REPUBLIC OF THE PIILD FINES DEPARTMENT OF LABOR AND EMPLOYMENT MANILA DEPARTMENT ORDER NO._26 (SERIES OF 1995) 43, 06. ‘Gc INTEGRATED GUIDELINES FOR ACCESSING TO FUNDS OF THE WORKERS ORGANIZATION AND DEVELOPMENT PROGRAM Pursuant to the nationwide mandate of the Department of Labor and Employment (DOLE) to strengthen trade_unionism and other workers organizations by promoting their capabililies as independent and active partners in _ national development; to empowsr workers through the provision of accessible information facilities as well as training, educational, technical and livelihood assistance; and to promote individual and collective initiative as a means of enhancing incomes, income Opportunities and employment generation, the following Integrated Guidelines for the Workers Organization and Development Program (WODP) are hereby issued for all concemed. - ARTICLE | COVERAGE These Guidelines shall apply to all workers organizations undertaking programs / or projects which are funded from the WODP. Workers organizations shall refer to the following: ‘A. Trade union centers, labor federations, national unions, locals/chapters and independent unions registered with the DOLE F B. Rural workers organizations (RVVOs) including rural workers federations operating either on the municipal, provincial, regional or national level registered either with the DOLE, the Cooperative Development Authority (CDA), or the Securities and Exchange Commission (SEC). Cc. Women workers organizations registered with the DOLE as RWOs, or with the CDA or SEC. ¥ARTICLE I OBJECTIVES The WODP shall pursue the following: A. Enhancement of the capabilities of workers organizations toward the promotion of trade unionism, worker empowerment and sound labor- management relations. B. Provision of assistance for enhancing the entrepreneurial capabilities of workers organizations and their members, and in setting up sustainable income or employment generating projects. C. Enhancement of women's productive role in national development and participation in workers organization and trade unionism ARTICLE III REQUIREMENTS FOR ACCREDITATION ‘A workers organization shall be deemed accredited to participate in the WODP upon compliance with the following basic requirements: 4, It must have legal personality as evidenced by its certificate of registration issued by the DOLE, CDA or SEC. 2. If it has been in existence for more than three years, it must have filed its financial statements or annual status report with the DOLE, CDA or SEC for the last three years. If it has been in existence for less than three years, it must have filed its latest financial statement or annual status report with the DOLE, CDA or SEC plus a certification from the DOLE, other competent government agency or authority or a duly-registered non-government organization, that the applicant is. legally operating in the area. 3. It must submit a profile of the organization consisting of a list of executive officers and their addresses together with the corresponding total number of members, and a list of projects or trainings undertaken, if any. In the case of a trade union center, federation or national union, the application shall include the names of the locals/chapters which are the intended beneficiaries of the program or project and the names and addresses of the establishments where such locals/chapters eNo federation or national union shall be accredited under the WODP: unless it shows proof that it has at least ten existing affiliates with duly registered collective bargaining agreements or which are duly certified collective bargaining agent. 4. Unless already covered by the immediately preceding number, it must submit a profile of the officers or members of the project management team or project coordinator who shall be directly responsible in the implementation of the project. 5. It must submit a resolution signed by the appropriate executive board consistent with its constitution and by-laws giving authority to the workers organization to participate in the WODP. ARTICLE IV COMPONENTS The WODP shall have the following components: A. Grants 1. Workers Capability Development. - This component shall provide support for the development and upgrading of the capabilities of workers organizations and their members in the areas of leadership, organizational development and management, research, module development, project management, cooperatives and entrepreneurial skills enhancement. 2. Creation or Upgrading of Libraries. - This component is intended to ensure access to information facilities of workers organizations and their members through the establishment of new libraries and upgrading of those which are already existing. 