North Luzon Railways Corp abolished

MANILA, Philippines — Malacañang has ordered the abolition of the North Luzon Railways Corp. (Northrail), the state-run firm mandated to operate and manage a railway project that was supposed to be funded by China, but was tainted with allegations of overpricing.

According to Memorandum Order No. 17 issued by the Office of the President last Oct. 19, the Governance Commission for Government-Owned or Controlled Corporations (GCG) had determined that Northrail was not producing the desired outcomes and was no longer achieving the objectives and purposes for which it was created.

The GCG added that the state-run firm was also not cost-efficient and did not generate the level of social, physical and economic returns, vis-à-vis the resource inputs.

“The Northrail is hereby abolished,” the memorandum signed by Executive Secretary Lucas Bersamin, by the authority of President Marcos, read.

The board of directors of the Bases Conversion and Development Authority (BCDA) shall act as the administrator and liquidator of Northrail.

It was also tasked to settle the liabilities of the Northrail, including the payment of separation incentive pay to affected officials and personnel; undertake steps to liquidate the state-run firm’s assets and assist in the winding up of its corporate affairs and conduct an inventory of all its existing programs and projects to be terminated or transferred to concerned government agencies, subject to existing laws, rules and regulations.

The BCDA board was also directed to conduct an inventory of all Northrail assets and liabilities and formulate an action plan by which they may be disposed of and settled; craft a change management plan for affected stakeholders; conduct an inventory of all pending cases brought by and against the state-run firm and formulate appropriate actions needed to resolve them, including the total amount of contingent liabilities arising from them, if any.

The memorandum also tasked the board to surrender to the Commission on Audit the original copies of Northrail’s corporate books of account and financial records and perform other actions as may be necessary to implement the Palace order.

Malacañang also ordered various agencies to assist the BCDA in implementing the abolition of Northrail.

The BCDA board, as the administrator and liquidator, shall submit a quarterly report to the GCG on the implementation of the order. The transportation department, as Northrail’s supervising agency, shall continue to oversee the programs and activities relative to the liquidation and winding up of the state-run firm’s affairs.

The Securities and Exchange Commission was directed to assist the BCDA in ensuring that the dissolution of the corporation is conducted in accordance with existing laws.
The Office of the Government Corporate Counsel, meanwhile, will provide the necessary legal assistance to the BCDA relative to the dissolution and winding-up of the affairs of Northrail.

The memorandum also stated that affected Northrail officials and personnel may avail of separation benefits, charged against the available corporate funds of Northrail, subject to existing rules.