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

SEVENTEENTH CONGRESS
Third Regular Session

- 8711
House Bill No.

Introduced by DIWA Party-list Representative Pepito M. Pico

EXPLANATORY NOTE

This bill seeks to establish the Mindanao Railways Corporation owing to the
importance of having a railway transit for the economic development of Mindanao.

Under the 1987 Constitution, it is the policy of the State to develop a self- reliant and
independent national economy (Section 19, Article XIII). The National Economic
Development Authority has stated Global assessments of the country’s transport infrastructure
network indicate that its quality and capacity remain low.

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 a recent report where the National Economic Development Authority (NEDA) sets
to start a feasibility study for Mindanao Railway, NEDA said that the proposed railway
transport service “will play a major role towards improvement of Mindanao’s intra island
accessibility, linkages and seamless multimodal transport network.”

Furthermore, 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.

In view of the foregoing, approval of this bill is thus earnestly sought.

PERITO M. PICO
Representative, DIWA Party-list

"NEDA Sets Stat of Feasibility for Mindanao Railway, Philippine Star, Monday, May 4, 2015, page-s.

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

SEVENTEENTH CONGRESS
Third Regular Session

House Bill No8 711

Introduced by DIWA Party-list Representative Pepito M. Pico

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 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 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

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
viaducts, toll tunnels and the like.

b)

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;

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©) 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 (10,000,000) shares at par value 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 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
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-
government 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 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 specifying such terms and conditions.

The President of the Philippines, through the Secretary of Finance, is hereby authorized
to guarantee, in the name and on behalf of the Republic of the Philippines, 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 No. 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 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 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
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

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by the President in their appointments for terms of two (2), four (4) and six (6) years, receive
aper 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 operations 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 prescribe, amend and repeal 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 of all the members
may, for cause, and with the President of the Philippines suspend and/or remove the
General Manager.

c) To approve the annual and/or such supplemental budgets of the Corporation which
may be submitted to it by the General Manager.

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)

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;

b) 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 meetings for or in the
absence of the chairman;

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©) To submit within sixty (60) days after 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;

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 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.

d)

fe

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 of materials for the construction of the
prescribed port charges on the 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.

b) 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 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 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.

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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 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, i.e., cause 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 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 parts thereof inconsistent with any of the provision
of this Act, are hereby repealed or modified accordingly.

SEC. 23. — 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,

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