Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

EIGHTEENTH CONGRESS
First Regular Session

6178

HOUSE BILL NO.

Introduced by Honorable MANUEL JOSE M. DALIPE

EXPLANATORY NOTE

This bill Seeks to establish the Mindanao Railways Corporation as a means of hastening
the development of the island.

Mindanao, the second largest island in the Philippines, is incredibly rich in resources and
economic opportunity. If further developed, the island could provide unparalleled growth for the
country. According to the World Bank, in its report entitled, “Philippines Mindanao Jobs Report:
A Strategy of Regional Development,” unlocking Mindanao’s potential is key to the country’s
overall economic progress. And progress cannot be achieved without infrastructure.

'mproving and upgrading transportation infrastructure in Mindanao will help stimulate
economic activity in all provinces in the island. Under the Duterte administration's “Build, Build,
Build” program, the infrastructure masterplan for Mindanao includes the development of the
Mindanao Railway System.

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.

In view of the foregoing, immediate approval of this measure is earnestly requested.



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

EIGHTEENTH CONGRESS
First Regular Session

6178
HOUSE BILLNO.

Introduced by Honorable MANUEL JOSE M. DALIPE

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:

SECTION 1. Name, Duration and Domicile. - A Corporation to serve as the
instrumentality of the Government 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 shalll 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 be 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 powerhouse, hotels;
restaurants, terminals, warehouse, 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 tunnels and the like.


SEC. 3, General Powers. ~ The Corporation shall have the following general powers:

a) To do all such other things and to transact all such business directly or indirectly,
incidental or conducive 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 (P10, 000,000,000.00), divided into Ten Million Pesos
(P10,000,000.00) shares at par value share of One Thousand Pesos (P1,000.00) 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 release 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 appropriation 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
indebtedness in any domestic or convertible foreign currency, or their capital goods, from foreign
governments, their agencies, instrumentalities or financial institutions, or any non-governmental
national or international institutions or firms extending suppliers credit deferred Payment
arrangement or other fund sources, or to issue bonds, the total outstanding amount of which,
exclusive of interest, 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 specifying such terms and conditions.

The President of the Philippines, through the Secretary of Finance, is hereby authorized
to guarantee, in the name and other behalf of the Republic of the Philippines, the payments 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 pursuant to loan agreements
entered into with foreign governments or any international financial institution of fund sources.

The loans, credits and indebtedness contracted under this Section and the payment of
the principal, interest and other charges thereon, as well as the importation of machinery,
equipment, materials suppliers, and services, by the corporation, paid from the proceeds of any

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loan, credit or indebtedness incurred under this Act, shall also be exempted from all charges and
restrictions previously imposed and to be imposed by the Republic of the Philippines, or any of
its agencies and political subdivisions.

SEC. 6. Board of Directors, Composition and Appointment. - The Corporate 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 term of office shall be six (6) years
from the date they qualify and assume office, except that any person chosen to fila 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 member shall receive a per diem of One Thousand Pesos
(P1,000.00). 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 Board 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 operataions for at leat
five (5) years is preferable. Majority of such officials must be residents of Mindanao for at least
five (5) years prior to the appointments.

SEC. 8. Powers and Duties of the Board of Directors. ~ The Board of Directors shall have
the following powers and duties:

a) To prescribed, amend and repeal laws, rules and regulations governing the manner in
which the general business of corporation may be exercised, including provisions for
the formulation 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 of all the members may, for
cause, and with the President of the Philippines suspend and/or 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 pre-qualified 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.

b)

qd)

d)



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 Philippines.

SEC. 10, Prohibition for Board Members. — No Chairman or member of the Board of
Directors of the Corporation shall serve in the Corporation in any capacity 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 on
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 supervision;

To sit in all meetings of the Board of Directors as Vice-Chairman, and participate in its

deliberation, with the right to vote and to preside any meeting for or in the absence

of the Chairman;

To submit within sixty (60) days after of each fiscal year an annual report, though the

Board of Directors, to the office of the President of the Philippines and the Congress

of the Philippines;

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

€) To perform such other duties as may be assigned by the Board of Directors from time
to time.

b)

q

d)

‘SEC. 13. Appointment and Promotion of Personnel. - The Provision of Civil Service Law
shall govern in the appointment and promotion of the 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 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 procedure 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 sources and applications 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 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 or law.

b)

‘SEC. 16. Legal Counsel - the Corporation shall have its own legal department, the other
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 it 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 the law to the contrary
notwithstanding, Le. cases of national emergency, or when in the opinion of the president of the

6


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 employment 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 are not inconsistent with the provisions 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 part thereof inconsistent with an of the provision of this Act, are hereby
repealed or modified accordingly.

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,