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Republic Act No. 3601
• Anact creating theNational IrrigationAdministration (NIA) signed into lawby thenPresidentDiosdadoMacapagalon June22,1963.PresidentialDecreeNos.552and1701amendedcertainsectionofR.A.3601.
Who is the Irrigators’ Association?
• Thesearegroupoffarmerswhoareidentifiedasdirectbeneficiariesofanirrigationproject/system,formedintoIrrigatorsAssociationdulyregisteredwiththeSecuritiesandExchangeCommission.
Legal Basis of Equity Participation
PD 552 – “AMENDING CERTAIN SECTIONS OF REPUBLIC ACT 3601 ENTITLED AN ACTCREATING THE NATIONAL IRRIGATION ADMINISTRATION”
P.D.552,Section1(b.1)
“Tochargeandcollectfromthebeneficiariesofthewaterfromallirrigationsystemsconstructedbyorunderitsadministration,suchfeesoradministrationchargesasmaybenecessarytocoverthecostofoperation,maintenanceandinsurance,andtore-coverthecostofconstructionwithinareasonableperiodoftimetotheextentconsis-tentwithgovernmentpolicy;torecoverfundsorportionsthereofexpendedfortheconstructionand/orrehabilitationofcommunal irrigationsystemswhich fundsshallaccruetoaspecialfundforirrigationdevelopmentunderSection2hereof”.
NIA Board Resolution No. 2547 – 74 dated December 23, 1974 approving the Proposed Policy and Implementing Guidelines in the Development of Irrigation Projects.
ItemI.2–“torecoverfromthebeneficiariesofallirrigationsystems,thefullcostofconstructionorportionthereofwithinareasonableperiodof
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timeandtoextentconsistentwithgovernmentpolicy,inadditiontothecollec-tionofirrigationfeescoveringinsuranceandexpensesfortheoperationsandmaintenanceofthesystembytheNIAorirrigationchargesformanagementandadministration”.
Item III-B2’“Theestimateof repaymentofconstructioncost shallbe inaccordancewiththefollowing:
(a) Tenpercent(10%)ofthetotaldirectcostshallbefree;(b) Seventypercent(70%)ofthetotalcostshallberepaidwithoutinterest;(c) Twentypercent(20%)ofthetotalcostshallberepaidwithinterestat6%per annum;and(d) Periodofrepaymentshallnotbelessthantwenty-fiveyearsforgravityirrigation
projects”.
ThisNIABoardResolutionwascircularizedthruMC#10S.1975.
MC # 59 S 1977 – DEFINING THE PARTICIPATION OF IRRIGATORS ASSOCIATIONS IN FINANCING THE CONSTRUCTION OF GRAVITY COMMUNAL IRRIGATION SYSTEMS AND AMENDING MC # 18 s 1977.
ItemA–EquityParticipationbytheIrrigatorsAssociations
TheIrrigatorsAssociationforwhomtheNIAconstructsagravitycommunalirrigationsystemshallbearatleasttenpercent(10%)ofthetotaldirectcostofconstruct-ingthesystem.Thisamount,calledequityparticipation,maybeintheformofmoney,labor,rightofway,sup-pliesandmaterials.
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NIA Board Resolution No. 2584 – 75 recommendedtotheNationalEconomic
and Development Authority, which issuedNEDA Resolution No. 20 S 1978 dated August 24,
1978 and duly approved by His Excellency President Ferdi-nandE.MarcosonOctober4, 1978. Thiswas circularizedthruMCNo.62S1978entitled,“NationalPolicyonRepay-mentofConstructionCostofIrrigationFacilities”.
Item A – Equity Participation by the Irrigators As-sociation,“theIrrigatorsAssociationforwhomtheNIAconstructsagravitycommunalirrigationsystem
shallbearduringtheconstructionatleasttenpercent(10%)ofDIRECTCOST(netofcostofroads,etc,ifany)orP300.00perhectareofareatobeirrigatedwhicheverislower. This amount (minimumrequirement, theassociationmay contributemore ifdesired),whichisknownasequityparticipationcouldbeintheformofmoney,labor,right-of-way, supplies andmaterials, etc. Overhead, including supervision and sur-chargeshallnotexceed10%ofESTIMATEDDIRECTCOST.Thistypeofexpenseshallnotbechargedtotheassociation.
