AMENDING CERTAIN SECTIONS OF REPUBLIC ACT NUMBERED FORTY-ONE HUNDRED AND FIFTY-SIX, ENTITLED "AN ACT CREATING THE PHILIPPINE NATIONAL RAILWAYS, PRESCRIBING ITS POWERS, FUNCTIONS, AND DUTIES AND PROVIDING FOR THE NECESSARY FUNDS FOR THE OPERATIONS", AS AMENDED BY REPUBLIC ACT NUMBERED SIXTY-THREE HUNDRED AND SIXTY-SIX.

• Number: Presidential Decree No. 741
• Sections: 26

Preamble

WHEREAS, under Republic Act Numbered Forty-One Hundred and

Fifty-Six as amended by Republic Act Numbered Sixty-Three Hundred and

Sixty-Six, it was declared as a national policy that the Philippine

National Railways, being a factor for socio-economic development growth,

shall (a) remain in and under government ownership during its corporate

existence; (b) be administered with the view of serving the best

interest of the public; and (c) while aiming at its greatest utility by

the public, the viability of its operation must be ensured so that the

service can be rendered at the minimum passenger and freight prices

possible;

WHEREAS, it has been declared a national policy to give

autonomy to the self-governing boards of government-owned or controlled

corporations in the management and operation of their respective

corporations;

WHEREAS, since transportation plays a vital role in the

prosecution of the national effort for the social and economic

development of the country, there arises an immediate need for the early

completion of the rehabilitation and selective modernization of the

facilities of the Philippine National Railways as provided for in

Republic Act Numbered Sixty-Three Hundred and Sixty-Six;

WHEREAS, in view of the expanded role and participation of

the Philippine National Railways in the total economic and social

development of the country, and of its anticipated major role in the

organization and operation of a centralized and integrated transport

system in the country, it is imperative that abandoned line services be

restored, existing line services be expanded and new lines or services

be created;

WHEREAS, in order to facilitate the realization of the

aforementioned declared policies and expeditiously attain the

above-mentioned objectives, certain sections of Republic Act Numbered

Forty-One Hundred and Fifty-Six as amended by Republic Act Numbered

Sixty-Three Hundred and Sixty-Six should be amended.

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the

Philippines, by virtue of the powers vested in me by the Constitution,

do hereby amend certain sections of the Charter of the Philippine

National Railways, Republic Act Numbered Forty-One Hundred and Fifty-Six

as amended by Republic Act Numbered Sixty-Three Hundred and Sixty-Six.

Section 1

SECTION 1. Section 1 of Republic Act Numbered Forty-One

Hundred and Fifty-Six as amended by Republic Act Numbered Sixty-Three

Hundred and Sixty-Six is hereby amended to read as follows:

Section 2

SEC. 2. Section 2 of Republic Act Numbered Forty-One

Hundred and Fifty-Six as amended by Republic Act Numbered Sixty-Three

Hundred and Sixty-Six is hereby further amended to read as follows:

Section 3

SEC. 3. Section 3 of Republic Act Numbered Forty-One Hundred

and Fifty-Six as amended by Republic Act Numbered Sixty-Three Hundred

and Sixty-Six, is hereby amended to read as follows:

Section 3-A

Section 3-a of Republic Act Numbered Forty-One Hundred and Fifty-Six, as

amended by Republic Act Numbered Sixty-Three Hundred and Sixty-Six,

which provides as follows:

Section 4

SEC. 4. A new section shall be inserted to be known as

Section 5

SEC. 5. Section 5 of Republic Act Numbered Forty-One Hundred

and Fifty-Six as amended by Republic Act Numbered Sixty-Three Hundred

and Sixty-Six is hereby amended to read as follows:

Section 6

SEC. 6. Section 6 of Republic Act Numbered Forty-One Hundred

and Fifty-Six as amended by Republic Act Numbered Sixty-Three Hundred

and Sixty-Six is hereby amended to read as follows:

Section 7

SEC. 7. Section 9 of Republic Act Numbered Forty-One Hundred

and Fifty-Six as amended by Republic Act Numbered Sixty-Three Hundred

and Sixty-Six is hereby amended to read as follows:

Section 8

SEC. 8. Section 10 of Republic Act Numbered Forty-One Hundred

and Fifty-Six as amended by Republic Act Numbered Sixty-Three Hundred

and Sixty-Six is hereby amended to read as follows:

Section 9 Managing Head.

