Palace orders NorthRail abolition

FILE: Facade of the Malacañang Palace as seen from Pasig River. (Photo by Architect Jorge Ramos (d. 2015) for the underlying copyrighted work (Malacañang Palace). Image is by Official Gazette of the Philippines, originally uploaded on Commons by User:P-JR – Commons:File:Malacañang Palace (Cropped).jpg, Public Domain)

MANILA – Malacañang has issued a memorandum directing the abolition of the North Luzon Railways Corp. (NorthRail).

Executive Secretary Lucas Bersamin, through Memorandum Order (MO) 17 he signed on Oct. 19 by authority of the President, said NorthRail has been ordered abolished after the assessment of the Governance Commission for Government-Owned and -Controlled Corporations (GCG).

According to MO 17, which was made public on Saturday, the GCG found that NorthRail is “not producing the desired outcomes; no longer achieving the objectives and purposes for which it was designed and created; and not cost efficient and does not generate the level of social, physical and economic returns vis-a-vis the resource inputs.”

“Pursuant to Section 5(a) of Republic Act No. 10149 or the GOCC Governance Act of 2011, the GCG has determined that NorthRail has met the standards for abolition,” the order read.

The Board of Directors of the Bases Conversion and Development Authority (BCDA) will serve as administrator and liquidator of NorthRail.

The BCDA is tasked to settle NorthRail’s liabilities, including the payment of separation incentive pay to affected officials and personnel; formulate a Change Management Plan for affected stakeholders; and conduct an inventory of all pending cases brought by and against the abolished corporation.

The separation pay will be charged against the available corporate funds of NorthRail, subject to existing budgeting, accounting, and auditing laws, rules and regulations.

The BCDA is also mandated to undertake the necessary steps in the liquidation of NorthRail’s assets and assist in the winding-up of its corporate affairs; conduct an inventory of all its assets and liabilities; and surrender to the Commission on Audit the original copies of its corporate books of account and financial records.

It is likewise designated to determine all NorthRail’s existing programs and projects that are to be terminated or transferred to concerned government agencies, subject to existing laws, rules and regulations.

The GCG is directed to monitor the implementation of MO 17, while the Securities and Exchange Commission (SEC) is tasked to assist the BCDA in ensuring that NorthRail is abolished, in accordance with the provisions of Republic Act 11232 or the Revised Corporation Code of the Philippines.

The Department of Transportation, as the supervising agency of NorthRail, is tasked to continue overseeing the programs and activities relative to the liquidation and winding-up of the affairs of the dissolved corporation.

Under MO 17, the Office of the Government Corporate Counsel will provide the necessary legal assistance to the BCDA relative to the abolition and winding-up of the affairs of NorthRail.

NorthRail was registered with SEC on July 31, 1995 as a fully-owned subsidiary of the BCDA with the principal mandate to develop, construct, operate, and manage a railroad system to serve Metro Manila and Central and Northern Luzon.

On May 20, 2019, the GCG issued MO 2019-05, ordering the deactivation of NorthRail.

MO 17 takes effect immediately.