CREATING A LIGHT RAIL TRANSIT AUTHORITY, VESTING THE SAME WITH AUTHORITY TO CONSTRUCT AND OPERATE THE LIGHT RAIL TRANSIT (LRT) PROJECT AND PROVIDING FUNDS THEREFOR

WHEREAS, the economic growth,
stability and security of the Nation require an efficient, adequate,
economical, safe, convenient, and dependable transportation system that shall
truly be responsive to the demands of the populace consistent with the total
scope of metropolitan needs;

WHEREAS, Metropolitan Manila, as
the premier metropolis of the country, requires an efficient mass
transportation system which can provide its people with safe, fast and reliable
mobility;

WHEREAS, a Metropolitan Manila
transportation, land use and development planning study was conducted to guide
transportation investments and operations, and such study indicates that a
light rail transit system is recommended, among others, to alleviate the
worsening traffic and transportation situation in Metropolitan Manila, within
the context of a rational land use pattern;

WHEREAS, it is imperative to
provide an organizational structure that will oversee the effective
implementation of the light rail transit project, including the construction
and operation thereof;

NOW, THEREFORE, I, FERDINAND E.
MARCOS, President of the Philippines, by virtue of powers vested in me by
Presidential Decree No. 1416, do hereby order the creation and organization of
a Light Rail Transit Authority.

ARTICLE 1
DECLARATION OF POLICY AND CREATION OF
THE LIGHT RAIL TRANSIT AUTHORITY

SEC. 1 – Declaration of
Policy. – It is hereby declared to be the policy of the State to promote,
encourage, and protect the mutual intermodal and intramodal complementation,
cooperation, and synchronization of the common carrier services in the most
practicable, expeditious, and organized manner with maximum safety, utility,
service, and cost effectiveness, as goals for both the public who avail of
these facilities and the investors/operators who provide the transportation
services; to foster sound economic conditions within the transportation
industry and among the several modes and common carriers, in order that a
healthy, dynamic, and strong private sector can meet the transportation
requirements of the Nation, among others, and in the pursuit thereof, the
government and the private sector shall interact effectively by performing
functions and pursuing priorities for which each is best suited and, at the
same time, reinforcing and complementing each other.

SEC. 2. Creation of Authority.
– To carry out the foregoing transportation policy, there is hereby created a
corporate body to be known as the LIGHT RAIL TRANSIT AUTHORITY, hereinafter
called the “AUTHORITY”, which shall be primarily responsible for the
construction, operation, maintenance, and/or lease of light rail transit
systems in the Philippines, giving due regard to the reasonable requirements of
the public transportation system of the country. The principal office of the
Authority shall be in the Metropolitan Manila Area, but it may establish
branches and agencies elsewhere within the Philippines, as may be necessary for
the proper conduct of its business and the discharge of its functions. The
Authority shall be attached to the Ministry of Transportation and
Communication.

The Authority shall conduct its
business, according to prudent commercial principles and shall ensure, as far
as possible, that its revenues for any given year are, at least sufficient to
meet its expenditures. Any excess of revenues over expenditure in any fiscal
year may be applied by the Authority in any way consistent with this Order,
including such provisions for the renewal of capital assets and the repayment
of loans, as the Authority may consider prudent.

SEC. 3. Board of Directors.
– The powers and functions of the Authority shall be vested in and exercised by
the Board of Directors composed of the Minister of Human Settlements as
Chairman; Minister of Transportation and Communications as Vice Chairman; the
Minister of Finance, the Minister of Economic Planning, the Minister of Public
Highways, the Minister of the Budget, the Chairman of the Board of
Transportation, and the Administrator of the Authority, as ex-officio members;
and one (1) representative from the private sector to be appointed by the
President. The appointed director shall serve for a term of two (2) years.

The officials next in rank to,
or such officials duly designated by, the regular members shall serve as
alternate members, except that, in the absence of the Chairman, the Board shall
elect a temporary presiding officer. The alternate members shall attend
meetings of the Board and committees assigned to them by their principals and
receive the corresponding per diems, whenever their principals are absent or
said positions are vacant.

The Chairman and each Member of
the Board shall receive a monthly commutable representation allowance of ONE
THOUSAND (P1,000.00) PESOS and per diem of TWO HUNDRED (P200.00) PESOS for
every meeting of the Board actually attended: Provided, That the total
amount of per diems which each may receive shall not exceed ONE THOUSAND
(P1,000.00) PESOS a month.

