[ Act No. 667, March 06, 1903 ]

AN ACT PRESCRIBING THE METHOD OF APPLYING TO GOVERNMENTS OF MUNICIPALITIES, EXCEPT THE CITY OF MANILA, AND OF PROVINCES FOR FRANCHISES TO CONSTRUCT AND OPERATE STREET RAILWAY, ELECTRIC LIGHT AND POWER AND TELEPHONE LINES, THE CONDITIONS UPON WHICH THE SAME MAY BE GRANTED, CERTAIN POWERS OF THE GRANTEES OF SAID FRANCHISES AND OF GRANTEES OF SIMILAR FRANCHISES UNDER SPECIAL ACT OF THE COMMISSION, AND FOR OTHER PURPOSES.

By authority of the United States, be it enacted by the Philippine Commission, that:SECTION 1. Whenever any person or corporation authorized to do such business in the Philippine Islands shall desire a franchise to construct and maintain an electric street railway, a telephone plant and line, or an electric light or power plant and line, he shall file a formal application with the council of the municipality in which or through which he desires to construct and maintain his line, stating the general route of his proposed line, whether on public streets, or roads, or on private property, the approximate length of the line, the time within which he will begin its construction, the time within which he will complete it, the character of the materials which he expects to use, and the rates per passenger on the electric street railway line, and per kilo of freight, if he intends to carry freight thereon, the rate per month for the use of telephones, and the rate per month for electric light, by lamp of specified standard candle-power, and by amount of electricity consumed where a meter is used; it shall also state the rate which he is willing to pay into the provincial treasury for the franchise.SEC. 2. The municipal council is authorized to accept the proposition of the petitioner upon certain fixed conditions, as follows, to wit:First. That the franchise shall not exceed thirty-five years.in duration and shall not be exclusive.Second. That not less than one-half of one per centum of the gross earnings shall be paid into the provincial treasury.Third. That the rates to be charged shall always be subject to regulation by Act of the Philippine Commission or the legislative body of the Islands.Fourth. That failure to construct, within the time limited shall be ground for forfeiture at the option of the municipalities and provinces through which the lines run, with the approval of the Civil Governor.Fifth. That in case of the construction of an electric railway the person or company receiving the franchise shall be under continuing obligation to keep the highway in repair between rails and eighteen inches on each side of the track.Sixth. That in electric light or power franchises there shall always be a term requiring the placing of poles, the insulation of wires, and their stringing on poles, in such a manner as to afford every reasonable precaution against injury to the public or danger of fire, and to cause no unnecessary injury or inconvenience to private owners. The grantee of the franchise, in the maintenance and operation of the line, shall be constantly subject to reasonable regulations for this purpose by the municipal council and the provincial board.Seventh. That no franchise shall become operative until the same shall have been approved, first by the municipal council, secondly by the provincial board, and finally by the Civil Governor.Eighth. That failure to build and maintain any part of the lines granted, without the consent of the municipal council and the provincial board, shall, if approved by the Civil Governor, constitute a ground for forfeiture, at the option of the municipality.Ninth. That no franchise shall be granted until after the applicant shall have deposited, in cash or in negotiable bonds of the United States or other securities to be approved by the Civil Governor, in the Insular Treasury, a sum not less than ten per cent of five thousand dollars in case of telephone or electric light or power lines, and not less than ten per cent of fifteen thousand dollars in case of electric street railways, as an earnest of the good faith of the application. Within six months after the franchise shall be granted the ninety per cent of the sums above stated shall be deposited, and the whole deposit thus made shall be retained in the Insular Treasury as security for the completion of the work to be done by the applicant within the time specified in the franchise. The amount of the deposit, either as an earnest of the good faith of the application or as security for the completion of the work, may be increased by the municipal council, the provincial board, or the Civil Governor over and above the sums in this section mentioned. In case the ninety per cent of the whole deposit is not made within six months after the Franchise is granted, the ten per cent already deposited shall he forfeited to the province or provinces in which the road was to be constructed. In case, after the deposit of the ninety per cent of the sum or sums above mentioned, the work to be done under the Franchise is not begun within the time specified or is not completed within the time specified in the franchise, the whole deposit may be forfeited, at the option of the municipality, provincial board, and the Civil Governor, to the province as liquidated damages for the breach of the contract involved in the acceptance of the Franchise: Provided, however, That provision may be made in the Franchise by which, after work shall be begun, the money or funds deposited may be delivered to the grantee of the franchise as the work progresses, monthly or quarterly, in the proportion which the work done bears to the work to be done.Tenth. That no franchise shall be operative for any purpose until the same shall he accepted in writing by the grantee thereof and the acceptance filed in the office of the Secretary of Commerce and Police. But this provision shall not be used as a defense by the grantee where he has begun to exercise the privileges conferred by the Franchise and has incurred liability by forfeiture or otherwise to the municipality or province.SEC. 3. In addition to the conditions above required as part of every granting of a franchise, the municipality or the provincial may stipulate for such additional conditions, in favor of the public, as may seem to it wise.SEC. 4. In cases where, in the opinion of the Civil Governor, such a course would result in benefit to the public, he may require that the letting of a franchise in any municipality or province shall be put up for public bid, after due advertisement to be prescribed by him; but in cases where, in his judgment, there is likely to