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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 Government of the Philippine Islands.

2. 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 Government of the Philippine Islands 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 Congress, to an amount of ninety-five per centum of the actual total cost of construction and equipment of such railway and appurtenances, completed in accordance with such approved definite plans and as such actual total cost is determined in the foregoing paragraph 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 Government of the Philippine Islands, 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 Government of the Philippine Islands shall so guarantee interest shall be secured by an absolute first lien, evidenced by mortgage or deed of trust, upon the railroad 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 Congress and this contract, in favor of the Government of the Philippine Islands, 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 Government of the Philippine Islands, 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 Congress, this contract, or other instruments.

It is expressly understood and agreed that the Government of the Philippine Islands, 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 Government of the Philippine Islands, or be deemed issued by said Government or under its authority.

After the construction and equipment of the railway 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 due the Government of the Philippine Islands under paragraph thirteen hereof; second, to the necessary and ordinary repairs of said railroad and its equipment; third, to such betterments and extraordinary repairs of said railroad or equipment as may be first by the Governor-General of the Philippine 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 Government of the Philippine Islands 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 Acts of Congress, the laws of the Philippine Islands, and this concessionary grant, shall be approved by the Secretary of War.

3. If the grantee makes breach of any of the conditions hereof, or of any of the obligations by it assumed hereunder, in respect to the construction of said railway, and shall allow the same to continue for upward of four months, after notice in writing from the Government of the Philippine Islands to the grantee, then, in such case, at any time thereafter, the Government of the Philippine Islands, at its option and at the cost and expense of the grantee, may 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 railway 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 railway and all franchises and property relating thereto, subject only to the first mortgage securing the first lien bonds respecting which the Government of the Philippine Islands may guarantee interest as herein provided, and shall be enforce- able by foreclosure in the same manner as if secured by a second mortgage. The remedy and relief given to the Government of the Philippine Islands by this paragraph shall be considered as an additional remedy and relief and shall not exclude the Government of the Philippine Islands from any remedy, relief, or right of action which said Government might otherwise have.

4. The Government of the Philippine Islands, 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 excercise the powers vested in the Government of the Philippine Islands 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 obliga

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tions of the grantee as contained in this franchise, and particularly in paragraphs one and two hereof.

(b) A guarantee from the Government of the Philippine Islands of a minimum annual gross business, of an amount to be fixed by the Governor-General, by and with the approval of the Secretary of War, and not to exceed one hundred thousand pesos: Provided, however, That no guarantee of this nature shall be executed for a period exceeding fifteen years from the date of the execution of the concessionary grant or contract.

(c) The right to make use of water power from the Bued and Agno Rivers, or their tributaries, on terms and conditions to be determined by the Governor-General, by and with the approval of the Secretary of War.

(d) The grantee may use the Benguet Road with all its bridges and other appurtenances, or any part thereof, for the construction of the said railway, on terms and conditions as to use of the same and the closing of the road or any portion thereof to traffic, either temporarily or permanently, to be determined by the Governor-General, by and with the approval of the Secretary of War.

SEC. 3. The Governor-General of the Philippine Islands is hereby authorized and directed to execute for and on behalf of the Government of the Philippine Islands the concessionary contract or grant set out in this Act, after its approval by the Secretary of War, with the best bidder for the same, after public advertisement for a period of not less than three months, and to receive on said behalf one of the triplicate copies thereof when the same are fully executed and when a bond properly executed, conditioned upon the signing and execution by the grantee of the concessionary contract or grant set out in this Act, which bond shall be in the penal sum of fifty thousand pesos, in a form and with sureties acceptable to the Secretary of War or the Governor-General, shall have been delivered to the Secretary of War or the Governor-General.

The Governor-General may reject any or all bids and may readvertise the concession as often as he deems the public interest requires such action: Provided, however, That the authority of the GovernorGeneral to execute this concessionary grant or contract shall cease on the expiration of three years from the date of the passage of this Act.

SEC. 4. The public good requiring the speedy enactment of this bill, the passage of the same is hereby expedited in accordance with section two of "An Act prescribing the order of procedure by the Commission in the enactment of laws," passed September twenty-sixth, nineteen hundred.

SEC. 5. This Act shall take effect on its passage, but the grant of the franchise shall not become operative unless and until the said concessionary grant or contract shall have been executed in the form and manner provided in this Act.

Enacted, October 2, 1907.

[No. 1736.]

AN ACT Appropriating the sum of one hundred thousand pesos, for the purpose of establishing a reimbursable fund for the promotion of agricultural pursuits upon certain haciendas and parcels of land, commonly known as Friar lands," and for the extension of the cultivated area thereof.