ARTICLE 2
CORPORATE POWERS

SEC. 4. General Powers. –
The Authority, through the Board of Directors, may undertake such action as are
expedient for or conducive to the attainment of the purposes and objectives of
the Authority, or of any purpose reasonably incidental to or consequential upon
any of these purposes. As such, the Authority shall have the following general
powers:

(1) To have continuous
succession under its corporate name, until otherwise provided by law;

(2) To prescribe, amend, and/or
repeal its by-laws;

(3) To adopt and use a seal and
alter it at its pleasure;

(4) To sue and be sued;

(5) To contract any obligation or
enter into, assign or accept the assignment of, and vary or rescind any
agreement, contract of obligation necessary or incidental to the proper
management of the Authority;

(6) To borrow funds from any
source, private or public, foreign or domestic, and to issue bonds and other
evidence of indebtedness, the payment of which shall be guaranteed by the
National Government, subject to pertinent borrowing law;

(7) To acquire, receive, take,
and hold by bequest, devise, gift, purchase or lease, either absolutely or in
trust for any of its purposes, from foreign and domestic sources, any assets,
grant or property, real or personal, subject to such limitations as are
provided in existing laws; to convey or dispose of such assets, grants, or
properties, movable and immovable; and invest and/or reinvest such proceeds and
deal with and expand its assets and income in such a manner as will best
promote its objectives;

(8) To improve, develop or alter
any property held by it;

(9) To carry on any business,
either alone or in partnership with any other person or persons;

(10) To employ an agent or
contractor or perform such things as the Authority may perform;

(11) To exercise the right of
eminent domain, whenever the Authority deems it necessary for the attainment of
its objectives;

(12) To prescribe rules and
regulations in the conduct of its general business as well as to fix and
implement the terms and conditions of its related activities;

(13) To determine the fares
payable by persons travelling on the light rail system, in consultation with
the Board of Transportation;

(14) To establish, operate, and
maintain branches or field offices when required by the exigencies of its
business;

(15) To determine its
organizational structure and the number, positions and salaries of its
personnel, subject to pertinent organization and compensation law; and

(16) To exercise such powers and
perform such duties as may be necessary to carry out the business and purposes
for which the Authority was established or which, from time to time, may be
declared by the Board of Directors to be necessary, useful, incidental or
auxiliary to accomplish such purposes; and generally, to exercise all powers of
an Authority under the Corporation Law that are not inconsistent with the
provisions of this Order, or with orders pertaining to government corporate
budgeting, organization, borrowing, or compensation.

SEC. 5. Specific Powers.
– The Board shall have the following specific powers:

(1) To provide comprehensive
policy guidance for the development, operation, and promotion of a light rail
transit system as provided for in this Order;

(2) To formulate a comprehensive
and practicable plan/program for the early completion of an LRT system in
Metropolitan Manila; to employ the necessary consultancy services therefor and
to organize, and employ personnel for a Project Management Office that will
supervise the construction of the said Metropolitan Manila LRT system;

(3) To borrow or otherwise raise
money and charge all or any part of its properties as security therefor;

(4) To create and issue bonds,
notes or other securities which may be charged on the property, undertaking
and/or revenue of the Authority of any part thereof;

(5) To invest any funds of the
Authority available for investment;

(6) To cooperate, coordinate,
and exchange such information, studies, and reports with, and to seek the
cooperation of other agencies and instrumentalities of the National Government
including government-owned or controlled corporations, as will be most
effectively conducive to the achievement of the purposes of this Order;

(7) To provide managerial or
administrative expertise including the rendering of professional and training
services for the development of the staff and employees of the Authority;

(8) To issue orders, not
inconsistent with this Order, negotiating the work and conduct of its
personnel;

(9) To appoint, discipline, and
remove personnel of the Authority in accordance with laws;

(10) To recommend to the
President, through the National Economic and Development Authority, the
establishment of light rail transit systems, where feasible, in other parts of
the country;

(11) To report annually to the
President of the Philippines on the status of its operations and finances, not
later than three (3) months after the year end; and

(12) To perform such acts as are
proper and necessary to carry out the purposes of the Authority.

ARTICLE 3
BORROWING AUTHORITY

SEC. 6. Domestic Indebtedness.
– Whenever the Board deems it necessary for the Authority to incur indebtedness
by contracting loans with domestic financial institutions or to issue bonds to
carry out the purpose for which the Authority has been organized, it shall, by
resolution, so declare and state the purpose for which the proposed debt is to
be incurred and such terms and conditions as it shall deem appropriate for the
accomplishment of the said purpose; Provided, That in the case of bond
issued, the same shall be subject to the approval of the President of the
Philippines, upon recommendation of the Minister of Finance.

The bonds issued under the
authority of this section shall be exempt from the payment of all taxes by the
Republic of the Philippines, or by any authority, branch, division or political
subdivision thereof, which parts shall be stated upon the face of said bonds.

