Republic of the Philippines
House of Representatives
Quezon City, Metro Manila

EIGHTEENTH CONGRESS
Second Regular Session

7117

House Bill No.

INTRODUCED BY
REP. ALFRED VARGAS

AN ACT
RESTRUCTURING THE PHILIPPINE NATIONAL RAILWAY SYSTEM,
CREATING THE PHILIPPINE NATIONAL RAILWAY DEVELOPMENT
AUTHORITY, THE PHILIPPINE RAILWAY CORPORATIONS,
APPROPRIATING FUNDS THEREFOR AND OTHER PURPOSES

EXPLANATORY NOTE

The transport system is the lifeline of a nation. It carries the speed
and efficiency on the road to progress. Global experts believe that rail
transport systems are more energy efficient and economical than roads. A
reliable and efficient railway system provides timely mobility to passengers,
goods and services, which are key elements to economic growth.

The Philippines has been operating railways for over a hundred years
yet our rail infrastructure lags behind our neighboring countries. There
seem to exist unresolved systematic and institutional issues. The deficiency
is made worse by the fact that there is a regulatory chaos since there is no
central authority regulating the Philippine Railway System.

The existing regulatory framework failed to address the daily problems
encountered by the train system, particularly by the Light Rail Transit (LRT)
and the Metro Rail Transit (MRT). The usual technical failures lead to
unsuccessful delivery of efficient, safe, and comfortable mode of
transportation to the riding public. The case of Philippine National Railways
(PNR) is worse, as it desperately needs modernization.

The incumbent administration aims to complete six of 10 railroad
projects by mid-2022. Of the six railway projects, one is a 102-km Mindanao
Rail project that runs from Digos City in Davao del Sur through Davao City
to Tagum City in Davao del Norte.


As for Visayas, there is no plan yet for a railway system, which can
render necessary services in the transport of goods and people around these
areas. Consequently, the absence of functioning railways and trains have
hampered potential economic growth and development.

In view of the foregoing, the immediate passage of this bill is earnestly
sought.

FRED VARGAS


Republic of the Philippines
House of Representatives
Quezon City, Aletes Mawile

EIGHTEENTH CONGRESS
Second Regular Session

House Bill No. 7117

INTRODUCED BY
REP. ALFRED VARGAS

AN ACT
RESTRUCTURING THE PHILIPPINE NATIONAL RAILWAY SYSTEM,
CREATING THE PHILIPPINE NATIONAL RAILWAY DEVELOPMENT
AUTHORITY, THE PHILIPPINE RAILWAY CORPORATIONS,
APPROPRIATING FUNDS THEREFOR AND OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in
Congress assembled:

ARTICLE I
GENERAL PROVISIONS

SECTION 1. Short Title. - This Act shall be known as the “Philippine
National Railway Restructuring Act”.

SECTION 2. Declaration of Policy. - It is the policy of the State to utilize
railways systems as an instrument for national progress and prosperity.
Toward this end, it shall establish a nationwide railway system that is cost-
effective, safe, reliable, efficient, state-of-the-art, accessible, sustainable and
compliant with international standards.

ARTICLE Il
PHILIPPINE NATIONAL RAILWAY DEVELOPMENT AUTHORITY

SECTION 3. Creation of the Philippine National Railway Development
Authority. - There is hereby created a body corporate to be known as the
Philippine National Railway Development Authority (“PNRDA’), hereinafter
referred to as the Authority which shall have the attribute of perpetual
succession and shall be vested with the powers of a corporation. It shall


establish its principal office in Metropolitan Manila, unless otherwise
provided by the Authority, and may put up branches as may be necessary.

SECTION 4. Mandate. - The Authority shall regulate all aspects of the
operations of the Railway Corporations, presently operating, those created
under this Act, as well as such other railway corporations which may be
established in the future. Said mandate of the Authority shall apply to
railway entities owned and/or operated either by government or by the
private sector.

SECTION 5. Powers of the Authority. — As a corporate body, the Authority
shall have the following powers, duties and functions:

(a) To succeed in its corporate name, to sue and be sued in such
corporate name and to adopt, alter, and use a corporate seal which
shall be judicially noticed;

(b) To adopt, amend, and repeal its by-Laws;

() To enter into, make perform and carry out contracts of every class
and description which are necessary and incidental to the
realization of its purposes with any person, firm or corporation,
private or public;

(d) To acquire, own, hold, administer and lease such real and personal
properties as it deems necessary or convenient in governing its
affairs and to encumber, lease, mortgage, sell, and alienate or
otherwise dispose of the same except its right-of-way;

() To enter into any obligation; assign or accept the assignment of
and rescind any agreement or contract necessary or incidental to
the proper functioning of the Authority;

(| To prescribe, fix and regulate the scheduled, frequency and route
of railway services;

(g) To privatize any part or all of the railway system or any sub-system
under the supervision and regulation of the Authority, with the
prior approval of Congress, and to permit the party that acquires
the system an authority to operate the same subject first to the
grant of a congressional franchise;

(h)To formulate and adopt a master plan for a modern national
railway system with ecological and environmental standards;

() To order the cessation of operations or any and all activities related
to the railway system upon the recommendation of the concerned
railway safety/ security officer;

§) To call upon any government agency or instrumentality for such
assistance as maybe necessary in the discharge of its duties and
functions;

(k) To promulgate such rules and regulations as may be necessary to
carry out the objectives of this Act;


() To perform such other powers as may be necessary to carry out the
purpose of this Act.