be but one bidder, and no benefit would accrue to the public by requiring the expense and delay of advertising, he is authorized to dispense with the same upon petition from the municipality and provincial board.SEC. 5. Every Franchise granted hereunder shall contain a provision that it is granted subject to the power of Congress to alter, modify, or repeal the same in accordance with the Act of Congress entitled "An Act temporarily to provide for the administration of the affairs of civil government in the Philippine Islands, and for other purposes," approved July first, nineteen hundred and two.SEC. 6. There shall be no power on the part of the municipal council or the provincial board in the granting of franchises to contract for the exemption from taxation of the property of the  grantee of the franchise; such exemption can only be granted by special Act of the Commission.SEC. 7. The books of the person or corporation maintaining and operating a line of street railway, telephone, or electric light or power plant under this law, shall always be open to the inspection of the provincial treasurer or a deputy designated by him for the purpose, and it shall be the duty of the grantee of the franchise operating under the same, to submit to the provincial treasurer quarterly reports showing the gross receipts and the net receipts for the quarter past and the general condition of the business. The percentage of gross receipts, which by the terms of the franchise are to be paid by the grantee thereof, shall he paid in quarterly installments, and shall be paid to the provincial treasurer for deposit in the provincial treasury. One-half thereof shall be retained for provincial purposes, and the other half shall be distributed to the municipalities in which the line of railway, telephone line, or electric light or power line is constructed; and where the line runs through more than one municipality, the one-half of the receipts shall be distributed between the two or more municipalities in proportion to the mileage of the line in each.SEC. 8. The quarterly reports of the grantee of the franchise, required in the preceding section, shall be in duplicate, and the provincial treasurer shall forward one of them to the Insular Auditor, who shall keep the same on file.SEC. 9. Franchises may be granted for the operation of an electric street railway line, electric light or power line, or electric telephone line, in two or more provinces; but in such cases the grant shall be made not only by the municipalities through which the line runs, but also by the action oi! the provincial boards of the provinces in which the proposed lines are to he, and in such cases the distribution of the percentage of gross receipts for the franchise shall be between the provinces in proportion to the mileage therein.SEC. 10. The owner of an electric street railway, electric telephone line, or an electric light or power line constructed under this law, or by authority of a special Act of the Commission, shall have the power to issue a mortgage upon the franchise, plant, equipment, and property owned and operated in connection with the franchise, which shall constitute a first lien on the entire property, movable and immovable, then in possession of or subsequently acquired by the owner of the franchise and used by him in operation under the franchise. Such mortgage shall not prevent the sale of movables or personal property of the owner when the same shall have ceased to be useful for the maintenance and operation of the line free from the lien, but the lien shall attach to all property purchased and substituted in the proper equipment of the line. In order that the mortgage shall constitute a prior lien as against purchasers of immovables, the mortgage having been duly executed in accordance with law, shall be filed with the registrar or registrars of land in the province or provinces in which the line is. When the mortgage is foreclosed and the property sold thereunder in accordance with its terms, as a whole, the sale shall include the franchise, which may pass by assignment to the assignee and be enjoyed by him, if he is otherwise competent to do such business in the Philippine Islands, in accordance with its terms. The mortgage may be issued to secure one loan or to secure a number of negotiable bonds, the owners of which shall be represented by one or more trustees, who shall be the grantee or grantees of the mortgage.SEC. 11. The franchise, when granted, shall be spread upon the minutes of the municipal council, upon the minutes of the provincial board, and a copy of the same, certified by the provincial secretary, shall be forwarded to the Secretary of Commerce and Police, by him to be filed in the records of the Executive Bureau.SEC. 12. Neither the provincial board nor the council of any municipality shall have power to confer the right to use water power derived from any of the streams in such province or municipality in connection with the franchise, the granting of which is herein provided for. Water-power rights are hereby declared to be grantable only by and in accordance with Acts of the Commission.SEC. 13. The grantee of a franchise for an electric street railway, electric light or power or telephone line, granted hereunder, or wider any special Act of the Commission, shall have the power of condemning private property reasonably needed for the construction of its line, to be exercised by a special proceeding begun in the proper Court of First Instance, with such auxiliary proceedings as may be necessary in the Court of Land Registration according to law; but such power of eminent domain shall only be exercised after approval by the Civil Governor, to be given before the judicial proceedings are begun.SEC. 14. Nothing herein contained, except the language of sections ten and thirteen, shall have application to electric street railways, electric light or power or telephone lines, or to the grantees of franchise for the same, in the city of Manila.SEC. 15. Nothing herein contained shall prevent the Commission from granting a special franchise to erect and maintain an electric street railway, or electric light or power or telephone line when, in the opinion of the Commission, the franchise applied for shall involve the construction of a line so long and important as to justify the exercise of insular authority in granting the franchise without requiring action by municipal and provincial governments to give it legality and force.SEC. 16. This Act shall take effect on its passage.Enacted, March 6, 1903.

Source: Supreme Court E-Library