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DATE: SO JUN 2aig

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Republic of the Philippines es__ 939%
HOUSE OF REPRESENTATIVES BY: /
Quezon City, Metro Manila .

SEVENTEENTH CONGRESS
First Regular Session

12s

BILLS AND IN

HOUSE BILL NO.

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 is a re-filed bill originally filed during the 16% Congress as
Senate Bill No. 3095, House Bill No. 3055 and House Bill No. 5736 by
Senator Aquilino “Koko” Pimentel Ill, Representatives Rufus and
Maximo Rodriguez, and Representative Mark Villar, respectively. The
said bills seek to create the Mindanao Railways Corporation (MRC) as
a means to hasten the development of the Islands of Mindanao.

Based on the Terms of Reference (TOR) of the National
Economic and Development Authority (NEDA) for the conduct of the
Feasibility Study (F/S) of the Mindanao Railway Project (MRP), the
proposed MRP is supportive of the thrust of the Updated 2011-2016
Philippine Development Plan (PDP), specifically under Chapter 10
(Accelerating Infrastructure Development). The major shortcoming of
the transportation sector is the lack of integrated and coordinated
transport network. Global assessments of the country’s transport
infrastructure network indicate that its quality and capacity remain
low. One of the major problems that result in disparities in the
transport network is the lack of integration between national and local
government plans and programs/projects, which contributes to the
low capacity and quality of infrastructure facilities.

Mindanao shares the same restraints in transport
infrastructure improvements. A fast, safe, reliable, efficient,
convenient, dependable, environment- friendly and alternative mode of
transport will provide the people of Mindanao the benefits of reduced
travel time and increased opportunities for economic activities, thus

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TRITON UNTE

X SERVICE
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improve physical connectivity within Mindanao. A railroad network
crisscrossing Mindanao will considerably shorten the travel time
between my hometown Zamboanga City and Cagayan de Oro, or
Davao and Cagayan de Oro.

Enhanced interconnectivity and linkages through passenger
and freight railway transport development will further boost tourism,
trade and commerce in Mindanao. The proposed railway transport
service will play a major role towards improvement of Mindanao’s
intra island accessibility, linkages and seamless multimodal transport
networks. The island is strategically located and has potential as a
major transshipment point and center of trade in the Brunei
Darussalam-Indonesia-Malaysia-Philippines East ASEAN Growth
(BIMP-EAGA) region.

The development of MRP has long been planned but never
realized. Mindanao is the second largest island group with an area of
106 thousand square kilometers and has a 22 million population with
an annual population growth rate of 1.9 percent from 2000 to 2010.

The proposed MRP will complement programs/ projects that will
address the lingering problem on poor quality of roads and incomplete
road networks in some parts of Mindanao.

‘The collective experience of Japan, Canada, the United States of
America and most of Europe shows how railroad networks have
spurred and sped up the national development. In these nations,
railroads opened up vast land areas for human settlement and made
it possible to transport tremendous number of people and huge
volume of goods at the lowest cost. The influx of people into areas
previously unsettled, the easy mobility of the populace, and the
availability of goods and services needed for civilized life means higher
productivity of the land and its people.

We must benefit from the experience of other countries whose
railway systems up to today provide people and goods the cheapest
and fastest way of mass transit movement.

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

Za
CELSO LOBREGAT
Representative
Zamboanga City, 1* District



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

SEVENTEENTH CONGRESS
First Regular Session

123

HOUSE BILL NO.

Introduced by: REPRESENTATIVE CELSO L. LOBREGAT

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 the House of Representatives of the
Philippines in Congress assembled:

SECTION 1. Statement of Policy. - The Mindanao Railways
Corporation, being a factor for socio-economic development and
growth, shall be a part of the infrastructure program of the
government and as such, shall remain in and under government
ownership during its corporate existence. The Mindanao Railways
Corporation must be administered with the view of serving the interest
of the public by providing them the maximum of service and, while
aiming at its greatest utility by the public, the viability of its operation
must be ensured so that services can be rendered at the minimum

passenger and freight prices possible.

SECTION 2. 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. This Corporation shall be an attached agency

of the Department of Transportation and Communications (DOTC).

SECTION 3. General Powers. - The Corporation shall have the

following general 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 conducive to the
attainment of the purpose of the corporation; and

d) Generally, to exercise all powers of a corporation under Batas

Pambansa Blg, 68 otherwise known as “The Corporation Code of

the Philippines,” as amended.

SECTION 4. Purposes and Specific Powers. - The

Corporation shall have the following purposes and specific powers:

a) To own or operate railroad trainways, subways, bus lines,
trucklines, or 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 S. Authorized Capital Stock of the Corporation.-
The auhorized capital stock of the Corporation shall be Fifty Billion
(P50,000,000,000.00) Pesos divided into Five Hundred Million
(P500,000,000.00) Pesos common shares at par value shares of One
Hundred (P100.00) Pesos each, which shall be fully subscribed by the
Philippine Government, twenty percent of which or Ten Billion
(P10,000,000,000.00) Pesos shall be initially paid-up and the balance
shall be paid from a continuing annual appropriation of not less than
One Billion (P1,000,000,000.00) 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
Department of Budget and Management in accordance with the
schedule of cash requirements to be prepared and submitted by the
Corporation; Provided, that this continuing annual appropriation of
One Billion (P1,000,000,000.00) 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 6. 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, instumentalities 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 interest, shall not exceed



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 No. 6142 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,
supplies and services, by the Corporation, paid from the proceeds of
any loan, credit or indebtedness incurred under this Act, shall 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 7. Board of Directors, Composition, and
Appointment. - The corporate powers of the Corporation shall be
vested in and exercised by the Board of Directors, hereinafter referred

to as the “Board”, composed of a Chairman to be appointed by the



President; the General Manager of the Corporation as Vice-Chairman;
the Secretary of the DOTC; the Secretary of Finance; the Director of
the National Economic and Development Authority; the Secretary of
Agriculture; and three (3) other members to be appointed as Board
Members by the President.

