THIRTEENTH CONGRESS OF 
First Regular Session 
OF THE PHILIPPINES 
Introduced by Senator S. R. OsmeAa 111 
EXPLANATORY NOTE 
The worsening traffic problem encountered by Metro Manila in the late 
1990's indicated the need to find alternative ways to get around the metropolis. 
The experience of the Light Rail Transit in transporting more than 400,000 
passengers daily showed that rail-based mass transit system can address such a 
problem. 
However, with the present financial problems of the LRT, the 
expansion projects it must undertake to service more commuters is limited. 
This bill proposes the creation of the Rail Network Authority as the 
successor agency of the cash strapped LRT. 
Under this bill, minimal 
government subsidy will be required in the form of equity. Private resources will 
instead be tapped to finance the development, operation and maintenance of rail- 
based mass transit systems. 
The experience of the Light Rail Transit and the Metro Rail Transit proves 
that rail-based mass transit system is the key to a reliable, safe, efficient and fast 
transit system. 
Early approval of this bill is therefore earnestly requested. 
pz, 
SERGIO OSMENA 111 
Senator 


THIRTEENTH CONGRESS OF THE REPUBLIC 
1 
%.a 
, I [ / ;  
1 3Q p 5 yj 7 
OF THE PHILIPPINES 
1 
First Regular Session 
) 
S E N A T E  
. )  
I. , " 
w 
S. No. 
I 
Introduced by Senator S. R. OsmeAa 111 
AN ACT 
CREATING THE RAIL NETWORK AUTHORITY, DEFINING ITS POWERS AND 
FUNCTIONS, PROVIDING FUNDS THEREFOR AND FOR OTHE PURPOSES 
Be it enacted by the Senate and House of Representatives of the Republic of the 
Philippines in Congress assembled: 
1 
Section 1, Declaration of Policy. -- It is hereby declared to be the policy 
2 
of the State to promote and encourage the synchronization of the common 
3 
carrier services in the most practicable, expeditious and cost-effective manner 
4 consistent with maximum safety to the public who will avail of these facilities and 
5 
to foster sound economic conditions within the transportation industry. In the 
6 
pursuit thereof, the government and the private sector shall interact effectively by 
7 
performing functions and pursuing priorities for which each is best suited and, at 
8 
the same time, reinforcing and complementing each other 
9 
To the extent that the government has to subsidize andlor financially 
I O  
assist in the development of any rail transit system, the same shall be limited to 
1 1 
capital grants, financial guarantees, and/or inclusion of appropriations in the 
12 
infrastructure program of the government, national and/or local, to cover the 
I 3  
construction cost of the carriageways, railtracks, and appurtenant facilities, 
74 
including the cost of acquisition of right-of-way. 
1 


1 
2 
3 
4 
5 
6 
7 
8 
9 
,lo 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 
29 
Section 2. Creation of the Rail Nefwork Authority. - In order to carry 
out the foregoing transportation policy, there is hereby created a corporate body 
to be known as the Rail Network Authority, hereinafter called the Authority, which 
shall be primarily responsible for the planning, development, construction, 
operation, maintenance, and/or lease of rail transit systems in the Philippines, 
provisions of Republic Act No. 7924 notwithstanding, giving due regard to the 
reasonable requirements of the public transportation systems of the country. All 
powers and prerogatives of the now existing Light Rail Transit Authority (LRTA), 
created under Executive Order No. 603, series of 1980, as amended, shall be 
absorbed by the Authority. As such, the Authority shall continue with the (a) 
Capacity Expansion of Line I 
; (b) the planning, construction, and development of 
Line 2 and subsequent Lines in the Metro Manila Area already started and 
presently being undertaken by LRTA; (c) supervise the implementation, operation 
and management of all urban rail lines, LRT and otherwise, which were started 
under the Department of Transportation and Communications (DOTC); and 
eventually, in the whole Philippine Archipelago. 
The principal office of the 
Authority shall be in the Metropolitan Manila Area, but it may establish branches 
and agencies elsewhere in the Philippines as may be necessary for the proper 
conduct of its business and the efficient discharge of its functions. The Authority 
shall be attached to the Department of Transportation and Communications for 
purposes of policy coordination. 
The Authority shall conduct its business according to prudent commercial 
practices. Any excess of revenues over expenditures in any fiscal year may be 
applied by the Authority in any way consistent with this Act, including such 
provisions for the acquisition andlor replacement of capital assets and the 
repayment of loans and expansion of the network, as the Authority may consider 
prudent under existing circumstances. 
Section 3. The Board of Directors. -- The powers and functions of the 
Authority shall be vested in and exercised by the Board of Directors composed 
2 