SECTION 9. Managing Head.—The Management of the

Corporation shall be vested in the General Manager who shall be

appointed by the President of the Philippines. 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 of eight (8) 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 of Directors and the President.

Section 10 Powers and Duties of the General Manager.

SECTION 10. Powers and Duties of the General Manager.—The

General Manager shall have the following powers and

duties:

To recommend to the Board short-and-long-range

plans and programs consistent with the overall objectives

of the Corporation;

To direct and manage the affairs and business

of the Corporation on behalf of the Board in accordance

with 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 the meetings for and in the absence of of

the Chairman;

To submit and recommend consolidated annual budget and

proposed 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: Provided, however, That in the case of removal

for cause, approval of the Board shall be necessary;

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 within

60 days after the close of said fiscal year an annual

report and such other reports on its operations as may be

required; and

To perform such other duties and functions as may

be assigned to him by the Board.

Section 11

SEC. 11. Section 15 of Republic Act Numbered Forty-One Hundred

and Fifty-Six as amended by Republic Act Numbered Sixty-Three Hundred

and Sixty-Six is hereby amended to read as follows:

Section 12

Section 12 of Republic Act Numbered Sixty-Three Hundred and Sixty-Six

shall remain valid and effective.

Section 13

SEC. 13. This Decree shall take effect immediately.

Done in the City of Manila, this 3rd day of July, in the year of

Our Lord, nineteen hundred and seventy-five.

(Sgd.)

FERDINAND E. MARCOS

President

Republic of the Philippines

By the President:

(Sgd.)

ALEJANDRO MELCHOR

Executive Secretary

Section 14 Legal Department.

SECTION 14. Legal Department.—Any provisions of law

or executive order to the contrary notwithstanding, the Philippine

National Railways shall have its own Legal Department which shall handle

all legal matters affecting the corporation: Provided, That the

Solicitor General's Office shall provide assistance and supervision in

the handling of court cases of the Corporation.

Section 15 Exemption from the Public Service Act.

SECTION 15. Exemption from the Public Service Act.—The

Philippine National Railways shall not be subject to the authority and

supervision of the Board of Transportation or any similar regulatory

Body.

Section 1 Name, Duration and Domicile.

SECTION 1 Name, Duration and Domicile.—A

Corporation to serve as the instrumentality of the Government of the

Philippines in providing a nation-wide railroad and transportation

system, is hereby created to be known as the Philippine National

Railways, which shall exist for a term of fifty (50) years from the date

of approval of this Act. It shall have its main office in the City of

Manila, and shall have such branches and agencies within the Philippines

as may be necessary for the proper conduct of its business. This

Corporation shall be under the Office of the President.

Section 2 Purpose and Specific Powers.

SEC. 2. Purpose and Specific Powers.—The Philippine

National Railways shall have the following purposes and specific

powers: (a) To acquire and hold the assets of the Manila

Railroad Company of the Philippine Islands, and to succeed to, or

acquire, maintain and operate such grants, concessions, and

franchises as are now held and enjoyed by the said Manila Railroad

Company of the Philippine Islands; (b) To own or operate railroad

tramways, bus lines, trucklines, subways, and other kinds of land

transportation; vessels, and pipe lines, for the purposes of

transporting for consideration, passengers, mail and property between

any points in the Philippines; c) As an auxiliary to its main purpose,

to own and/or operate powerhouses, hotels, restaurants, terminals,

warehouses, timber con cessions, coal mines, iron and other

mining 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 d) To borrow money

and contract loans, credits and indebtedness from domestic and/or

foreign sources for the prosecution and furtherance of its goals and

objectives.

