec. 3. Creation of the Philippine National Railway Authority. - There is
hereby created a body corporate to be known as the Philippine National

Page 1 of 26


Railway Authority (“PNRA”), hereinafter referred to as the Authority
which shall have the attribute of perpetual succession and shall be vested
with the powers of a corporation. It shall establish its principal office in
Metropolitan Manila, unless otherwise provided by the Authority, and
may put up branches as may be necessary.

Sec. 4. Mandate. ~The Authority shall regulate all aspects of the
operations of the Railway Corporations, presently operating, those
created under this Act, as well as such other railway corporations which
may be established in the future. Said mandate of the Authority shall
apply to railway entities owned and/or operated either by government
or by the private sector.

Sec. 5. Powers, of the Authority. - As a corporate body, the Authority
shall have the following powers, duties and functions:

(a)To succeed in its corporate name, to sue and be sued in such
corporate name and to adopt, alter and use a corporate seal which
shall be judicially noticed;

(b)To adopt, amend, and repeal its By-Laws;

(c) To enter into, make perform and carry out contracts of every class
and description which are necessary and incidental to the
realization of its purposes with any person, firm or corporation,
private or public;

(d)To acquire, own, hold, administer and lease such real and personal
properties as it deems necessary or convenient in governing its
affairs and to encumber, lease, mortgage, sell, alienate or otherwise
dispose of the same except its right-of-way;

(e) To enter into any obligation, assign or accept the assignment of and
rescind any agreement or contract necessary or incidental to the
proper functioning of the Authority;

(f) To prescribe, fix and regulate the scheduled, frequency and route of
railway services;

Page 2 of 26


(g)To privatize any part or all of the railway system or any sub-system
under the supervision and regulation of the Authority, with the
prior approval of Congress, and to permit the party that acquires
the system an authority to operate the same subject first to the grant
of a congressional franchise;

(h)To formulate and adopt a master plan for a modern national railway
system with ecological and environmental standards;

(i) To order the cessation of operations or any and all activities related
to the railway system upon the recommendation of the concerned
railway safety / security officer;

(j) To call upon any government agency or instrumentality for such
assistance as maybe necessary in the discharge of its duties and
functions;

(k)To promulgate such rules and regulations as may be necessary to
carry out the objectives of this Act;

(1) To perform such other powers as may be necessary to carry out the
purpose of this Act.

ARTICLE III
RAILWAY STANDARDS

Sec. 6. Standards. - In order to sustain the development of the
railway industry, enhance the operations of railway systems and ensure
the safety and security of the railway riding public, and protect them from
any form of natural calamities and man-made disasters, the Board shall
set the necessary routes, fares, and standards on safety and security, and
facilities for the easy access by persons with disabilities (PWD) and senior
citizens, to be observed by all railway operators, be they public or private.
The fare and standards on safety and security must be compliant with
international standards and best practices.

Sec. 7. Rules and Regulations. - The Board shall formulate rules and
regulations on the following:

Page 3 of 26


(a) Uniform standards and specifications with respect to rolling stock,
track and structural facilities and other railway equipment and
apparatus;

(b)Construction, maintenance, repair and removal of track and
structural facilities;

(c) Permanent and temporary fencing of right-of-way and structural
facilities including the apportionment of costs in relation thereto;

(d)Track crossing and its usages;

(e) Installation and use of signage, warning signals, barriers, operating
signals and other similar apparatus;

(f) Qualifications of persons operating rolling stock and of persons
carrying out functions regarding the operation of track and of other
equipment and matters ancillary to the operation of rolling stock;

(g)Materials, equipment and technology to be used for the building
and construction of the railway systems;

(h)Tariff, rates and other fees and charges;
(i) Railway security and safety; and
(j) Imposition of fines and penalties.

ARTICLE IV
BOARD OF DIRECTORS

Sec. 8. Board of Directors; Composition. - The powers and functions of
the Authority shall be exercised through a Board of Directors, hereinafter
referred to as the Board, to be composed of five (5) members: the secretary
of the department of transportation as the chairman, the three (3) general
managers of the railway corporation, and one (1) member from the
private sector appointed by the President of the Philippines, for a term, or
terms, in accordance to Republic Act (RA) 10149.

Page 4 of 26


Members of the Board shall receive a per diem of not more than ten
thousand pesos (Php 10,000.00), or as otherwise set by the Department of
Budget and Management, for every board meeting: Provided, however,
That the per diem collected per month does not exceed the equivalent four
(4) meetings.