3. Provision of Scholarship for Officers and Members of Workers Organizations. - This component consists of scholarship grants covering Masteral Degrees, completion of Bachelor's Degrees, technical and short term courses, or review courses for professional examinations. B. Loans There is hereby established a loan assistance for entrepreneurship to provide workers organizations and their members with a low interest credit facility to enable them to put up or sustain income generating projects. It shall have the following sub-components: 1. Workers Entrepreneurship (WE) for trade union centers, federations, national unions, \pcals/chapters and independent unions registered with the DOLE. 32. __Group Entrepreneurship Development (GED) for RWOs including Tural workers federations operating on the municipal, provincial, regional or national level registered with the DOLE, CDA or SEC. 3. Women Workers Employment and Entrepreneurship Development (WEED) for women workers organizations registered with the DOLE as RWOs, or with the CDA or SEC. ARTICLE V GiNERAL CONDITIONS OF ASSISTANCE A Application requirements. No application for assistance shall be Processed or approved unless the following are submitted: 1. A detailed project proposal or business plan, including a detailed description of the project, its location or venue, the timetable for. its implementation, and, an itemized listing of projected expenses and schedule thereof. If the project consists of phases, the proposal must include the schedule of implementation and the corresponding costs for each phase 2. An undertaking to put up equity of at least 10% of the project cost, accompanied by a description or valuation of the property, service, activity of item of expenditure which constitutes such equity. 3. For all grants and loans, the workers organization concerned shall keep a book of accounts, duly stamped by the appropriate implementing agency of the DOLE, which shall be separaté and distinct from the book of accounts for the other disbursements and financial transactions of the workers organization, The book of accounts shall be open to inspection or audit by authorized DOLE ‘employees upon reasonable notice. B. Release of funds. The release of funds shall be subject to the following conditions: 1. Assistance for each project shall be covered by a Memorandum of Agreement (MOA), signed by the parties or their authorized representatives. The MOA shall not be signed by the parties unless it is stamped with a certification by the appropriate officer in the DOLE or its Regional Offices that funds are available for the purpose. 2. Assistance in an amount of P300,000.00 or less for each project may be released in full, depending on the nature of the project. Assistance in an amount exceeding P300,000.00 may be released in tranches, with the.schedule of releases being dependent on the nature or phases of the projéct and its schedule of implementation. in either case, the initial release shall be effected not later than ten (10) days “agyenne of the MOA.If fund assistance is released in tranches, subsequent releases shall be made only upon submission of the following: fa) A progress or documentation report prepared by the workers organization for each portion or phase of the project; b) A detailed fund disbursement report, supported by the appropriate receipts, prepared by the designated project management team or project coordinator of the workers organization, duly certified by the President, Treasurer, Auditor or Accountant/Bookkeeper of the workers organization, and validated by the DLE officer/s monitoring the project; ©) Monitoring report prepared by the appropriate DOLE officer. 3, For grants in amounts exceeding P300,000.00 and loans in amounts exceeding P100,00.00, the workers organization shall open and maintain a bank account with at least two signatories separate from its other bank accounts, in addition to its book of accounts. The workers organization, however, may be Tequired to open a separate bank account for grants or loans of lower amounts, depending on the nature and circumstances of the project ©. Use of funds, The use of funds shall be governed by the following rules: 4. Funds shall be used exlusively for the purpose intended and in accordance with the terms of the approved project proposal. No deviations from the approved project proposal shall be allowed except upon prior written application by the workers organization and approval by the DOLE implementing agency, in which case the MOA’ shall be amended accordingly. Any unauthorized deviation shall be a ground for termination of the MOA and discontinuance in the further release of funds, without prejudice to the right of the appropriate DOLE implementing agency to pursue any legal action to protect the interests of the government. 2. Mere delay in the utilization of funds shall not constitute unauthorized deviation, but shall be governed by the following rules: a) If the workers organization has not started implementing the approved project or phase thereof within two months from the date of release of funds, the MOA may be deemed resolved or rescinded without need of judicial action, in accordance with Article 1191 of the Civil Code of the Philippines. However, if the unused amount for a particular portion or phase of the project exceeds 15% of the amount released for such portion or phase, revision of the project schedule may be allowed upon prior written application with and approval of the appropriate DOLE implementing agency. In such case, the MOA shall be amended accordingly. If the unused amount does not exceed 15% of the amount released, no revision of the MOA shall be needed but the workers organization shall submit a “~— for the delayed use of funds.b) The workers organization shall return any unused oF unliquidated amount of