ARTICLE Ill
RAILWAY STANDARDS

SECTION 6. Standards. - In order to sustain the development of the
railway industry, enhance the operations of railway systems and ensure the
safety and security of the railway riding public, and protect them from any
form of natural calamities and man-made disasters, the Board shall set the
necessary routes, fares, and standards on safety and security, and facilities
for the easy access by persons with disabilities (PWD) and senior citizens, to
be observed by all railway operators, be they public or private. The fare and
standards on safety and security must be compliant with international
standards and best practices.

SECTION 7. Rules and Regulations. - The board shall formulate rules and
regulations on the following:

(a) Uniform standards and specifications with respect to rolling stock,
track and structural facilities and other railway equipment and
apparatus;

(b) Construction, maintenance, repair and removal of track and
structural facilities;

(c) Permanent and temporary fencing of right-of-way and structural
facilities including the apportionment of costs in relation thereto;
(d) Track crossing and its usages;

(c) Installation and use of signage, warning signals, barriers,
operating signals and other similar apparatus;

( Qualifications of persons operating rolling stock and of persons
carrying out functions regarding the operations of track and of
other equipment and matters ancillary to the operation of rolling
stock;

(g) Materials, equipment and technology to be used for the building
and construction of the railway systems;

(b) Tariff, rate and other fees and charges;
( Railway security and safety; and

() Imposition of fines and penalties.


ARTICLE IV
BOARD OF DIRECTORS

SECTION 8. Board of Directors: Composition. - The powers and functions
of the Authority shall be exercised through a Board of Directors, hereinafter
referred to as the Board, to be composed of five (5) members; the secretary of
the department of transportation as the chairman, the three (3) general
managers of the railway corporation, and one (1) member from the private
sector appointed by the President of the Philippines, for a term, or terms, in
accordance to Republic Act (RA) 10149.

Members of the Board shall receive a per diem of not more than ten
thousand pesos (Php 10,000.00), or as otherwise set by the Department of
Budget and Management, for every board meeting: Provided, however, That
the per diem collected per month does not exceed the equivalent four (4)
meetings.

SECTION 9. Functions, Meetings, Quorum, and Reports of the Board. -
The Board of Directors shall be the policy-making body of the Authority and
shall perform the following powers and functions:

(a) Determine the organizational structure of the Authority, define the
duties and responsibilities of all officials and employees and adopt
a compensation and benefit scheme that shall be subject to the
approval of the Governance Commission on Government-Owned
and Controlled Corporations (GCG);

(b) Appoint all officials down to the third level and authorize the
Administrator of the Authority to appoint all others.

(c) Formulate policies, rules and regulations, plans and projects and
programs;

(d) Establish financial and operations targets for management as the
basis for evaluating and monitoring corporate performance;

() Authorize such expenditures for the effective and efficient
administration and operations of the Authority; and

(9 Submit an annual report of the operation of the Authority, through
the Secretary of the DOTr, to the President of the Philippines,


Senate President of the Philippines as Speaker of the House of
Representatives;

(g) Meetings of the Board- The Board shall meet regularly once every
month at its principal office. There must be notice to all members
of the Board, sent through electronic or traditional means, at least
three (3) days before said meeting. The Board may also conduct
special meetings whenever necessary.

Majority of the members shall constitute a quorum for the transaction of
corporate business, and every decision of at least a majority of the members
present, at which there is a quorum, shall be valid as a corporate act, except
for the election of officers which shall require the vote of a majority of all the
members of the board.

ARTICLE V
ADMINISTRATION OF THE AUTHORITY

SECTION 10. The Administrator. - The general conduct of the operations
and management of the Authority shall be vested in an Administrator with
the rank and privileges of an Undersecretary who shall serve as Chief
Executive Officer of the Authority. He or she shall be primarily responsible
for carrying out the projects and programs of the Authority as well as for the
implementation of its policies, rules and regulations, including the faithful
execution of the decisions of the Board.

SECTION 11. Qualifications ~ The Administrator must be a citizen of the
Philippines, at least thirty-five (35) years of age on the day of his/her
appointment, of good moral character and with recognized executive ability
and competence in the field of transportation, business administration,
management, finance or law. He or she shall be appointed by the President
of the Republic of the Philippines for a term or terms, in accordance with RA
10149.

SECTION 12. Duties and Responsibilities of the Administrator. -
The Administrator of the Authority shall have the following duties and
responsibilities:

(a) Executive, administer and implement the policies and measures
approved by the Board;

(b) Direct and supervise the operations and administration of the
Authority insofar as regulating the operation of railways;


(0) Direct and supervise the preparation of the agenda for the meeting
of the Board, and to submit for the consideration of the Board such
measures as he or she believes necessary to carry out the purposes
and objectives of the Act;

(d) Represent the Authority in all its transactions with other offices,
agencies and instrumentalities of the government and to deal with
any persons and entities, public or private, domestic or foreign, on
matters related to the mandate of the Authority.

