By authority of the United States, be it enacted by the Philippine Commission, that:
Section 1. The lands commonly known as the San Lazaro estate, in the city of Manila, which are under the control and administration of the Insular Government, by virtue of Act Numbered Seventeen hundred and twenty-four of the Philippine Commission, confirming and ratifying the agreement made between the Secretary of War of the United States of North America, representing the Government of the Philippine Islands, and the Archbishop of Manila, representing the Roman Catholic Church, dated the eighth of June, nineteen hundred and seven, are hereby set aside to be sold, either at public auction or by private sale, as hereinafter provided.
Section 2. Within nine months from the date of the passage of this Act each of the present occupants or tenants shall be entitled to purchase a lot, or any of the lots of lands occupied by him, the area whereof shall not be in excess of fifteen hundred square meters if it is for a residence or six thousand square meters if for other purposes at a price to be fixed by the Director of Lands, not more than the valuation at which they are now assessed by the Collector of Internal Revenue, payable in semiannual installments within a period of not more than fifteen years if for a residences and not more than five years if for other purposes: Provided, That the purchaser who shall have selected the period of fifteen years in which to pay for the lot purchased by him for residence purposes shall, after the first ten years, be compelled to pay the land tax on said lot, the provisions of section five of this Act to the contrary notwithstanding.
Section 3. Any lots or parcels not sold in accordance with the last preceding section shall be sold at public auction at a price not less than their assessed value and payment may be made on cash terms or in installments which shall in no case exceed one year. The purchaser shall be obliged to respect any contract of lease that the Director of Lands may have made prior thereto with respect to the lot sold.
Section 4. Until complete payment of the purchase price of each lot or parcel sold, deferred payments shall bear interest at the rate of six per centum per annum.
Section 5. The title to any lot under the provisions of this Act shall not be deemed to be conveyed until the purchaser shall have fully paid all installments on the purchase price and interest thereon, and any scale or encumbrance thereof shall be null and void as against the Government of the Philippine Islands and shall be in all respects subordinate to its prior claim.
Section 6. In the event of the death of a purchaser prior to the complete payment of the price of the parcel or lot purchased, his heirs or successors shall succeed in all his rights and obligations. In case a purchaser shall have conveyed or sold to another his interest in the lot or parcel purchased by him before complete payment thereof, such person shall succeed him in all his rights upon presenting his assignment to the Director of Lands for registration.
Section 7. In the event that a purchaser is delinquent in the payment of two or more semiannual installments, the Director of Lands, in order to protect the Government from loss, may bring suit for the recovery of the installments and interest due, or for the total amount of the purchase price unpaid, with interest thereon, and to enforce the lien of the Government against the land by selling the same in the manner provided by Act Numbered One hundred and ninety for the foreclosure of mortgages. In the event of such sale the purchaser at such sale shall acquire a good and indefeasible title. The proceeds of sale shall be applied to the payment of the costs of court and of all installments due or to become due on such land, and the surplus, if any, shall be returned to the original purchaser or his representative.
Section 8. Within a period of two months from and after the passage of this Act, the Director of Lands shall prepare regulations, subject to the approval of the Secretary of the Interior, prescribing the form and manner of effecting the sale at public auction of the lots not sold to occupants or tenants, and all such rules as he may deem necessary for the strict compliance with the provisions of this Act.
Section 9. The Director of Lands, or any other person who, through any circumstance, may be substituted for him in the Bureau or Department which may hereafter intervene in the administration of said lands, is hereby authorized: To make the sales prescribed by this Act; to receive full or part payment for any parcel or lot sold; to grant acquittances, and to sign, on the behalf of the Government of the Philippine Islands, with the approval of the Secretary of the Interior, the proper title deeds in favor of the purchasers who have completely paid the purchase price.
Section 10. All sums collected by virtue of this Act shall constitute a special fund set aside exclusively for the care and welfare of lepers in the Philippine Islands, to be expended upon appropriation by the Philippine Legislature for the aforesaid purpose.