1 
2 
3 
4 
5 
6 
7 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 
29 
on nine (9) members, namely, the 
Secretary of Transportation and 
Communications as Chairman, the General Manager of the Authority as Vice- 
Chairman, the Secretary of Finance, the NEDA Director General, the Secretary 
of Budget and Management, the Chairman of the Land Transportation 
Franchising and Regulatory Board, the Chairman of the Metropolitan Manila 
Development Authority, a representative from the Office of the President, as 
members, and one (I) 
representative from the private sector to be appointed by 
the President. 
In the absence of the Secretary of Transportation and 
Communications, the Vice-chairman shall serve as Chairman. 
The Board may, in the exercise of its functions, create committees as may 
be necessary. The officials next to, or such officials duly designated by the 
regular members, shall serve as alternate members. The alternate members, 
whose rank should not be lower than a Director level, shall attend meetings of 
the Board and Committees assigned to them by their principals and receive the 
corresponding compensation, whenever their principals are absent. 
The Chairman and each Member of the Board shall receive for every 
meeting actually attended a per diem not exceeding the monthly salary of the 
lowest regular employee of the Authority, rounded off to the nearest hundred 
pesos: Provided, That in no case shall the total amount received in any one 
month by each member exceed three (3) times the per diem per meeting. 
Members of the Board shall be reimbursed by the Authority for actual expenses, 
including travel and subsistence expenses incurred by them in the performance 
of their duties. 
Section 4. Functions and Powers. -- The Authority, through the Board 
of Directors shall have the following powers: 
1. 
To have continuous succession under its corporate name until 
otherwise provided by law; 
2. 
3. 
To prescribe, amend, and/or repeal its by-laws; 
To accept and use a seal at its pleasure; 
3 


I 
1 
2 
3 
4 
5 
6 
7 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 
4. 
Tosueandbesued; 
5. 
To provide comprehensive policy guidance for the development, 
operation and promotion of rail transit systems, continuing for the purpose, the 
activities presently being performed by the LRTA and by the DOTC; 
6. 
To formulate a comprehensive master strategic plan on urban mass 
rail transit services in Metro Manila and such other places wherever feasible and 
necessary for public convenience; 
7. 
To contract any obligation or enter into, assign or accept the 
assignment of, and modify or rescind any agreement whenever necessary or 
incidental to the proper management of the Authority; 
8. 
To borrow funds from any source, private or public, foreign or 
domestic, and to issue bonds and other evidence of indebtedness, the payment 
of which shall be guaranteed by the National Government and charge all or any 
part of its properties as security therefor, subject to pertinent laws; 
9. 
To carry on any business consistent with this Act, either alone or in 
partnership with any person or persons, to form subsidiaries, enter into joint 
agreements with foreign and/or local entities, including but not limited to, projects 
or activities involving the Build Operate and Transfer (BOT) concept or its 
variants. The governing board of each subsidiary so formed and established, for 
proper management and supervision shall be chaired by the General Manager of 
the Authority; 
10. 
To exercise the right of eminent domain, whenever necessary for 
the attainment of its objectives; 
11. 
To acquire, receive, take and hold by, bequest, devise, gift, 
purchase or lease, either absolutely or in trust for the furtherance of any of its 
purposes, from foreign and domestic sources, any asset, grant or property, real 
or personal subject to such limitations as are provided in existing laws; to convey 
or dispose of such assets, grants or properties, movable and immovable; and 
4 