() Prepare the annual and supplemental budgets of the Authority;
and

(§ Exercise such other powers and perform such other duties and
function as the Board may assign or authorize.

ARTICLE VI
RAILWAY CORPORATIONS

SECTION 13. Railway Corporations: Name, Duration, and Domicile. -
There is hereby created three (3) separate and distinct government
corporations which shall operate railways in the islands of Luzon, Visayas
and Mindanao, to be known, respectively as, the Luzon Railway Corporation
(‘LRC’), the Visayas Railway Corporation (“VRC”) and the Mindanao Railway
Corporation (“MRC”). Said Corporations shall exist for a term of fifty (50)
years upon the approval of the President of the Philippines.

The LRC shall have its main office in Clark, Pampanga, the VRC in Panay
Island, and the MRC in Tagum City, Davao, and shall have such branches
within their respective areas of jurisdiction as may be necessary for the
proper conduct of their business.

SECTION 14. Powers of the Railway Corporation. - The Railway
Corporations herein created shall have the following powers:

(a) To exercise the right of eminent domain whenever necessary for
the attainment of its objectives;

(b) To borrow money and contract loans, credits, or indebtedness from
domestic or foreign sources for the furtherance of its goals and
objectives;

(c) To do all such other things and to transact all such business
directly or indirectly necessary, incidental or conductive to the
attainment of the purpose of the corporation; and


(d) Generally, to exercise all powers of a corporation under Batas
Pambansa Big. 68 otherwise known as “The Corporation Code of
the Philippines,” as amended.

(e) To construct, own lease, operate and maintain public utilities,
infrastructure facilities and such auxiliary support services needed
to develop and regulate a nationwide railway system.

() To design, construct, maintain and operate by itself or by
delegation to, or through contractual arrangement such auxiliary
infrastructure support facilities such as, but not limited to,
parking structures above or below the ground, including the
means of access;

(g) To own or operate railroad trainways and subways for the purpose
of transporting, for consideration, passengers, mails, and property
between any point in their respective areas of operation through
the use of railways; and

(h)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.

Further, the assets, liabilities, powers, and functions of public railway
entities, which are owned by the government, shall, upon effectivity of this
Act, be transferred and absorbed by the appropriate railway corporation,
and all such public railway entities shall be deemed abolished.

SECTION 15. Authorized Capital Stock of the Railway Corporation. -
The authorized capital stock of each Railway Corporation shall be Thirty
Billion Pesos (Php 30,000,000,000.00) divided into Fifteen Million (Php
15,000,000.00) common shares with a par value of Two Thousand Pesos
(Php 2,000.00) each, which shall be fully subscribed by the National
Government and other government institutions, _ corporations,
instrumentalities, and agencies, whether national or local, within the
framework of their respective charters, twenty percent (20%) of which or Six
Billion Pesos (Php 6,000,000,000.00) shall be initially paid-up and the
balance shall be paid from a continuing annual appropriation of not less
than Two Billion Pesos (Php 2,000,000,000.00), which is hereby
appropriated. The said amount shall be programmed and released by the
Department of Budget and Management (“DBM”) in accordance with the
schedule of cash requirements to be prepared and submitted by each


Railway Corporation; Provided, that this continuing annual appropriation of
‘Two Billion pesos (Php 2,000,000,000.00) and the programming and release
thereof shall remain in force until the authorized capital subscribed by the
Government shall have been paid in full.

SECTION 16. Board of Directors, Composition, and Appointment. - The
corporate powers of each Railway Corporation shall be vested in the Board
composed of seven (7) Directors. The Undersecretary from the DOTr shall be
the Chairperson and the Secretary of Finance shall be the Co-Chair, both
acting in their ex-officio capacity. The remaining five (5) members shall be
appointed by the President for a term, or terms, in accordance with RA
10149,

Members of the Board shall receive a per diem of not more than ten
thousand pesos (Php 10,000.00), or as otherwise decided by the DBM, for
every board meeting: Provided, however, that the per diem collected per
month does not exceed the equivalent four (4) meetings.

SECTION 17. Qualifications of Appointive Members of the Board. - The
appointive members of the Board of Directors shall be Filipino citizens, at
least thirty-five (35) years of age at the time of their appointments, and
holders of degrees in the fields of transport planning, engineering,
economics, management, finance, marketing, law, or related course, with
preference for those with master’s degrees in such fields or work experience
in railway management and operations for at least five (5) years. All such
official must be residents of the place where the respective corporations they
work for hold their primary office or business, at least one (1) years prior to
their respective appointments. Further, they shall be persons of good moral
character, competent, and experienced in one or more of the followings
fields: transport planning, engineering, economics, management, finance,
corporate law, or marketing.