Sec. 9. Functions, Meetings, Quorum and Reports of the Board. - The
Board of Directors shall be the policy-making body of the Authority and
shall perform the following powers and functions:

(a) Determine the organizational structure of the Authority, define the
duties and responsibilities of all officials and employees and adopt
a compensation and benefit scheme that shall be subject to the
approval of the Governance Commission on Government-Owned
and Controlled Corporations (GCG);

(b)Appoint all officials down to the third level and authorize the
Administrator of the Authority to appoint all others.

(c) Formulate policies, rules and regulations, plans and projects and
programs;

(d)Establish financial and operations targets for management as the
basis for evaluating and monitoring corporate performance;

(e) Authorize such expenditures for the effective and efficient
administration and operations of the Authority; and

(f) Submit an annual report of the operation of the Authority, through
the Secretary of the DOTr, to the President of the Philippines, Senate
President of the Philippines as Speaker of the House of
Representatives;

(g)Meetings of the Board - The Board shall meet regularly once every
month at its principal office. There must be notice to all members of
the Board, sent through electronic or traditional means, at least
three (3) days before said meeting. The Board may also conduct
special meetings whenever necessary.

A majority of the members shall constitute a quorum for the

Page 5 of 26


transaction of corporate business, and every decision of at least a
majority of the members present, at which there is a quorum, shall
be valid as a corporate act, except for the election of officers which
shall require the vote of a majority of all the members of the board.

ARTICLE V
ADMINISTRATION OF THE AUTHORITY

Sec. 10. The Administrator. - The general conduct of the operations
and management of the Authority shall be vested in an Administrator
with the rank and privileges of an Undersecretary who shall serve as
Chief Executive Officer of the Authority. He shall be primarily
responsible for carrying out the projects and programs of the Authority
as well as for the implementation of its policies, rules and regulations,
including the faithful execution of the decisions of the Board.

Sec. 11. Qualifications. - The Administrator must be a citizen of the
Philippines, at least thirty-five (35) years of age on the day of his/her
appointment, of good moral character and with recognized executive
ability and competence in the field of transportation, business
administration, management, finance or law. He shall be appointed by the
President of the Republic of the Philippines for a term or terms, in
accordance with RA 10149.

Sec. 12. Duties and Responsibilities of the Administrator. - The
Administrator of the Authority shall have the following duties and
responsibilities;

(a) Execute, administer and implement the policies and measures
approved by the Board;

(b) Direct and supervise the operations and administration of the
Authority insofar as regulating the operation of railways;

(c) Direct and supervise the preparation of the agenda for the meeting
of the Board, and to submit for the consideration of the Board such
measures as he believes necessary to carry out the purposes and
objectives of the Act;

Page 6 of 26


(d) Represent the Authority in all its transactions with other offices,
agencies and instrumentalities of the government and to deal with
any persons and entities, public or private, domestic or foreign, on
matters related to the mandate of the Authority;

(c) Prepare the annual and supplemental budgets of the Authority; and

(f) Exercise such other powers and perform such other duties and
function as the Board may assign or authorize.

ARTICLE VI
RAILWAY CORPORATIONS

Sec. 13. Railway Corporations: Name, Duration, and Domicile. - There
is hereby created three (3) separate and distinct government corporations
which shall operate railways in the islands of Luzon, Visayas and
Mindanao, to be known, respectively as, the Luzon Railway Corporation
(“LRC”), the Visayas Railway Corporation (“VRC”) and the Mindanao
Railway Corporation (“MRC”). Said Corporations shall exist for a term of
fifty (50) years, from the date of approval of this Act, renewable for
another fifty (50) years upon the approval of the President of the
Philippines.

The LRC shall have its main office in Clark Pampanga, the VRC in
Panay Island, and the MRC in Tagum City, Davao, and shall have such
branches within their respective areas of jurisdiction as may be necessary
for the proper conduct of their business.

Sec. 14. Powers of the Railway Corporation. - The Railway
Corporations herein created shall have the following 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;

Page 7 of 26


°)

d)

e)

8)

h)

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

Generally, to exercise all powers of a corporation under Batas
Pambansa Blg. 68 otherwise known as the “The Corporation
Code of the Philippines,” as amended.

To construct, own lease, operate and maintain public utilities,
infrastructure facilities and such auxiliary support services
needed to develop and regulate a nationwide railway system;

To design, construct, maintain and operate by itself or by
delegation to, or through contractual arrangement such
auxiliary infrastructure support facilities such as, but not
limited to, parking structures above or below the ground,
including the means of access;

To own or operate railroad trainways and subways for the
purpose of transporting, for consideration, passengers, mails,
and property between any point in their respective areas of
operation through the use of railways; and

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.

Further, the assets, liabilities, powers, and functions of public
railway entities, which are owned by the government, shall, upon
effectivity of this Act, be transferred and absorbed by the appropriate
railway corporation, and all such public railway entities shall be deemed

abolished.