, 
1 
2 
3 
4 
5 
6 
7 
8 
9 
I O  
I 1  
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 
29 
invest and/or reinvest such proceeds and deal with and expand its assets and 
income in such manner as will best promote its objectives; 
12. 
13. 
To improve, develop or alter any property held by it; 
To invest such funds of the Authority available for investment in any 
manner consistent with its purposes and the provisions of this Act; 
14. 
To cooperate, coordinate, and exchange such information, studies 
and reports with, and to seek the cooperation of other agencies and 
instrumentalities of the National Government including government-owned and 
controlled 
corporations and private sector 
and 
other 
non-government 
organizations, as will be most effectively conducive to the achievement of the 
purposes of this Act; 
15. 
To determine the fare policy, structure, and amount payable by 
persons travelling on the network developed by, and/or contracted for, by the 
Authority; 
16. 
To approve additional benefits of the officers and employees of the 
Authority as recommended by the General Manager; 
17. 
To approve under such terms and conditions or amounts in excess 
of the authority of the General Manager most advantageous to it any claim by or 
against it; 
18. 
19. 
To approve the annual corporate budget of the Authority; and 
To exercise such powers and perform such duties as may be 
necessary to carry out the business and purposes for which the Authority was 
established or which from time to time, may be declared by the Board of 
Directors to be necessary for the accomplishment of its purposes; 
Section 5. 
Facilities for the Differenfly-Abled Persons. 
-- In 
consonance with the spirit and intent of Batas Pambansa Blg. 344 and as 
compliance therewith, the Authority shall establish and maintain a special transit 
fund from its rail revenues which shall be used to provide safe, convenient and 
efficient dedicated transit facilities for differently-abled persons travelling along 
5 


? 
1 
2 
3 
4 
5 
6 
7 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 
29 
the transit routes or lines serviced by the Authority. Said special conveyances 
shall be available during the operating hours of the Authority and at fare rates 
equivalent to that normally charged for passenger rail service. 
Section 6. Domestic lndebtedness. - Whenever the Board deems it 
necessary for the Authority to incur indebtedness by contracting loans with 
domestic financial institutions or to issue bonds to carry out the purposes for 
which the Authority has been organized, it shall, by resolution, so declare and 
state the purpose for which the proposed debt is to be incurred and such terms 
and conditions as it shall deem appropriate for the accomplishment of the said 
purpose: Provided, That in the case of bond issues, the same shall be subject to 
the approval of the Secretary of Finance. 
The bond issued under the authority of this section shall be exempt from 
the payment of all taxes imposed by the Republic of the Philippines, or by any 
authority, branch, division or political subdivision thereof which parts shall be 
stated upon the face of the bonds. 
Section 7. Foreign Loans, - Subject to pertinent provisions of R.A. No. 
4860 and related issuances, the Authority is hereby authorized to contract loans, 
credits or indebtedness in any convertible foreign currency or capital goods, from 
foreign governments or any international financial institutions, or to issue bonds 
on such terms and conditions as it shall deem appropriate for the 
accomplishment of these purposes and/or to enter into and execute agreements 
and other documents specifying such terms and conditions. 
The President of the Philippines, by himself, or though his duly authorized 
representatives, is hereby further authorized to guarantee, absolutely and 
unconditionally as primary obligor and not as surety, in the name and on behalf 
of the Republic of the Philippines, the payment of the loans credit, indebtedness 
and bonds issued up to the amount authorized under existing laws, as well as the 
performance of all or any of the obligations undertaken by the Authority in the 
territory of the Republic of the Philippines, pursuant to Loan Agreement entered 
6 


1 
into with foreign governments or any international financial institutions or fund 
sources. 
Section 8. Exemptions from Taxes, Custom and Tariff Duties. -- 
The importation of equipment, machineries, spare parts, accessories, and other 
materials, including supplies and services used directly in the construction, 
5 
installation, and/or operations of the guided transit system whether owned, 
6 
leased, or contracted by the Authority, shall be exempt from all direct and indirect 
7 
taxes, customs, duties, fees, imports, tariff duties, compensating taxes, and other 
8 
9 
levies, the provisions of existing laws to the contrary notwithstanding. 
Any loan, credit and/or, indebtedness including bond issues contracted by 
the Authority and the payment of the principal, interest and other charges thereof 
I O  
11 
12 
13 
14 
shall be exempt from all taxes. 
The depot, carriageways, terminals, stations, rail tracks, parapets and 
other fixed facilities appurtenant thereto, now existing or that may be constructed 
in the future, whether elevated, at ground, or underground, shall be considered 
15 
as public infrastructure in the nature of roads and therefore not subject to capital 
16 
gains tax, real estate taxes, and any local government tax impositions. 
17 
Provisions of existing laws to the contrary notwithstanding, the payments 
18 
of lease, rent, concession fee, and/or purchase price for such assets of the 
Authority ' as rail vehicles, track maintenance equipment, signaling system, 
19 
20 
21 
22 
23 
24 
25 
instruments and other workshop devices, by private entities granted the rights to 
operate and maintain any component of the rail transit business, shall be exempt 
from the ten percent (70%) valued added tax. 
Section 9. Organization and Management. -- For the purposes of this 
Act, the incumbent Administrator of the LRTA shall be the General Manager of 
26 
the Authority who shall be assisted by Deputy General Managers. The General 
Manager and Deputy General Managers of the Authority shall be citizens of the 
27 
28 
Philippines, at least thirty-five (35) years old on the date of their appointment, in 
29 
excellent health and fitness, of good moral character, of recognized executive 


