Title
Supreme Court
Creation and powers of Philippine National Railways
Law
Republic Act No. 4156
Decision Date
Jun 20, 1964
The Philippine National Railways (PNR) is established as a corporation under the Office of Economics Coordination, with the authority to acquire and hold assets, operate transportation systems, construct toll viaducts and tunnels, and manage properties, exempt from taxes and duties, and subject to the Corporation Law.

Law Summary

Purposes and Specific Powers

  • Acquire and operate assets, grants, concessions, and franchises of the former Manila Railroad Company.
  • Operate various land and water transportation systems for passengers, mail, and freight nationwide.
  • Engage in auxiliary activities including operation of powerhouses, hotels, restaurants, warehouses, mining properties, and rolling stock manufacturing.
  • Construct toll viaducts and tunnels connected with railroad lines.

Authorized Capital Stock

  • Authorized capital set at ₱250 million, divided into shares of ₱200 par value, incorporating capitalization of the Manila Railroad Company.
  • Government to fully subscribe to the increased capital.
  • Conversion of Manila Railroad Company’s long-term debts to government into PNR capital stock.
  • Funding allocated for construction of new lines and rehabilitation projects under specified Republic Acts.
  • Additional funds reserved for purchasing rolling stock and survey of new railway projects including Mindanao.

General Powers

  • Authority to undertake all transactions and activities necessary or conducive to achieving corporate objectives.
  • Exercise all powers granted to railroad corporations as per Corporation Law.

Board of Directors Composition and Appointment

  • Board consists of 5 to 11 members including chairman and vice-chairman.
  • Members appointed by the President of the Philippines with Commission on Appointments’ consent.
  • Initial staggered terms set; successors serve three-year terms.
  • Members receive a per diem for meeting attendance.

Powers and Duties of the Board

  • Prescribe and amend corporate by-laws, rules, and committees with approval of Economic Coordination Administrator.
  • Appoint and fix compensation of General Manager and other officers, subject to Presidential and Economic Coordination approval.
  • Approve budgets, subject to final approval by Economic Coordination Administrator.

Suspension and Removal of Directors

  • Board members may be suspended or removed by the President of the Philippines.

Prohibition on Board Members’ Concurrent Roles

  • Board members cannot hold other capacities in the corporation unless authorized by the President or law.

Management by the General Manager

  • General Manager holds primary responsibility for managing corporate affairs.

General Manager’s Powers and Duties

  • Direct day-to-day operations under Board’s control.
  • Serve as Vice-Chairman of the Board, with voting rights.
  • Submit annual reports to the President through the Board.
  • Appoint subordinate personnel with Board approval; impose disciplinary measures.
  • Perform additional duties as assigned by the Board.

Appointment and Promotion Policy

  • Based on merit and efficiency; political qualifications are prohibited.
  • Officers and employees subject to Civil Service rules and regulations.

Tax and Duty Exemptions

  • Exempt from all taxes on capital stock, franchises, property, and earnings.
  • Exempt from import duties on railway materials and equipment.
  • Port charges exempted or proportionally reduced for vessels carrying construction materials.

Audit Personnel and Reporting

  • Auditor General appoints the Corporation’s Auditor and staff.
  • Audit expenses borne by PNR.
  • Comprehensive annual audit report including financial statements and analysis submitted to the President, Economic Coordination Administrator, and Congress.
  • Report includes disclosure of unauthorized expenditures or programs.

Legal Counsel

  • PNR shall have its own legal department, staffed by Board appointees.

Exemption from Public Service Act

  • PNR is not under the jurisdiction of the Public Service Commission.

Liquidation Procedures

  • Upon expiration, PNR continues for three years to settle affairs, defend suits, and dispose of assets.
  • A Board of Liquidators appointed by the President oversees liquidation.

Strike Prohibition During National Emergency

  • Employees prohibited from striking during national emergencies or threats to national security as declared by the President.

Reversion of Funds Upon Dissolution

  • Funds from liquidation revert to the Government’s general funds.

Applicability of Corporation Law

  • Applicable provisions of Corporation Law apply unless inconsistent with this Act.

Repeal or Modification of Conflicting Laws

  • Conflicting laws, orders, or proclamations are repealed or modified accordingly.

Separability Clause

  • Unconstitutional provisions or applications severable without affecting the rest of the Act.

Abolition of Manila Railroad Company

  • Manila Railroad Company dissolved; assets, liabilities, personnel, and rights transferred to PNR.
  • Liquidation of Manila Railroad Company to follow legal and accounting standards.

Effectivity

  • Act takes effect immediately upon approval.

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