HOUSE OF REPRESENTATIVES
RECEIVED
27 JUL 2016

DATE:
TIME:
BY:

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

pre
PILLS uN

TRATION UNIT
Xx SERVICE

SEVENTEENTH CONGRESS,
First Regular Session

one
House BILL No. 2066

Introduced by Honorable MARK A. VILLAR

AN ACT
CREATING THE MINDANAO RAILWAYS CORPORATION PRESCRIBING ITS
POWERS, FUNCTIONS AND DUTIES AND PROVIDING FOR THE
NECESSARY FUNDS FOR ITS OPERATION

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. (Sections 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 govemment
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.

N

1 NEDA Sets Start of Feasibility Study for Mindanao Railway, Philippine Star, Monday, May 4, 2015, Page 8-5


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

SEVENTEENTH CONGRESS
First Regular Session

2066
HOUSE BILL NO.

Introduced by Honorable MARK A. VILLAR

AN ACT
CREATING THE MINDANAO RAILWAYS CORPORATION PRESCRIBING
ITS POWERS, FUNCTIONS AND DUTIES AND PROVIDING FOR THE
NECESSARY FUNDS FOR ITS OPERATION

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

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

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 viaducts, toll tunnels and the like.

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

a) To do alll 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
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-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 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
Numbered Sixty-One Hundred and Forty-Two (R.A. 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 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 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 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 operations for at least 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 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.

b) To appoint and fix the compensation of the General Manager, subject to the
approval of the President of the Philippines 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 from time to time

d) 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.

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;

c) 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;

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 by the Board of Directors
from time to time,

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, earings, 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 fin.al. 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 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 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 Audit, which in
the opinion of the Auditor, has been carried on or made without authority of
law.

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. cases 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. 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,