FIFTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
SENATE 
S~nate Bill No. 1248 
INTRODUCED BY SEN. MANNY VILLAR 
EXPLANATORY NOTE 
This bill seeks the estabHshment of the Mindanao Railways Corporation as 
a deliberate effort of the presel'lt 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 developed transportation of Luzon 
and Visayas. 
In view of the foregoing, approval of this bill is thus requested. 


FIFTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
.. ' 
l' " 
'! ""1 
:, "1,'1'" 
•. 1 
SENATE 
."" 
"" ""'P",~ " 
Senate Bill No. 1248 .... 
INTRODUCED BY SEN. MANNY VILLAR 
AN ACT 
CREATING THE MINDANAO RAILWAYS CORPORATION PRESCRIBING ITS 
POWERS, 
FUNCTIONS 
AND 
DUTIES 
AND 
PROVIDING 
FOR 
THE 
NECESSARY FUNDS FOR ITS OPERATION 
Be it enacted by the Senate and House of Representatives of the 
Philippines in Congress assembled: 
1 
SECTION 1. Name, Duration and Domicile. - A corporation to serve as 
2 
the instrumentality of the Government of the Philippines in providing a railroad 
3 
and transportation system for the whole island of Mindanao is hereby created, to 
4 
be known as the Mindanao Railways Corporation, which for the purpose of this 
5 
Act, shall be called the Corpora~ion. The Corporation shall exist for a term of fifty 
6 
(50) years from the date of approval of this Act. It shall have its main office in 
7 
Cagayan de Oro City, and shall have such branches and agencies within or 
8 
outside the Philippines, as may be necessary for the proper conduct of its 
9 
business. 
10 
SEC. 2. Purposes and Specific Powers. - The Corporation shall have 
11 
the following purposes and specific powers: 
12 
(a) To own or operate railroads, tramways, and other kinds of land 
13 
transportation, vessels and pipelines, for the purpose of transporting 
14 
for consideration, passengers, mails and property between any points 
15 
in Mindanao; and 
2 


1 
(b) As an auxiliary to its main purpose, to own and/or operate 
2 
powerhouse, 
hotels; 
restaurants, terminals, 
warehouse, timber 
3 
concessions, coal mines iron and other mineral properties and to 
4 
manufacture rolling stocks, equipment tools and other appliances, to 
5 
construct and operate in connection with its railroad lines, toll viaducts, 
6 
toll tunnels and the like. 
7 
SEC. 3. General Powers. -
The Corporation shall have the following 
8 
general powers: 
9 
(a) 
To do all such other things and to transact all such business directly 
10 
or indirectly, incidental or conducive to the attainment of the purpose 
11 
of the corporation; and 
12 
(b) 
Generally, to exercise all powers of a corporation under the 
13 
Corporation Law; 
14 
(c) 
To exercise the power of eminent domain. 
15 
SEC. 4. Authorized Capital Stock of the Corporation. - The Authorized 
16 
Capital Stock of the Corporation shall be Ten billion pesos (P10,OOO,OOO,OOO.OO), 
17 
. divided into Ten million pesos (P10,000,000.00) shares at par value shares of 
18 
One thousand pesos (P1,000.00) each, which shall be fully subscribed by the 
19 
Philippine Government, twenty. percent (20%) of which or Two billion pesos 
20 
(P2,000,000,000.00) shall be initially paid-up and the balance shall be paid from 
21 
a continuing annual appropriation of not less than Two hundred million pesos 
22 
(P200,OOO,OOO.OO) which is hereby appropriated, out of any funds in the National 
23 ,Treasury not otherwise appropri'ated. The said amount shall be programmed and 
24 
released by the Budget Commission in accordance with the schedule of cash 
25 
requirements to be prepared and submitted by the Mindanao Railways 
26 
Corporation: Provided, That this continuing annual appropriation of Two billion 
27 
pesos (P2,OOO,OOO,OOO,OO) artd the programming and release thereof shall 
28 
remain in force until the authorized capital subscribed by the Government shall 
29 
have been paid in full. 
3 