assistance upon completion of the project or phase thereof. However, it may use the savings for expansion of the project or for activities allied to the project, upon prior written application with and approval of the appropriate DOLE implementing agency. D. Periodic/Completion reports. The workers organization shall be under an obligation to submit periodic progress reports in accordance with Letter B, Fo. 2 of this Article, as well as such other reports as may be specified in the MOA Upon completion of the project, the workers organization shall submit a completion or terminal report, attaching thereto the appropriate receipts and seedunting of fund disbursements as well as a statement on whether or not the objectives of the project have been met. This report shall be verified by the president and treasurer of the organization and validated by the appropriate DOLE implementing officer. Upon validation of the report, the appropriate DOLE implementing agency shall issue a cerlificate of acceptance in favor of the workers organization. E. Effects of dissolution of the workers organization. The rights and obligations of the workers organization under any ‘of the foregoing components Shai not be affected by any change in its leadership; provided that where fraud, bad faith or misrepresentation exists, the liability of the outgoing officers with respect to the outstanding or unsettled obligations shall be joint and several. ARTICLE VI PROVISIONS SPECIFIC TO GRANTS A. Workers Capability Development. Projects under this component may consist of individual training courses or modules, a series of training courses or modules, research activities for organizational advancement, or a combination of training and research. Subject to equity considerations, a workers organization may avail of more than one grant per year provided that Subsequent grants shall be covered by a project proposal distinct in objectives and purpose fromthe first project. B. Creation of Libraries. The maximum amount of grants in the upgrading of libraries shall be fifty-thousand pesos (P50,000.00), all of which must be used exclusively for the acquisition of books and information materials relevant to labor concerns. The maximum amount of grants in ‘he creation of new libraries shall be two hundred and fifly-thousand pesos (P250,000.00); provided, that the workers organization shall provide a suitable and accessible venue for setting up the library; provided further, that the = organization shall be responsible forovethead expenses, including salaries of personnel who will manage and run the library; and provided finally, that. an amount not exceeding fifty-thousand pesos (P50,000.00) out of the total grant may be used for the improvement of physical facilities, including the acquisition of chairs, tables, shelves and cabinets. ‘Aworkers organization may avail itself of upgrading assistance only once a year, In the case of creation of a new library, this may be availed of by a workers organization only once in its organizational life. ©. Scholarships. Any member or officer of a workers organization desiring to avail hiniself of this component shall be subject to the following requirements: 4. He must be an officer/member in good standing; 2, He must not have previously undergone through the WODP the same or similar course being applied for; 3,He must be recommended by the president and at least two officers of the organization; and 4, He must pass the’ screening and selection process of the DOLE and the educational or training institution in which he intends to enroll. For this purpose, the appropriate DOLE implementing agency may allow enrollment only in those educational or training institutions with established reputation and proven track record in their fields of specialization. & 5, The workers organization to which he belongs must guarantee that upon completion of the course, he shall submit a true copy of his grades or certificate of attendance or completion, as the case may be, to the appropriate DOLE implementing agency. ARTICLE VII PROVISIONS SPECIFIC TO LOANS A. Uniform provisions. Unless the context provides otherwise, the following provisions shall apply to every loan assistance for entrepreneurship, whether through the WE, GED or WEED: 4. Creditworthiness. - In every case, the appropriate DOLE implementing agency. shall conduct a background investigation to establish the creditworthiness of the applicant workers organization. The details of the background investigation, duly certified by the investigaling/recommending officer, shall be contained in a {for and shall form an integral part of the records of the project2. Exclusive use of funds for entrepreneurship activities. Every loan assistance shall be used by the workers organization exclusively for undertaking or expanding a single income-generating project, or for_ setting up a relending program for its affiliates or individual members, or a combination of both. Where the workers, organization relends in whole or in part the proceeds of the loan to its affiliates or individual members, such affiliates or individual members must use the amount relent for setting up their own income-generating projects. 