I 
2 
3 
4 
5 
6 
7 
a 
9 
10 
11 
12 
13 
14 
75 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 
29 
ability and competence, with adequate training in either transport planning, 
engineering, management and economics, finance, law, public utility and other 
transport related aspects. The General Manager and Deputy General Managers 
shall be appointed by the President. The Authority shall establish and maintain 
such departments as it may deem necessary for the proper and efficient 
transaction and/or operations of its business. The powers and duties of the 
departments shall be determined by the Board: Provided, That the Office of the 
Chief Legal Counsel shall advise and represent the Authority in all legal matters, 
procedures and actions. 
The salary of the General Manager and the other officers of the Authority 
shall be set by the Board: Provided, That the total compensation package for the 
General Manager shall not exceed twenty times the basic salary of the lowest 
paid regular employee of the Authority. 
Section 10. Powers and Dufies of the General Manager. -- The 
General Manager shall have the following powers and duties: 
1. 
To represent the Authority in all dealings with other offices, 
agencies and instrumentalities of the Government and with all other persons and 
entities, whether public or private, domestic, foreign or international; 
2. 
To implement, enforce and apply the policies, programs, plans, 
standards, guidelines, procedures, decisions, rules and regulations, issued, 
prescribed, or adopted by the Board of Directors; 
3. 
To undertake studies, investigations, and other activities related to 
the development and operations of the urban rail system and to submit reports to 
the Board of Directors; 
4. 
To undertake studies for present and future requirements of the 
metropolitanhrban rail network and projects expansion in consultation with 
appropriate agencies; 
5. 
To manage the affairs of the Authority, subject to the provisions of 
this Act and applicable laws, orders, rules and regulations; 
8 


-I 
2 
3 
4 
5 
6 
7 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
6. 
To determine, with the approval of the Board, the organization 
structure, the staffing pattern and the number of personnel of the Authority and to 
define their functions and duties; 
7. 
To prescribe rules, regulations and standards towards a safe, fast 
and reliable rail transit services; 
8. 
To employ the necessary consultancy and advisory services and to 
organize and employ personnel for any project implementation activity; 
9. 
To enter into contracts with private or government entities offering 
administrative, clerical and other services for the efficient performance of 
services to the public; 
10. 
Authority; 
11. 
To appoint, discipline and remove for cause personnel of the 
To prescribe rules and regulations in the conduct of the general 
business of the Authority as well as to fix and implement the terms and 
conditions of its related activities. 
12. 
To establish, operate and maintain branches or field offices in any 
part of the country as required by the expansion of its activities; 
13. 
To establish and maintain, in coordination with the appropriate 
government offices and agencies a regular and prompt information system 
regarding traffic flows, mass rail transit operations, finance and other related 
data; 
14. 
To approve under such terms and conditions most advantageous to 
the Authority any claim by or against it up to Five Hundred Thousand Pesos 
(P 500,000.00); 
15. 
With the approval of the Board, to delegate such functions and 
duties to proper ranking officials of the Authority for the efficient administration 
and management thereof; 
9 


1 
2 
3 
4 
5 
6 
7 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
I 9  
20 
21 
22 
23 
24 
25 
26 
27 
28 
16. 
To report annually to the President of the Philippines on the status 
of the Authority’s operation and finances, not later than three (3) months after the 
yea r-e nd ; 
17. 
To perform such other powers and functions as the Board may 
direct, and such acts as may be necessary and proper to implement this Act; 
Section 11. Supplies and Services Other Than Personnel. -- All 
purchase of supplies or contracts for services, except for personal services shall 
be in accordance with the existing government laws, rules and regulations as 
provided by the Commission on Audit. 
Section 12. Merit System. -- The Authority shall establish a human 
resource management system which shall govern the selection, hiring, 
appointment, transfer, promotion, or dismissal of all personnel. Such system 
shall aim to establish professionalism and excellence at all levels of the 
Authority’s organization in accordance with sound principles of management. A 
progressive compensation structure shall be instituted as an integral component 
of the Authority’s resource development program and it may grant across-the- 
board salary increase or modify its compensation structure subject to the 
approval of the Board. 
Section 13. Applicability of the Civil Service Law. -- All permanent 
officers and employees of the Authority below the rank of Department Manager 
shall be subject to the Civil Service Law, rules, and regulations. The hiring of 
temporary workers, contractuals or casuals for special projects shall be 
exempted from existing Civil Service rules and regulations. 
Section 14. 
Prohibition Against Strikes, Work Stoppages and 
Slowdowns. -- In view of the vital nature of transport services and its effect on 
national interest, the officers and employees of the Authority are prohibited from 
conducting strikes, work slowdowns or stoppages, and such other acts that may 
disrupt the delivery of services to the public. 