SECTION 18. Powers and Duties of the Board of Directors. — The Board
of Directors shall have the following powers and duties:

(a) To prescribe, amend, or repeal by-laws, rules and regulations, or
policies governing the manner in which the general business of the
Railway Corporation may be exercised;

(b) To fix the compensation of the General Manager and Assistant
General Managers, subject to the approval of the Government
Commission on Government-Owned and Controlled Corporations
(GCG), and to appoint and fix the compensation of the other
officers of the Corporation;


(c) To approve, the annual and/ or such annual supplemental budgets
of the Corporation;

(d) By a two-thirds (2/3) vote of all members, to recommend to the
President the suspension or removal for cause of the General
Manager or Assistant General Manager(s);

(c) Upon the recommendation of the General Manager, to approve the
appointment of all officials of the Corporation from the rank of
division head and above;

() Subject to the provisions of applicable laws and regulations, and
upon recommendation of the General Manager, to reorganize the
Railway Corporations, determine its staffing patter, or define the
functions and duties of organization units and personnel; and

(g) To expropriate, with rightful compensation, in accordance with RA
10752, the necessary right of way needed by the Corporation to
acquire, maintain, and/or expand its track lines.

SECTION 19. General Manager of the Railway Corporation. - The
management and day-to-day operations of each Railway Corporation shall
be vested in the General Manager who shall be appointed by the President of
the Republic of the Philippines, upon the recommendation of the Board of
Directors of said Railway Corporations. The General Manager shall possess
technical competence in management, preferably in railroad transport
management, have demonstrated executive ability, and be of good moral
character. The General Manager shall hold office for a term of eight (8)
years.

SECTION 20. 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 Railway
Corporation on behalf of the Board of Directors, subject to the
policies, rules, and regulations established by the latter;

(b) To sit in all meeting of the Board as a resource person, and to
participate in its deliberations, with no right to vote, and to preside
in any meeting for or in the absence of the Chairman;

(c) To recommend to the board short-and-long range plans and
programs consistent with the overall objectives of the Railway
Corporation;


(d)To submit and recommend consolidated annual budget and
propose capital and other supplemental budgets to the Board;

(e) To appoint officials and employees below the rank of a division
head and to suspend or otherwise discipline for cause, all
subordinate officials and employees of the Corporation; Provided,
however, that in the case of removal for cause, approval of the
Bord shall be necessary;

(9 To recommend to the Board such changes in the organizational
structure and staffing patterns of the Corporation as may be
necessary to carry out its functions effectively;

(g) To submit to the President of the Philippines, the Senate President,
and the Speaker of the House of Representatives, within sixty (60)
days after the close of each fiscal year, an annual report on the
operations of the Railway Corporation or such other reports as
may be required; and

(h) To perform such other duties as may be assigned to him or her by
the Board of Directors from time to time.

SECTION 21. Exemption from Taxes, Duties, Port Charges or Dues, and
Customs Bonds. - The Railway Corporations hereby created shall be
exempt from the payment of all taxes of any kind and nature such as those
imposed by the Municipal, city, provincial, or national government including
the Value-Added Tax (VAT), upon its capital stock, franchise, right of way,
earning, and all other property owned or operated by it in relation to it
principal and auxiliary purposes, and all import duties on all railway
materials, rolling stocks, spare parts, supplies and equipment imported in
the Philippines for and/or by the Railway Corporation: Provided, That this
exemption shall extend to wharfage dues, storage charges, arrastre, and
shipside charges, and special duties on such importations and other port
charges upon the carrying vessels whose entire cargo consists of materials
for the construction of its projects or rehabilitation of its lines, facilities, and
to such proportion of the prescribed port charges on other vessels as the
tonnage of materials for such construction or equipment may bear to the
tonnage of the entire cargo of the vessel: Provided, further, that such
exemption shall further extend to the filling of general importer’s and
general documentary bonds and warehouse bonds for the operation of its
warehouses, whether general bonded warehouses or general order store.

SECTION 22. Audit Personnel and Report. —

(a) Personnel - The Commission on Audit (“COA”) shall appoint an
Auditor for each of the Railway Corporations, and the necessary


personnel to assist said representative/s in the performance of
their respective duties. The number and salaries of the Auditor/s
and said personnel shall be determined and paid by the COA.

(b) Report — The report of audit of each fiscal year, by the Auditor of
the Railway Corporation s/he assigned to, to the Board of Directors
of the Railway Corporation, and copies thereof shall be furnished
the President of the Republic of the Philippines, the Secretary of
Transportation and the Senate President and the Speaker of the
House of Representatives. 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 of 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 shall also show 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 23. Liquidation. - When its term of existence has expired in
accordance with the provisions of this Act, the Railway 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 and convey its properties, but not for the purpose of continuing
the business for which it was established.

ARTICLE VII
CONSTRUCTION OF RAILWAYS

SECTION 24. Construction of Railways and Highway Crossing Track. -
Construction of any form and kind of railway track such as track crossing,
intersections, joints, or connections that unites with any existing railway
track or structural facilities for purpose of developing a railway shall not be
allowed without prior approval of the Authority. Construction on, across,
over or under a highway without prior approval of the Authority shall
likewise not be allowed.

