This instrument, made, executed, and entered into this....................day of.................................., anno Domini one thousand nine hundred and six, by and between the Philippine Government, by the Governor-General of the Philippine Islands, of the one part, and The Philippine Railway Company, a corporation duly organized and existing under and by virtue of the laws of the State of Connecticut, of the other part, witnesseth that:
In consideration thereof, it is conceded and granted by the Government of the Philippine Islands (hereinafter referred to as the Government), of the one part, and contracted and agreed by the party of the second part (hereinafter referred to as the grantee), for itself, and for its successors and assigns, of the other part, as follows:
1. The grantee, and its successors and assigns, are hereby authorized by the Government to construct, equip, maintain, and operate in perpetuity lines of railway in the Philippine Islands, generally and approximately as follows, and subject to such variations and" such extensions of the main stem, not exceeding twenty-live miles each, as may be approved by the Governor-General and ratified by the Secretary of War:
On the Island of Panay: (a) A line from Iloilo, in the Province of Iloilo and Island of Panay, in a northerly direction, forking to the town of Capiz and to a terminal on the Bay of Capiz and to the town of Bataan, on the north coast of the Island of Panay, in the Province of Capiz, a distance, approximately, of one hundred miles;
On the Island of Negros: (b) A line in the Island of Negros, from the harbor of Escalante, on the northeast coast of said island, westerly, following the coast line to Himamailan, a distance, approximately, of one hundred miles;
On the Island of Cebu: (c) A line in the Island of Cebu, running north from the city of Cebu to Danao, on the east coast, and south from Cebu to Argao, on the east coast, with the option to the grantee of a line across the Island from Carcar or Sibonga to the west coast, and thence along the coast between Dumanjug and Barili, a distance, approximately, of ninety-five miles.
The grantee may, with the consent of the Governor-General, in addition to the lines named, construct branch lines to reach traffic points within a reasonable distance from the main lines of the railways : Provided, however, That the cost of construction of such branch lines shall not be included in the cost of construction as defined in paragraph nine hereof.
Surveys on and along the several proposed lines shall be commenced by the grantee within sixty days after written demand therefor shall be made to the grantee by the Governor-General; detailed reports of the definite plans, surveys, and specifications, accompanied by complete maps and profiles of the character and kind in respect of such construction and equipment directed by the Governor-General, and embodying also estimates of the costs of such construction and equipment, shall, in writing, be submitted; to the Governor-General within six months after said demand, or at such later time as may be permitted by the Governor-General; and within two months after the submission thereof to the Governor-General the latter shall fix and determine the final route, substantially in accordance with the routes as above generally described.
2. Under and by virtue hereof the right of way through the, public lands of the Philippine Government is hereby given and granted to the grantee for the construction, operation, and maintenance of the railroad or railroads as herein authorized to the extent of one hundred feet in width where it may pass through the public domain, including all necessary ground for depots, machine shops, station buildings, workshops, water stations, warehouses, terminals, including wharves and dock fronts, switches, side tracks, and turntables, and also such extra lands beyond such one hundred feet as may be found necessary for said purposes: Provided, That the same be approved by the Governor-General as a part of the definite plans herein before provided for, and the right, power, and authority shall thereunder he given to said grantee, with the written approval of the Governor-General, to open and work quarries and gravel pits upon any public lands and take from such lands earth, stone, timber, and other materials for the construction of such railway; but the provisions of this paragraph shall only apply to public lands available for homestead settlement or for sale under the Public Land Act, or to timber lands of the Philippine Government, and shall not apply to,lands used and assigned for other public purposes, nor to the lands known as the "friars' lands."
The grantee shall have the right, with the approval of the Governor-General, to cross or occupy such parts of public roads, alleys, avenues, and squares, acquire title to such other municipal or provincial lands, as may ho necessary, on terms to lie agreed upon by the grantee and the proper provincial or municipal authorities, as the case may be; and in case of failure to agree upon the terms thereof, such terms shall lie fixed by the Governor-General.
Lands or rights of use and occupation of lands granted under the foregoing provisions of this paragraph shall revert to the governments by which they were respectively granted upon the termination of this franchise or concession, or upon its revocation or repeal.