3, Amounts of assistance. - Amounts of assistance shail be subject to the following ceilings: a) WE projects. For each trade union center, federation, or national union, the maximum loanable amount shall be 1.5 million pesos. For each local/chapter or independently registered union, the maximum loanable amount shall depend on the size of union membership, as follows: From 30 to 50 P100,000.00 Over 50 to 100 200,000.00 Over 100 300,000.00 b) GED and WEED projects. For each rural or women workers organization, the maximum loanable amount shall be P300,000.00, The aggregate amount of funds each beneficiary can avail of shall be determined on the basis of the project requirements as reflected in the project proposal but in no case shall exceed P300,000.00. Amounts relent by the workers organization to its individual members, whether through WE, GED or WEED, shall not exceed P20,000.00. 3. Repayment period, - Unless a shorter period is specified in the MOA, the workers organization shall have three years from the date of the first release of funds within which to pay for the loan. The three-year period shall be inclusive of a six-month grace period from the first release of funds. The amortization schedule of the loan shall depend on the nature of the project and shall be stated in the MOA, 4, Project management/Social preparation. - In addition to the provisions of Article Ill, no. 5 and Article V, the members of the project management team shall be required to undergo a Business Appreciation Course (BAC) or other similar training courses to ensure efficient management of the project. For the purpose of undertaking this training, the workers organization may apply for a grant under the Workers Capability Development component of the WODP. 5. Employment content. - Every project proposal must indicate targets for the creation of income or employment opportunities either for the members of the workers organization or for members of their immediate family. Priority shall be given to proposals with greater = or employment generating potentials.6. Capital build-up. - Every project proposal must state its projected return on investment, and must include a scheme for capital build-up which, at the end of the three-year repayment period, shall represent al least 10% of the total loan. 7. Interest rates. - The workers organization shall pay to the DOLE. an annual interest of 6%, based on the diminishing balance of the loan. Where the workers organization relends the whole. >f part of the loan proceeds to its affiiates or individual members, the interest rate for the relent eovaint shall not exceed 18% per annum, based on the diminishing balance of the loan. . 8, Collatera/Chattel mortgage. - All asses. acquired with the loan proceeds shall stand as collateral for {he oan. In cases where the assets may be Povered by a chattel mortgage, the workers organization shall be under obligation to execute in favor of the DOLE a chattel mortgage over the asset or assets acquired from the time absolute ‘ownership thereof passes to the workers organization. Notwithstanding the foregoing provisions, the appropriate DOLE implementing agency may require the workers organization to put up sufficient security or surety for the loan 9, Rebates/Penalties. - A 1% rebate shall be given for prompt payment for every scheduled amortization, However, if there iS 8 delay in payment, a 2% penalty shall be charged on the amount due 8 40, Defaults, Failure of the workers organization to pay amortizations as these fall due, where such failure is due to bad faith, fraud or negligence, shall constitute default. In the absence of bad faith, fraud or negligence, failure of the workers organization to pay two consecutive ‘amortizations if the schedule is monthly, or after six months from the date the amortization falls due, if the schedule is not éftener than monthly, shall constitute default, unless it has in the meantime applied for restructuring of the loan under the immediately succeeding number. Unathorized deviations shall likewise constitute default. In every case of default, the loan shall become due and demandable at once, without prejudice to the exercise of the DOLE, through the appropriate implementing agency, ofits rights and remedies under applicable laws. 44. Restructuring of loan. - In cases of force majeure 0 fortuitous events, or other unforeseen circumstances not attributable to the fault or negligence of the workers organization but affecting its project such that it is tegpie to comply with the amortization schedule, the worker organization may apply with the appropriate DOLE implementing agon’y for the restructuring of the loan. The application shall “ope and shall contain an explanation why10 the payments have been delayed and a proposed plan for rescheduling or restructuring. 12. Liability of officers. - Officers shall be jointly and severally liable with the workers organization for loans contracted during their term of office. In case there is a change of officers during the lifetime of the loan, the new officers shall be jointly and severally liable with the organization under the same terms and conditions as the former officers. B. Provisions specific to WE. In addition to the uniform requirements, the following provisions shall apply to loan assistance given through the WE ‘component: 4. No local/chapter or independently registered union shall be given any loan assistance unless it has a duly registered collective bargaining agreement or is a duly certified bargaining agent. 