THIRTEENTH CONGRESS OF THE REPUBLIC) 
OF THE PHILIPPINES 
1 
First Regular Session 
) 
S E N A T E  
S. NO. 
Introduced by Senator Juan M. Flavier 
EXPLANATORY NOTE 
This bill seeks the establishment of the Mindanao Railways Corporation as 
a deliberate effort of the present government to hasten the development of the 
Mindanao region.* 
The Mindanao Railways Corporation, if created, will serve as a 
government instrumentality in providing railroad and transportation system for the 
whole island of Mindanao. The people from the South and traders from all over 
the land who have difficulties traveling and transporting their goods within and 
outside the island will be benefited. A railroad network crisscrossing Mindanao 
will considerably shorten the distance and/or travel of the people or the goods 
whose destination is the Visayas or Luzon, not to mention the opportunity to 
trade and transport huge volume of goods at the lowest cost. 
The experience of Japan, Canada, the United States and most of Europe 
whose railroad networks have enhanced national development, is sufficient 
encouragement for the railroad system in the South. 
The establishment of said Corporation will spearhead Mindanao's 
economic take-off and become at par with the more developed transportation of 
Luzon and Visayas. 
In view of the foregoing, approval of this bill is thus requested, 


THIRTEENTH CONGRESS OF THE REPUBLIC) 
First Regular Session 
OF THE PHILIPPINES 
1 
S E N A T  
Introduced by Senator Flavier 
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 klouse of Representafives of the 
Phlilippines in Congress assembled: 
SECTION I. 
Name, Duration and Domicile. -- A Corporation to sel-ve 
the instrumentality of the Governmerit of the Philippines 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 the 
purpose of this Act, shall be called the Corporation. The Corporation shall exist 
for a term of fifty (50) years from the date of approval of this Act. It shall have its 
main office in Cagayan de Oro City, and shall have such branches and agencies 
within or outside the Philippines, as may bo necessary for the proper conduct of 
its business. 
SEC. 2. Purposes 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 and property between any points 
in Mindanao; and 
b) 
As an auxiliary to its main purpose, to own and/or operate 
power h o u s est hot el s , rest a u ria r) t s , t errn i n a I s , warehouses , ti m 5 e r 


concessions, coal mines, iron and other mineral properties and to 
manufacture rolling stocks, equipment, tools and other appliances, to 
construct and operate in coiinection 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 tn transact all such business directly or 
indirectly, incidental or conduciv(? to the attainment of the purpose of 
the corporation; and 
b) Generally, to exercise all powers of a corporation under the 
Corporation Law; 
c) To exercise the power of eminent domain. 
SEC. 4. 
Authorized Capital Stock of the Corporation. - The 
Authorized Capital Stock of the Corporation shall be Ten billion pesos 
(P 1 O,OOO,OOO,OOO.OO), 
divided into Ten million pesos (PI 0,000,000.00) shares at 
par value shares of One thousand pesos (PI ,000.00) each, which shall be fully 
subscribed by the Philippine Government, twenty percent (20%) of which or Two 
billion pesos (P2,000,000,000.00) shall be initially paid-up and the balance shall 
be paid from a continuing annual appropriation of not less than Two hundred 
million pesos (P200,000,000.00) 
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 Budget Commission in accordance with the 
schedule of cash requirements to be prepared and submitted by the Mindanao 
Railways Corporation: Provided, That this continuing annual appropriatior! of 
Two billion pesos (P2,000,000,000.00) 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. 5. Loans. -- The Corporation is hereby authorized to contract 
loans, credits, and indeb,tedness in any dornestic or convertible foreign currency, 


or their capital goods, from foreign governnients, their agencies, instrumentalities 
or financial institutions, or any non-governmental national or international 
institutions or firms extending suppliers crt?clit deferred payment arrangement or 
other fund sources, or to issue bonds, the total outstanding amount of which, 
exclusive of interests, shall not exceed Five hundred million United States dollars 
($500,000,000.00) or the equivalent thereof in other currencies; on such terms 
and conditions as it shall deem appropriate for the accomplishment of its purpose 
and to enter into and execute documents and other documents and other 
documents specifying such terms and conditions. 
The President of the Philippines, through the Secretary of Finance, is 
hereby authorized to guarantee, in the narrx and on behalf of the Republic of the 
Philippiries, 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 of the Philippines is authorized to guarantee under Republic Act 
Numbered Sixty-One Hundred and Forty-Two (R.A. 6142) as amended, as well 
as the performance of all or any of the obligation 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 institution of 
furid sources. 
The loans, credits and indebtedness contracted under this Section arid the 
payment of the principal, interest and other charges thereon, as well as the 
importation of machinery, equipment, materials, suppliers, and services, by the 
Corporation, paid from the proceeds of any loan, credit or indebtedness incurred 
under this Act, shall also be exempted from all charges and restrictions 
previously and presently imposed and to be imposed by the Republic of the 
Philippines, or any of its agencies and political subdivisions. 
SEC. 6. Board of Directors, Coniposition and Appointment. -- The 
corporate power 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 of the Philippines, with the consent of the 
Commission on Appointments. Their terms of office shall be 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: Provided, That the first appointed members of the Board shall be 
divided to serve as designated by the President in their appointments for terms of 
two (2), four (4) and six (6) years, respectively. For actual attendance of Board 
meetings, each such members shall receive a per diem of One thousand pesos 
(P.1,OOO.OO). The Board meetings may not exceed four (4) times a month. 
SEC. 7. Qualification of Board Members. -- The Chairman, Vice- 
Chairman, and the members of the Boad of Directors 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 and related courses. In addition, a masteral degree in the 
same field and/or experience in railway management and operations for at least 
five (5) years is preferable. 
Mindanao for at least five (5) years prior to the appointments. 
Majority of such officials must be residents of 
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. 
To appoint and fix the compensation of the General Manager, subject 
to the approval of the President of the Philippines, and to appoint and 
fix the compensation of the other officers of the Corporation. The 
Board by a majority vote of all the members may, for cause, and with 
b) 


