Post on 31-Jan-2021
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
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.
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.
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,
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.
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.
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
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,
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.
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.
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____________.