Section 3 Authorized Capital Stock of the Philippine National Railways.

SECTION 3. Authorized Capital Stock of the Philippine

National Railways.—-The authorized capital stock of the Philippine

National Railways shall be One Billion, Five Hundred Million Pesos

divided into seven million, five hundred thousand common shares all with

par value at two hundred pesos each, which shall

include the present authorized capitalization of six hundred fifty

million pesos of the Philippine National Railways; Provided, that

the increase in the authorized capital shall be fully subscribed by the

Government: Provided, further, that the sum of five hundred

thirty-four million, nine hundred sixteen thousand, seven hundred nine

pesos and eighty-five centavos (P534,916,709.85) as of June 30, 1975,

which has been already subscribed and fully paid for by the Government

of the Republic of the Philippines shall be the initial paid-in capital

of the authorized capital of one billion, five hundred million pesos

provided herein.

The remaining unpaid subscription of the Government in the

amount of nine hundred sixty-five million, eighty-three thousand two

hundred ninety pesos and fifteen centavos (P965,083,290.15) shall be

paid as follows:

The sum of twenty-nine million, one hundred seventy-seven

thousand, four hundred twenty-six pesos and forty-three centavos

(P29,177,426.43) representing the following obligations of the

Philippine National Railways to the Government shall be additional

paid-in subscription for one hundred forty-five thousand eight hundred

eighty seven (145,887) common shares of stock to be held by the National

Government;

1.

Advances by the National

Treasury for payment of various Letters of Credit

P3,616,136.85

2.

Taxes due the Bureau of Customs

covering importations of the Rehabilitation and Selective Modernization

Program

11,341,484.00

3.

Guaranteed dividends of six percent

(6%) on preferred share of the Government Service Insurance System

5,260,800.00

4.

MRRCo. loans with PNR included in the

Government rehabilitated accounts which were liquidated by the National

Government

5,959.005.58

5.

Releases from the Calamity Fund for the

Repair of PNR Lines and Bridges damaged by typhoon

3,000,000.00

____________

P29,177,426.43

The sum of five million, six hundred eighty nine thousand,

five hundred fifty four pesos and twenty eight

centavos (P5.689.554.28) representing the remaining unpaid account

of the Philippine National Railways to the Development Bank

of the Philippines shall likewise be additional paid-in

subscription for twenty eight thousand four hundred forty-seven

(28,447) common shares of stock to be held by the

Development Bank of the Philippines;

The sum of two million, five hundred seventeen

thousand, seven hundred seventy nine pesos and eighteen centavos

(P2,517,779.18) representing the remaining unpaid account of the

Philippine National Railways to the Philippine National Bank shall be

also additional paid-in subscription for twelve thousand, five

hundred eighty-eight (12,588) common shares of stock to be held by

the Philippine National Bank;

The sum of forty million, five hundred thousand

pesos (P40,500,000.00) released to the Philippine National

Railways out of the appropriation under Presidential Decree

Number Three for national railway projects and the sum

of thirteen million, eight hundred ten thousand pesos (P13

810,000.00) released out of the appropriation of two

hundred sixty-nine million pesos (P269,000,000.00) under

Presidential Decree Number Four Seventy Five for the construction,

installation, improvement, rehabilitation, reconstruction, completion,

including project preparation and purchase of necessary materials for

various railways projects, or a total of Fifty-four million, three

hundred ten thousand pesos (P54,310,000.00) representing two hundred

seventy-one thousand, five hundred fifty (271,550) common shares of

stock, shall also form part of the paid-in capital of the Philippine

National Railways; and

Whatever balance remaining of the authorized capital of the

Philippine National Railways shall be paid from a continuing annual

appropriation of not less than one hundred million pesos which is hereby

appropriated out of any funds in the National Treasury not otherwise

appropriated, such amount to be programmed and released by the Budget

Commission in accordance with the schedule of cash requirements to be

prepared and submitted by the Philippine National Railways; Provided,

that this continuing annual appropriation of one hundred million pesos

and the programming and release thereof shall remain in force until the

authorized capital stock subscribed by the Government shall have been

paid in full.

