Be it enacted by the Senate and House of Representatives of the Philippines in Legislature assembled and by the authority of the same:

SECTION 1. Name of the grantee; term of the franchise.— A franchise is hereby granted to the firm Lizarraga Hermanos, domiciled in the Province of Iloilo, Philippine Islands, for a term of ninety-nine years, to operate and maintain a railroad for the transportation of freight and passengers, connecting the municipalities of Kabankalan and Hog, in the Province of Occidental Negros, approximately fourteen kilometers in length, subject to the terms and conditions specified in this Act, with the right, however, to modify the proposed line when the circumstances and conditions of the land, the safety of the line, and the public interest require it: Provided, That this franchise shall not take effect until the grantee shall have obtained from the Public Utility Commission a certificate showing the public necessity and convenience of the same, in accordance with the purpose of section twenty-three of Act Numbered Twenty-three hundred and seven, as amended, and shall have filed such certificate with the Secretary of Commerce and Communications : And provided, further, That the grantee shall apply for such certificate within three months from and after the approval of this Act and that this franchise shall become null and void at the expiration of said period if it fails to make such application within the same.

Whenever in the following sections the term "grantee" is used, the same shall be held and understood to refer to the grantee firm "Lizarraga Hermanos."

SEC. 2. Special condition for the acceptance of this franchise.—The concession of the privilege mentioned in the : preceding section shall not take effect unless the grantee shall accept in writing and make part of this concession the following condition, to wit:

"That the grantee state in writing that it is informed of the message of the President of the United States addressed to the Filipino people and communicated to said people by the Governor-General of the Philippine Islands on the sixth day of October, nineteen hundred and thirteen, and of the reply message of the Philippine Assembly made in the name of the Filipino people and approved and sent on October sixteen, nineteen hundred and thirteen; that said grantee binds itself not to engage in or aid, by means of contributions in cash or otherwise, any propaganda directed against the policy of the Government of the United States outlined in such message of the President and the aspirations of the Filipino people set forth in said reply message of the Philippine Assembly, whether under the pretext of vested interests or under any other pretext, and that said grantee shall further bind itself to exact a similar engagement from its administrators, agents, successors, and assigns."

SEC. 3. Rights, powers, and exemptions of the grantee.— The grantee shall have the following powers, rights, and exemptions:

(a) To enjoy, with the approval of the Governor-General first had, a right of way thirty meters wide through the public lands of the Philippine Government for the purposes of the franchise as well as for the construction of stations and station buildings, machine shops and similar shops necessary for the operation of the road, water stations, warehouses, terminals, including wharves, dock fronts, switches, sidetracks, and turntables. Also, with the approval of the Governor-General, extra public land beyond the thirty meters herein specified may be set aside for the same purposes. But none of these provisions shall be held to authorize the use of public land other than timber land of the Philippine Government or land available for homestead settlement or for sale under the Public Land Act.

(b) To cross or occupy, for the purposes of the franchise, any public road, street, avenue, or square, with the approval of the Governor-General.

(c) To acquire and hold provincial or municipal land in such manner as may be agreed upon between the grantee and the province or municipality concerned, and in case of disagreement, the decision of the Governor-General shall be final; to acquire from other corporations, entities  or companies by purchase, lease, donation, or any other legal means the land necessary for the purposes of the franchise.

He shall also have the right to acquire by contract, agreement, or, in the last instance, by expropriation, the land necessary  for its  right  of way  of thirty  meters  or  for bridges, terminals, wharves, dock fronts, sidetracks, stations, warehouses,  shops, turntables,  switches,  and  other means suitable for the operation of the road, or for fills, cuts,  excavations,  and  quarries,  or  for  the  deviation  of watercourses,   wagon   roads,   drainage   of  marshy   lands, dams, and other works necessary for the protection of the track from inundations. But the grantee shall not occupy any land within the limits of any province or municipality if the same is used for provincial or municipal purposes, without due authorization by the proper authorities.    The right of eminent domain granted by this Act shall be exercised by the grantee in conformity with the laws in force at the time.

(d) To sell, convey, or transfer this franchise or lease the same to any person, corporation or entity; but such sale, conveyance or transfer shall not take effect until the purchaser, transferee, or lessee shall have filed in the office of the Secretary of Commerce and Communications   an agreement in writing binding itself to comply with all the terms  and  conditions  imposed   upon the grantee by the franchise and accepting the franchise subject to all  its existing terms and conditions.