Sec. 15. Authorized Capital Stock of the Railway Corporation. - The
authorized capital stock of each Railway Corporation shall be Thirty
Billion Pesos (P30,000,000,000.00) divided into Fifteen Million

Page 8 of 26


(15,000,000.00) common shares with a par value of Two Thousand Pesos
(B2,000.00) each, which shall be fully subscribed by the National
Government and other government institutions, corporations,
instrumentalities, and agencies, whether national or local, within the
framework of their respective charters, twenty percent (20%) of which or
Six Billion Pesos (26,000,000,000.00) shall be initially paid-up and the
balance shall be paid from a continuing annual appropriation of not less
than Two Billion Pesos (22,000,000,000.00), 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 Department
of Budget and Management (“DBM”) in accordance with the schedule of
cash requirements to be prepared and submitted by each Railway
Corporation; Provided, that this continuing annual appropriation of Two
Billion Pesos (22,000,000,000.00) and the programming and release
thereof shall remain in force until the authorized capital subscribed by the
Government shall have been paid in full.

Sec. 16. Board of Directors, Composition, and Appointment. - The
corporate powers of each Railway Corporation shall be vested in the
Board composed of seven (7) Directors. The Undersecretary from the
DOTr shall be the Chairperson and the Secretary of Finance shall be the
Co-Chair, both acting in their ex-officio capacity. The remaining five (5)
members shall be appointed by the President for a term, or terms, in
accordance with RA 10149.

Members of the Board shall receive a per diem of not more than ten
thousand pesos (Php 10,000.00), or as otherwise decided by the DBM, for
every board meeting: Provided, however, that the per diem collected per
month does not exceed the equivalent four (4) meetings.

Sec. 17. Qualifications of Appointive Members of the Board. - The
appointive members of the Board of Directors shall be Filipino citizens, at
least thirty-five (35) years of age at the time of their appointments, and
holders of degrees in the fields of transport planning, engineering,
economics, management, finance, marketing, law, or related course, with
preference for those with masteral degrees in such fields or work
experience in railway management and operations for at least five (5)
years. All such official must be residents of the place where the respective
corporations they work for hold their primary office for business, at least
one (1) years prior to their respective appointments. Further, they shall be

Page 9 of 26


persons of good moral character, competent, and experienced in one or
more of the following fields: transport planning, engineering, economics,
management, finance, corporate law, or marketing.

Sec. 18. Powers and Duties of the Board of Directors. - The Board of
Directors shall have the following powers and duties:

a)

b)

°)

d)

e)

8)

To prescribe, amend, or repeal by-laws, rules and regulations,
or policies governing the manner in which the general
business of the Railway Corporation may be exercised;

To fix the compensation of the General Manager and Assistant
General Managers, subject to the approval of the Government
Commission on Government-Owned and Controlled
Corporations (GCG), and to appoint and fix the compensation
of the other officers of the Corporation;

To approve, the annual and/or such annual supplemental
budgets of the Corporation;

By a two-thirds (2/3) vote of all members, to recommend to
the President the suspension or removal for cause of the
General Manager or Assistant General Manager(s);

Upon the recommendation of the General Manager, to
approve the appointment of all officials of the Corporation
from the rank of division head and above;

Subject to the provisions of applicable laws and regulations,
and upon recommendation of the General Manager, to
reorganize the Railway Corporation, determine its staffing
pattern, or define the functions and duties of organization
units and personnel; and

To expropriate, with rightful compensation, in accordance
with RA 10752, the necessary right of way needed by the
Corporation to acquire, maintain, and/or expand its track
lines.

Page 10 of 26


Sec. 19. General Manager of the Railway Corporation. - The
management and day-to-day operations of each Railway Corporation
shall be vested in the General Manager who shall be appointed by the
President of the Republic of the Philippines, upon the recommendation of
the Board of Directors of said Railway Corporation. The General Manager
shall possess technical competence in management, preferably in railroad
transport management, have demonstrated executive ability, and be of
good moral character. The General Manager shall hold office for a term of
eight (8) years.