The grantee shall also have the right to acquire from corporations, or private individuals, by purchase, contract, lease, grant, or donation, any lands which may be necessary or useful for the construction, maintenance, and operation of the said lines of railway or any of them.
The grantee shall also have the right to acquire by condemnation the lands necessary for the right of way, for bridges, for terminals- including wharves and docks at harbor points and elsewhere-for sidings, stations, engine houses, water stations, and other appropriate buildings and structures for the proper and convenient construction, operation, and maintenance of the lines of railway herein authorized; but no lands within the boundaries of any province, city, town, or municipality shall be occupied by the grantee if the same are in actual use for provincial, governmental, or municipal purposes, nor shall any land within the boundaries of any city, town, or municipality be so occupied without the consent of the proper authorities of such city, town, or municipality, unless the Governor-General shall consent to the same. The right of condemnation or eminent domain shall be exorcised by the grantee in accordance with the laws of the Philippine Islands at the time being in force.
The grantee shall have the right to construct and maintain for the operation of said railways any and all tracks (single, double, or more), bridges, viaducts, culverts, fences, and other structures; and all depots, station houses, engine houses, car houses, freight houses, wood houses, and other buildings; and all machine shops and other shops, water tanks, turntables, superstructures, erections, and fixtures; and all elevators, warehouses, wharves, piers, and other facilities, terminal or otherwise, for operating said railroads, and also any hotels or restaurants at any station or terminal.
3. All tracks of all the said lines of railway shall be of the gauge of three feet six inches, so that when completed the gauge of all lines covered hereby shall be uniform, and the construction, equipment, and rolling stock shall be in every respect first class, and in accordance with the approved definite plans, and, with due regard to local conditions, shall be equal in quality to the best American practice. This specification as to gauge may be modified with the approval of the Governor-General. And the said grantee hereby agrees to construct and complete and put in operation an average of not less than one hundred miles of main track per annum, after the approval of the final plans for the same, such mileage to be distributed between the three islands herein above named, covering such portions of the approved routes of the same as will, in the opinion of the Governor-General of the Philippine Islands, afford the most immediate profitable traffic for the railways, and at the same time develop to the greatest degree the resources of the respective islands.Extension of time of completion may be granted by the Governor-General, in his judgment, for good cause shown.
The said railways shall be operated as commercial railways for the transportation of freight, passengers, express, and mail, and, on demand of the Governor-General, preference of carriage shall be given over said lines of railway, or any part thereof, to business offered by the Government of the United States or of the Philippine Islands.
4. The motive power of said railways shall be steam, except that, with the consent of the Governor-General, any of said lines may be operated by electricity or other equivalent power.
5. The grantee, in respect of any of said railways, shall permit (and the right is reserved the Philippine Government to grant permission to) any other railway now constructed or hereafter to be constructed in the Philippine Islands to form and establish traffic connections or arrangements with it on fair and equitable terms, to be determined, in case of disagreement, by the Governor-General of the Philippine Islands upon petition of either party, and, upon appeal, by the Secretary of War.
6. The grantee and its contractors and subcontractors shall, so far as possible, give preference to such satisfactory laborers as may be found along the lines of railway, and the employment of labor shall be at all times under the reasonable direction of the Governor-General of the Philippine Islands. All material employed in the construction of the lines shall be of first class and quality, adapted to the conditions of the country, and equal to the best American practice for railroads of similar gauge. Definite specifications as regards all construction shall be approved by the Governor-General of the Philippine Islands.
7. Until the construction and completion of the railways covered , hereby, and if the grantee shall not then be in default hereunder, the Philippine Government undertakes to protect the grantee in the use and enjoyment of the railways and property covered hereby against the acts of ladrones, insurgents, rebels, and outlaws.