SECTION 25. Structural Change. - No change or replacement of any
existing railway structure or methodology shall be allowed without prior
approval of the Authority.


SECTION 26. Right of Entry and Disturbance Fee. - A railway operator
or his authorized agent, including the Railway Corporation herein created,
bringing in equipment and materials to a piece of land may gain access to
such land to construct or maintain a rail system or to repair a rolling stock,
track or structural facilities of a public railway, subject to the payment of a
disturbance fee in such amounts as may be determined by the Authority.

SECTION 27. Highway Crossing. - When the construction is carried out to
lay track on, across, over or under a highway, the person carrying out the
construction shall allow vehicles using the highway adequate passages, and
on the completion of the construction restore the highway to its acceptable
passable condition.

SECTION 28. Crossing Construction. - Subject to the approval of the
Authority, the owner of a private road may be allowed to construct and
maintain at his own cost, either an underpass or overpass crossing across
the right-of-way that already existed prior to the construction of his private
road. However, if the private road was in existence before the rail right-of-
way was established, the railway owner/ operator is responsible for the cost
of constructing and maintaining the crossing.

SECTION 29. Crossing of Landowners. - Any proponent of a railway
project shall provide an access road in between lands cut crossed by the
project when public interest so demands.

SECTION 30. Cost. - When a railway operator is unable to agree with the
road authority as to the cost apportionment associated with the
construction of projects under this article, the parties may resort to
arbitration.

SECTION 31. Fencing of Railway Track. - The operators of railway
systems when public safety demands as may be determined by the
Authority, shall provide the necessary fences along railway tracks.

SECTION 32. Drainage. - In the construction of railways, the Authority
shall ensure that appropriate and adequate drainage and sanitary facilities
are provided. No construction of railways shall be allowed by the Authority
without such facilities.

SECTION 33. Fire Prevention. - All railway operators shall provide their
railway systems all the necessary fire-fighting equipment and adopt ways
and means to protect their systems and commuters from fire or damages
arising there from.


SECTION 34. Stoppage. - When the construction or work poses danger to
person or property, the Safety Officer may immediately order the stoppage of
construction or work unless constrained by the Authority.

ARTICLE VIII
RIGHT-OF-WAY

SECTION 35. Right-of-Way. - The authority, upon consultation with the
Railway Corporations herein created, shall identify and establish within
three (3) years after the approval of this Act, the alignment of a National
Railway System and once established and the right-of-way is acquired, the
same shall not be the object of any scale, lease or other forms of disposition.

SECTION 36. Intrusion into the Right-of-way. - Any intrusion into right-
of-way by any person shall be punishable by imprisonment as provided
under Section 92, Article XXVII hereof.

ARTICLE Ix
EXPROPRIATION AND OVERRIDING OBJECTIVE OF CONSTRUCTION

SECTION 37. Expropriation. - The Railway Corporations herein created
may initiate the necessary expropriation proceedings to carry out the
objectives of this Act.

SECTION 38. Ejection. - Any person or group of persons who enter,
intrude, occupy, settle, possess, construct into the railway alignment or
right-of-way or any property owned by any railway office or owned or
controlled corporations, or local government units (LGUs) agency shall be
considered as nuisance per se and shall be summarily ejected from the
premises such entry, intrusion occupation, settlement, possession and
construction shall be considered as a criminal act and therefore punishable
under Section 73, Article XXI hereof.

SECTION 39. Suspension. - When the construction or work in a railway
project is not being carried out in accordance of the approved specifications
relative to design and product standards, the Safety Officer may order the
suspension of the construction or work until after correction shall have been
made by the contractor or its resumption is ordered by the Authority.

SECTION 40. Prohibition Against Issuance of Restraining Orders and
Preliminary Injunctions or Preliminary Mandatory Injunctions. - No
Court in the Philippines, except the Supreme Court, shall have the
jurisdiction to issue any restraining order, preliminary injunction, or
preliminary mandatory injunction in any case, dispute, or controversy


involving any contract or project being implemented by the Authority, to
prohibit any person or persons, or entity or implementation of such contract
or project, or pursuing any lawful activity necessary for the execution,
implementation or operation of such railway project/system.

ARTICLE X
RAILWAY OPERATIONS

SECTION 41. Operations. - The operator of a railway including the Railway
Corporations herein created, shall ensure that the track and other railway
facilities are constructed, operated and maintained in accordance with this
Act, pertinent rules and regulations implementing the same and policies
that may be promulgated by the Authority and the Railway Regulatory
Board and that the rolling stock is maintained and operated in accordance
with the applicable rules and regulations promulgated by the Authority and
the Regulatory Board.

SECTION 42. Suspension and Termination. - Any operator of a public or
industrial railway, including the Railway Corporations herein created, who
intends to suspend or terminate its operation shall, within six (6) months,
prior to the suspension or termination, give notice thereof to the Authority
and to the public.

SECTION 43. Safety Officer. - The railway Corporations shall have Safety
Officer with the following duties and functions:

(a) Administer and foster faithful compliance with railway safety
legislations, approvals and operating rules and regulations;

(b) Ensure the safety at all times of rolling stocks, railway tracks,
signaling and communication systems and other facilities.