Sec. 20. Powers and Duties of the General Manager. - The General
Manager shall have the following powers and duties:

a)

b)

°)

d)

e)

To direct and manage the affairs and business of the Railway
Corporation on behalf of the Board of Directors, subject to the
policies, rules, and regulations established by the latter;

To sit in all meeting of the Board as a resource person, and to
participate in its deliberations, with no right to vote, and to
preside in any meeting for or in the absence of the Chairman;

To recommend to the Board short-and-long range plans and
programs consistent with the overall objectives of the Railway
Corporation;

To submit and recommend consolidated annual budget and
propose capital and other supplemental budgets to the Board;

To appoint officials and employees below the rank of a
division head and to suspend or otherwise discipline for
cause, all subordinate officials and employees of the
Corporation; Provided, however, That in the case of removal
for cause, approval of the Board shall be necessary;

To recommend to the Board such changes in the
organizational structure and staffing patterns of the
Corporation as may be necessary to carry out its functions
effectively;

Page 11 of 26


g) To submit to the President of the Philippines, the Senate
President, and the Speaker of the House of Representatives,
within sixty (60) days after the close of each fiscal year, an
annual report on the operations of the Railway 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.

Sec. 21. Exemption from Taxes, Duties, Port Charges or Dues, and
Customs Bonds. - The Railway Corporations hereby created shall be
exempt from the payment of all taxes of any kind and nature such as those
imposed by the municipal, city, provincial, or national government
including the Value-Added Tax (VAT), upon its capital stock, franchise,
right of way, earning, and all other property owned or operated by it in
relation to its principal and auxiliary purposes, and all import duties on
all railway materials, rolling stocks, spare parts, supplies and equipment
imported in the Philippines for and/or by the Railway Corporation:
Provided, That 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 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: Provided, further, that such exemption shall further
extend to the filling 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.

Sec. 22. Audit Personnel and Report. -

a) Personnel -- The Commission on Audit (“COA”) shall appoint
an Auditor for each of the Railway Corporations, and the necessary
personnel to assist said representative/s in the performance of their
respective duties. The number and salaries of the Auditor/s and said
personnel shall be determined and paid by the COA.

b) Report -- The report of audit of each fiscal year, by the Auditor
of the Railway Corporation s/he assigned to, to the Board of Directors of

Page 12 of 26


the Railway Corporation, and copies thereof shall be furnished the
President of the Republic of the Philippines, the Secretary of
Transportation and the Senate President and the Speaker of the Houses of
Representatives. 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 of 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 shall
also show 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.

Sec. 23. Liquidation. - When its term of existence has expired in
accordance with the provisions of this Act, the Railway 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 and convey its properties, but not for the purpose of continuing
the business for which it was established

ARTICLE VII
CONSTRUCTION OF RAILWAYS

Sec. 24. Construction of Railways and Highway Crossing Track. -
Construction of any form and kind of railway track such as track crossing,
intersections, joints, or connections that unites with any existing railway
track or structural facilities for purposes of developing a railway shall not
be allowed without prior approval of the Authority. Construction on,
across, over or under a highway without prior approval of the Authority
shall likewise not be allowed.

Sec. 25. Structural Change. - No change or replacement of any
existing railway structure or methodology shall be allowed without prior
approval of the Authority.

Sec. 26. Right of Entry and Disturbance Fee. - A railway operator or
his authorized agent, including the Railway Corporation herein created,

Page 13 of 26


bringing in equipment and materials to a piece of land may gain access to
such land to construct or maintain a rail system or to repair a rolling stock,
track or structural facilities of a public railway, subject to the payment of
a disturbance fee in such amounts as may be determined by the Authority.

Sec. 27. Highway Crossing. - When the construction is carried out to
lay track on, across, over or under a highway, the person carrying out the
construction shall allow vehicles using the highway adequate passages,
and on the completion of the construction restore the highway to its
acceptable passable condition.

Sec. 28. Crossing Construction. - Subject to the approval of the
Authority, the owner of a private road may be allowed to construct and
maintain at his own cost, either an underpass or overpass crossing across
the right-of-way that already existed prior to the construction of his
private road. However, if the private road was in existence before the rail
right-of-way was established, the railway owner/operator is responsible
for the cost of constructing and maintaining the crossing.

Sec. 29. Crossing of Landowners. - Any proponent of a railway project
shall provide an access road in between lands cut crossed by the project
when public interest so demands.

Sec. 30. Cost. -When a railway operator is unable to agree with the
road authority as to the cost apportionment associated with the
construction of projects under this article, the parties may resort to
arbitration.

Sec. 31. Fencing of Railway Track. - The operators of railway systems
when public safety demands as may be determined by the Authority,
shall provide the necessary fences along railway tracks.

Sec. 32. Drainage. - In the construction of railways, the Authority
shall ensure that appropriate and adequate drainage and sanitary
facilities are provided. No construction of railways shall be allowed by
the Authority without such facilities.

Sec. 33. Fire Prevention. - All railway operators shall provide their
railway systems all the necessary fire-fighting equipment and adopt ways

Page 14 of 26


and means to protect their systems and commuters from fire or damages
arising there from.

Sec. 34. Stoppage. - When the construction or work poses danger to
person or property, the Safety Officer may immediately order the
stoppage of the construction or work unless constrained by the Authority.