8. The grantee shall have the right to construct and operate telegraph, telephone, and electrical transmission lines over said right of way for use in the construction and operation of said railways, and also, with the consent of the Governor-General, for public service and commercial purposes, but the latter privileges shall be subject to the following provisions:
In the construction of telegraph or telephone lines along the right of way the grantee shall erect and maintain poles with sufficient space thereon to permit the Philippine Government, at its expense, to place, and itself or by the United States Government to operate and maintain, four wires for telegraph, telephone, and electrical transmission for any purpose between the termini of the lines of railway; a,nd the Philippine Government reserves to itself the right to construct, maintain, and operate telegraph, telephone, or electrical transmission lines over the right of way of said railways for commercial, military, or governmental purposes, without unreasonably interfering with the construction, maintenance, and operation by the grantee of its railways, telegraph, telephone, and electrical transmission lines.
The grantee shall furnish suitable telegraph offices and operators at its stations for public use, when so directed by the Governor-General, on payment of reasonable compensation for the service.
9. For all purposes hereunder and for the determination of the amount of first-lien bonds in respect of which interest will be guaranteed as hereinafter provided, the actual total cost of construction and equipment of the railways herein referred to shall be deemed to be the actual cost, first, of all necessary land for buildings, right of way, and other railway purposes; .second, of all materials and labor, including transportation of employees, tools, implements, plant, and animals used in such construction and equipment, marine and fire insurance upon any such material, machinery, and so forth, used in and expended upon or in aid of. the construction of the roadbeds, tracks, and bridges, and in and about the building of telegraph, telephone, and electrical transmission lines, sidings and switches, depots, terminals, roundhouses, turntables, water stations, repair and machine shops, freight, houses, docks, wharves, warehouses, waiting rooms, dining rooms, hotels, and employee boarding houses, and all other appropriate buildings and structures necessary for the construction, maintenance, and operation of the railway lines, on plans approved by the Governor-General; third of all expenses of engineering, surveying, and supervising in the Philippine Islands, both of the grantee and of the Philippine Government, connected with the building of said railroads, and all legal expenses connected with the acquiring of land therefor (such expenses of the Philippine Government to be borne and paid by the grantee upon demand of the .Philippine Government); fourth, of all expenses and outlays necessarily incurred by the grantee, or damages done to the property of the grantee covered hereby, arising from acts of rebellion, ladronism. outlawry, earthquakes, or through action of the elements, or through accidents or acts of God; fifth, of all equipment of every name and nature necessary for the operation of the railway lines covered hereby, including locomotives, passenger and freight cars, wrecking cars, and of all tools, implements, and machinery for the construction, operation, and repair of such railway lines; sixth, every other outlay and expense of whatsoever character and wheresoever made, actually incurred in and about the construction and equipment of the lines of railway herein referred to, and whether included in any of .the specific items of cost herein enumerated or not: seventh, interest at four per centum per annum upon all sums expended for such construction and equipment, from the respective dates at which outlays are made, until the issue and delivery, in aid of such construction and equipment, of the bonds respecting which the Philippine Government will so guarantee; interest, less any net) earnings arising from the operation of any portion of such lines' during construction; eighth, for the contractor's profit, and expenses incurred in connection with the organizing of the grantee, and such general expense outside of the Philippine Islands as it may be necessary for the grantee to incur preliminary to its organization and acceptance of this concession, there shall he added as a part of said actual total cost of construction, to be determined as above, an amount equal to fifteen and one-half per centum of such actual total cost: Provided. That the cost of material, supplies, and equipment shall be the actual first cost thereof to the grantee delivered on the ground where it is to be used, and that the cost of labor, superintendence, and administration shall he the actual wages, salaries, and fees paid in good faith by the grantee, and shall not include any commissions, allowances, profits, rebates, or drawbacks to any third person.
All plans for work to be done hereunder shall be subject to the approval of the Governor-General, the work itself shall be subject to his inspection, and all bills and construction accounts shall be subject to the audit of the Philippine Government.
All material imported into the Philippine Archipelago for the construction and equipment of the railways undertaken by the grantee, pursuant to authority conferred by this concessionary contract or grant (and which shall, in fact, be so used), shall be admitted free of duty, under such rules and regulations as shall be ' prescribed by the Philippine Government: Provided, That this provision shall not extend or apply to any portion of such lines, or to any material or supplies therefor, after the same shall be constructed and equipped.
