Malacañang Directs Abolition of North Luzon Railways Corp. Following Governance Assessment
MANILA – The Malacañang Palace has issued a memorandum order for the abolition of the North Luzon Railways Corp. (NorthRail). Executive Secretary Lucas Bersamin signed Memorandum Order (MO) 17 on October 19, acting on the authority of the President. The memorandum cites findings from an assessment by the Governance Commission for Government-Owned and -Controlled Corporations (GCG) as the basis for the decision.
According to News Releases by Philippines News Agency, MO 17 made public on Saturday states that the GCG found NorthRail to be ineffective in achieving its original objectives and purposes. It was also assessed as not being cost-efficient, and failing to generate adequate social, physical, and economic returns in comparison to the resources invested. The order also mentions that NorthRail met the standards for abolition as set by Section 5(a) of Republic Act No. 10149, or the GOCC Governance Act of 2011.
The Bases Conversion and Development Authority (BCDA) will serve as the administrator and liquidator for NorthRail. Among its responsibilities are settling the corporation’s liabilities, including separation incentive pay for affected employees; formulating a Change Management Plan for stakeholders; conducting an inventory of pending cases for and against the corporation; and liquidating its assets. Funding for the separation pay will come from NorthRail’s available corporate funds, in compliance with existing budgetary, accounting, and auditing regulations.
Additionally, the BCDA is mandated to take necessary steps in winding up NorthRail’s corporate affairs, including an inventory of all assets and liabilities, and surrendering original copies of its corporate books of account and financial records to the Commission on Audit. It is also responsible for determining which of NorthRail’s existing programs and projects will be terminated or transferred to other government agencies.
MO 17 directs the GCG to monitor the implementation of these tasks, while the Securities and Exchange Commission is tasked to assist the BCDA in ensuring that NorthRail is properly abolished in accordance with Republic Act 11232 or the Revised Corporation Code of the Philippines. The Department of Transportation, as the supervising agency of NorthRail, will continue to oversee activities related to the liquidation and winding-up of the corporation. Legal assistance to the BCDA will be provided by the Office of the Government Corporate Counsel.
NorthRail was registered with the SEC on July 31, 1995, as a fully-owned subsidiary of the BCDA. It was mandated to develop, construct, operate, and manage a railroad system serving Metro Manila and the Central and Northern Luzon regions. A prior memorandum from the GCG dated May 20, 2019, had ordered the deactivation of NorthRail. MO 17 takes effect immediately.