‘The Chairman and three appointive members of the Board
shall serve for a period of six years; Provided, That in the initial
appointments, one member shall be appointed for a term of two years,
one member for four years, and one member for six years; Provided
further, That their successors shall be appointed for a term of six
years except that any person appointed to fill a vacancy shall only

serve for the unexpired term of the member succeeded.

‘The officials next in rank to the ex-officio members of the Board,
as designated by them, shall serve as alternate members. They shall
attend the meetings of the Board whenever their principals are absent
or the said positions are vacant and shall receive the same benefits

and privileges as their principals.

For actual attendance of Regular or Special Board meetings, or
Board Committee meetings, the members of the Board shall receive a
per diem, to be determined by the Governance Commission for

Government Owned or Controlled Corporations (GCG).

All necessary expenses of the members of the Board to attend
Board and other meetings and to discharge their official duties, within
the limits allowable by the GCG, shall be paid directly by the

Corporation in the form of cash advance reimbursement.

SECTION 8. Qualifications of Appointive Members of the
Board. - The appointive members of the Board of Directors who need

not be stockholder of the Corporation, shall be Filipino citizens, at



least 35 years of age at the time of their appointments, and shall be of
good moral character, competent, experienced and holders of degrees
in the field of transport planning, engineering, economics,
management, finance, marketing, law, or related courses, with
preference for those with masteral degrees in such fields or experience
in railway management and operations for at least five (5) years. All
such officials must be residents of Mindanao for at least five (5) years

prior to their respective appointments.

SECTION 9. 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 of the
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 fix the compensation of the General Manager and Assistant
General Managers, subject to the approval of the GCG, and to
appoint and fix the compensation of other officers of the

Corporation;

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) By a two-thirds vote of all members, to suspend or remove for

cause the General Manager or Assistant General Manager(s);

€) Upon recommendation of the General Manager, to approve the
appointment of all offifcials of the Corporation from the rank of

division head and above;



1) Subject to the provisions of applicable laws and regulations, and
upon recommendation of the General Manager, to reorganize
the Corporation, determine its staffing pattern, or define the

functions and duties of organization units and personnel; and

g) To expropriate, with rightful compensation, the necessary “right
of way” needed by the Corporation to acquire, maintain, and/or

expand its track lines.

SECTION 10. Suspension and Removal of Directors.- Any
member of the Board may, for a cause, be suspended or removed by

the President of the Philippines.

SECTION 11. 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 12. Managing Head.- The Management of the
Corporation shall be vested in the General Manager who shall be
appointed by the Board. He shall possess technical competence in
management, preferably in railroad transport management, have
demonstrated executive ability, and be of good moral character.

In the performance of his functions, he shall be assisted by
Assistant General Managers who shall be appointed by him with the
approval of the Board.



SECTION 13. Powers and Duties of the General Manager. -

‘The General Manager shall have the following powers and duties:

a)

b)

8)

h)

To direct and manage the affairs and business of the
Corporation on behalf of the Board, subject to the policies,
rules, and regulations established by the Board;

To sit in all meetings of the Board as Vice-Chairman, and
participate in its deliberations, with the right to vote, and to

preside in any meeting for or in the absence of the Chairman;

To recommend to the Board short-and-long range plans and
programs consistent with the overall objectives of the

Corporation;

To submit and recommend consolidated annual budget and

propose capital and other supplemental budgets to the Board;

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;

To recommend to the Board such changes in the organizational
structure and staffing pattern of the Corporation as may be

necessary to carry out its functions effectively;

To submit to the Office of the President of the Philippines and to
the Congress of the Philippines, through the Board of Directors,
within sixty (60) days after the close of each fiscal year, an
annual report on the operations of the Corporation or such

other reports as may be required; and

To perform such other duties as may be assigned to him by the

Board of Directors from time to time.

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SECTION 14. Appointment and Promotion of Personnel. - In
the appointment and promotion of officers and employees of the
Corporation, merit and efficiency shall serve as basis, and no political
test or qualification shall be prescribed and considered for such

appointments or promotions.

SECTION 15. 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, earnings,
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 16. 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 the 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

un



b)

maintaining the Auditor’s office shall be paid by the

Corporation.

Report - The financial transactions of the Corporation shall be
audited in accordance with law, administrative regulations and
the principles and procedures applicable to commercial
corporate transactions. A report of audit of each fiscal year, 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 transactions 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 17. Legal Department. - The Corporation shall have

its own legal department, the chief and members of which shall be
appointed by the Board of Directors; Provided, That the Office of the
Government Corporate Counsel shall provide assistance and

supervision in the handling of court cases of the Corporation

12



SECTION 19. 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 and 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 20. 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 21. 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.

13



SECTION 22. 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 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. 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 25. Effectivity. - This Act shall take effect fifteen (15)
days after its publication in the Official Gazette or in a national

newspaper of general circulation.

Approved,

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