10. Under and in accordance with the terms and conditions of section four of the Act of Congress approved February sixth, nineteen hundred and five, the Philippine Government hereby guarantees for a period of thirty years from the date of issue and delivery of the bonds hereinafter described, the due and punctual payment by the grantee of interest (and in the event of the default of the grantee it will itself pay the same upon demand) at the rate of four per centum per annum, upon first-lien bonds to be issued by the grantee under and in conformity with this instrument and said Act of the Congress, to an amount of ninety-five per centum of the actual total cost of construction and equipment of such railways and appurtenances, completed in accordance with such approved definite plans and as such actual total cost is determined in paragraph nine hereof, such bonds to be delivered under the terms, conditions, and circumstances and at the times prescribed by said section four of said Act of Congress approved February sixth, nineteen hundred and five.
The grantee covenants and agrees duly and punctually to pay the interest upon all bonds the interest upon which may be so guaranteed by the Philippine Government, and. as such interest becomes due and payable; and in all respects duly and punctually to fulfill the covenants and conditions of the mortgage securing such bonds; and that all bonds in respect of which the Philippine Government shall so guarantee interest shall be secured by an absolute first lien, evidenced by mortgage or deed of trust, upon the railroads, in respect of which bonds may be so issued, and the equipment, franchises (including this concessionary contract or grant), and other property, real, personal, and mixed, earnings, rents, revenues, and income thereof, then owned and thereafter to be acquired.
Appropriate instruments, sufficient in law to secure more effectually any liens existing or arising under any provision of the said Acts of the Congress and this contract, in favor of the Philippine Government, under or by reason of the making of said guaranty and of any payment made or to be made thereunder, subject to, such first-lien bonds and the mortgage securing the same, shall be duly executed and delivered to the Philippine Government or to any trustee by it designated. But failure to execute such instruments shall not impair or affect the liens or the remedy of foreclosure secured by said Acts of the Congress, this contract, or other instruments.
it is expressly understood and agreed that the Philippine Government, although obligated upon its said guaranty of interest, shall not be in any sense or to any degree obligated for the payment of any part of the principal of any bond respecting which it may so guarantee the payment of interest, nor upon any other bond, indebtedness, contract, liability, or obligation whatsoever of the grantee, and that any such bonds shall not be deemed, for any purpose "whatsoever, to be the bonds or obligations of the Philippine Government, or be deemed issued by said Government or under its authority.
After the construction and equipment of the railways herein referred to in accordance with the foregoing provisions and all others of this contract of guaranty, the grantee shall apply its gross earnings as follows: First, to the necessary operating expenses, including reasonable expenses of the corporation, and the amounts duo the Philippine Government under paragraph thirteen hereof; second, to the necessary and ordinary repairs of said railroads and their equipment; third, to such betterments and extraordinary repairs of said railroads or equipment as may be first by the Governor-General of the Islands, in writing, expressly consented to; fourth, to the payment of the interest on "the bonds, the interest on which to any extent shall have been guaranteed by the Philippine Government under this concession.
The form of the bonds, mortgages, deeds of trust, liens, guaranties, and other instruments herein provided for, as well as the legality of the organization of the grantee herein, and its compliance with the requirements of the ads of the Congress, the laws of the Philippine Islands, and this concessionary grant, shall be approved by the Secretary of War.
11.1aшphi1 If the grantee make broach of any of the conditions hereof or of any of the obligations by it assumed hereunder, in respect to the construction of said railways, and shall allow the same to continue for upward of four months, after notice in writing from. the Philippine Government to the grantee, then, in such case, at any time thereafter, the Philippine Government may, at its option, and at the cost and expense of the grantee, do and perform any and all acts and things which it may deem useful and necessary to insure the construction, equipment, and completion of the railways covered hereby or the fulfillment of such condition or obligation, as the case may be; and in said event such cost and expense shall thereupon thenceforth be and become a debt of the grantee presently payable, and a lien upon the said railways and all franchises and property relating thereto, subject only to the first mortgage securing the first-lien bonds respecting which the Philippine Government may guarantee interest as herein provided, and shall be enforceable by foreclosure in the same manner as if secured by a second mortgage. The remedy and relief given to the Philippine Government by this paragraph shall be considered as an additional remedy and relief and shall not exclude the Philippine Government from any remedy, relief, or right of action which said Government might otherwise have.