ARTICLE VIII
RIGHT-OF-WAY

Sec. 35. Right-of-Way. - The Authority, upon consultation with the
Railway Corporations herein created, shall identify and establish within
three (3) years after the approval of this Act, the alignment of a National
Railway System and once established and the right-of-way is acquired,
the same shall not be the object of any sale, lease or other forms of
disposition.

Sec. 36. Intrusion into the Right-of-Way. - Any intrusion into the right-
of-way by any person shall be punishable by imprisonment as provided
under Section 92, Article XXVII hereof.

ARTICLE IX
EXPROPRIATION AND OVERRIDING
OBJECTIVE OF CONSTRUCTION

Sec. 37. Expropriation. - The Railway Corporations herein created
may initiate the necessary expropriation proceedings to carry out the
objectives of this Act.

Sec. 38. Ejection. - Any person or group of persons who enter,
intrude, occupy, settle, possess, construct into the railway alignment or
right-of-way or any property owned by any railway office or owned or
controlled corporations, or local government units (LGUs) agency shall
be considered as nuisance per se and shall be summarily ejected from the
premises such entry, intrusion, occupation, settlement, possession and
construction shall be considered as a criminal act and therefore
punishable under Section 73, Article XXI hereof.

Sec. 39. Suspension. - When the construction or work in a railway
project is not being carried out in accordance of the approved

Page 15 of 26


specifications relative to design and product standards, the Safety Officer
may order the suspension of the construction or work until after
corrections shall have been made by the contractor or its resumption is
ordered by the Authority.

Sec. 40. Prohibition Against Issuance of Restraining Orders and
Preliminary Injunctions or Preliminary Mandatory Injunctions.- No court in
the Philippines, except the Supreme Court, shall have the jurisdiction to
issue any restraining order, preliminary injunction, or preliminary
mandatory injunction in any case, dispute, or controversy involving any
contract or project being implemented by the Authority, to prohibit any
person or persons, or entity or government official from proceeding with,
or continuing the execution or implementation of such contract or project,
or pursuing any lawful activity necessary for the execution,
implementation or operation of such railway project/system.

ARTICLE X
RAILWAY OPERATIONS

Sec. 41. Operations. - The operator of a railway, including the
Railway Corporations herein created, shall ensure that the track and other
railway facilities are constructed, operated and maintained in accordance
with this Act, pertinent rules and regulations implementing the same and
policies that may be promulgated by the Authority and the Railway
Regulatory Board and that the rolling stock is maintained and operated
in accordance with applicable rules and regulations promulgated by the
Authority and the Regulatory Board.

Sec. 42. Suspension and Termination. - Any operator of a public or
industrial railway, including the Railway Corporations herein created,
who intends to suspend or terminate its operation shall, within six (6)
months, prior to the suspension or termination, give notice thereof to the
Authority and to the public.

ARTICLE XI
SAFETY AND SECURITY OFFICERS

Sec. 43. Safety Officer. - The Railway Corporations shall have Safety
Officers with the following duties and functions:

Page 16 of 26


a. Administer and foster faithful compliance with railway safety
legislations, approvals and operating rules and regulations;

b. Ensure the safety at all times of rolling stocks, railway tracks,
signaling and communication systems and other facilities.

c. Conduct regularly safety audit of railway system including a check
on inventory levels of essential spare parts; and

d. Ensure the safety of the general riding public and of persons
employed by or acting on behalf of operators of railways;

Sec. 44. Qualifications. - No one shall be appointed as a Safety Officer
unless he is a graduate of a course related to railway safety and passes the
examination given by the Professional Regulatory Commission for the
purpose.

Sec. 45. Security Officer. - There shall be created positions of Security
Officers with the following duties and functions:

a. Administer and foster faithful compliance with railway security
legislations, approvals and operating rules and regulations;

b. Ensure the security of the general riding public and of persons
employed by or acting on behalf of operators of railways; and

c. Ensure the installation of the state of the art surveillance and
tracking equipment for passengers and cargo.

Sec. 46. Qualifications. - No one shall be appointed as a Security
Officer unless he is a graduate of a course related to security and passes
the examination given by the Professional Regulatory Commission for the
purpose.

ARTICLE XII
MAINTENANCE

Sec. 47. Proper Maintenance. - There shall be created a Maintenance

Group headed by a Maintenance Engineer, in every railway line with the
following duties and functions:

Page 17 of 26


a. Ensure that the economic lifespan of the system is attained through
rehabilitation, refurbishment and overhauling;

b. Ensure continuous and efficient operation of the system;
c. Ensure a continued availability of spare parts in the inventory;

d. Ensure the repair and maintenance of the rolling stock, track or
structural facilities.