1 
SEC. 5. Loans. - The Corporation is hereby authorized to contract loans, 
2 
credits, and indebtedness in any domestic or convertible foreign currency, or 
3 
their capital goods, from foreign governments, their agencies, instrumentalities or 
4 
financial 
institutions, 
or any non-governmental national or international 
5 
institutions or firms extending suppliers credit deferred payment arrangement or 
6 
other fund sources, or to issue bonds, the total outstanding arnount of which, 
7 
exclusive of interests, shall not exceed Five hundred million United States dollars 
8 
($500,000,000.00) or the equivalent thereof in other currencies; on such terms 
9 
and conditions as it shall deem appropriate for the accomplishment of its purpose 
10 
and to enter into and execute documents and other documents specifying such 
11 
terms and conditions. 
12 
The President of the Philippines, through the Secretary of Finance is 
13 
hereby authorized to guarantee, in the name and on behalf of the Republic of the 
14 
Philippines, the payment of the loans, credits, indebtedness and bonds issued up 
15 
to the amount herein authorized.which shall be over and above the amount which 
16 
the President of the Philippines is authorized to guarantee under Republic Act 
17 
Numbered Sixty-One Hundred and Forty-Two (R.A. 6142) as amended, as well 
18 
as the performance of all or any of the obligation undertaken by the Corporation 
19 
in the territory of the Republic of the Philippines pursuant to loan agreements 
20 
entered into with foreign governments or any international financial institution of 
21 
fund sources. 
22 
The loans, credits and indebtedness contracted under this Section and the 
23 
payment of the principal, interest and other charges thereon, as well as the 
24 
importation of machinery, equipment, materials, suppliers, and services, by the 
25 
corporation, paid from the proceeds of any loan, credit or indebtedness incurred 
26 
under this Act, shall also be exempted from all charges and restrictions 
27 
previously imposed and to be imposed by the Republic of the Philippines, or any 
28 
of its agencies and political subdivisions. 
4 


1 
SEC. 6. Board of Directors, Composition and Appointment. - The 
2 
corporate power of the Corporation shall be vested in and exercised by a Board 
3 
of Directors consisting of a chairman, vice-chairman and nine (9) members who 
4 
shall be appointed by the President of the Philippines, with the consent of the 
5 
Commission on Appointments. Their term of office shall be six (6) years from the 
6 
date they qualify and assume office, except that any person chosen to fill a 
7 
vacancy shall serve only for ,the unexpired term of the member whom he 
8 
succeeds: Provided, That the first appointed members of the Board shall be 
9 
divided to serve as designated by the President in their appointments for terms of 
10 
two (2), four (4) and six (6) years, respectively. For actual attendance of Board 
11 
meetings, each such members shall receive a per diem of One thousand pesos 
12 
(P1 ,000.00). The Board meetings may not exceed four (4) times a month. 
13 
SEC. 7. Qualification of Board Members. -
The Chairman, Vice-
14 
Chairman, and the members of the Board of Directors of the Corporation shall be 
15 
Filipino citizens, at least thirty-five (35) years of age at the time of their 
16 
appointments and holders of degrees in the field of engineering, economics, 
17 
business management and related courses. In addition, a masteral degree in the 
18 
same field and/or experience in, railway management and operations for at least 
19 
five (5) years is preferable. Majority of such officials must be residents of 
20 
Mindanao for at least five (5) years prior to the appointments. 
21 
SEC. 8. Powers and Duties of the Board of Directors. - The Board of 
22 
Directors shall have the following powers and duties: 
23 
(a) To prescribe, amend and repeal laws, rules and regulations governing 
24 
the manner in which the general business of corporation may be 
25 
exercised, including provisions for the formation of such committee or 
26 
committees as the BQard of Directors may deem necessary to facilitate 
27 
its business. 
28 
(b) To appoint and fix th~ compensation of the General Manager, subject 
29 
to the approval of the President of the Philippines of the Philippines, 
5 