12. The Philippine Government, through the auditing, engineering, and railroad Bureaus thereof, and by such other agencies as may be fixed by law, shall have the power, by monthly or other regular inspection of the books, accounts, vouchers, and other papers, or by special inspection, if in its judgment necessary, to keep itself advised of the financial conditions and operations of the grantee to enable it to exercise the powers vested in the Philippine Government by law in respect of this franchise and concession, and especially to verify the statements in the financial reports of the railway company as to construction, maintenance, and operation, with a view to the proper enforcement and execution of the obligations of the grantee as contained in this franchise, and particularly in paragraphs nine and ten hereof.
13. In consideration of the premises and of the granting of this concession or franchise, there shall be paid by the grantee to the Philippine Government, annually, for the period of thirty years from the date hereof, an amount equal to one-half of one per centum of the gross earnings of the grantee in respect of the lines covered hereby for each preceding year: after said period of thirty years, and for fifty years thereafter, the amount so to be paid annually shall be an amount equal to one and one-half per centum of such gross earnings for each preceding year; and after such period of eighty years the percentage and amount so to be paid annually by the grantee shall be fixed by the Philippine Government.
Such annual payments, when promptly and fully made by the grantee, shall be in lieu of all taxes of every name and nature-municipal, provincial, or central-upon its capital stock, franchises, right of way, earnings, and all other property owned or operated by the grantee under this concession or franchise.
14. The right is hereby given to the grantee to fix, charge, and collect just and reasonable compensation for carriage of freight and passengers. Such right, however, for the purpose of insuring just and reasonable rates at all times, shall be subject to effective regulation to be exercised, in the first instance, by the Philippine Government, and upon appeal by the Secretary of War of the United States.
15. The said railway lines, and each thereof, shall be post routes and military roads, subject to the use of the Philippine Government and the United States of America for postal, military, naval, and other governmental service, and also subject to such reasonable regulations as the Philippine Government, with the approval of the Secretary of War, shall impose restricting the charges for such Government transportation.
16. The grantee shall at all times have and maintain, by corporate declaration satisfactory to the Governor-General, an office and domicile in the Philippine Islands and a representative and agent at all times fully qualified and empowered to treat with the Philippine Government in respect of all matters arising hereunder. and upon whom process may be served in any judicial proceeding for any object or purpose, whether arising hereunder or otherwise, and upon whom also any and all notices, demands, tenders, deliveries, and communications may be given or made to, for, or in behalf of the grantee hereunder, and its and their successors and assigns; and all processes so served and all notices, demands, tenders, deliveries, and communications so made shall be legal, sufficient, and binding upon the grantee, and upon its and their successors and assigns, as if made to it or them in person.
17. This franchise or concession is subject to amendment, alteration, or repeal by the Congress of the United States; no stock or bonds shall be issued by the grantee hereunder except in exchange for actual cash, or for property at a fair valuation, equal to the par value of the stock or bonds so issued; the grantee shall not declare stock or bond dividends.
The foregoing and all other terms and provisions of section seventy-four of the Act of Congress approved July first, nineteen hundred and two, and sections four and five of the Act of Congress approved February sixth, nineteen hundred and five, relating to said railways, are incorporated into and made a part hereof, with the same effect as if they were set forth herein at length.
18. The word "grantee" herein shall be held to include and apply to the successors and assigns of said grantee.
19. By the acceptance hereof the grantee stipulates and agrees to construct said railways herein described in accordance with the terms and conditions herein imposed and in perpetuity properly to maintain and operate them as commercial railways and common carriers in a manner suitable to the local conditions.
In witness whereof, by virtue of authority conferred upon him, this instrument, in triplicate, is executed by the Governor-General of the Philippine Islands on behalf of the Philippine Government. Done the day and year first above written.
The foregoing concessionary grant and contract is hereby accepted by. the grantee in its corporate name and under its corporate seal, by its proper officers thereto duly authorized by resolution of its
board of directors, passed on the.................day of.........................nineteen hundred and six, certified copies of which are hereto attached and made a part hereof.
Done the day and year first above written.