ARTICLE XIII
COMPLIANCE, ACCIDENTS AND ADMINISTRATIVE PENALTIES

Sec. 48. Inspection of Railways. - The Authority shall also have a
Railway Safety or Security Officer who shall carry out inspections of the
following:

a. Rolling stock, track, goods and other facilities; and

b. Record, document, object or thing that relates to the operations of
a railway.

Sec. 49. Access. - A Railway Safety or Security Officer, in carrying
out an inspection may do one or more of the following:

a. Enter any track, structural facility, rolling stock, building or any
other property associated with railways;

b. Make inquiries with any person who is employed by or who
carries out any duties or functions for or in behalf of the railway
operator; and

c. Perform or caused to be performed tests or examinations of
anything relative to the inspection.

Sec. 50. Production of Documents. - In the course of safety or security

inspection, the officer conducting the inspection may require the
production of any documents, records or things relative thereto.

Page 18 of 26


Any person who is the subject of an inspection shall, when
requested to do so by a railway Safety or Security Officer, produce for
inspection, within reasonable period of time, any record, document,
object or thing that relates to the matter under inspection. A railway
Safety or Security Officer may request copies or take photographs of the
record, document, object or thing under inspection and immediately
thereafter return the same.

When conducting an inspection of a record, document, object or
thing and a railway Safety or Security Officer is of the opinion that he
must retain possession of the record, document, object or thing under
inspection for a longer period of time, he may do so but shall not be longer
than three (3) days after receipt thereof.

Sec. 51. Directions of Railway Safety Officer. -When a railway safety
officer carries out an inspection, he may do one or more of the following:

a. Recommend the cessation of the operation of any railway system
or any activity related thereto when in his expert opinion, there are
reasonable grounds to believe that the continuing operation of the
railway system and any related activity, may endanger the safety
of the riding public and the employees of the railway or cause
damage to property;

b. Order the removal of a rolling stock or any equipment or any
person on board, when the railway safety officer is of the opinion
that the operation or presence of the same poses danger to the
safety of the public or persons employed by or acting on behalf of
the operator unless restrained by the National Railway Authority;
and

c. Issue orders to stop the over-speeding of a train or when violations
are being committed related to the speed of the rolling stock.

Sec. 52. Accidents. - The railway operator shall keep a record of
every accident involving a person or the railway system and shall
forthwith report to the Authority.

Sec. 53. Investigation. -The Authority shall conduct an investigation
on accidents provided for in the immediate preceding section, and for this

Page 19 of 26


purpose, the investigating officer shall have full access to the place and
attributes of the accident.

Sec. 54. Liability. - The operator and his agent shall be jointly and
solidarily liable for the fines and penalties provided under this Article.

Sec. 55. Execution. - When the operator and/or his agent fails to pay
the administrative penalty in accordance with this Article, the Authority
shall take all the necessary legal actions to compel the payment of the
administrative legal penalties and fines against the operator and his
agent.

ARTICLE XIV
REVIEW

Sec. 56. Review/Appeal. - Any order issued by a Safety or Security
Officer maybe appealed for review by the affected person to the Authority
within Fifteen (15) working days from notice thereof whose decision shall
be final and executory.

Sec. 57. Motion for Reconsideration. - Any person affected by an order
or decision of the Authority may file a motion for reconsideration within
Fifteen (15) days from receipt of thereof. No second motion for
reconsideration shall be entertained.

ARTICLE XV
RAILWAY ENERGY PLANT

Sec. 58. Power Plant. - In order to ensure a continuous and
uninterrupted operation of railway systems in the Philippines, the
Corporations herein created may establish a power plant for any of its rail
systems: Provided, That before it can put up a power plant, the Authority
shall undertake a cost-benefit analysis on this matter in order to determine
its cost-effectiveness, viability and whether it is going to be advantageous
to the government.

Sec. 59. Waste-to-Energy Plant. - The Authority shall establish in

cooperation with LGUs and/or the private sector, waste-to-energy plant
in strategic areas in the country.

Page 20 of 26


ARTICLE XVI
TRANSFER OF RAILWAY TECHNOLOGY

Sec. 60. Railway Engineering Course. - A four (4)-year baccalaureate
course in Railway Engineering Management and other related courses
shall be established in the University of the Philippines and/or the
Polytechnic University of the Philippines and shall receive an annual
budgetary support which shall be provided in the Annual General
Appropriations Act.

Sec. 61. Railway Training Center. - A Railway Training Center shall
be established by the Authority to equip the railway manpower resource
with the necessary skills and expertise in the development and
implementation of railway projects and programs, and in the operation of
railway systems.