ItemB–Theprovisionsonrecoveryofcostandinterestshallapplytoallcommunalirrigationprojects/systemsconstructedbytheNIAwhich issubject torepaymentofcostunderPD552.”
MC # 15 S 1981 – EQUITY OR COUNTERPART PARTICIPATION OF IRRIGATORS ASSOCIA-TIONS IN COMMUNAL IRRIGATION PROJECTS. “For the purpose of supplementing pre-vious memoranda on the above subject the following guidelines are hereby issued:
1. Theterm“equityparticipation”isthesameas“counterpartparticipation”.Asthelatterisusuallymoreunderstandabletothefarmers,itshouldhenceforthbeusedinlieuoftheformer.
2. Ingeneral,“counterpart”or“equityparticipation”bytheassociationshallbeatleast10%ofthecostoflabor,materials,andequipmentuseontheprojectandmaybeanyoracombinationofthefollowing:
a. ThecostoflaboratNIAratesfurnishedbytheassociationwithoutpaymentfromtheNIA.Thelabormaybeforcanals,structures,farmditches,drainageditches,
surveys,temporaryfieldoffice,bodegas,takingandrecordinggage,read-ings,securityandguardingservices,andsimilarworksdonebytheAssociationontheproject.
b.ThecostofmaterialsandsuppliesusedintheprojectfurnishedbytheAssociationwithoutpaymentfromNIA.
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c. Theright-of-wayofcanals,diversionworks,structuresoraccessroadsfur-nished by the Associationwithout payment fromNIAwithin the serviceareaonlandsownedbythebeneficiariesoftheproject.
d. Anyright-of-wayacquiredbytheAssociationonlandsoutsidetheserviceareaoftheprojectwithoutpaymentfromNIA.
e. CashcontributedbytheAssociationtotheconstruction.
MC # 29 S 1984 – GUIDELINES AND PROCEDURES IN THE RECORDING AND CONTROL OF EQUITY CONTRIBUTION OF IRRIGATORS ASSOCIATIONS FOR THE CONSTRUCTION OF COMMUNAL IRRIGATION PROJECTS.
MC # 27 S 1991 – COST RECOVERY SCHEMES AND OTHER PERTINENT GUIDELINES FOR COMMUNAL IRRIGATION PROJECTS.
SCHEME 1 – THIRTY PERCENT (30%) EQUITY PARTICIPATION
This arrangement could be availedof by the Irrigators Associationsinplaceoftheregularamortiza-tionofthechargeablecostun-derthefollowingconditions:
a. Thatthe IA iswillingandcapable to raise within theconstruction/rehabilitationperioditsequityparticipationwhichisdefinedastheamountequivalent to THIRTY PERCENT
(30%)ofthechargeablecost.
b.ThatthemoneyvalueoftheIAeq-uityparticipationmaycomefromthefol-lowing:
1. Thecostof laborvaluedatNIArates fur-nishedbytheIAwithoutpaymentfromNIA.The labormay be for the constructionof diversion works, canals, farmditches, drainage ditches,
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temporaryfieldoffice,bodegas,conductof surveys, taking and recording gage,
readings, security and guarding services,andsimilarworksdonebytheIAontheproject.
2. Thecostofmaterialsand supplies furnishedby theIA,usedintheprojectandwithoutpaymentfromNIA.
3.The costof right-of-way for canals, diversionworks,structures, or access roads negotiated and acquired
bytheIAeitherwithinoroutsidetheserviceareaoftheprojectandwithoutpaymentfromNIA.