Section 3-A Foreign Loans.

SECTION 3-a. Foreign Loans.—The Corporation is

hereby authorized to contract loans, credits and indebtedness in any

convertible foreign currency, or capital goods, from foreign

governments, their agencies, instrumentalities or financial

institutions, or any nongovernmental national or international financial

institutions or firms extending suppliers credit deferred payment

arrangements or other fund sources, or to issue bonds, the total

outstanding amount of which, exclusive of interests, shall not exceed

two hundred million 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 purposes and to enter into and

execute agreements 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 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 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

subsection 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 incurred under this Act, shall also 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 5 Board of Directors, Composition and Appointment.

SECTION 5. Board of Directors, Composition and

Appointment.— The corporate powers of the Corporation shall be

vested in and exercised by a 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 who shall be its

Vice-Chairman; the Deputy Executive Secretary; the Deputy

Director-General (Programs and Projects) of the National Economic and

Development Authority; the Undersecretary of Finance (Fiscal Affairs);

Undersecretary of Public Works, Transportation and Communications, and

three other members to be appointed by the President.

The appointive members of the Board who need not be stockholders

of the Corporation shall be persons of good moral character, competent

and experienced in one or more of the following fields: transport

planning, engineering, economics, management, finance, corporate law, or

marketing.

The Chairman and the 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 two members 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 due their principals.

* including the Chairman

For actual attendance of meeting the members of the Board shall

receive a per diem of five hundred pesos each for every meeting. Provided,

That no member shall receive per diem exceeding one thousand pesos a

month; Provided, further, That the total for travelling and

representative expenses for any one month shall not exceed one thousand

pesos for each regular member and two thousand pesos for the

Chairman.

Section 6 Powers and Duties of the Board of Directors.

SECTION 6. Powers and Duties of the Board of Directors.—The

Board shall have the following powers and duties:

To prescribe, amend, and repeal

the by-laws, rules, regulations and policies governing the manner in

which the general business of the Corporation may be exercised;

To fix the compensation of the General Manager and Assistant

General Managers subject to the approval of the Office of the

President, which shall not be less than sixty thousand pesos

(P60,000.00) per annum and forty-eight thousand pesos

(P48,000.00) per annum respectively;

To approve the budgets of the Corporation;

By a two-thirds vote of all members, to recommend to the

President suspension or removal for cause of the General Manager and

Assistant General Managers

Upon recommendation of the General Manager, to approve the

appointments of all officials of the Corporation from the rank of

division heads and above;

Subject to the provisions of applicable laws and regulations and

upon recommendation of the General Manager, to reorganize the

Corporation, determine its staffing pattern and define the

functions and duties of organization units and personnel.

Section 9

SEC. 9. Notwithstanding the provisions of Presidential Decree

Nos. 14 and 69 and the provisions of other laws to the contrary, the

exemption from taxes, duties and port charges or dues, customs bonds

port charges formerly enjoyed by the Corporation as provided for in

Section 10

SEC. 10. Section 14 of Republic Act Numbered Forty-One

Hundred and Fifty-Six as amended by Republic Act Numbered Sixty-Three

Hundred and Sixty-Six is hereby amended to read as follows:

Section 12

SEC. 12. This Decree, is. hereby made part of the laws of the

land and provisions of existing laws, executive and administrative

orders, or parts thereof, in conflict with this Decree are hereby

modified and repealed.