Sec. 62. Manufacturing of Railway Equipment. - The Authority may
endeavor to establish the necessary mechanisms for the manufacturing of
railway equipment to ensure the expansion and sustainability of a
National Railway System herein envisioned.

ARTICLE XVII
TRAIN DRIVERS

Sec. 63. Train Drivers. - To promote proficiency and to ensure the
safety of the general railway riding public, all train drivers must be
physically and mentally fit and pass all the tests and qualifications to be
prescribed by the Authority. They shall also undergo constant and
continuing training to improve their level of skills, with annual
certification examinations to test the same.

Sec. 64. Train Driver's License. - The Railway Training Center shall
conduct the training for train drivers for a duration that it may determine
and thereafter issue the necessary Train Driver’s License (TDL) for those
who will pass the training according to its standards, tests and
measurements.

Page 21 of 26


ARTICLE XVIII
INSURANCE COVERAGE

Sec. 65. Rail Systems Insurance Coverage. - All rail systems shall be
covered by insurance from natural and man-made disaster by the
Government Service Insurance System (GSIS). In the event the
management and/or operation of the railway system or any part thereof
with a private entity, the insurance shall be covered by an insurance
corporation which attained the lowest, most responsive bid after a
competitive bidding process, taking into consideration the provisions of
this Article.

Sec. 66. Passenger's Insurance Coverage. - Each and every rail
passenger shall be covered by accident insurance by the rail operators,
government or private, in the amount of Two Hundred Thousand Pesos
(P200,000.00) in case of death and not more than One Hundred Thousand
Pesos (P100,000.00) in case of an injury exclusive of medical and
hospitalization expense, and these amounts shall be adjusted once every
five (5) years based on inflation as determined by the National Economic
Development Authority (“NEDA”).

ARTICLE XIX
ACCOUNTABILITY

Sec. 67. Accountability. - To ensure public accountability, the
Authority shall be subject to the audit of the Commission on Audit (COA)
and shall comply with all the generally accepted accounting and auditing
rules and regulations and those which the Commission may promulgate
from time to time pursuant to its constitutional mandate.

ARTICLE XX
LEGISLATIVE FRANCHISE

Sec. 68. Legislative Franchise. - All railway operators are required to
secure a franchise from the Congress of the Philippines. Entities already
operating with an existing franchise shall have one (1) year during which
it must renew the same.

Any entity from the private sector may own, construct, maintain
and operate a railway system, Provided that it shall be a holder of the

Page 22 of 26


appropriate legislative franchise prior to the construction, maintenance
and/or operation of a railway system, and Provided, further, that such
railway system shall not conflict with that already being operated,
managed and maintained by the Railway Corporations herein created.

Sec. 69. Violation of Legislative Franchise. - Any person holding a
legislative franchise which commits a violation of said franchise shall be
subject to the review of the Congress of the Philippines, which may
amend, modify, revoke or cancel its franchise, whichever is applicable,
and without prejudice to the other punishable acts and imposable
penalties under this Article, if any.

ARTICLE XXI
PENALTIES

Sec. 70. Intrusion. - The entry, intrusion, occupation, settlement,
possession and construction on the properties described in Section 43,
Article XI hereof shall be considered a crime against property and
punishable by imprisonment ranging from six (6) months and one (1) day
to two (2) years and or fined in an amount not lower than Ten Thousand
Pesos (P10,000. 00) as maybe determined by the court.

Sec. 71. Obstruction. - Any person who obstructs or impedes the
construction, operation, repair, maintenance and removal of any track,
rolling stock or railway facilities shall be criminally liable and the
punishment by imprisonment ranging from two (2) years and one (1) day
to three (3) years.

Sec. 72. Theft of Railway Property. - Any person who is found to have
stolen any part of a track or rolling stock shall be punished by
imprisonment of six (6) years and one (1) day to twelve (12) years and a
fine of One Million Pesos (P1, 000, 000. 00) Pesos, or both at the direction
of the Court.

Sec. 73. Administrative Penalties. - The Authority may impose a fine
or penalty or both, against the operator and/or its agents who commits
any or all of the following acts of violations:

a. Exceeding the authorized speed limit of his rolling stock shall be
punished with: (1) a fine of One Hundred Thousand Pesos

Page 23 of 26


(P100,000.00) for the first offense; (2) a fine of Three Hundred
Thousand Pesos (300,000.00) for the second offense; and (3) a fine
of Five Hundred Thousand Pesos (2500,000.00) for the third
offense;