4. CashcontributedbytheIrrigatorsAssociations,
c.IftherequiredTHIRTYPERCENT(30%)EQUITYPARTICIPATIONisnotmetduringtheconstruction/rehabilitationperiod,theIAshallbegivengraceperiodofonecroppingseasonafterproject completionand turnover to raise the remainingamount.Aftertheonecroppingseasongraceperiod,whateverbetheremainingamountwhichtheIAwasnotabletosettleshallbepaidbythesameimmediatelywithinthesucceedingseason.However,thisunpaidbalanceoftheIAequityparticipationshallbesubjectedtoamaximuminterestofONEPERCENT(1%)PERMONTH.IftheIAwasnotabletoputupcompletelytherequiredequityparticipationafterthetwo(2)croppingseasons,SchemeIIshallbeadopted–theIAwillamortizetheremainingbalanceofconstruc-tion/rehabilitationcostwhichisnetofthetotalchargeablecostandthetotalequitywhichtheIAwasabletoraise(AmounttobeAmortized=totalchargeablecost–totalequityraised).
SCHEME II – AMORTIZATION OF THE CHARGEABLE COST
This is the long-term arrangement on costamortization which has been availed of bymostofourcommunalIAs.Underthisarrangement, the IA is required to put upanequityparticipationofNOT LESSTHANTENPERCENT(10%)ofthechargeablecost
duringtheconstruction/rehabilitationperiod of the project and amortizethe remaining amount (withoutinterest) within an agreed period,
the duration of whichshallnotexceedfifty(50)years.Theequityparticipa-
tion of the IA shall consists ofthemoneyvalueoftheitemsdefined
underSchemeI.bhereof.
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OTHER PERTINENT GUIDELINES
• IAWishingtoConvertfromSchemeIItoSchemeI
• TheIAshouldforwarditsintentionthroughaBoardResolutionaddressedtotheRe-gionalIrrigationManager,attentionthrutheDivisionManager,IrrigationManagementOffice(IMO);
• TheIABoardResolutionshallbeendorsedbytheDivisionManager,IMOtotheRIMattachingtheretoacurrentstatusofamortizationpaymentoftherequestingIAwhichshallbedulycertifiedbytheRegionalAccountant;
• TheequityparticipationoftheIAshallbeTHIRTYPERCENT(30%)oftheremainingba-lanceoftheamortizableamountplusanybackaccounts,ifthereareany;and
• TheequityparticipationoftheIAshallbepayableincashandwithinamaximumperiodofsix(6)months,theeffectivityofwhichshallbereckonedfromthedate the IAhas received thenoticeof theRIMapproving the IArequest.Anyunpaidamountwithinthedesignatedperiodshallbesub-jected to a maximum interest ofONEPERCENT(1%)permonthandtobe settledby the IAwithin thenext sixmonths.
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MEMORANDUM OF AGREEMENTBY AND BETWEEN
THE NATIONAL IRRIGATION ADMINISTRATIONAND
_______________ IRRIGATORS’ ASSOCIATION, INC.
KNOW ALL MEN BY THESE PRESENTS:
Thisagreementexecutedandenteredintothis______dayof_______________20__in_____________.
THENATIONALIRRIGATIONADMINISTRATION,agovernment–ownedandcontrolledcor-porationcreatedunderRepublicAct3601,asamendedbyPresidentialDecreeNo.552withprincipalofficeatEDSA,Diliman,Quezoncity,representedhereinby_________________inhiscapacityas______________referredtoastheNIA:
AND
____________IRRIGATORS’ASSOCIATION,INC.,anassociationorganizedandregisteredwiththeSecuritiesandExchangeCommissionwithprincipalofficeat_____________________,represented in this agreement by ____________________ in his capacity as President,hereinreferredtoastheASSOCIATION.
WITNESSETH THAT:
WHEREAS, the Association has petitioned the NIA to construct/rehabilitate the__________ communal irrigation system, which shall irrigate lands situated at________________________.
WHEREAS,theconstructionoftheprojectintheareaisinaccordancewiththeirrigationdevelopmentoftheNIA;
NOWTHEREFORE,forandinconsiderationoftheforegoingpremisesandbyauthorityoftheprovisionsofRepublicAct3601asamendedbyPD552
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and1701,theGuidingPrinciplesandtheRulesandRegulationsoftheNIAwhichareincorporatedpartofthisagreement,thePartieshaveagreedandbythesepresentsdoherebyagreeasfollows;towit:
ON THE PART OF THENATIONAL IRRIGATION ADMINISTRATION
1. TheNIAshallbear thecostof investigationandsurvey,planpreparationandotherpre-constructionengineeringactivitiesfortheproject,includingthecostofthecom-munityorganizers.