1 
and to appoint and fix the compensation of the other officers of the 
2 
Corporation. The Board by a majority of all the members may, for 
3 
cause, and with the President of the Philippines suspend and/or 
4 
remove the General Manager. 
. 5 
(c) To approve the annual and/or such supplemental budgets of the 
6 
Corporation which may be submitted to it by the General Manager 
7 
from time to time. 
8 
(d) To enter into contract with any duly pre-qualified private contractor for 
9 
the financing, construction, operation and maintenance of any 
10 
financially viable infrastructure facilities through the Build Operate and 
II 
Transfer or Build and Transfer scheme, as provided for by law. 
12 
SEC. 9. Suspension and Removal of Directors. - Any member of the 
13 
Board of Directors may, for cause, be suspended or removed by the President of 
14 
the Philippines. 
15 
SEC. 10. Prohibition for Board Members. - No Chairman or member of 
. 
16 
the Board of Directors of the Corporation shall serve in the Corporation in any 
17 
capacity other than as Chairman or member thereof, unless otherwise authorized 
18 
by law. 
19 
SEC. 11. Managing Head. - The management of the Corporation shall be 
20 
vested in the General Manager, who shall possess technical competence in 
21 
Railroad Management, hold ·office for a term of six (6) years without 
22 
reappointment and who shall be removable for cause. He shall be appointed by 
23 
the President of the Philippines, with the consent of the Commission of 
24 
Appointments. 
25 
SEC. 12. Powers and Duties of the General Manager. - The General 
26 
Manager shall have the following powers and duties: 
27 
(a) To direct and manage the affairs and business of the Corporation on 
28 
behalf of the Board of Directors, and subject to its control and 
29 
supervision; 
6 


1 
(b) To sit in all meetings bf the Board of Directors as Vice-Chairman, and 
2 
participate in its deliberation, with the right to vote and to preside any 
3 
meetings for or in the absence of the Chairman; 
4 
(c) To submit within sixty (60) days after of each fiscal year an annual 
5 
report, through the Board of Directors, to the Office of the President of 
6 
the Philippines and the Congress of the Philippines; 
7 
(d) To appoint and fix the number and the salaries, with the approval of 
8 
the Board of Directors, of such subordinate personnel as may be 
9 
necessary for the proper discharge of the duties and functions of the 
10 
Corporation, and with the approval of the Board of Directors, to 
11 
remove, suspend, or otherwise discipline, for cause, any subordinate 
12 
employee of the Corporation; and 
13 
(e) To perform such other duties as may be assigned by the Board of 
14 
Directors from time to time, 
15 
SEC. 13. Appointment and Promotion of Personnel. - The provision of 
16 
Civil Service Law shall govern ih the appointment and promotion of officers and 
17 
employees of the Corporation, 
18 
SEC. 14. Exemption from Taxes, Duties and Port Charges. - The 
19 
Corporation is hereby exempt from payment of all taxes of every name and 
20 
nature -
municipal, city, provincial, or national -
upon its capital stock, 
21 
franchisees, right of way, earnin,gs, and all other property owned and operated by 
22 
it and all duties, all railways materials, supplies and equipment imported in the 
23 
Philippines for and/or by the said Corporation, and this exemption shall extend to 
24 
port charges upon vessels whose entire cargo of materials for the construction of 
25 
the prescribed port charges on other vessels as the tonnage of materials for such 
26 
constructions or equipment may bear to the tonnage of the entire cargo of the 
27 
vessel. 
28 
7 


