"HOUSE OF REPRESENTATIVES
RECEIVED
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ISTMITION UNIT
_ _ BILLS AND oF sre\/)
juced by Representative Maximo B. Rodriquez, JF- ——

SEVENTEENTH CONGRESS
REPUBLIC OF THE PHILIPPINES )
First Regular Session )

HOUSE OF REPRESENTATIVES
House Bill No, 358

EXPLANATORY NOTE

This bill seeks to create the Mindanao Railways Corporation as a means of hastening
the development of the island.

The experience of Japan, Canada, the United States and most of Europe shows how
their railroad networks have sped up the national development. In these nations, railroads
opened up vast land areas, thereby making it possible for tremendous numbers of people to
settle and huge volumes of goods to be transported there at the lowest cost. The influx of
people into areas previously unsettled and the easy availability of goods needed for civilzed
life means higher productivity of the land.

A railroad network crisscrossing Mindanao will considerably shorten the distance, for
example, between Zamboanga and Cagayan de Oro or Davao and Cagayan de Oro. That
will, in turn, mean a shortening of the travel time of the people of the goods whose end
destination is the Visayas or Luzon or beyond our northern shores or vice versa

We must benefit from the experience of other lands whose railway systems up to
today provide people and goods the cheapest and fastest way of moving in volume overland,

Approval of this bill is thus, requested,

MAXIMO B. RODRIGUEZ, JR


SEVENTEENTH CONGRESS )
REPUBLIC OF THE PHILIPPINES )
First Regular Session )

HOUSE OF REPRESENTATIVES
House Bill No. __ 358

Introduced by Representative Maximo B. Rodriguez, Jr._

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 purposes 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.

SECTION 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 point in Mindanao; and

b) 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.

SECTION 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
necessary, 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.
It shall also have the power of eminent domain.

SECTION 4. Authorized Capital Stock of the Corporation. — The authorized capital
stock of the Corporation shall be One Billion (P1,000,000,000.00) Pesos divided into Ten
Million (10,000,000) shares at par value shares of One Hundred (100.00) Pesos each,
which shall be fully subscribed by the Philippine Government, twenty percent of which or
Two Hundred Million (P200,000,000.00) Pesos shall be initially paid-up and the balance
shall be paid from a continuing annual appropriation of not less than Two Hundred Million
(P200,000,000.00) Pesos 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 Hundred Million (B200,000,000.00) Pesos and the



programming and release thereof shall remain in force until the authorized capital subscribed
by the Government shall have been paid in full

SECTION 5. Loans. - The Corporation is hereby authorized to contract loans, credits and
indebtedness in any domestic or convertible foreign currency, or capital goods, from foreign
governments, their agencies, instrumentalities or financial institutions, or any non-
governmental national or international financial 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
($500,000,000.00) United States dollars 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, absolutely and unconditionally as primary obligor and not as surety
merely, in the name and on behalf of the Republic of the Philippines, the payment of the
loans, credits, indebtedness and bond 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 as amended,
as well as the performance of all or any of the obligations 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 institutions or 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, supplies 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.

SECTION 6. Board of Directors, Composition and Appointment. — The corporate
powers of the Corporation shall be vested in and exercised by the Board of Directors
consisting of a chairman, vice-chairman and nine members who shall be appointed by the
President of the Philippines with the consent of the Commission on Appointments. The
members of the Board shall serve as designated by the President in their appointments for
terms of six 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. For actual attendance of Board Meetings, each such members shall receive a per
diem of One Thousand (P1,000.00) Pesos. The Board meetings may not exceed four times
a month.

SECTION 7. Qualifications of Officials. - The Chairman, Vice-Chairman, members of the
Board of Directors and the General Manager of the Corporation shall be Filipino citizens, at
least 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 adcition, a masteral
degree in the same field and/or experience in railway management and operations for at
least five (5) years is preferable. All such officials must be residents of Mindanao for at least
five (5) years prior to the appointments.

SECTION 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 and 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.


b) 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 members may, for
cause, suspend and/or remove the General Manager.

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

SECTION 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.

SECTION 10. Prohibition for Board Members. ~ No Chairman or member of the Board of
Directors of the Corporation shall at the same time serve in the Corporation in any capacity
whatsoever other than as Chairman or member thereof, unless otherwise authorized by law.
SECTION 11. Managing Head. — The management of the Corporation shall be vested in
the General Manager.

SECTION 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 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 to
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.

SECTION 13. Appointment and Promotion of Personnel. - In the appointment and
promotion of officers and employees of the MRC merit and efficiency shall serve as basis,
and no political test or qualification shall be prescribed and considered for such
appointments or promotions.

SECTION 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, franchises, right of way, earings, and all
other property owned or operated by it and all duties on 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

SECTION 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 Auditor 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 procedures applicable
to commercial corporate transactions. A report of audit of each fiscal year, by the
representative of the Commission on Audit, through the latter, to be Board of Directors 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 the
audit, which in the opinion of the Auditor, has been carried on or made without authority of
law.

SECTION 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.

SECTION 17. Exemption from the Land Transportation Commission Act, — The
Corporation shall not be subject to the authority and supervision of the Land Transportation
‘Commission.

SECTION 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 years after the time o 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 effecting its liquidation.

SECTION 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 in its 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 said period of emergency.

SECTION 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.

SECTION 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.

SECTION 22. Repeal or Modifications. — The provisions of Republic Act No. 4156, as
amended, creating the Philippine National Railways and all Acts, Executive Orders, and
Proclamations or parts thereof inconsistent with any of the provisions of this Act, are hereby
repealed or modified accordingly.


SECTION 23. Separability Clause. — In the event any provision of this act or the
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.

SECTION 24. Effectivity. — This Act shall take effect upon its approval.
Approved