2. TheNIAshallhavetherighttoenterprivatepropertyoftheAssociationinconnectionwiththeconstructionoftheproposedprojectandtheNIAoritsemployeesshallnotbeheldliablewhatsoevertodamageswhichtheAssociationmaysustainonaccountofsaidactivities,unlessthereisgrossnegligenceorwillfulactsdonebytheNIAoritsemployeestocausesuchdamages.
3. TheNIAshalllikewisebearthecostofconstructionofdiversionworksandappurte-nantstructures,thecanalsandotherirrigationstructuresincludingtheturn-outsoftheirrigationprojects.
4. The NIA shall render assistance to the said Association in the organization and/orstrengtheningtheIrrigatorsAssociation/cooperativeandshalltrainthebeneficiariesorthosepersonsdulyselectedandarequalifiedtoundertaketheoperation,mainte-nanceandmanagementoftheirrigationsystemuponitscompletionandturn-over.
5. TheNIAandtheAssociationshallconductmonthlycostreconciliationtodeterminetheactualchargeablecosttotheIrrigators’Associationandinordertofacilitateturn-overofthesystem.
ON THE PART OF THE IRRIGATORS ASSOCIATION
1. TheAssociationshallberesponsibleforsecuringandcomplyingwithallthe legalrequirementsrelatedtotheconstructionofthe irrigationsys-tem,suchaswaterpermit,legalfeesorchargesandothersimilarrequirements.
2. The Association shall acquire by legalmeans Right-of-Way of private propertiesaffected by the construction of the projectanditsappurtenances.
3. TheAssociationshallmakeavailabletotheNIAfor training all personswho shall beulti-matelyresponsiblefortheoperation,
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maintenanceandmanagementoftheirrigationsystems.
4. Upontheturn-overoftheirrigationsystem,theAssociationshallmaintainandadministerthesamein
accordancewiththeBy-LawsoftheAssociation.
5. TheAssociationshallformulatepoliciesandrulesandregulationsonoperationandmaintenancewithconcur-renceoftheNIA.
6. Thebeneficiariesshallspendforthecostofrepair,rehabilitationandimprovementoftheirrigationsystem.Providedthatmajorrepairorrehabilitationofdiversionfacilitiesandmajorstructuresmayuponrequestof theAssociationandundersuchtermsandconditionswhichbeembodied in thesupplementalagreementbetweenthePartiesherein,beundertakenbytheNIA.
7. TheAssociationisobligedtoabidebythetermsandconditionsasstipulatedintheagreementirrespectiveofwhetherornotthesetofofficerschangesfromtimetotime.
8. TheAssociationshallcontributeasitscounterparttotheconstructionoftheproject,cash,laborandmaterials,thetotalvalueofwhichisnotlessthanTENPERCENT(10%)ofthetotalchargeablecostoftheproject.
9. TheAssociationshallformulateitsEquityGenerationProgrambasedontheapprovedProgramofWorkoftheprojectusingtheEquityGenerationFormat,whichshallformpartofthisagreement.
10. TheAssociationshallamortizeforthefollowingchargeablecostincurredbytheNIAontheprojectsuchasexpendituresfor:a. Materialsb. Equipmentrentalc. FuelandOild. Right-of-WaypaidbyNIA,ifanye. LaboruptothelevelofConstructionForeman,Project-In-Charge,InstitutionalDe-
velopmentOfficerincludingTEV,andallowancesinconnectionwiththeproject.f. Otherexpendituresnotcoveredabovebutagreeduponbybothparties.
TheAssociationshallnothoweveramortizeforthefollowing;
a.Constructionofaccessroadorserviceroads b.Floodcontrolorprotectiondikesthatarenotpartofthediversionworksc.Powerengineeringfacilitiesd.Reforestationandothernon-irrigationrelatedfacilities.
