Senate Bill was filed by Senator Aquilino Pimentel III during the 18th Congress of Republic of the Philippines on the 22nd of July 2019. This post focuses on this bill, and is divided into the following sections: 

• Status and summary of the bill
• Explanatory note
• Text of the bill

Status and summary of the bill

Filed on July 22, 2019 by Pimentel, Aquilino "Koko" III

Explanatory note

The senator's exploratory note appears below.

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

The collective experiences of Japan, Canada, the United States of America and most of Europe show how railroad networks have spurred and sped up national development. In these places, railroads opened up vast land areas for human settlement and made it possible to transport massive 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 needed for civilized life mean higher productivity of the land and its people.

A railroad network crisscrossing Mindanao will considerably shorten the travel time between Zamboanga and my hometown, Cagayande Oro, or Davao and Cagayan de Oro. That will, in turn, mean a reduction of the transportation cost of goods and travel cost for people whose end destination is the Visayas or Luzon, and vice versa.

Considering all the foregoing, approval of this bill is earnestly sought.

AQUILINO "KOKO" PIMENTEL

Text of the Bill

 The text of the bill appears below. 

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

Be it enacted by the Senate and the House o f Representatives o f 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 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 interests of the public by providing them the maximum of service. 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.

SEC. 2. Name, Duration, and Domicile. — A corporation to be known as the Mindanao Railways Corporation (hereinafter, “Corporation”) is hereby created to serve as the instrumentality of the Philippine government in providing a railroad and transportation system for the whole island o f Mindanao. It shall have its main office in Cagayan de Oro and shall have such branches and agencies within the Philippines as may be necessary for the proper conduct of its business. This Corporation shall exist for a term o f fifty (50) years from the date of approval of this Act and shall be an attached agency of the Department of Transportation (DOTr).

SEC. 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 Big. 68 otherwise known as “The Corporation Code of the Philippines,” as amended.

SEC. 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.

SEC. 5. Authorized Capital Stock of the Corporation. - The authorized capital stock of the Corporation shall be One hundred billion pesos (PhP 100,000,000,000.00) divided into Five hundred million (500,000,000) common shares all with par value of Two hundred pesos (PhP 200.00), 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-five percent (25%) of which or Twenty-five billion pesos (PhP 25,000,000,000.00) 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).

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 the Corporation;

Provided, That this continuing annual appropriation of Two billion pesos (PhP2,000,000,000.00) 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. 6. Loans. - The Corporation is hereby authorized to contract loans, credits and indebtedness in any domestic or convertible foreign currency, from foreign governments, their agencies, instrumentalities or financial institutions, or any non-governmental national or international financial institutions or firms extending suppliers credit deferred payment arrangement or other fund sources, or to issue bonds, 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 merely as surety, in the name and on behalf of the Republic of the Philippines, the payment of the loans, credits, indebtedness and bond issued, which shall be over and above the amount which the President of the Philippines is authorized to guarantee under Republic Act No. 4860, as amended by Republic Act No. 6142, as well as the performance of all or any of the obligations undertaken by the Corporation in the territory of the Republic of the Philippines pursuant to loan agreements entered into with foreign governments or any international financial institutions or fund sources.

The loans, credits, and indebtedness contracted under this section and the payment of the principal, interest, and other charges thereon, as well as the importation of machinery, equipment, materials, supplies, and services, by the Corporation, paid from the proceeds of any loan, credit or indebtedness ineurred under this Act, shall also be exempted from all charges and restrictions previously and presently imposed and to be imposed by the Republic o f the Philippines, or any of its agencies and political subdivisions.

SEC. 7. Board o f Directors, Composition, and Appointment. - The corporate powers o f the Corporation shall be vested in and exercised by the Board of Directors, hereinafter referred to as the “Board”, composed of:

a. A Chairman to be appointed by the President;
b. The General Manager of the Corporation who shall be its Vice-Chairman;
c. The Undersecretary o f Planning and Infrastructure Projects of the DOTr;
d. An Undersecretary of the Department of Finance;
e. The Deputy Director-General for Investment Programming of the National Economic and Development Authority (NEDA);
f. An Undersecretary of the Office of the Executive Secretary, Office of the President; and
g. Three (3) other members to be appointed by the President.

The Chairman and the three appointive members of the Board as stated in Sec. 7 (g) shall serve for a period of six (6) years; Provided, That of the three appointive members, one member shall be appointed for a term of two (2) years, one member for four (4) years, and one member for six (6) years; Provided, further, That their successors shall be appointed for a term o f six (6) years except that any person appointed to fill a vacancy shall only serve for the unexpired term o f the member succeeded.

The officials next in rank to the members o f the Board listed in Sec. 7 (c), (d), (e) and (f), as designated by them, shall serve as alternate members. The alternate members 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 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 or reimbursement.