(c) Conduct regularly safety audit of railway system including a check
on inventory levels of essential spare parts; and

(d) Ensure the safety of the general riding public and of persons
employed by or acting on behalf of operators of railways;

SECTION 44. Qualifications. - No one shall be appointed as a Safety
Officer unless he or she is a graduate of a course related to railway safety
and passes the examination given by the Professional Regulatory
Commission for the purpose.

SECTION 45. Security Officer. - There shall be created positions of
Security Officers with the following duties and functions:

(a) Administer and foster faithful compliance with railway security
legislations, approvals and operating rules and regulations;


(b) Ensure the security of the general riding public and of persons
employed by or acting on behalf of operators of railways; and

(c) Ensure the installation of the State-of-the-art surveillance and
tracking equipment for passengers and cargo.

SECTION 46, Qualifications. - No one shall be appointed as a Security
Officer unless he or she is a graduate of a course related to security and
passes the examination given by the Professional Regulatory Commission for
the purpose.

SECTION 47. Proper Maintenance. - There shall be created a Maintenance
Group headed by a Maintenance Engineer, in every railway line with the
following duties and functions:

(a) Ensure that the economic lifespan of the system is attained
through rehabilitation, refurbishment and overhauling;

(b) Ensure continuous and efficient operation of the system;

(c} Ensure a continued availability of spare parts in the inventory;

(d) Ensure the repair and maintenance of the rolling stock, track or

structural facilities.
ARTICLE XII
COMPLIANCE, ACCIDENTS AND ADMINISTRATIVE PENALTIES

SECTION 48. Inspection of Railways. - The Authority shall also have a
Railway Safety or Security Officer who shall carry out inspections of the
following:

(a) Rolling stock, track, goods and other facilities; and

(b) Record, document, object or thing that relates to the operations of
a railway.

SECTION 49. Access. - A Railway Safety or Security Officer, in carrying out
an inspection may do one or more of the following:

(a) Enter any track, structural facility, rolling stock, building or any
other property associated with railways;


{b) Make inquiries with any person who is employed by or who carries
out any duties or functions for or in behalf of the railway operator;
and

(c) Perform or caused to be performed tests or examinations of
anything relative to the inspection.

SECTION 50. Production of Documents. - In the course of safety or
security inspection, the officer conducting the inspection may require the
production of any documents, records or things relative thereto.

Any person who is the subject of an inspection shall, when requested to do
so by Railway Safety or Security Officer, produce for inspection, within
reasonable period of time, any record, document, object or thing that relates
to the matter under inspection. A Railway Safety or Security Officer may
request copies or take photographs of the record, document, object or thing
under inspection and immediately thereafter return the same.

When conducting an inspection of a record, document, object or thing and a
railway Safety or Security Officer is of the opinion that he or she must retain
possession of the record, document, object or thing under inspection for a
longer period of time, he or she may do so but shall not be longer than three
(3) days after receipt thereof.

SECTION 51. Directions of Railway Safety Officer. - When a railway
safety officer carries out an inspection, he or she may do one or more of the
following:

(a) Recommend the cessation of the operation of any railway system or
any activity related thereto when in his expert opinion, there are
reasonable grounds to believe that the continuing operation of the
railway system and any related activity, may endanger the safety of
the riding public and the employees of the railway or cause damage
to property;

(b) Order the removal of a rolling stock or any equipment or any
person on board, when the railway safety officer is of the opinion
that the operation or presence of the same poses danger to the
safety of the public or persons employed by or acting on behalf of
the operator unless restrained by the PNRDA; and

(o Issue orders to stop the over-speeding of a train or when violations
are being committed related to the speed of the rolling stock.

SECTION 52. Accidents. - The railway operator shall keep a record of every
accident involving a person or the railway system and shall forthwith report
to the Authority.


SECTION 53. Investigation. - The Authority shall conduct an investigation
on accidents provided for in the immediate preceding section, and for this
purpose, the investigating officer shall have full access to the place and
attributes of the accident.

SECTION 54. Liability. - The Operator and his agent shall be jointly and
solidarily liable for the fines and penalties provided under this Article.

SECTION 55. Execution. - When the operator and/or his agent fails to pay
the administrative penalty in accordance with this Article, the Authority
shall take all the necessary legal actions to compel the payment of the
administrative legal penalties and fines against the operator and his agent.

ARTICLE XIV
REVIEW

SECTION 56. Review/Appeal. - Any order issued by a Safety or Security
Officer maybe appealed for review by the affected person to the Authority
within Fifteen (15) working days from notice thereof whose decision shall be
final and executory.

SECTION 57. Motion for Reconsideration. - Any person affected by an
order or decisions of the Authority may file a motion for reconsideration
within fifteen (15) days from receipt of thereof. No second motion for
reconsideration shall be entertained.

