Royal Order of August 6, 1875

In view of the reasons submitted to me by the colonial minister, and having heard the opinion of the full council of state in full on the propriety of issuing the general bases for the legislation for railways in the Philippines, I hereby decree the following:

CHAPTER I.
CLASSIFICATION OF RAILWAYS.

ARTICLE 1. The railways of the Philippine Islands shall be classified as lines of general service and lines of private interest.

ART. 2. Until there shall be formed and approved a plan of the railway lines of general interest for said Islands, the Government shall decide the class to which each line whose concession may be requested shall belong, in view of its importance and the public and private interests which its construction may affect.

ART. 3. All the railway lines of general service are hereby declared to be works of public utility for the application of the privileges which the provisions in force grant to those which have this character. Lines of private interest must first be declared of public utility in order to enjoy said privileges.

CHAPTER II.
THE CONCESSION OR AUTHORIZATION TO CONSTRUCT AND OPERATE RAILWAYS.

ART. 4. The construction and operation of railway lines of general service may be performed by the Government, and in its default by private persons or companies. Lines of private interest shall always be constructed and operated by their owners or concessioners with the intervention of the agents of the Government specified in the regulations.

ART. 5. The construction of a line can not be commenced, whether built with the funds of the State or with a subvention of State or local funds, without its plan being approved and without first securing royal permission or concession, until by means of a public auction. Lines for which no subsidy whatsoever is requested shall be granted by the Government after the proper proceedings for the declaration of public utility, if it should be asked for, and also permission to cross other lines and channels or lands of public ownership crossed by the said lines. The lines for the building of which such declaration or permission is not requested shall be granted by the governor general, reporting the same to the Government.

ART. 6. The construction of lines of general interest may be aided by the State or with local funds:

1.By giving to the concessioner part of the works already constructed.
2. By paying at fixed periods a part of the capital invested, recognizing as the limit thereof the approved estimate.
3. By granting him the ownership of lands of the State adjoining or nearest to the line which may be disposed of, and
4. By granting the privileges and exemptions prescribed in Chapter IV. After the plans of each line or section have been approved, in view of proceedings instituted in the Philippines, and after hearing the council of state, the Government shall determine the maximum amount of the subsidy or subsidies with. which its construction should be aided, and the periods of the payments thereof.

ART. 7. The concessions for lines subsidized by the State or with local funds shall be granted for the maximum period of ninetynine years. Lines not subsidized shall be granted in perpetuity or temporarily, as may be considered equitable in each case.

ART. 8. After the subvention of a line or section has been determined, the concession thereof shall be offered at public auction, giving at least three months' notice; the object of the bidding being the capital to be paid to the concessioner, and if he should renounce it the object of the bidding shall be the lands to be granted to him, and if he should also renounce these lands the object of the bidding shall be the time of the duration of the concession and the usufruct of the road by the concessioner. The sale shall be awarded by the Government to the highest bidder, who shall be obliged to pay the cost of the approved plans to those who may have prepared them, the price of which shall be determined before the sale.

ART. 9. In order to take part in the public sale it is necessary to prove that there has been deposited at the place mentioned in the notice of sale, as a guaranty of the proposals which may be presented, 2 per cent in coin of the total value of the railway, according to the approved estimate.

ART. 10. The concessions which it is proper for the Government to grant shall be granted by a royal order or by a royal decree, according to their importance.- No concession shall be granted until it is first proven that there has been deposited in the place designated 5 per cent in coin of the estimated value of the works, or its equivalent at the quoted rate in bonds of the State debt, if the work should be subsidized, and only 2 per cent should it not be. Should the concessioner allow four months to elapse without making this deposit, the granting of the concession shall be declared null with the loss of' the bond given, and a new sale shall take place if, the lines were of those granted at a public auction.

ART. 11. The deposit referred to in the foregoing article may be withdrawn by the concessioners as they prove by the certificates of the inspecting engineer' that they have performed sufficient work, estimated according to the prices of the approved estimate, in order to pay their cost, the works of the railway remaining specially mortgaged in place of that part of the guaranty that may have been returned.

ART. 12. Upon the expiration of the term of the concession the State shall take possession of the line, with all its rolling stock and all its dependencies, entering into full ownership and the complete enjoyment of the right of its operation.

CHAPTER III.
FORMALITIES TO BE OBSERVED IN REQUESTING AUTHORIZATION OR CONCESSION.

