SEC. 10. When it is desirable and possible to loan any funds of the Government for the purpose of building irrigation systems or maintaining, improving, and reconstructing any irrigation system actually in existence, the said funds shall be loaned only upon the following conditions:
(a) The owners of the lands to be irrigated shall organize themselves as a'corporation or as an association under the laws of the Philippine Islands. The submission to, and approval by, the Secretary of Commerce and Police, of the articles of incorporation or by-laws of the association shall be necessary.
(b) The water rights shall be determined, acquired, and shall be appurtenant to land in accordance with Act Numbered Twenty-one hundred and fifty-two as amended.
(c) A cadastral survey of the lands to be irrigated shall be made and a map thereof perfected and completed in accordance with Act Numbered Twenty-one hundred and fifty-two as amended.
(d) The lands belonging to a corporation or an association formed to obtain the benefits of this Act shall be known as an irrigation district. The lands to be included in, and the limits of a district shall be determined by the Director of Public Works and approved by the Secretary of Commerce and Police.
(e) Loans shall be made only upon lands to which torrens titles exist.
(f) A corporation or association organized as above shall forward a petition to the Secretary of Commerce and Police indicating the intention of the said corporation or association to build an irrigation system, or to maintain, improve and reconstruct any irrigation system actually in existence, which furnishes or is to furnish water to lands owned by the members of the corporation or association, binding said corporation or association to contribute funds to the extent of one-half of the actual cost of the proposed work and requesting a loan for the remaining one-halt". As soon as the petition is received by the Secretary of Commerce and Police he will refer it to the Director of Public Works for an investigation of the project and a recommendation upon the feasibility thereof. If the Secretary of Commerce and Police, after being duly advised by the Director of Public Works, shall decide favorably upon the petition he shall advise the corporation or association to that effect, submitting a statement of the amount of the estimated cost of the project which shall include the cost of engineering and preliminary investigation. The corporation or association, if satisfied with the statement of estimated cost, shall then deposit with the Insular Treasurer or with the provincial treasurer of the province in which such corporation or association is located one-half of such estimated cost, subject to the order of the Director of Public Works, to be used for the reconstruction, maintenance, or improvement of an irrigation system actually in existence, or for the building of a new system as the case may be, and a loan of the remaining one-half will then be made, whereupon the Director of Public Works will prosecute the work to final completion as rapidly as circumstances permit: Provided, That if the Secretary of Commerce and Police shall decide that the proposed project is impracticable the expenses of the investigation made by the Director of Public Works shall be charged to the funds appropriated, and no part of said expenses shall be paid by the corporation or association: And provided further, That in the event the becretary of Commerce and Police shall decide that the project is feasible and practicable, all of the expenses shall be paid by the association or corporation, as the case may " be: And provided further, That if the estimate of the Director of Public Works shall be insufficient for the completion of the work contemplated additional funds shall be provided within thirty days by the corporation or association, as the case may be, of the date of the formal request therefor by the Secretary of Commerce and Police, for the purpose of defraying any additional expense over and above the estimated cost of the work. Any funds contributed and remaining unexpended when the proposed work is completed shall be refunded to the corporation or association.
(g) The administration of the irrigation works built, maintained, improved or reconstructed under the provisions of this Act as well as the distribution of water among the consumers, together with the assessment of the annual cost for maintenance, operation, reconstruction and repair of same shall be in accordance with the provisions of Act Numbered Twenty-one hundred and fifty-two.
(h) In carrying out the provisions of this Act the Secretary of Commerce and Police shall issue and enforce such rules and regulations not inconsistent with the specific provisions of this Act, as may be necessary to give full effect to the purposes of the law as set forth herein.
(i) The amount loaned shall not exceed fifty per centum of the assessed value of the land, exclusive of the value of buildings thereon. The amount loaned shall be a lien upon the lands of the corporation or association and such lien shall have preference over all other liens except that for taxes on the land and any mortgage lien of prior date in favor of the Philippine Agricultural Bank or its successor, and such preferred lien shall not be removed until the entire loan, plus interest thereon or interest upon that part of the indebtedness remaining unpaid at the rate of four per centum per annum, is paid or the land is sold for payment thereof.
(j) All work shall be executed in accordance with the-procedure provided by section six of Act Numbered Five hundred and eighty-four for the construction of public works: Provided, That, other things being equal, preference-shall be given to the corporation or association owning the land to be irrigated in the matter of awarding contracts for the construction, maintenance, improvement or reconstruction
(k) The minimum size of a district shall be twenty-five hectares.
(l) The maximum loan shall not exceed fifty thousand pesos.
(m) The amount loaned shall be repaid as follows: Interest shall begin upon the date the loan is made. One year thereafter the accrued interest for one year shal bes paid. One vear after the date that the Director of Public Works certifies that the work for which the loan was made is completed, the first payment upon the principal, plus> accrued interest, shall be made. The payment upon the Principal Shall be one-twentieth of the amount of the loan. Thereafter each year until the loan is completely repaid, one-twentieth of the amount of the loan, plus accrued interest, shall be paid: Provided, That the balance unpaid at the beginning of the twentieth year after the date of the loan shall be paid in full during said year: And provided further, That if the corporation or association wishes to pay off the loans, plus accrued interest in a period less than twenty years from the date of completion of the work, it may do so.
Enacted, February 24, 1916.