2. Security for trade union centers, federations or national unions. - Where the applicant is a trade union center, federation, or national union, it shall issue post-dated checks in the amounts and bearing the dates of the amortization payments as set forth in the MOA. 3. Security for independently registered unions or locals/chapters. - Where the applicant is an independently registered union or local/chapter, its members shall issue check-off authorizations to secure the loan, If the union undertakes a single income generating project, all members must issue check- off authorizations. If the union intends to relend the whole Ioan amount to its members, only the members who apply for a loan shall issue check-olf authorizations. In lieu of the check-off system, the independently registered union or local/chapter may issue post-dated checks in the amounts and bearing the dates of the amortization payments as set forth in the MOA. \ ) “4, Operationalization of check-olf. Where the independently registered fe or local/chapter fails to pay two consecutive amortization payments but at no instance exceeding six months, and such failure is not due to bad faith, fraud, __— negligence or any malfeasance, the check-off shall be operationalized as 3 follows: a) If the project consists of a single income-generating project, the remaining loan balance shall be divided into twelve equal monthly payments and checked off monthly. b) If the project, consists of a relending the whole loan amount to individual members, the remaining balance shall be checked off on a monthly basis. The amount to be checked off shall be the remaining balance of the loan divided equally over a twelve-month period 5, Rescheduling in lieu of check-off. - To stop the operation of the check- off, the independently registered union or localichapter may apply with the appropriate DOLE implementing agency for a rescheduling or restructuring of its 10payments on ground of force majeure, fortuitous events, or other unforeseen circumstances not attributable to the fault or negligence of the organization, in accordance with Letter A, No. 10 of this Article. Filing of the application shall automatically stop the operation of the check-off, but without prejudice to whatever action the appropriate DOLE implementing agency may take on the application. In any event, the DOLE shall act on the application within ten days from receipt thereof. Where the plan for rescheduling or restructuring is approved, the MOA shall be automatically amended accordingly. ARTICLE VII IMPLEMENTATION A Filing and processing of applications 4. Who may file. - All applications shall be filed in the name of the workers organization. 2. Venue for filing/processing. - a) Applications of trade union centers, federations and national unions shall be filed with and processed by the Bureau of Labor Relations (BLR). Applications of independent unions and locals/chapters shall be filed with and processed by the Industrial Relations Divisions (IRDs) in the Regional Offices where these organizations principally operate Applications of trade union centers, federations and national unions operating outside the National Capital Region may be filed directly with the Regional Office where these organizations operate; provided, however, that the Regional Office shall, within five days from receipt of the application, transmit the documents to the BLR for processing, 2. Applications of national federations of rural workers organizations shall be filed with and processed by the Bureau of Rural Workers (BRW) 3. Applications of independent ruralAvomen workers’ organizations and federations of rural workers regional in scope shall be filed with and processed by the Workers Amelioration and Welfare Divisions (WAWDs) in the Regional Offices. ¥ n12 B. Approval of Applications 1. Project. proposals amounting to P300,000.00 or less shall be approved by the appropriate Bureau/Regional Director. 2. Project proposals amounting to more than P300,000.00 shall be approved by the Undersecretary for Labor Relations. ARTICLE 1X MANAGEMENT The BLR, BRW and BWYW shall be in charge of the overall management, supervision and coordination of the WODP, in accordance with the following functional delineations: A. The BLR shall be in charge of projects involving trade union centers, federations, national unions, Iccals/chapters and independent unions. B. The BRW shall be in charge of projects involving rural workers organizations. C. The BWYW shall be in charge of projects involving women workers’ organizations. S The BLR, BRW and BWYW shall submit an integrated quarterly report to the Secretary, through the Oversight Committee as constituted under Administrative Order No. 217, series of 1994, on the implementation of the program components and the status of utilization of funds ARTICLE X EFFECTIVITY These Guidelines shall supersede Department Orders No. 17 and 19, series of 1995, and shall take effect immediately upon its complete publication in two (2) newspapers of general circulation. Manila, Philippines, 32} October 1995. JOSES. BRILLANTES ‘Acting Secretary 12