Palace: ‘Northrail met standards for abolition, not producing desired outcomes’

Malacañang announced on Saturday that President Ferdinand Marcos Jr. has ordered the abolition of the North Luzon Railways Corp. as it is no longer cost-efficient and producing desired outcomes.

The Memorandum Order 17 was signed by Executive Secretary Lucas Bersamin—by the authority of President Marcos—on 19 October.

The Governance Commission for GOCCs determined that Northrail has met the standards for abolition for not producing the desired outcomes; no longer achieving the objectives and purposes for which it was designed and created; not being cost-efficient; and not generating the level of social, and physical, and economic returns vis-a-vis the resource inputs.

In ordering the abolition, Marcos tasked the Bases Conversion and Development Authority board of directors to act as the administrator and liquidator of Northrail.

The BCDA should settle the Northrail liabilities, including the payment of separation incentive pay to affective officials and personnel as well as undertake the necessary steps in liquidating Northrail's assets and assist in the winding up of its corporate affairs.

The BCDA directors shall also conduct an inventory of all of Northrail's existing programs and projects and either terminate or transfer them to concerned government agencies.

The inventory also includes the list of Northrail's assets and liabilities and how to dispose of or settle them.

The BCDA is also tasked to formulate a Change Management Plan for affected stakeholders of Northrail.

It shall likewise conduct an inventory of all pending cases brought by and against Northrail and formulate the appropriate actions to resolve the cases.

The original copies of Northrail's corporate books and account and financial records will be surrendered to the Commission on Audit by the BCDA board of directors.

Palace said the Office of the Government Corporate Counsel shall provide the necessary legal assistance to the BCDA in this endeavor.

The GCG shall monitor the implementation of the abolition of the Northrail.

The Department of Transportation, as the supervising agency of the Northrail, shall continue to oversee the programs and activities relative to liquidation and winding-up of the affairs by the Northrail.

Malacañang imposed the separation incentive pay to all effective personnel and officials of Northrail.

Those who have rendered 20 years of service may avail of the following separation benefits of 1.00 x Monthly Basic Salary x No. of years.
20 years and 1 day to 30 years: 1.25 x MBS x No. of years
30 years and 1 day and above: 1.50 x MBS x No. of years

The separation pay shall be charged against the available corporate funds of Northrail, subject to existing budgeting, accounting, and auditing policies.

The Northrail was registered with the Securities and Exchange Commission on 31 July 1995. It was then created as a wholly owned subsidiary of the BCDA to develop, construct, operate, and manage a railroad system to serve Metro Manila, Central Luzon, and Northern Luzon.

In 2015, the National Economic and Development Authority Board approved the North-South Commuter Railway Project, which was financed through official development assistance from Japan, effectively rendering the Northrail project terminated.

The GCG ordered the "deactivation" of the Northrail, through Memorandum Order No. 2019-05 on 20 May 2019.