ART. 13. When it is considered proper to build a railway line with public funds, the Government shall order a study thereof made, and the governor general shall forward the complete plan of the same, prepared in accordance with the forms in force in the Peninsula, with a report in which shall be heard the council of the administration, the Economic Society of Friends of the Country, the authorities, and the boards of agriculture, industry, and commerce of the Provinces that the line crosses, the general inspection and the consulting board of public' works, the officers of the treasuries with whose funds the works must be paid, and the other corporations, official bodies, and individuals which in the judgment of the governor general can advise the Government with reference to the utility of the project and the direction of its line. This investigation shall not be necessary with regard to the lines which are declared to be of general service in the plan mentioned in Articles 2 and 40, but shall be made for all of them at one time after said plan has been formed.

ART. 14. Individuals or companies who desire the concession of a line shall address their petitions to the governor general, accompanied with a preliminary plan thereof, prepared according to approved forms'; but the investigation mentioned in the foregoing article must be made by said authority should they request that the line be classified as of general service or desire a subsidy or exemption of duties or privilege of any kind whatsoever, or the declaration of public utility, and when the construction should in any way affect the public domain. The public sale of subsidized lines shall be made with the purpose of constructing the works according to the final or preliminary plans approved by the Government.

ART. 15. The definite plans of the lines whose concession appertains to the Government shall be presented by the concessioners to the governor general (which may be done in sections), who shall forward it for superior approval, with the reports of the general inspection and the consulting board of public works before proceeding with their construction; but the governor general may authorize the beginning of said sections if from said reports it appears that neither the line nor the technical conditions of the preliminary plan and of the works have not been materially departed from, subject always to the definite approval of the Government.

CHAPTER IV.
PRIVILEGES AND GENERAL EXEMPTIONS GRANTED TO CONCESSIONERS.

ART. 16. Foreign capital employed in the construction of railways and loans for this purpose remain under the safeguard of the State and are exempt from reprisals and confiscations or embargoes by reason of war.

ART. 17. The following shall be granted to the concessioners of lines of general service:

1.The public lands which the line and its dependencies may have to occupy.
2.The rights which the inhabitants of the districts through which the line passes have to cut timber, to pasturage, and other rights, shall be enjoyed by the employees and laborers of the companies, and shall be used for the care of the draft animals employed on the works.
3.The right to open quarries, gather loose stone, construct lime, chalk, and brick kilns, to deposit material and establish workshops on lands adjoining the lines. If these be public lands the right shall be enjoyed, after giving due notice to the local authority; but if they should be private property it can not be used without first having advised the owner or his representative through said authority, and having formally bound themselves to indemnify the losses and damages that may be caused.
4.The exclusive right to receive, during the term of the concession and according to the schedule of rates approved, the passage and transportation charges, without prejudice to those which may belong to other companies.
5.The remission, during construction and for ten years afterwatds, of the duties fixed in the customs tariff, the lighthouse dues, bar duties, bridge tolls and ferriage, which prime material, manufactured effects, instruments, utensils, machinery, cars, timber, coke, and everything which constitutes the stationary and rolling stock which may be imported, and which is applied exclusively to the construction and operation of the railway for which concession has been granted. The Government shall determine, in a special provision, the manner in which the concessioners shall enjoy these franchises during the construction, and the manner of utilizing them during the first ten years, taking into account that this right may have begun at different times for each section of the line belonging to the same concessioner or company.
6.The exemption from the mortgage charges due on account of the transfers of property made by virtue of the law of eminent domain.
7.The power of utilizing for the construction of railways the labor of the "polistas" when they are not needed for communal and provincial works, paying into the local funds the price of their labors at the current prices in each jurisdiction.
8.The advantages granted to the agricultural industry by royal order of February 16, 1851, relating to the introduction of Chinese colonists, and the analogous privilege granted to the mining industry by the royal decree of May 14, 1867, which concession can be utilized both for the construction and operation of railway lines of which they are the concessioners, as also for the cultivation and colonization of the lands which form part of the subsidy of said lines. The Government may grant all or part of these privileges and exemptions to the lines of private interest which in view of their importance deserve the same.

CHAPTER V.
FORFEITURE OF CONCESSIONS.

ART. 18. Railway concessions shall be forfeited if the works are not commenced, or if the road or sections into which it is divided are not finished within the period prescribed in the concessions, except in cases of force majeure. When such case should occur, and it is duly proven, the terms fixed may be extended for the time absolutely necessary by the authority which may have granted the concession; but when this time has elapsed, the concession shall be forfeited if the work stipulated has not been performed.

ART. 19. The concession shall also be forfeited if the public service be wholly or partially interrupted through any fault of the concessioner in the case prescribed in article 36.

ART. 20. From the decisions declaring the forfeiture of railway concessions the concessioners may appeal by administrative litigation within the periods prescribed in the law, counted from the day on which they are notified. If they should not appeal within these periods, it shall be taken for granted that they consent to the forfeiture and they shall have no further remedy.

