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____________.