(e) With the approval of the Secretary of Agriculture and  Natural  Resources,  to  open  and  work  quarries and gravel pits upon any public land and take from the same stone, timber, and other materials for the construction of the road, provided such public land is available for home stead settlement or for sale under the Public Land Act.

(f) To appear in court, petition for, initiate, prosecute, and abandon judicial or extrajudicial proceedings. To appoint and remove freely its employees and agents, assigning to them such compensation as it may see fit.

(g) To have the title to or possession of any personal or real property, easement, or other real right, by purchase, assignment, donation, or any other legal means; and to acquire, possess, lease, barter, pledge, encumber, sell, or dispose of the same entirely or in part, in accordance with law.

(h) To construct, maintain, and operate or modify the course of the railroad covered by the franchise, construct buildings, stations, shops, fills, aqueducts, bridges, wharves, roads, crossings, ditches, drains, pillars, arches, retaining walls, and fences on land of its own, and also to cross any railroad, tramway, river, canal, creek, lake, shore, culvert, road, or public highway, upon obtaining the necessary authorization therefor from the public or private persons, entities or corporations whom it may concern or affect.

(i) On land owned by the grantee or leased by it, to open quarries, gather stones from the surface of the land, cut timber, excavate the ground or construct and operate ovens for lime, gypsum, and bricks for the construction, operation, or maintenance of the railroad.

(j) To conduct water to the railroad, for its use, and construct the roads necessary to facilitate access to the stations from the pueblos.

(k) To contract indebtedness for the construction, completion, maintenance, or operation of the road or for any other legal purpose, issuing or negotiating promissory notes, chits, bonds, and other documents representing value for any sum borrowed or indebtedness contracted at a rate of interest of not less than four per centum nor more than eight; guarantee such indebtedness by mortgages in the shape of public instruments encumbering property already acquired, or capital of the road actually invested. These bonds, chits, promissory notes, or other documents representing value shall be redeemed ten years after their issue or sooner if the grantee deem it advisable, in such manner that twenty per centum of the total of those issued shall be paid each year.

(I) To have and to hold the personal or real property useful and necessary for the operation of the line, free from any taxation, Insular, provincial, or municipal, from the granting of the franchise until its expiration, and to import duty free such material as it may be necessary to import from Europe and America for the construction, maintenance, or preservation of the railroad. In no case shall such imported material be sold or used for purposes other than those authorized in this paragraph unless the Secretary of Finance is satisfied that, having become unnecessary for said purposes, the import duties thereon have been duly paid.

(m) To retain, until full payment of the freight charges, such articles or merchandise carried as have not been recovered on account of delay, refusal or failure to pay. The owner, consignee, or person claiming goods or merchandise of which delivery has not been taken for over forty-eight hours after arrival at their destination, shall also be required to pay the storage charges thereon.

When any articles, freight, merchandise, or baggage carried have not been claimed by the owner or consignee for a period of more than two months, the grantee may petition the justice of the peace of the municipality in which the station is located for an order for the sale at public auction of the same. And when the owner or consignee is not known or refuses to receive the articles transported, or if he refuses to pay the transportation expenses, the grantee may petition the justice of the peace court concerned for an order for the sale at public auction of the perishable goods. The proceeds of the sale shall be applied primarily to the judicial costs and expenses incurred on account of such sale, and then to the payment of the freight and transportation expenses. The remainder, if any, shall be deposited in the court in which the petition has been filed, at the disposal of the person entitled to claim it.

The grantee shall have the right to refuse to transport perishable goods unless the freight charges thereon are paid in advance, as well as merchandise considered dangerous to the public safety or the carriage of which is prohibited by the Government.

SEC. 4. Duties and obligations of the grantee.—The grantee shall have the following duties and obligations:

(a) To place suitable gates in charge of guards at the points where the railroad crosses public highways or roads.

(b) To establish a telegraph line along the entire right of way for the exclusive use of the grantee. The poles of this line shall carry such wires as the Government may deem necessary; but the custody and maintenance of the same shall be at the expense of the Government.

