MANILA — Malacañang has ordered the abolition of the North Luzon Railways Corporation (Northrail) since it "is no longer achieving the objectives and purposes for which it was designed and created," a document showed.

Northrail is mandated to develop, construct, operate, and manage a railroad system to the capital region, Central Luzon, and Northern Luzon, government-run e-FOI website showed.

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In May 2019, the Governance Commission for GOCCs ordered Northrail deactivated.

Memorandum Order No. 17, signed by Executive Secretary Lucas Bersamin on Oct. 19, 2023, stated that Northrail was no longer "cost efficient, and does not generate the level of social, physical and economic return vis-a-vis the resource inputs."

"Northrail is not producing the desired outcomes," said Bersamin.

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The Bases Conversion and Development Authority (BCDA) will carry out the abolition, and serve as the administrator and liquidator of Northrail, based on the memorandum order. Northrail is a pre-operating subsidiary of the BCDA.

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BCDA must help settle Northrail's liabilities, including the payment of separation pay to its officials and personnel affected by the abolition. It must also create a change management plan.

The Palace also directed BCDA to conduct an inventory of Northrail's current programs and projects "which are to be terminated or transferred to concerned government agencies, subject to existing laws, rules, and regulations."

It also ordered BCDA to list Northrail's pending cases and from there create actions to resolve the cases.

This includes the "total amount of contingent liabilities arising therefrom, if any."

The separation pay for the affected personnel will be as follows:

First 20 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 authorized herein shall be charged against the available corporate funds of the Northrail, subject to existing budgeting, accounting and auditing laws, rules and regulations," the order read.

Memorandum Order No. 17 will be effective immediately upon publication on the Official Gazette.