ART. 21. When the decisions declaring the forfeiture of concessions become final, the amount of the guaranty, which has been demanded of the concessioner, shall revert to the State, if the road should not be concluded and in operation; and if it should be concluded, this guaranty shall not become forfeited.

ART. 22. In the case mentioned in the foregoing article, the annulled concession shall be offered at public auction on the same conditions under which it was originally granted.

ART. 23. The basis for this auction shall be its value, according to the appraisement made by the agents of the Government, with the intervention of the former concessioner, the plans made, the lands acquired, the works performed, the construction and operating material acquired, and the tools, utensils, and apparatus for the existing work, with a deduction of that which was paid to said concessioners on account of the aid or subsidy in coin, bonds, works, lands, and other things.

ART. 24. If, on holding the sale, no bidder should present himself within the period fixed, new sales shall be held on successive bases of two-thirds, the half and the third part of the basis mentioned in the foregoing article. ART. 25. If neither in this last sale bidders should appear, the Government can finish and operate the line of the forfeited concession or grant it to a new concessioner under the conditions deemed proper. ART. 26. If the new award of a line has taken place in any of the sales mentioned in articles 23 and 24, the amount of the guaranty or the part thereof which the concessioner may have withdrawn, according to article 11, if proper, according to article 21, as well as the expenses of the appraisement and sale, shall be deducted from the proceeds of the latter, delivering the balance to the bankrupt concessioner or to his legal representatives or heirs. The guaranty which the new concessioner must present shall be only 5 per cent of the value of that which is lacking for the complete conclusion of the road, according to the plan approved.


CHAPTER VI.
TECHNICAL CONDITIONS TO BE OBSERVED IN THE PLANS AND CONSTRUCTION OF THE LINES.

ART. 27. The railways of general service in the Philippines shall be constructed subject to the following conditions:

1.The gauge of the line, or the distance between the inside borders of the rails, shall be the same for all railways, and the Government shall fix said gauge on approving the first railway project, or before; in view of proceedings which the governor general of said islands shall be instructed to prepare immediately, taking into consideration the probable traffic and other requirements of the country, as well as the necessary economy with which the works should be constructed.
2.In the same document the distance between parallel tracks shall be determined, the minimum radius of the curves, the maximum gradients, the width of the roadbed, in cuts and fills for one and two tracks, and of the structural works both above and below the line or lines.
3.The railways may be constructed with one or with two tracks, or with a combination of both systems, without taking into account the greater number -demanded by the service in the stations. In the railways of private interest the technical conditions may be different and shall be fixed in each case as may be proper.

CHAPTER VII.
THE OPERATION OF RAILWAYS.

ART. 28. All railways shall have two distinct sources of revenue, that of passage and that of freight. The first shall consist of the payment to be made for the use of the railway, and the second of the charges to be paid for carrying persons, animals, and goods on the line.

ART. 29. The rates of both shall conform to those of the maximum tariffs which may be approved for each line on or before granting its concession.

ART. 30. In the regulations and instructions which may be drafted for the execution of this decree, and in the sheet of general conditions or the particular conditions of each concession, shall be expressed the gratuitous services or the reduced prices which the lines must offer, and the special rates for public service, considering among the first the transportation of the ordinary mails at the times fixed by the governor general of the islands, and among the second military and similar transportation.

ART. 31. No one can be forbidden to establish transportation companies over the lines of a concessioner if the latter is paid the schedule rates, and observing the police regulations for this kind of lines.
ART. 32. After the first five years of the operation of a railway have elapsed, and every five years thereafter, the Government may revise the maximum or legal schedules. If the Government believes that said rates may be reduced without prejudice to the interests of the concessioner, and the latter should not agree to the reduction, it may nevertheless reduce the same 10 per cent, after hearing the council of state, and guaranteeing to said concessioner the gross proceeds of the last year and the increase which had been obtained on an average during the past five years.

ART. 33. The concessioners may at any time reduce the rates of the legal schedules as they may consider proper, advising the governor general of the islands thereof. They may also, within the rates which result from the application of the basis of the legal rates in force, fix the schedules to be applied, and establish the combined, reduced, special, and differential rates that they desire, forwarding the same for the examination of the governor general, with the anticipation mentioned in the regulations. In every case the schedules shall be announced to the public in due time, and the changes which may be made in the same shall be posted in all the stations in full view, and shall be applied without any privilege or favor.

ART. 34. In all railways there shall be established a telegraph line for the exclusive service of the same. Upon the poles of this telegraph line the concessioners shall place the number of wires fixed in each concession for the telegraph service of the State, their construction and preservation being at the expense of the concessioners, and the service of the official and private correspondence at the expense of the State. Nevertheless, the Government and the concessioners may arrange that the officials of the State take charge of the telegraph service of the railway lines, or vice versa. The concessioners shall provide the Government with the places necessary for its telegraph stations, in the railway stations, wherever it may consider it convenient to have them, the establishment of said stations, as well as their maintenance, being for the account of the State. The Government may also make use of the apparatus of the railways in cases of recognized urgency or for the public interest.