(c) To carry the mails free of charge, in the manner stipulated with the Director of Posts, for which purpose it shall provide a suitable and adequate place on its trains. In case of failure to arrive at an agreement, the Secretary of Commerce and Communications shall establish the manner in which said mails shall be carried. But it shall be entitled to a reasonable compensation in case the Government requires, in addition to the ordinary mail service, the transportation of urgent mail or orders at other hours than those established by the grantee or at a greater speed than that of the ordinary trains, or the transportation of troops, ammunition, funds, or freight, in which cases it shall be the duty of the grantee to transport the same in a suitable and adequate manner.

(d) To equip the locomotives used in the operation of the road with a bell and a steam-whistle, and have the bell rung and the whistle blown at a distance of at least three hundred meters from any point where the railroad crosses a road or highway, said ringing to continue until such road or highway has been crossed.    The locomotives shall also be equipped with the apparatus necessary to protect the property adjacent to the railroad from the danger of fire from the sparks of the engine.

(e) To reduce the velocity of the trains upon crossing streets or public thoroughfares to a maximum of thirty-two kilometers per hour.

(f) To issue receipts from a stub book for merchandise or articles booked and to properly label such merchandise or articles.

(g) To provide the personnel of the train service with a uniform, without which no employee or agent of the grantee shall be allowed to perform any official duty or apply for assistance to the peace officers.

(h) To grant a free baggage allowance of fifty kilograms to first-class passengers and of thirty kilograms to passengers of inferior classes. Baggage shall be understood to mean ordinary wearing apparel, bicycles, and articles required by each person in the exercise of some profession or occupation. But the grantee shall not be obliged to accept baggage not in a safe condition for transportation and shall be liable only to the extent of three hundred pesos for each fifty kilograms of baggage except in case the owner, before his baggage is accepted for transportation, declares its contents and pays for it a reasonable insurance for any additional liability of the grantee in case of loss, deterioration, or damage.

(i) The grantee shall establish its schedules of passenger and freight rates and the Public Utility Commission shall exercise control over the same in accordance with Act Numbered Twenty-three hundred and seven of the Legislature and its amendments. The schedules adopted shall be posted in conspicuous places at the stations.

(j) Before commencing with the construction of any section of the railroad herein referred to, the grantee shall file with the Director of Public Works three copies of the plan and cross section thereof and of the proposed system of construction, accompanied by three copies of the proper descriptive report. Upon receipt of the same, the Director of Public Works shall examine them without delay and shall forward them thereafter with his report to the Public Utility Commission, which shall submit them, with its recommendation, to the Secretary of Commerce and Communications, for his approval. Upon the approval of the plans, two of the three copies thereof and of the descriptive report shall be filed in the proper office of the Government and the other shall be delivered to the grantee.

(k) Before opening all or part of the road to the public for the transportation of passengers or freight, the grantee shall notify the Director of Public Works in writing, stating the date on which it is desired to begin operation. Upon receiving such notice, the Director of Public Works shall direct an immediate inspection to be made of all the works on the section, engines and rolling stock to be used, and if he finds everything in accordance with the law, he shall recommend to the Public Utility Commission that it authorize the opening of the road or of the part thereof fit for traffic.

(I) Before the inauguration of the first section of the road covered by this concession, the grantee shall submit for approval by the Public Utility Commission the regulations for the operation of the road, train and station service, accounting, conditions of traffic, care and maintenance of the tracks and other appurtenances, for the government of its employees. These regulations upon approval by said Commission shall have the force of law, but shall be subject to such amendments as practice may counsel and the Commission may authorize or direct. Amendments duly approved by said Commission shall always have the force of law.

SEC. 5. Restrictions of the franchise.—The franchise is granted subject to the following restrictions:

(a) The grantee shall not object to its line being crossed by any other railroad or wagon road authorized by the Government, provided proper indemnity is paid and the railroad police regulations complied with.

(b) The franchise herein granted shall be subject in all respects to the limitations imposed by the Act of Congress approved August twenty-nine, nineteen hundred and six teen, entitled "An Act to declare the purpose of the people of the United States as to the future political status of the people of the Philippine Islands, and to provide a more autonomous government for those Islands," and to the provisions of Act Numbered Twenty-three hundred and seven of the Philippine Legislature and its amendments, any provisions hereof to the contrary notwithstanding. This franchise shall also be subject to amendment or alteration by the Philippine Legislature.