c 
1 
2 
3 
4 
5 
6 
7 
8 
9 
I O  
I 1  
12 
13 
14 
15 
16 
17 
18 
I9 
20 
21 
22 
23 
24 
25 
26 
27 
28 
29 
Nothing in this provision shall prevent such officers and employees from 
forming a union or employee association in accordance with Civil Service rules 
and regulations and for the purposes of securing changes or improvements in the 
terms and conditions of their employment. 
Section 15. 
Exemption from Rules and Regulations of the 
Compensation and Position Classification Office. 
-- 
All personnel and 
positions of the Authority shall be governed by Section 12 hereof, and as such 
shall be exempt from the coverage of the rules and regulations of the 
Compensation and Position Classification Office. 
Section 16. Annual Accounts. -- The Authority shall maintain such 
accounts and other records under a commercial system of accounting on a 
calendar year basis. 
Section 17. The Auditor. -- 
In consonance with existing laws and 
regulations, the Commission on Audit shall appoint and assign such personnel as 
may be necessary to audit the accounts of the Authority. However, the Authority 
may engage the services of any person or firm duly authorized by law for the 
audit of accounts of the Authority as may be necessary. 
The Auditor, shall as soon as practicable, but later than three (3) months 
after the accounts have been submitted for audit, send an annual report to the 
Board. The Auditor may also submit such periodical or special reports to the 
Board as may appear to him necessary, or requested by the Board. 
Section 18. Authority to Administer Oaths. -- The Chairman of the 
Board, the General Manager, the Deputy General Managers, the Administrative 
Manager and the Chief Legal Counsel of the Authority shall have the power to 
administer oaths in connection with the transaction of official business. 
Section 19. Capitalization. -- The Authority shall have an authorized 
capital stock of One Hundred Billion Pesos (PI 00,000,000,000.00) divided into 
six hundred (600) million Class “A” shares and four hundred (400) million Class 
“B” shares all voting and with a par value of One Hundred Pesos (P100.00). The 


1 
Class “A” shares shall be fully subscribed by the Government or any of its 
2 
3 
4 
5 
6 
7 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 
29 
instrumentalities, and may only be owned, sold to, bought or held by a 
government entity. The Class “B” shares may be owned by private entities 
whether domestic or foreign and will be available for sale to Filipinos or foreign 
nationals and may be traded in any manner through tenders, public offerings, or 
the stock market at such time, and in such numbers, and for such prices not less 
than par as may be authorized by the Board in accordance with applicable laws: 
Provided, That in no case shall the subscription of the foreign nationals or entities 
be more than forty percent (40%) of the authorized capital stock. 
The subscriptions of the National Government in Class “A” shares shall be 
paid as follows: 
1. 
The actual share in the paid in capital of Light Rail Transit Authority, 
created under Executive Order No. 603, as amended, in the amount of TWO 
Billion Eight Hundred Thirteen Million Seven Hundred Seventy-Seven Thousand 
Two Hundred Fifty Three Pesos (P2,813,777,253.00); 
2. 
Conversion into equity of all advances made by the National 
Treasury for payment of maturing debts of the light Rail Transit Authority, in the 
equivalent amount of Six Billion One Hundred Ninety-One Million Forty-Four 
Thousand Four Hundred Sixty-Three Pesos and Fifty-Seven Centavos 
(P6,191,044,463.57); 
3. 
Conversion into equity of the Transfer Credit Facility re-lent by the 
Philippine National Bank and subsequently transferred to the National 
Government through the Bureau of Treasury valued at the peso equivalent of 
Two Hundred Thirty-Two Million Nine Hundred Twenty-Three Thousand Five 
Hundred Twenty-Five and Sixty-Three Centavos (P232,923,525.63); 
4. 
Conversion into equity of Lloyds Bank Loan subsequently 
restructured into bonds by the Bureau of Treasury, valued at the peso equivalent 
of Five Hundred Thirty-Six Million Five Hundred Twenty Thousand Pesos 
(P536,520,000.00); 