1 
SEC. 15. Audit Personnel and Report.-
2 
a) Personnel -- The Commission on Audit shall appoint a representative 
3 
who shall be the Auditor of the Corporation, and the necessary 
4 
personnel to assist said representative in the performance of his 
5 
duties. The number and salaries of the Auditors and said personnel 
6 
shall be determined by the Commission on Audit, subject to 
7 
appropriation by the Board of Directors. In case of disagreement, the 
8 
matter shall be submitted to the President of the Philippines whose 
9 
decision shall be fin.al. Said salaries and all other expenses of 
10 
maintaining the Auditor's Office shall be paid by the Corporation. 
11 
b) Report - The financial transactions of the Corporation shall be audited 
12 
in accordance with law, administrative regulations and the principles 
13 
and procedure applicable to commercial corporate transaction. A 
14 
report of audit for each fiscal year, by the representative of the 
15 
Commission on Audit, through the latter, to the Board of the 
16 
Corporation, and copies thereof shall be furnished the President of the 
17 
Philippines, the Secretary of Transportation and Communications and 
18 
the Presiding Officers of the Two Houses of Congress. The report shall 
19 
set forth the scope of the audit and shall include a statement of assets 
20 
and liabilities, capital and surplus or deficit; a statement and surplus or 
21 
deficit analysis; statement of income and expenses; a statement of 
22 
sources and application of funds; and such comments and information 
23 
as may be necessary, together with such recommendations with 
, 
24 
respect thereto as may be advisable, including a report of any 
25 
impairment of capital noted in the Audit. The report also shows 
26 
specifically any program, expenditures or other financial transaction or 
27 
undertaking observed in the course of Audit, which in the opinion of the 
28 
Auditor, has been carr!ed on or made without authority of law. 
8 


• 
1 
SEC. 16. Legal Counsel - the Corporation shall have its own legal 
2 
department, the other chief and members of which shall be appointed by the 
3 
Board of Directors. 
4 
SEC. 17. Exemption from the Land Transportation Commission Act.-
5 
The Corporation shall not be subject to the authority and supervision of the Land 
6 
Transportation Commission. 
7 
SEC. 18. Liquidation. -.When its term or period of existence has expired 
8 
in accordance with the provision of this Act, the Corporation shall nevertheless, 
9 
continue as a body corporate for three (3) years after the time of its dissolution 
10 
for the purpose of prosecuting and defending suits by or against it and of 
11 
enabling it gradually to settle a'nd close its affairs, to dispose of any convey its 
12 
properties, but not for the purpose of continuing the business for which it was 
13 
established. In order to carry ·out its liquidation, upon the dissolution of the 
14 
Corporation, a Board of Liquidators shall be appointed by the President to take 
15 
charge of winding up its corporate affairs and affecting its liquidation. 
16 
SEC. 19. Strikes during National Emergency. - The provisions of law to 
17 
the contrary notwithstanding, i~. cases of national emergency, or when in the 
18 
opinion of the President of the Philippines, the national security or interest is in 
19 
imminent danger, employees a(1d laborers of the corporation shall not strike for 
20 
the purpose of securing changes or modification in their terms and conditions of 
, 
21 
employment during the period of emergency. 
22 
SEC. 20. Reversion of General Funds. -
All funds resulting from 
23 
dissolution and liquidation of the Corporation as herein provided shall revert to 
24 
the general funds of the Government. 
25 
SEC. 21. - Applicability of the Corporation Law. - The provisions of the 
26 
Corporation Law which are not inconsistent with the provisions of this Act, shall 
27 
be applicable to the corporation created hereby. 
28 
SEC. 22. Repeal or Modification. - The provisions of Republic Act No. 
29 
4156, as amended, creating the Philippine National Railways, and all acts, 
9 


1 
executive orders, administrative orders, and proclamation or parts thereof 
2 
inconsistent with any of the provision of this Act, are hereby repealed or modified 
3 
accordingly. 
4 
SEC. 23. Separability Clause. - In the event any provision of this Act or 
5 
application of such provision to any person or circumstances is declared 
6 
unconstitutional, the remainder of this Act or the application of said provision to 
7 
other persons or circumstances shall not be affected thereby. 
8 
SEC. 24. Effectivity. - This Act shall take effect upon its approval. 
9 
10 
Approved, 
10