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11. TheAssociationshallpaythesumduetotheNIAinanannualinstallmentwith-outinterest,theamountoftheinstallmenttobethemoneyvalueatprevailinggovernmentpriceof1½cavans(50kg/cav),multipliesbythewetseasonactu-allybenefittedareainhectaresprovidedtheresultingperiodofpaymentdoesnotexceed50years,themaximumpayingperiod.Iftherepaymentperiodexceeds50years,theinstallmentshallbeincreasedsothatrepaymentshallbewithintheperiodnotlongerthan50yearsfromtheturn-overoftheproject.
12. Amortizationshallbepaidannually,thefirstpaymenttocommencewithinoneyearafterprojectturn-over.
13. CounterpartparticipationreducedtheamounttheAssociationwillpayNIA.ThustheAssociationshallkeeparecordofthecontribution/participationofeachmember.
SPECIAL CONDITION
TofurtherensurerecoveryoftheNIAinvestmentintheproject,theAssociationchoiceofitsOperation’sManagershallbesubjecttoNIA’sapproval.
TheNIAreservestherighttosupervisetheactivitiesandoperationoftheAssociationforaslongastheconsiderationofthisAgreementhasnotbeenfullypaidbytheAssociation.TheAssociationshall submit itself toNIAsupervisionasa safeguard that theprovisionsofthisAgreementshallbefaithfullyobservedandthattheinterestsofthemembersareprotected.
Intheexerciseofthesesupervisoryfunctions,theNIAmayaudittheBookofAccountsandrecordsof theAssociationandmay issuenecessaryguidelinesandsuchguidelinesshallformpartofthisAgreement.
TheAssociation isrequiredtoregister itsofficialreceiptswiththeBIRandsubmitstate-mentsoffinancialconditionsandoperationstotheSEC,copyfurnishedNIAforcontrolandmonitoringactivities.
Theby-lawsoftheAssociationshallcontainaprovisionthatallfeesreceivedbytheAssocia-tionfromitsmembersandbeneficiariesshallbedirectlydepositedinabankofchoiceandthatthesameaccountcannotbewithdrawnwithoutsignaturesofboththePresidentandtheTreasurer.
In the absence of a calamity fund, ad-ditional cost of repair/rehabilitation ofprojects not yet turned over and damageddue to force majeure shall be shouldered bytheNIAwiththeAssociationprovidingtheequityintheformof laborand/ormaterials.Theamountof equity shall dependupon theextentof damagesbutshouldbenotlessthantenpercent(10%)ofthetotalcost.Thecostofrepair/rehabilitationofdamagesnotdue to technicaldeficiencyshall be charged to the Associationloan.
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Producedbythe
Public Affairs and Information StaffNationalIrrigationAdministration
Edsa,Diliman,QuezonCity
NATIONAL IRRIGATION ADMINISTRATION ______________________________IRRIGATORS ASSOCIATION, INC.
By: By:
DivisionManager,IMO IAPresident
SIGNED IN THE PRESENCE OF:
Project-in-Charge IAVicePresident
___________________________________
InstitutionalDevelopmentOfficer
RECOMMENDING APPROVAL:
___________________________________
DivisionManager,EngineeringandOperationsDivision
APPROVED:
___________________________________
RegionalManager
Amortizationpayment shall not includethecostofaccessroadsorserviceroads,
flood control or protection dikes that arenotpartofthediversionworks,poweroperating
facilities,reforestationandshouldbeonlyfortherecoveryofcostofirrigationandfarmdrainagefacilities.
Forrehabilitationproject,wherethereisanexistingloan,restructuringofamortizationscheduleshouldbedonetoaccommodatetheoldloanandnewloan,providedthattheresultingperiodofamortizationwillnotex-ceedfiftyyears.
TheNIAthrutheEngineer-in-ChargeandtheInstitutionalDevelopmentOfficershallkeeparecordofthecounterpartparticipationoftheAssociation.
INWITNESSWHEREOF,thePARTIEStothisAgreementhavehereuntosingedthis instru-mentthis_______dayof____________.