(c) The grantee, his successors or assigns shall not issue stock or bonds except in exchange for actual cash or for property at a fair valuation equal to the par value of the stock or bonds issued, nor shall it declare any stock or bond dividend.

(d) All lands or rights of occupation or use of lands granted gratuitously by this Act to the grantee, his successors, or assigns, shall, upon the termination of this franchise, or upon its revocation or repeal, revert to the Insular or the provincial or municipal government to which such lands or the right to use and occupy them belonged at the time the grant thereof or the right to use or occupy the same was conceded to the grantee, its successors or assigns.

SEC. 6. Conditions of the railroad and its structures— motive power.— (a) The maximum grade of the railroad shall be two per centum and the minimum curve shall have a radius of two hundred meters. The grade on curves shall be compensated in such manner that the maximum grade on minimum radius curves shall not exceed one and six-tenths per centum.

(b) The grantee shall construct and maintain stations in such places as it may deem necessary for an adequate public service, using in their construction material of good class and quality and galvanized-iron roofing.    The same class of materials shall be used in the construction of any building.    Bridges and culverts shall be of reinforced concrete or of masonry and steel.

(c) All material used in the construction of the line shall be of good quality and adapted to the conditions of the country.    The  rails shall  be  steel  rails weighing fifteen kilograms per meter, with a resistance of three thousand five hundred kilos. On each kilometer of track there shall be used twelve hundred ties of native hard wood, one meter and fifty centimeters long, seven inches wide and five inches thick.

(d) The railroad shall be single track, of seventy-five to ninety centimeter gauge, with the necessary sidings to allow of the trains passing each other at each station.    The width of the fills and cuts shall be that required for the development of the track.

(e) For the transportation of freight and passengers no other motive power shall be used than steam.

SEC. 7. Deposit reimbursable upon the completion of the road.—Within one hundred and twenty days from and after the date of the acceptance by the grantee of the conditions and terms of this franchise, as specified in this Act, said grantee shall deposit in the office of the Insular Treasurer in the city of Manila a sum equal to fifty pesos Philippine currency per kilometer of the railroad covered by this franchise. This deposit shall be returned to the grantee in two equal installments, as the work is completed.

The grantee shall forfeit said deposit if two years elapse without the work on the railroad having been begun, or over five after such work has begun, without its being completed. The forfeiture of this deposit shall not take place if the completion of the work has been hindered totally or partially by the act of God, force majeure, disturbance of the order, usurped or military power, martial law, riot or civil commotion. The Secretary of Commerce and Communications, upon the recommendation of the Public Utility Commission made after hearing the grantee, its successors or assigns, shall be empowered, with the approval of the Governor-General, to declare this franchise annulled and the deposit made under this section forfeited, and against this declaration the grantee, its successors or assigns shall have the right to apply to any court of competent jurisdiction for such remedy as they may see fit, but if they should fail to do so within two months from the date on which such declaration was made, they shall be deemed to have waived said right and the annullment and forfeiture so declared shall thereupon become final.

SEC. 8. Portion of the earnings to be paid to the Insular Government.—The grantee, its successors or assigns shall pay quarterly into the Insular Treasury of the Islands one-half of one per centum of the gross receipts from the passenger and freight traffic on the railroad during the first thirty years, and after this period, for fifty years, one per centum of said earnings, and after the said period of eighty years, two per centum of the said earnings, which will be the compensation of the Government for the concession of the franchise and the earnings, revenues, or profits derived from the operation of the road and for the exemption from taxation granted by this Act to the grantee, its successors and assigns.

It shall be the duty of the grantee to keep a record or accounts, setting forth in detail the receipts from the operation of the railroad, which record and accounts shall be subject to inspection by the Government authorities, who shall have the right to audit and approve the accounts and determine the sums due to the Government.

SEC. 9. Time within which the grantee shall express his acceptance.—The franchise granted in this Act shall not take effect unless within a period of sixty days from and after the date of obtaining the certificate required in section one hereof, the grantee shall file with the Secretary of Commerce and Communications, together with such certificate, his acceptance in due form, binding himself to abide by the terms and conditions established in this Act.

SEC. 10. Date on which this Act shall take effect.—This Act shall take effect on its approval.

Approved, March 5, 1918.