the President of the Philippines suspend andlor remove the General 
Manager. 
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. 
To enter into contract with any duly prequalified private contractor for 
the financing, construction, operation and maintenance of any 
financially viable infrastructure facilities through the Build Operate 
and Transfer or Build and Transfer scheme, as provided for by law. 
SEC. 9. Suspension and Removal of Directors. -- Any member of the 
Board of Directors may, for cause, be suspended or removed by the President of 
the Phi I i pp in es . 
SEC. I O .  Prohibition for Board Members. -- No Chairman or member 
of the Board of Directors of the Corporation shall 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, who shall possess technical competence in 
Railroad Management, hold office for a term of six (6) years without 
reappointment and who shall be removable for cause. He shall be appointed by 
the President of the Philippines, with the consent of the Commission of 
Appointments. 
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 
su pe rvi s i on; 


b) To sit in all meetings of the Board of Directors as Vice-chairman, and 
participate in its deliberations, with the right to vote and to preside any 
meetings for or in the absence of the Chairman; 
c) To submit within sixty (60) days after the close of each fiscal year an 
annual report, through the Board of Directors, to the Office of the 
President of the Philippines and the Congress of the Philippines; 
d) TO appoint and fix the number and the salaries, with the approval of 
the Board of Directors, of such subordinate personnel as may be 
necessary for the proper discharge of the duties and functions of the 
Corporation, and with the approval of the Board of Directors, to 
remove, suspend, or otherwise discipline, for cause, any subordinate 
employee of the Corporation; and 
e) To perform such other duties as may be assigned to him by the Board 
of Directors from time to time. 
SEC. 13. Appointment and Promotion of Personnel. -- The provision 
of Civil Service Law shall govern in the appointment and promotion of officers 
and employees of the Corporation. 
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, 
franchisees, right of way, earnings, and all other property owned and operated by 
it and all duties, all railways materials, supplies and equipment imported in the 
Philippines for and/or by the said Corporation, and this exemption shall extend to 
port charges upon vessels whose entire cargo consists of materials for the 
construction of the prescribed port charges on other vessels as the tonnage of 
materials for such constructions or equipment may bear to the tonnage of the 
entire cargo of the vessel. 


SEC. 15. Audit Personnel and Report. - 
a) Personnel -- The Commission on Audit shall appoint a representative 
who shall be the Auditor of the Corporation, and the necessary 
personnel to assist said representative in the performance of his 
duties. The number and salaries of the Auditors 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. 
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 transaction. 
A 
report of audit for each fiscal year, by the representative of the 
Commission on Audit, through the latter, to the Board of the 
Corporation, and copies thereof shall be furnished the President of the 
Philippines, the Secretary of Transportation and Communications and 
the Presiding Officers of the two Houses of Congress. The report shall 
set forth the scope of the audit and shall include a statement of assets 
and liabilities, capital and surplus or deficit; a statement and surplus or 
deficit analysis; statement of income and expenses; a statement of 
sources and application of funds; and such comments and information 
as may be necessary, together with such recommendations with 
respect thereto as may be advisable, including a report of any 
impairment of capital noted in the Audit. 
The report also shows 
specifically any program, expenditures or other financial transaction or 
undertaking observed in the course of audit, which in the opinion of the 
Auditor, has been carried on or made without authority of law. 


SEC. 16. Legal Counsel. -- The Corporation shall have its own legal 
department, the chief and members of which shall be appointed by the Board of 
Directors. 
SEC. 17. Exemption from the Land Transportation Commission Act. 
-- The Corporation shall not be subject to the authority and supervision of the 
Land Transportation Commission. 
SEC. 18. Liquidation. -- When its term or period of existence has 
expired in accordance with the provision of this Act, the Corporation shall 
nevertheless, continue as a body corporate for three (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 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 affecting its liquidation. 
SEC. 19. Strikes during National Emergency. -- The provisions of law 
to the contrary notwithstanding, in cases of national emergency, or when in the 
opinion of the President of the Philippines, the national security or interest 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 
erriployment during the period of emergency. 
SEC. 20. 
Reversion of General Funds. -- All funds resulting from 
dissolution and liquidation of the Corporation as herein provided shall revert to 
the general funds of the Government. 
SEC. 21. Applicability of the Corporation Law. -- The provisions of 
the Corporation Law which ace not inconsistent with the provisioris of this Act, 
shall be applicable to the corporation created hereby. 
SEC. 22. 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 proclamation or parts thereof 
inconsistent with any of the provision of this Act, are hereby repealed or modified 
accord i n g I y . 
SEC. 23. Separability Clause. -- In the event any provision of this Act 
or 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. 24. Effectivity. -- This Act shall take effect upon its approval. 
Approved,