A sinking fund shall be
established by the Authority in such manner that the total annual contribution
thereto, accrued at such rate of interest as may be determined by the Minister
of Finance in consultation with the Monetary Board, shall be sufficient to
redeem at maturity the bonds issued under this section. The sinking fund shall
be under the custody of the Central Bank of the Philippines, which shall invest
the same, subject to the approval of the Board and the Minister of Finance in consultation
with the Monetary Board: Provided, That the proceeds thereof shall
accrue to the Authority.

The Republic of the Philippines
hereby guarantees the payment by the Authority of both the principal and the
interest of the bonds or other evidences of indebtedness and shall pay such
principal and interest, in case the Authority fails to do so. Provided,
That the sums so paid by the Republic of the Philippines shall be refunded by
the Authority; and Provided, further, That the Authority, to assure such
refunding, shall establish reserves or sinking funds and comply with such other
restrictions and conditions as the Minister of Finance may prescribe and
establish for that purpose.

SEC. 7. Foreign Loans. –
The Authority is hereby authorized to contract loans, credits or indebtedness
in any convertible foreign currency or capital goods, from foreign governments
or any international financial institutions or fund source, or to issue bonds,
the total outstanding amount of which, exclusive of interests, shall not exceed
$300 million 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, by himself, or through his duly authorized representative, is
hereby authorized to negotiate and contract with foreign governments or any
international financial institutions or fund sources, in the name and on behalf
of the Authority, for the accomplishment of its purposes.

The President of the
Philippines, by himself, or through his duly authorized representative, is
hereby further 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 Forty-Eight Hundred Sixty, as amended, as
well as the performance of all or any of the obligations undertaken by the
Authority 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.

Any loan, credit, indebtedness,
contracted by the Authority and the payment of the principal, interest and
other charges thereon, as well as the importation of machinery, equipment,
materials, supplies, and services paid from the proceeds of any such loan,
credit or indebtedness shall be exempt from all direct and indirect taxes,
customs duties, fees, imposts, other charges and restrictions, including import
restrictions, previously and presently imposed and to be imposed by the
Republic of the Philippines, or any of its agencies and political subdivisions.

ARTICLE 4
TAX AND DUTY EXEMPTIONS

SEC. 8. Equipment,
Machineries, Spare Parts and Other Accessories and Materials. – The
importation of equipment, machineries, spare parts, accessories, and other
materials, including supplies and services, used directly in the operations of
the Light Rail System, not obtainable locally on favorable terms, out of any
funds of the Authority including, as stated in Section 7 above, proceeds from
foreign loans, credits or indebtedness, shall, likewise, be exempted from all
direct and indirect taxes, customs duties, fees, imposts, tariff duties,
compensating taxes, wharfage fees and other charges and restrictions, the
provisions of existing laws to the contrary notwithstanding.

ARTICLE 5
ORGANIZATION AND MANAGEMENT

SEC. 9. Management. The
management of the Authority shall be headed by an Administrator, who shall be
assisted by two (2) Deputy Administrators. The LRT Administrator and Deputy
Administrators shall be citizens of the Philippines, at least thirty-five (35)
years old on the date of their appointments, of good moral character or
recognized executive ability and competence, with adequate training in either
transport planning, management and economics, finance, law, public utility or
other transport related aspects. They shall be appointed by the President.

SEC. 10. Powers and Duties of
the Administrator. The Administrator shall have the following powers and
duties:

(1) To implement, enforce, and
apply the policies, programs, plans, standards, guidelines, procedures,
decisions, rules and regulations issued, prescribed, or adopted by the Board;

(2) To undertake studies,
investigations, and other activities related to the operations, on his own
initiative or upon instructions of the Board, and to submit comprehensive
reports and appropriate recommendations to the Board for its information and
action;

(3) To undertake studies for
present and future requirements of development of the LRT project expansion, in
consultation with appropriate agencies;

(4) To manage the affairs of the
Authority, subject to the provisions of this Order and applicable laws, orders,
rules and regulations;

(5) With the approval of the
Board, to determine the staffing pattern and the number of personnel of the
Authority and to define their functions and duties;

(6) To regularly inspect the LRT
facilities and operations and recommend measures to maintain a high standard of
safe, fast and reliable service;

(7) To establish and maintain,
in coordination with the appropriate government offices and agencies a regular
and prompt information system regarding traffic flows, LRT operations, finance
and other related data;

(8) With the approval of the
Board, to delegate such functions and duties to the Deputy Administrators or
other ranking officials of the Authority for the efficient administration and
management thereof;

(9) To perform such other duties
as the Board may assign and such acts as may be necessary and proper to
implement this Order.