1 
2 
3 
4 
5 
6 
7 
8 
9 
10 
I 1  
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
5. 
Conversion into equity of other obligations of the Light Rail Transit 
Authority, which are outstanding at the effectivity of this Act, as their payments 
become due, to be valued in equivalent pesos at the prevailing rates at the time 
of actual payments, more particularly described as follows: 
a. 
Public Debt re-lent by the Department of Finance (Belgian 
Loan) with an approximate amount of One Hundred Eighteen Million 
Pesos (PI 18,000,000.00); 
b. 
Buyers Credit Society Generale de Banque with an 
approximate amount of Eighty-six Million Pesos (P86,000,000.00); 
c. 
Belgian State Loans with an approximate amount of Six 
Hundred Twenty-Six Million Pesos (P626,000,000.00); 
d. 
Land Bank of the Philippines loan valued at Sixty-Six Million 
One Hundred Twenty-Five Thousand Pesos (P66,I 25,000.00) and 
e. 
Swiss Mixed Financing (Amendment No. 1) valued at Three 
Million Eight Hundred Eighty-Three Thousand Eight Hundred Sixty-Eight 
Pesos and Twenty Centavos (P3,883,868.20). 
6. 
Any capital gains that may be derived from the privatization of LRT 
Line 1 and Line 2, net of expenses incurred therefrom; and 
7. 
Such amounts as may be appropriate from time to time from the 
funds of the National Treasury not otherwise appropriated, or from any other 
source that Congress may hereinafter identify. 
Section 20. 
Sources of Funds and fhe Operafing Budget of the 
Authority. -- The annual expenditures including capital outlay of the Authority 
shall be funded out of corporate funds, loan proceeds andlor from any other 
source that may be identified by Congress. 
I 
26 
Section 21, Management of Funds. -- As part of a prudent cash flow 
27 
management practice, the Authority may from time to time invest any of its funds 
28 
not immediately required to be expended in meeting its obligations or in the 


1 
2 
3 
4 
5 
6 
7 
8 
9 
I O  
I 1  
12 
13 
14 
15 
16 
17 
18 
I9 
20 
21 
22 
23 
24 
25 
26 
27 
28 
29 
discharge of its functions, in such secured notes, government securities, and 
other negotiable instruments that satisfy the guidelines prescribed by the Board. 
Funds other than equity and directly-contracted loans of the Authority, 
such as capital grants, loan proceeds, and appropriations by the National 
Government as capital subsidy for mass transit projects may be disbursed 
through or administered by the Authority. 
The corresponding fixed assets 
procured thereby shall be considered the property of the national government, 
but their care and maintenance shall be borne by the Authority as the beneficial 
owner. 
All funds of the Authority shall be deposited in such commercial and 
universal banks as may be authorized by the Board. 
Section 22. Penalties. -- Any person who willfully or maliciously gives 
false or misleading data or information, or conceals or falsifies a material fact, in 
any investigation, inquiry or hearing or other proceedings held by the Board of 
Directors or the Authority or any one duly acting in their behalf, shall be dealt with 
according to pertinent provisions of existing penal laws. 
Section 23. Relationship with Other Government Instrumentalities. -- 
The Authority shall be the primary government agency responsible for the 
planning and integrated development of urban transit systems whether monorail, 
light rail, heavy rail, or any other guided mode of mass transit that may be 
hereinafter be invented, in Metropolitan Manila and in other large cities of the 
country. It shall coordinate with the Metropolitan Manila Development Authority 
(MMDA) in the planning of future transit lines and the expansion of the network in 
the national capital region, and in the development of public inter-modal transport 
terminals or stations by itself, or in joint venture with the MMDA and/or the private 
sector. The Philippine National Railways may continue to operate its Commuter 
Train service independent of the Authority: Provided, However, That its 
expansion into other transport corridors within Metropolitan Manila shall be 
coordinated with the Authority. 


