Law Summary

Purpose and Directives

The Letter of Instructions No. 1026, issued by President Ferdinand E. Marcos, aims to enhance the manufacturing operations of national vocational schools and state universities and colleges for the purpose of national productivity.

• Objective: To utilize existing resources in vocational schools and colleges to meet national demands for school furniture and other items.
• Encouragement of Productive Activity: Improve funding mechanisms for vocational schools to engage in productive activities.

Revolving Fund Establishment

A Revolving Fund is established to retain income generated from the sale of manufactured items.

• Income Retention: Vocational schools and colleges may keep earnings from sales of school desks and furniture.
• Expenditure Allocation: Income must be used for:
  • Raw materials for manufacturing
  • Honoraria for involved personnel (teachers, students)
  • Wages for casual workers
  • Supplies and related costs
• Banking Procedures:
  • Schools can open a bank account with an authorized government depository bank to manage these funds.
  • Joint signatures from the school head and the Commission on Audit are required for transactions.

Reporting and Accountability

Schools must adhere to strict reporting and accountability measures regarding the Revolving Fund.

• Transaction Recording: All transactions must be documented in government books, following Commission on Audit regulations.
• Quarterly Reports: Schools must submit quarterly financial reports to the Ministry of the Budget via Regional Offices.
• Penalties for Non-compliance: The Minister of the Budget can suspend or cancel the fund arrangement for schools that fail to comply with reporting requirements.

Fund Utilization and Compensation

Regulations specify the utilization of the Revolving Fund and limitations on compensation.

• Use of Fund:
  • Income from the fund can also support regular academic programs.
  • Advances from customers can initiate operations of the Revolving Fund.
• Compensation Restrictions:
  • Honoraria and compensation cannot be paid to personnel outside the school or to those not directly involved in production activities.
  • Rates of compensation must be approved by the Minister of the Budget.

Operational Guidelines

Specific guidelines govern the operations of manufacturing activities within schools.

• First Year Expenditures: Operating and maintenance funds may cover initial manufacturing costs during the first year.
• Product Pricing:
  • Products cannot be sold to private parties below the prices charged to government agencies.
  • Sales prices must cover costs including raw materials, labor, and overhead.
• Approval for Equipment Purchases: Any purchases of vehicles or equipment from the fund must comply with existing approval mechanisms (referencing LOIMP No. 29).

Preventive Measures

Measures are outlined to prevent misuse of school resources.

• Preventing Misuse: The Commission on Audit and the Minister of Education and Culture are tasked with preventing school facilities from being used for private enterprises.

Key Takeaways

• The Letter of Instructions No. 1026 establishes a framework for enhancing productivity in national vocational schools through a Revolving Fund.
• Schools are empowered to retain and utilize income from manufactured products, with strict guidelines for expenditures, reporting, and accountability.
• Compensation for personnel involved in production activities is regulated and requires approval.
• Schools must comply with pricing regulations and preventive measures to ensure proper use of resources.