ARTICLE XV
RAILWAY ENERGY PLANT

SECTION 58. Power Plant. - In order to ensure a continuous and
uninterrupted operation of railway systems in the Philippines, the
Corporations herein created may establish a power plant for any of its rail
systems: Provided, That before it can put up a power plant, the Authority
shall undertake a cost-benefit analysis on this matter in order to determine
its cost-effectiveness, viability and whether it is going to be advantageous to
the government.

SECTION 59. Waste-to-Energy Plant. ~The authority shall establish in
cooperation with LGUs and/ or the private sector, waste-to-energy plant in
strategic areas in the country.

SECTION 60. Railway Engineering Course. - A four (4)- year
baccalaureate course in Railway Engineering Management and other related
courses shall be established in the University of the Philippine and/or the
Polytechnic University of the Philippines and shall receive an annual


budgetary support which shall be provided in the Annual General
Appropriations Act.

SECTION 61. Railway Training Center. - A Railway Training Center shall
be established by the Authority to equip the railway manpower resource
with the necessary skills and expertise in the development and
implementation of railway projects and programs, and in the operation of
railway systems.

SECTION 62. Manufacturing of Railway Equipment. - The Authority
may endeavor to establish the necessary mechanisms for the manufacturing
of railway equipment to ensure the expansion and sustainability of a
National Railway System herein envisioned.

ARTICLE XVII
TRAIN DRIVERS

SECTION 63. Train Drivers. - To promote proficiency and to ensure the
safety of the general railway riding public, all train drivers must be
physically and mentally fit and pass all the tests and qualifications to be
prescribed by the Authority. They shall also undergo constant and
continuing training to improve their level of skills, with annual certification
examinations to test the same.

SECTION 64. Train Driver’s License. - The Railway Training Center shall
conduct the training for train drivers for a duration that it may determine
and thereafter issue the necessary Train Driver’s License (TDL) for those
who will pass the training according to its standards, tests and
measurements.

ARTICLE XVIII
INSURANCE COVERAGE

SECTION 65. Rail Systems Insurance Coverage. - All rail systems shall
be covered by insurance from natural and man-made disaster by the
Government Service Insurance System (GSIS). In the event the management
and/or operation of the railway system or any part thereof with a private
entity, the insurance shall be covered by an insurance corporation which
attained the lowest, most responsive bid after a competitive bidding process,
taking into consideration the provisions of this Article

SECTION 66. Passenger’s Insurance Coverage. - Each and every rail
passenger shall be covered by accident insurance by the rail operators,
government or private, in the amount of Two Hundred Thousand Pesos (Php


200,000.00) in case of death and not more than One Hundred Thousand
Pesos (Php 100,000.00) in case of an injury exclusive of medical and
hospitalization expenses, and these amounts shall be adjusted once every
five (5) years based on inflation as determined by the National Economic
Development Authority (“NEDA”).

ARTICLE XIX
ACCOUNTABILITY

SECTION 67. Accountability. - To ensure public accountability, the
Authority shall be subject to the audit of the Commission on Audit (COA)
and shall comply with all the generally accepted accounting and auditing
rules and regulations and those which the Commission may promulgate
from time to time pursuant to its constitutional mandate.

ARTICLE XX
LEGISLATIVE FRANCHISE

SECTION 68. Legislative Franchise. - All railway operators are required to
secure a franchise from the Congress of the Philippines. Entities already
operating with an existing franchise shall have one (1) year during which it
must renew the same.

Any entity from the private sector may own, construct, maintain and operate
a railway system, Provided, that it shall be a holder of the appropriate
legislative franchise prior to the construction, maintenance and/or
operation of a railway system, and Provided, further, that such railway
system shall not conflict with that already being operated, managed and
maintained by the Railway Corporations herein created.

SECTION 69. Violation of Legislative Franchise. - Any person holding a
legislative franchise which commits a violation of said franchise shall be
subject to the review of the Congress of the Philippines, which may amend,
modify, revoke or cancel it franchise, whichever is applicable, and without
prejudice to the other punishable acts and imposable penalties under this
Article, If any.

ARTICLE XXI
PENALTIES

SECTION 70. Intrusion. - The entry, intrusion, occupation, settlement,
possession and construction on the properties described in Section 43,
Article XI hereof shall be considered a crime against property and
punishable by imprisonment ranging from six (6) months and one (1) day to


two (2) years and or fined in an amount not lower than Ten Thousand Pesos
(Php 10,000.00) as maybe determined by the court.

SECTION 71. Obstruction. - Any person who obstructs or impedes the
construction, operation, repair maintenance and removal of any track,
rolling stock or railway facilities shall be criminally liable and the
punishment by imprisonment ranging from two (2) years and one (1) day to
three (3) years.

SECTION 72. Theft of Railway Property. - Any person who is found to
have stolen any part of a track or rolling stock shall be punished by
imprisonment of six (6) years and one (1) day to twelve (12) years and a fine
of One Million Pesos (Php 1,000,000.00), or both at the direction of the
Court.