ART. 35. Every concessioner is obliged to maintain the operation of his lines, or secure it by private contracts, and to combine its operations with those lines with which they join or with their own extensions.

ART. 36. When by fault of the concessioner the public service of the railway is wholly or partially interrupted, the governor general shall immediately take the necessary steps in order to temporarily provide for said service at the expense of the concessioner, making a report to the Government. Within a period of six months the concessioner must prove that he has sufficient means to continue its operation, having the right to grant the latter to another person or company after special authorization of the Government. If even by this means the service is not continued, the concession shall be forfeited, the provisions of article 19 and following of Chapter V of this decree being consequently observed.

ART. 37. The operation of the railways of the State shall be performed by the same, or by companies which contract for this service at public auction, as may be considered most convenient for the public interests.

ART. 38. In the general regulations issued or in each concession shall be determined the manner in which the Government shall exercise the intervention necessary in order to maintain the service of the railways in proper condition and that which corresponds to the commercial part of the company.

ART. 39. The regulations issued for the police of railways shall determine all that is necessary with regard to the preservation and security of said roads, of their works, material, and accessories, meanwhile observing the similar provisions in force in the Peninsula in so far as applicable to the Philippines.

CHAPTER VIII.
THE STUDY OF RAILWAY LINES.

ART. 40. The governor general of the Philippines shall order that the general inspection of public works form at once a general plan of the railway lines of general service of the Island of Luzon, including only such lines, the construction of which is considered most urgent, and taking into consideration that of the cart roads that is being prepared. Said plan, reported upon according to the provisions of article 13 of this decree, shall be forwarded for royal approval, and it shall be enlarged as may be convenient. Similar plans shall be prepared successively for the Island of Mindanao and other islands of the archipelago in proportion as the necessities of the case indicate the advisability of constructing therein this kind of lines. The Government, in view of said plan, shall order that a commission of engineers study the preliminary and definite plans of the lines of greater interest, following the order of their importance, so that according to the plans and estimates which may be approved, their construction may be commenced.

ART. 41. Provision shall be made in subsequent general estimates for the expenses -occasioned by these labors.

ART. 42. The Government and the governor general of the Philippines may authorize individuals or companies who request it, that they make studies of railways, as mentioned in article 14, without this permission bestowing any right, nor limiting in any manner the power which the Government possesses to grant similar authority to all who request it, reserving alone the right to be repaid the cost of the study, if they are approved when the line is granted in accordance with article 8.

CHAPTER IX.
COMPANIES FOR THE CONSTRUCTION AND OPERATION OF RAILWAYS.

ART. 43. The formation of associations, corporations, or companies with the object of building or operating railways shall be subject to the provisions of the Code of Commerce and other commercial laws of the Philippines for the different kinds of commercial associations which said code permits. In stock companies the capital may consist in mortgage obligations in the proportion which said law may prescribe, or which may be fixed by special provision. All associations or companies can also contract loans for the fulfillment of their corporate obligations, subject to the provisions of the aforementioned legislation or to that which may be enacted in the future. Both the obligations as well as the loans may be guaranteed with the proceeds of the operation of the line during the period of the concession, and must be redeemed within said period, unless the line has been granted in perpetuity, in which case it can also be mortgaged and the time for the repayment of the same may be indefinite.

ART. 44. The definite organization of the associations or companies can not take place until the concession of the line or lines which they propose to build and operate has been granted. The domicile of the companies must be at Madrid or Manila; but in the latter case they shall have a representative in Madrid near the Government.

ART. 45. The companies or associations constituted for the purpose of building or operating one or more lines can increase their sphere of action and extend it to other lines by competent authority, either by petitioning for their concession or acquiring them by purchase, fusion, or in any manner permitted by law, from those to whom they have already been granted.

ART. 46. They are also authorized to work directly or by contract with a third party the lands which they may have received as part of the subsidy which they enjoy.

ADDITIONAL ARTICLES.

1.Until the regulations and instructions are issued for the execution of this decree, and for the operation and police of the Philippine railway lines, there shall be observed the similar provisions in force in the Peninsula in so far as compatible and which are not opposed to the special legislation for those Islands.
2.The general provisions issued with reference to the Philippine railways are binding on all concessioners.

Given at the palace on August 6, 1875.
ALFONSO.

ADELARDO LOPEZ DE AYALA,
Colonial Secretary.
Boletin del Ministerio.