QuestionsQuestions (Act No. 1497)
Act No. 1497 grants the Philippine Railway Company (and its successors/assigns) a concession to construct, furnish, maintain, and operate railways in perpetuity in the islands of Panay, Negros, and Cebu, on the terms stated in the concessionary contract.
It references Section 74 of the Act of Congress approved July 1, 1902 (authorizing grants of franchises/privileges/concessions for public utility works), and Sections 4 and 5 of the Act of Congress approved Feb. 6, 1905 (authorizing the Philippine Government to enter into a guaranty contract with a railroad company undertaking to build railways specifically authorized under terms and restrictions recited).
Panay: Iloilo north, forking to Capiz and to a terminal on Bay of Capiz and to Bataan on north coast of Panay—~100 miles. Negros: Escalante harbor westerly along coast to Himamailan—~100 miles. Cebu: North from Cebu to Danao and south from Cebu to Argao (option for a line across the island from Carcar/Sibonga to west coast and along coast between Dumanjug and Barili)—~95 miles.
Main stem variations/extensions are allowed but not exceeding 25 miles each, subject to Governor-General approval and Secretary of War ratification. Branch lines may be built to reach traffic points within a reasonable distance from main lines, but the cost of such branch lines shall not be included in the construction cost definition used for bond-amount computation.
Surveys must be commenced within 60 days after written demand. Detailed plans/reports with maps and estimates must be submitted within 6 months (or later as allowed). Within 2 months after submission, the Governor-General must fix and determine the final route substantially in accordance with described routes.
A right of way of 100 feet in width where it passes through the public domain, including necessary grounds for depots, workshops, station buildings, terminals (including wharves and dock fronts), switches/side tracks/turntables, etc., plus extra lands beyond 100 feet that may be necessary for those purposes.
The grantee cannot occupy lands within boundaries of any province/city/town/municipality if in actual use for provincial, governmental, or municipal purposes, and cannot occupy land within a city/town/municipality without the consent of proper authorities unless the Governor-General consents.
Rights to open quarries/gravel pits and take materials apply only to public lands available for homestead settlement or sale under the Public Land Act or to timber lands, and do not apply to lands used and assigned for other public purposes nor to the “friars’ lands.”
All tracks must be of the gauge of three feet six inches to ensure uniformity, and the specification may be modified only with the approval of the Governor-General.
The grantee must construct and complete and put into operation an average of not less than 100 miles of main track per annum after approval of final plans, distributed among the islands as the Governor-General deems most immediately profitable and resource-developing. Extension of time may be granted by the Governor-General for good cause.
The railways must operate as commercial railways for freight, passengers, express, and mail; on demand of the Governor-General, preference of carriage must be given to business offered by the U.S. or Philippine Governments. Operations must also be suitable to local conditions and as common carriers.
The Government guarantees for 30 years from the date of issue and delivery of bonds the due and punctual payment of interest at 4% per annum on first-lien bonds up to 95% of the actual total cost of construction and equipment (as determined by the contract), as completed according to approved definite plans.
No. It expressly states the Government is not obligated for any part of the principal of bonds and none of such bonds are deemed to be bonds or obligations of the Philippine Government or issued under its authority.
After breach and a continuation upward of four months after written notice, the Government may at its option and at the grantee’s cost do and perform acts necessary to ensure construction/equipment/completion or fulfillment of the obligation. Such cost becomes a debt immediately payable and a lien on the railways, franchises, and related property, enforceable by foreclosure similarly to a second mortgage remedy.
The contract defines actual total cost in enumerated categories: land, materials/labor/transport/insurance for construction, engineering/survey supervision and legal expenses, expenses/damages from rebellion/ladronism/outlawry/earthquakes/elements/accidents, operating equipment, other necessary outlays, interest during construction (4% on sums expended minus net earnings during construction), and a contractor’s profit/general expense equal to 15.5% of actual total cost. It notes material cost is actual first cost delivered on ground, labor/superintendence/administration is actual wages/salaries/fees paid in good faith, and it excludes commissions/allowances/profits/rebates/drawbacks to third persons.
The grantee pays annually for 30 years an amount equal to 0.5% of gross earnings, and for 50 years thereafter 1.5% of gross earnings; after 80 years, the percentage is fixed by the Philippine Government. When promptly and fully paid, these payments are in lieu of all taxes (municipal/provincial/central) on capital stock, franchises, right of way, earnings, and other property owned or operated under the concession.
The grantee must maintain an office/domicile in the Philippine Islands and a representative/agent at all times qualified and empowered to deal with the Government and upon whom process and notices/demands may be served. Such service/communications are deemed legal, sufficient, and binding on the grantee and successors/assigns.