SEC. 8. 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, persons of good moral character 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.

SEC. 9. Powers and Duties of the Board of Directors. - The Board of Directors shall have the following powers and duties:

a) To prescribe rules and regulations, or policies governing the manner in which the general business of the Corporation may be exercised;

b) To recommend amendments of, or the repeal of by-laws;

c) To fix the compensation o f the General M anager and Assistant General M anagers, subject to the approval of the GCG, and to appoint and fix the compensation of the other officers of the Corporation;

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

e) By a two-thirds vote o f all members, to recommend to the President the suspension or removal for cause of the General Manager or Assistant General Manager(s);

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

g) Subject to the provisions of applicable laws and regulations, and upon recommendation o f the General Manager, to reorganize the Corporation, detennine its staffing pattern, or define the functions and duties of organization units and personnel; and

h) To expropriate, with just compensation, the necessary “right of way” needed by the Corporation to acquire, maintain, and/or expand its track lines.

SEC. 10. Suspension and Removal o f Directors. - Any member of the Board may, for cause, be suspended or removed by the President of the Philippines.

SEC. 11. Prohibition fo r Board Members. - No Chairman or member o f the Board of Directors o f 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.

SEC. 12. Managing Head. - The management of the Corporation shall be vested in the General M anager who shall be appointed by the President of the Philippines upon the recommendation o f the Board. He shall possess technical competence in management, preferably in railroad transport management, have demonstrated executive ability, and be of good moral character. He shall hold office for a term o f six (6) years.

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 and the President.

SEC. 13. 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, subject to the policies, rules, and regulations established by the Board;

b) 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 o f the Chairman;

c) To recommend to the Board short-and-long range plans and programs consistent with the overall objectives of the 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 Coqioration; Provided, however, That in the case of removal for cause, approval of the Board shall be necessary;

f) 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;

g) To submit to the Office of the President 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

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

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, Port Charges or Dues, and Customs Bonds. - The Corporation is hereby exempt from payment of all taxes of any kind and nature, including those imposed by municipal, city, provincial, or national governments, upon its capital stock, franchise, right of way, earnings, and all other property owned or operated by it in relation to its principal and auxiliary purposes, and all import duties on all railways materials, rolling stocks, spare parts, supplies and equipment imported in the Philippines for and/or by the said Corporation and 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; and such exemption shall further extend to the filing 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. These exemptions shall extend to the Value-Added Tax (VAT), Expanded Value-Added Tax (E-VAT), or any subsequent VAT laws.

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 said representative in the performance of his duties. The number and salaries of the Auditor and said personnel shall be determined by the Commission on Audit, subject to appropriation by the Board of Directors. In case of disagreement, the matter shall be submitted to the President of the Philippines whose decision shall be final. Said salaries and all other expenses of maintaining the Auditor’s office shall be paid by the Corporation.

b) Report - The financial transactions of the Corporation shall be audited in accordance with law, administrative regulations and the principles and procedures applicable to commercial corporate transactions. The representative shall submit a report of audit of each fiscal year to the Board of Directors of the Corporation, and copies thereof shall be furnished the President of the Philippines, the Secretary of Transportation and the Presiding Officers of the two
houses of Congress. The report shall set forth the scope of the audit and shall include a statement of assets and liabilities, capital and surplus or deficit; a statement and surplus or deficit analysis; statement of income and expenses; a statement of sources and application of funds; and such comments and information as may be necessary, together with such recommendations with respect thereto as may be advisable, including a report of any impairment of capital noted in the audit. The report also shows specifically any program, expenditures or other financial transaction or undertaking observed in the course of the audit, which in the opinion of the Auditor, has
been carried on or made without authority of law.

SECTION 17. Legal Department. - Any provisions of law or executive order to the contrary notwithstanding, the Corporation shall have its own Legal Department, which shall handle all legal matters affecting the Corporation; Provided, That the Office of the Government Corporate Counsel shall provide assistance and supervision in the
handling of court cases of the Corporation.

SECTION 18. Exemption from Regulation. - The Corporation shall not be subject to the authority and supervision of the Land Transportation Franchising and Regulatory Board (LTFRB) or any similar regulatory body.

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 years after the time of its dissolution for the purpose of prosecuting and defending suits by or against it and of enabling it to gradually 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. Reversion of General Funds. — All funds resulting from dissolution and liquidation of the Corporation as herein provided shall revert to the general funds of the Government.

SECTION 21. 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 22. Repealing Clause. - The provisions of Republic Act No. 4156, as amended, creating the Philippine National Railways and all Acts, Executive Orders, and Proclamations or parts thereof inconsistent with any of the provisions of this Act, are hereby repealed or modified accordingly.

SECTION 23. Effectivity. - This Act shall take effect upon its publication in a newspaper of general circulation.

Approved,