SECTION 73. Administrative Penalties. - The Authority may impose a
fine or penalty or both, against the operator and/ or its agents who commits
any or all of the following acts of violations:

(a) Exceeding the authorized speed limit of his rolling stock shall be
punished with: (1) a fine of One Hundred Thousand Pesos (Php
100,000.00) for the first offense; (2) a fine of Three Hundred
Thousand Pesos (Php 300,000.00) for the second offense; and (3) a
fine of Five Hundred Thousand Pesos (Php 500,000.00) for the
third offense;

(b) Failure to properly maintain the system resulting to service
interruption shall be fined: (1) One Hundred Thousand Pesos (Php
100,000.00) to Two Hundred Thousand Pesos (Php 200,000.00) for
the first offense; (2) Two Hundred Thousand Pesos (Php
200,000.00) to Three Hundred Thousand Pesos (Php 300,000.00)
to Five Hundred Thousand Pesos (Php500,000.00) for the third
offense;

(c) Failure to secure Annual Passengers Insurance Coverage shall be
fined Ten Million Pesos (Php 10,000,000.00);

(d) Failure to operate shall be fined with One Million Pesos (Php
1,000,000.00) for every day of non-operation, and cancellation of
its franchise or authority after thirty (30) days of non-operation,
except when caused by force majeure or fortuitous event;

(c) Failure to comply with safety and security regulations resulting to
injury or loss of life and damage to property shall be fined with One
Hundred Thousand Pesos (Php 100,000.00) for injury and Five


Hundred Thousand Pesos (Php 500,000.00) for every loss of
human life;

() Failure to maintain adequate spare parts inventory shall be fined
with an amount equivalent to the cost of the required spare parts;

(g) Failure to maintain a maintenance and accident record shall be
fined with: (1) One Hundred Thousand Pesos (Php 100,000.00) for
the first offense; (2) Two Hundred Thousand Pesos (Php
200,000.00) for the second offense; and (3) Three Hundred
Thousand Pesos (Php 300,000.00);

(h) Failure to comply with regulations on cleanliness and sanitation
shall be fined with: (1) One Hundred Thousand Pesos (Php
100,000.00) for the first offense; (2) Two Hundred Thousand Pesos
(Php 200,000) for the second offense; and (3) Three Hundred
Thousand Pesos (Php 300,000.00) for the third offense; and

() Failure to comply with orders, decisions and similar issuances of
the Authority shall be fined with One Hundred Thousand Pesos
(Php 100,000.00) for every day of non- compliance.

ARTICLE XXII
CONSOLIDATION OF EXISTING RAIL OFFICES AND AGENCIES

SECTION 74. Consolidation. - Upon the effectivity of this Act, the
Philippine National Railways (PNR), the Light Rail Transit Authority (LRTA),
the Panay Railways, Incorporated, the North Luzon Railway Corporation
(NORTHRAIL), and all other rail offices and agencies shall be deemed
abolished and their functions, projects, assets and liabilities shall be
assumed, absorbed and transferred to the appropriate Railway Corporation,
as the case may be. The Railway Corporations herein created shall be given
a transition period of six (6) months to one (1) year to carry out this
provision of this Act.

SECTION 75. Assets and Liabilities. - The assets and liabilities of the
EDSA Light Rail Transit of the Department of Transportation in so far as its
existing Build-Lease Transfer Contract with the Metro Rail Transit
Corporation (MRTC) are likewise deemed transferred to, and assumed by,
the Luzon Railway Corporation.

SECTION 76. Valuation. - The assets of the existing railway offices and
agencies mentioned in Section 100 hereof shall be valued by the
Commission on Audit, and their respective liabilities determined by the
Commission on Audit and Department of Finance.


SECTION 77. Personnel. - All affected Officers and Personnel who are
qualified to receive retirement benefits under RA 1616 and RA 660 shall be
entitled to an additional one (1) month salary for every year of service. Any
officers or personnel may avail of the same benefits as provided by the
immediately preceding paragraph; provided that they voluntarily separate or
retire from the service. Provided, further, that they are qualified to receive
retirement benefits under RA 1616 and RA 660.

Affected Officers and Personnel shall be all Officers and Employees who are
involuntarily removed or separated from the service due to the abolition of
their respective agencies by this Act.

ARTICLE XXII
CONGRESSIONAL OVERSIGHT COMMITTEE

SECTION 78. Congressional Oversight Committee. - A congressional
Oversight Committee is hereby created composed of the Chairpersons of the
Committee on Public Services of the Senate and the Committee on
Transportation of the House of the Representatives as Chairpersons and
four (4) members from each House as Members, to be designated by the
Senate President and the Speaker of the House of Representatives,
respectively. The Oversight Committee, shall among others, monitor and
ensure the effective implementation of this Act.

ARTICLE XXIV
FINAL PROVISIONS

SECTION 79. Separability Clause. - If any of the provisions of this Act is
declared invalid, the provisions thereof not affected by such declaration
shall remain in force and effect.

SECTION 80. Repealing Clause. - The provisions of Republic Act No.
1156, as amended and Executive Order No. 603, as amended, are hereby
repealed.

SECTION 81. Effectivity. - This Act shall take effect fifteen (15) days
following its publication in at least two (2) newspapers of general circulation.

Approved,