. Failure to properly maintain the system resulting to service
interruption shall be fined: (1) One Hundred Thousand Pesos
(P100,000.00) to Two Hundred Thousand Pesos (200,000.00) for
the first offense; (2) Two Hundred Thousand Pesos (P200,000.00) to
Three Hundred Thousand Pesos (300,000.00) for the second
offense; and (3) Three Hundred Thousand Pesos (P300,000.00) to
Five Hundred Thousand Pesos (500,000.00) for the third offense;

. Failure to secure Annual Passengers Insurance Coverage shall be
fined Ten Million Pesos (P10,000,000.00);

. Failure to operate shall be fined with One Million Pesos
(R1,000,000.00) for every day of non-operation, and cancellation of
its franchise or authority after thirty (30) days of non-operation,
except when caused by force majeure or fortuitous event;

. Failure to comply with safety and security regulations resulting to
injury or loss of life and damage to property shall be fined with
One Hundred Thousand Pesos (P100,000.00) for injury and Five
Hundred Thousand Pesos (500,000.00) for every loss of human
life;

. Failure to maintain adequate spare parts inventory shall be fined
with an amount equivalent to the cost of the required spare parts;

- Failure to maintain a maintenance and accident record shall be
fined with: (1) One Hundred Thousand Pesos (P100,000.00) for the
first offense;( 2) Two Hundred Thousand Pesos (2200,000.00) for
the second offense; and (3) Three Hundred Thousand Pesos
(P300,000.00);

. Failure to comply with regulations on cleanliness and sanitation

shall be fined with: (1) One Hundred Thousand Pesos (100,000.00)
for the first offense; (2) Two Hundred Thousand Pesos

Page 24 of 26


(2200,000.00) for the second offense; and (3) Three Hundred
Thousand Pesos (R300,000.00) for the third offense; and

i. Failure to comply with orders, decisions and similar issuances of
the Authority shall be fined with One Hundred Thousand Pesos
(P100,000.00) for every day of non-compliance.

ARTICLE XXII
CONSOLIDATION OF EXISTING RAIL
OFFICES AND AGENCIES

Sec. 74. Consolidation. - Upon the effectivity of this Act, the
Philippine National Railways (PNR), the Light Rail Transit Authority
(LRTA), the Panay Railways, Incorporated, the North Luzon Railway
Corporation (NORTHRAIL), and all other rail offices and agencies shall
be deemed abolished and their functions, projects, assets and liabilities
shall be assumed, absorbed and transferred to the appropriate Railway
Corporation, as the case may be. The Railway Corporations herein created
shall be given a transition period of six (6) months to one (1) year to carry
out this provision of this Act.

Sec. 75. - The assets and liabilities of the EDSA Light Rail Transit of
the Department of Transportation in so far as its existing Build-Lease
Transfer Contract with the Metro Rail Transit Corporation (MRTC) are
likewise deemed transferred to, and assumed by, the Luzon Railway
Corporation.

Sec. 76. Valuation. - The assets of the existing railway offices and
agencies mentioned in Section 100 hereof shall be valued by the
Commission on Audit, and their respective liabilities determined by the
Commission on Audit and Department of Finance.

Sec. 77. Personnel. - All affected Officers and Personnel who are
qualified to receive retirement benefits under RA 1616 and RA 660 shall
be entitled to an additional one (1) month salary for every year of service.
Any Officers or Personnel may avail of the same benefits as provided by
the immediately preceding paragraph; provided that they voluntarily
separate or retire from the service. Provided, further, that they are
qualified to receive retirement benefits under RA 1616 and RA 660.

Page 25 of 26


Affected Officers and Personnel shall be all Officers and Employees
who are involuntarily removed or separated from the service due to the
abolition of their respective agencies by this Act.

ARTICLE XXIII
CONGRESSIONAL OVERSIGHT COMMITTEE

Sec. 78. - Congressional Oversight Committee. - A Congressional
Oversight Committee is hereby created composed of the Chairpersons of
the Committee on Public Services of the Senate and the Committee on
Transportation of the House of the Representatives as Chairpersons and
four (4) members from each House as Members, to be designated by the
Senate President and the Speaker of the House of Representatives,
respectively. The Oversight Committee, shall among others, monitor and
ensure the effective implementation of this Act.

ARTICLE XXIV
SEPARABILITY AND REPEALING CLAUSES

Sec. 79. Separability Clause. -If any of the provisions of this Act is
declared invalid, the provisions thereof not affected by such declaration
shall remain in force and effect.

Sec. 80. Repealing Clause. - The provisions of Republic Act No. 1156,
as amended and Executive Order No. 603, as amended, are hereby
repealed.

ARTICLE XV
EFFECTIVITY

Sec. 81. Effectivity. - This Act shall take effect fifteen (15) days
following its publication in at least two (2) newspapers of general

circulation.

Approved,

Page 26 of 26