SEC. 11. Supplies and
Services Other Than Personnel. All purchase of supplies or contracts for
services, except for personal services, entered into by the Authority, shall be
done through competitive public bidding: Provided, That bidding shall
not be required when an emergency, as certified by the Administrator, requires
immediate delivery of the supplies or performance of the services, and the
aggregate amount involved in any one purchase of supplies or procurement of
services does not exceed Ten Thousand Pesos, in which case, such purchase or
procurement may be made in the usual course of business: Provided, further,
That the Authority’s emergency purchase of supplies and services shall not
exceed the amount of Fifty Thousand Pesos for any one month: Provided, finally,
That in comparing bids and in making awards, the Authority shall consider such
factors as the cost and relative quality and adaptability of supplies or
services; the bidder’s financial responsibility, skill, experience, integrity,
and ability to furnish repairs and maintenance services; the time of delivery
or performance offered; and the bidder’s compliance with the specifications
desired.

SEC. 12. Departments of the
Authority. – The Authority shall establish and maintain such departments as
it may deem necessary for the proper and efficient transaction and/or operation
of its business. The powers and duties of the departments shall be determined
by the Board: Provided, That the office of the Chief Legal Counsel of
the Authority, which shall be separate and distinct from and independent of the
Office of the Government Corporate Counsel, shall advise and represent the
Authority in all legal matters, procedures and actions.

SEC. 13. The Auditor. –
The Chairman of the Commission on Audit shall appoint a representative who
shall be the auditor of the Authority. He shall likewise appoint the necessary
personnel to assist said representative in the performance of his duties.
Subject to the approval of the Board of Directors of the Authority, the
salaries of the Auditor and his staff shall be fixed by the Chairman of the
Commission on Audit. Salaries and other expenses for the auditor’s office shall
be paid by the Authority. The Auditor of the Authority and personnel under him
may be removed only by the Chairman of the Commission on Audit.

SEC. 14. Authority to
Administer Oath. – The Chairman of the Board, the Administrator, the Deputy
Administrators, and the Chief Legal Counsel of the Authority shall have the
power to administer oaths in connection with the transaction of official
business.

ARTICLE 6
CAPITALIZATION & FINANCING

SECTION 15. Capitalization.
– The Authority shall have an authorized capital of FIVE HUNDRED MILLION PESOS
(P500,000,000.00) which shall be fully subscribed by the Republic of the
Philippines and other government institutions, corporations, instrumentalities,
and agencies, whether national or local, within the framework of their
respective charters. The authorized capital shall be used for the purpose of
financing the Authority’s business transactions and shall be paid as follows:

(1) The sum of TWO HUNDRED
MILLION PESOS (P200,000,000.00) to be taken from the general fund in the
National Treasury out of appropriations available for the purpose.

(2) The balance of the
authorized capital amounting to THREE HUNDRED MILLION PESOS (P300,000,000.00)
shall be released from the National Treasury out of appropriations available
for the purpose, or subscribed and paid by government institutions as may be
authorized pursuant to this Section, with the approval of the President.

SEC. 16. Initial Debt. –
The Authority shall be indebted to the Government, or any of its ministries,
bureaus, agencies or offices, in a sum equal to all expenditures, directly or
indirectly advanced or incurred by the Government or any of its ministries,
bureaus, agencies or offices, in relation to the investigation, planning and/or
construction of the light rail transit system. The Minister of Finance shall,
upon prior notice, determine the accuracy and reasonableness of such advances
or indebtedness.

ARTICLE 7
PENALTIES

SEC. 17. Penalties. – Any
person who wilfully or maliciously gives false or misleading data or
information, or conceals or falsifies a material fact, in any investigation,
inquiry or hearing, or other proceeding held by the Board or the Authority or
any one duly acting in their behalf, shall be dealt with according to the
pertinent provisions of existing penal laws.

ARTICLE 8
FINAL PROVISIONS

SEC. 18. Repealing and
Separability Clauses. – All laws, decrees, orders, rules and regulations,
policies, programs or parts thereof, that are inconsistent with any of the
provisions of this Order, are hereby repealed, amended or modified accordingly.

If for any reason, any section
or provisions of this Order is declared to be unconstitutional or invalid, the
other sections or provisions hereof, which are not affected hereby, shall
continue in full force and effect.

SEC. 19. Effectivity. –
This Order shall take effect immediately.

DONE in the City of Manila, this
12th day of July, in the year of Our Lord, nineteen hundred and eighty.

By the President:

(SGD.) JOAQUIN T. VENUS, JR.
Presidential Assistant