Preliminary Contracts for Land Purchase
- On December 22, 1903, the Philippine government entered into preliminary contracts to purchase multiple haciendas with the following details:
- Philippine Sugar Estates Development Co.: 8 haciendas, approx. 60,302 hectares for $3,671,657
- La Sociedad Agricola de Ultramar: 18 haciendas, approx. 62,140 hectares for $2,213,779
- Recoleto Order: 23,266 hectares for $306,759
- British-Manila Estates Co.: 18,419 hectares for $1,045,000
- Contracts are executory subject to title examination and specific stipulations.
Legal Authority for the Purchase
- The Philippine Commission acted under Section 64 of the Act of Congress of July 1, 1902, to acquire these lands.
- The acquisitions respond to concerns that concentrated corporate ownership injures the peace and welfare of the Islands.
Terms and Nature of Bonds Issued
- Bonds to be dated February 1, 1904, with the following terms:
- Interest rate: 4% per annum, payable quarterly
- Redeemable at the government's option after 10 years
- Maturity period: 30 years
- Principal and interest payable in U.S. gold coin of the current standard value
- Denominations: $1,000 and $10,000 denominations, registered and transferable in Washington, D.C.
- Payment of principal and interest at the U.S. Treasury.
Tax Exemption Provisions
- Bonds are exempt from all taxes and duties imposed by the Philippine Islands, U.S. Government, and any state, municipal, or local authority in either U.S. or the Philippine Islands.
- This tax exemption is explicitly stated on the face of each bond.
Sale and Proceeds of Bonds
- Secretary of War authorized to sell bonds on terms most favorable to the Philippine government.
- Bonds cannot be sold below par value.
- Proceeds to be deposited with the Guaranty Trust Company of New York to the credit of the Philippine Treasurer.
Reporting Requirements
- Secretary of War to report to the Auditor and Treasurer of the Philippine Islands:
- Amount of bonds issued and sold
- Bond numbers and denominations
- Amount realized from sales
- Reports to be recorded officially in the Auditor and Treasurer's offices.
Management of Funds from Land Disposition
- Any money received from leasing, selling, or disposing of the acquired lands must be:
- Treated as a trust fund for the payment of bond principal and interest
- Established as a sinking fund dedicated exclusively for the bonds' payment at maturity
- Collected rents and proceeds must be deposited in the Philippine Treasury and held as a separate trust fund.
- The sinking fund must be invested and reinvested per the Philippine Commission's direction.
Immediate Effect and Expediency
- The Act’s passage expedited under the procedural law governing the Philippine Commission.
- The law takes effect immediately upon enactment on January 6, 1904.