1 
2 
3 
4 
5 
6 
7 
8 
9 
I O  
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 
29 
The Northrail project initiated by the Bases Conversion Development 
Authority to provide a rail link between Metropolitan Manila and the Clark Special 
Economic Zone shall not be affected by this Act, except that at station or stations 
where transfers between the Authority’s network and that of the Northrail may 
occur. Development of the common stations shall be coordinated by the parties 
concerned, but in case of conflict the Authority’s mass transit plan shall prevail. 
Urban rail transit projects contracted by the national government, or may 
hereinafter pursue, under the Build-Operate-Transfer law shall be delegated to or 
assumed by the Authority so that the rights and interest of the government shall 
accrue to, and be exercised by, the Authority. 
Nothing in this Act shall prevent cities and other local government units 
from pursuing the development of mass transit systems in their respective 
jurisdictions in accordance with the Local Government Code either through Build- 
Operate-Transfer Law or through their own funding. 
Assistance shall be 
provided by the Authority when so requested by the local government unit 
concerned. 
However, when a locally-initiated mass transit project will entail 
funding andlor guarantee from the national government, the Authority shall take 
primary responsibility. In urban areas where rail transit system is found to be 
economically viable, the prior consent of local government unit shall be secured 
by the Authority before any further steps are taken. 
Section 24. Abolition of LRTA. -- The Light Rail Transit Authority 
(LRTA) is hereby abolished. All powers and duties, rights and choices of actions, 
vested by law or exercised by the LRTA are hereby transferred to the Authority. 
All real and personal properties which upon the effectivity of this Act are vested 
in, or owned by LRTA are hereby transferred to the Authority without need of 
conveyance, transfer or assignment. Likewise, all assets, liabilities (other than 
BTR advances and debts enumerated under Section 19 hereof), appropriations, 
obligations, contracts, records, and documents relating to the operation of LRTA 
are hereby transferred to the Authority created under this Act. 


P 
1 
5 
6 
7 
8 
9 
IO 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 
Section 25. 
Transitory Provisions. -- Pending implementation of the 
Authority’s organizational structure and staffing pattern and the appointment of its 
officers, all officials and employees of the present LRTA and its subsidiary shall 
continue to exercise their present duties and functions and receive their salaries 
and allowances until such time as they shall have been given notice of change of 
duties and functions. 
The incumbent Administrator of the LRTA shall continue to hold office and 
assume the powers and functions of the General Manager of the Authority 
created under this Act. 
Officials and employees of the LRTA shall be absorbed into the Authority 
on the basis of merit and fitness: Provided, That those who shall opt to be 
separated or get separated or terminated as a result of the organization of the 
Authority, shall be entitled to gratuity pay at the rate equivalent to one and a half 
(1 1/) month’s salary for every year of service in the government, in addition to 
the retirement benefits or pensions under existing retirement laws. Within six (6) 
months from the effectivity of this Act, the Authority shall formulate a program to 
privatize operations and maintenance of LRT Line I and LRT Line 2, including 
the sale and/or dissolution of Metro Transit Organization, Inc. The privatization 
program shall be approved by the Secretary 
of 
Transportation and 
Communications and implemented after informing the appropriate Committees of 
the House of Representatives and the Senate. 
The Secretary is hereby 
authorized to implement the privatization of the LRT system and accordingly, sell, 
dispose of, convey, encumber or transfer any or all of the Authority’s assets, 
stocks, and other resources to the private sector, in accordance with existing 
rules and regulations. The winning bidder or bidders shall be granted, where 
appropriate with the corresponding franchise or authority as a public transport 
carrier, consistent with the provisions of Executive Order No. 125, series of 1987, 
and of Republic Act No. 7718. 


, . 
b r  
1 
2 
3 
4 
5 
6 
7 
8 
9 
I O  
Section 26. -- Repealing and Separability Clauses. -- Executive Order 
No. 603 dated July 12, 1980, as amended, is hereby repealed. All other laws, 
executive orders, decrees, rules and regulations or parts thereof that are 
inconsistent with any of the provisions of this Act are hereby repealed, amended 
or modified accordingly. 
If for any reason, any section or provision of this Act is declared to be 
unconstitutional or invalid, the other sections or provisions hereof which are not 
affected thereby, shall continue to remain in full force and effect. 
Section 27. Effectivity. -- This Act shall take effect fifteen (1 5) days after 
its approval and publication in at least two (2) newspapers of general circulation. 
Approved