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By authority of the United States, be it enacted by the Philippine Commission, that:

SECTION 1. There is hereby appropriated out of any funds in the Insular Treasury not otherwise appropriated, the sum of one hundred thousand pesos, for the purpose of establishing a reimbursable fund, under the direction and control of the Director of Lands except as hereinafter provided, which shall be known as the Friar Lands Loan Fund, and which shall be made available in accordance with the provisions hereinafter specified, for the making of mortgage loans upon growing crops and salable commodities manufactured therefrom, work animals, warehouses, mill houses and machinery, and other property both real and personal belonging to actual and bona fide cultivators of the so-called Friar Estates, for the encouragement of agricultural pursuits and the extension of the cultivated areas of the said estates.

SEC. 2. The Secretary of the Interior shall designate to the Director of Lands the maximum amount of the Friar Lands Loan Fund which may be loaned in accordance with the provisions of this Act within any given period of time, the rate of interest which such loans shall bear, the term within which the mortgages shall be redeemed, the estate or estates to which the provisions of this Act shall be extended, the kind or kinds of crops or salable commodities manufactured therefrom and the class or classes of buildings, animals or other property, both real and personal, which may become subject to mortgage as herein provided, the manner in which advances of loans shall be made and the maximum amount which shall be advanced for each hectare under cultivation: Provided, however, That in no case shall the maximum amount so advanced exceed one hundred pesos for each hectare cultivated by the mortgagor.

SEC. 3. The Director of Lands shall, under the direction and approval of the Secretary of the Interior, promulgate such regulations and issue such forms and instructions as may become necessary to secure the Government against loss and to carry out the purposes of this Act. He shall likewise cause to be kept a full and complete record of all transactions regarding loans and payments thereof, and shall keep such books and render such accounts approved by the Insular Auditor as may be necessary for the proper accounting for said fund, and loans made therefrom, together with interest on such loans.

SEC. 4. By and with the approval of the Secretary of the Interior the Director of Lands is hereby empowered, for and on behalf of the Government of the Philippine Islands, to make such loans as are authorized by this Act, and to execute as mortgagee, acting for and on behalf of the Government of the Philippine Islands, the necessity mortgages to carry out the purposes of this Act, and all mortgages executed under this Act shall be executed to the Director of Lands, mortgagee, acting for and on behalf of the Government of the Philippine Islands.

SEC. 5. For the purposes of this Act the Director of Lands shall be the trustee for all mortgagors for the purpose of disbursing amounts advanced in consideration of the mortgages, and shall have custody of all mortgages and other securities for the mortgage debts pending their final satisfaction and release. He shall approve or disapprove all applications for loans, either wholly or in part, and such approval or disapproval shall be final and conclusive: Provided, however, That the Secretary of the Interior shall endorse upon each mortgage his approval thereof, before said mortgage shall be considered as valid and effective.

SEC. 6. In case the mortgagors have failed or neglected to discharge the mortgages in accordance with the agreement therein specified, the Director of Lands shall, upon the maturity of the mortgage notes, proceed to the foreclosure of the mortgages in the manner provided by law. Whenever, in his opinion, the interests of the Insular Government are in jeopardy through the failure or neglect of the mortgagors properly to observe the conditions of the mortgage agreements, the Director of Lands shall likewise proceed to the foreclosure of all mortgages, or shall take such other action as may to him seem necessary in the premises.

SEC. 7. The actual and necessary expenses arising from the administration of the Friar Lands Loan Fund shall be advanced from the general appropriations made for the Bureau of Lands, and shall be reimbursed thereto from the interest and profits realized from the mortgage loans which may be made in accordance with the provisions of this Act.

SEC. 8. Upon the repayment and satisfaction of all mortgage debts the principal of the loans shall be reimbursed to the Friar Lands Loan Fund as established by section one of this Act, and all net profits from said loans shall likewise accrue to and become a part of said fund, and may be available for any or all of the purposes for which said fund may be used.

SEC. 9. The public good requiring the speedy enactment of this bill, the passage of the same is hereby expedited in accordance with section two of "An Act prescribing the order of procedure by the Commission in the enactment of laws," passed September twentysixth, nineteen hundred.

SEC. 10. This Act shall take effect on its passage.
Enacted, October 2, 1907.

[No. 1737.]

AN ACT To amend section one of Act Numbered Fourteen hundred and eleven, entitled "An Act for the purpose of maintaining the parity of the Philippine currency in accordance with the provisions of sections one and six of the Act of Congress approved March second, nineteen hundred and three, by prohibiting the exportation from the Philippine Islands of Philippine silver coins, and for other purposes," by providing that the prohibition therein contained shall not apply to sums of twenty-five pesos or less of the new coins authorized by Act Numbered Fifteen hundred and sixty-four and carried by passengers leaving the Philippine Islands.

By authority of the United States, be it enacted by the Philippine Commission, that:

SECTION 1. Section one of Act Numbered Fourteen hundred and eleven, entitled "An Act for the purpose of maintaining the parity of

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