DOJ Opinion No. 051, s. 1992

DOJ OPINION NO. 051 , s. 1992 April 22, 1992 Atty. Ariel F. Aguirre Government Corporate Counsel Government Corporate Counsel Centre 1203 A. Mabini St., cor Arquiza Ermita, Manila Sir : This has reference to your request for opinion regarding the validity of the following: (1) Executive order No. 486, s. 1991, establishing a performance-based incentive system for government-owned and controlled corporations, in the light of Republic Act No. 6971, entitled, "An Act to Encourage Productivity and Maintain Industrial Peace by Providing for Incentives to Both Labor and Capital", and (2) the Supplemental Rules Implementing R.A. No. 6971 issued jointly by the Secretary of the Department of Labor and Employment and the Secretary of the Department of Finance, on December 24, 1991. prcd You state that E.O. No. 486 is of doubtful validity since it was issued after the promulgation of R.A. No 6971 and, therefore, cannot serve to modify said law; and that at the time of its issuance, the President no longer had any legislative powers. You further state that assuming that the President had the authority to issue E.O. No. 486, it cannot possibly apply to GOCOs already covered by R.A. 6971. It is also your view that Supplemental Rules and Regulations implementing R.A. No. 6971 is of doubtful validity since the subject rules and regulations have clearly gone beyond R.A. No. 6971. llcd I do not share your doubts concerning the validity of E.O. 486 and the Supplemental Rules and Regulations implementing R.A. No. 6971 for the reasons stated hereunder. I Re: E.O. No. 486 [1991] At the outset, it must be stated that Presidential directive, executive order or proclamation should be presumed valid or legal and is binding upon all offices and bureaus under the Executive branch (Secretary of Justice Op. No. 7, s. 1976; Nos. 65 and 132, s. 1987 and No. 107, s. 1986). Furthermore, a close examination of the language of the provisions of R.A. No. 6971 shows that the establishment of the "Productivity Incentives Program" is voluntary in character. The incentives program is encouraged through the provision for the enjoyment of certain benefits and tax incentives and is not intended to serve as a legal imposition. Thus, R.A. No. 6971 pertinently provides: "SEC. 2. Declaration of Policy . It is the declared policy of the State to encourage higher levels of productivity, maintain industrial peace and harmony and promote the principle of shared responsibility in the relations between workers and employers, recognizing the right of labor to its just share in the fruits of production and the right of business enterprises to reasonable returns on investments and to expansion and growth, and accordingly to provide corresponding incentives to both labor and capital for undertaking voluntary programs to ensure greater sharing by the workers in the fruits of their labor." "SEC. 5. Labor-Management Committee . (a) A business enterprise or its employees, through their authorized representatives, may initiate the formation of a labor-management committee that shall be composed of an equal number of representatives from the management and from the rank-and-file employees: . . . "SEC. 7. Benefits and Tax Incentives . a) Subject to the provisions of Section 6 hereof, a business enterprise which adopts a productivity incentives program duly and mutually agreed upon by parties to the labor-management committee, shall be granted a special deduction from gross income equivalent to fifty percent(50%) of the total productivity bonuses given to employees under the program over and above the total allowable ordinary and necessary business deductions for said bonuses under the National Internal Revenue Code, as amended. "SEC. 8. Notification . A business enterprise which adopts a productivity incentives program shall submit copies of the same to the National Wages and Productivity Commission and to the Bureau of Internal Revenue for their information and record." The voluntary character of the program is further bolstered by the penal provision of R.A. No. 6971 which covers only fraudulent claims for tax benefits. Accordingly, there is obviously nothing in the provisions of the subject law which would tie the hands of the President or deprive her of the authority vested in her by existing laws, such P.D. No. 985, as amended by P.D. No. 6758, invoked in the preambulatory clauses of E.O. No. 486. prcd II Re: Supplemental Rules and Regulations Implementing R.A. 6971 The aforesaid supplement Rules issued on December 27, 1991 defined the term "business enterprises" to include: "government-owned and controlled corporations performing proprietary functions which are established solely for business or profit or gain and accordingly excluding those created, maintained or acquired in pursuance of a policy of the State, enunciated in the Constitution or by the law, and those whose officers and employees are covered by the Civil Service." The foregoing Supplemental Rule was promulgated by the Secretary of Labor and the Secretary of Finance pursuant to Section 10 of R.A. No. 6971. It is settled that: "It is an elementary rule in administrative law that administrative regulations and policies enacted by administrative bodies to interpret the law which they are entrusted to enforce have the force of law and are entitled to great respect. They have in their favor the presumption of legality (Gonzales V. Land Bank of the Philippines, 183 SCRA 520 [March 22, 1990], Espaol v. Philippine Veterans Administration, 137 SCRA 314 [June 29, 1985] citing Sierra Madre Trust v. Secretary of Agriculture and Natural Resources, 121 SCRA 348 [1983]). "Administrative policies enacted by administrative bodies to interpret the law have the force and effect of law and are entitled to great respect (Santiago v. Deputy Executive Secretary, 192 SCRA 199 [December 10, 1990]. Warren Manufacturing Workers Union v. Bureau of Labor Relations, 159 SCRA 387 [March 30, 1988]) and it is the general policy of the court to sustain the decisions of administrative authorities not only on the basis of the doctrine of separation of powers but also for their personal knowledgeability and even expertise in the laws they are entrusted to enforce" (Cuerdo v. Commission on Audit, 166 SCRA 657 [October 27, 1988] citing the case of Tagum Doctors Enterprises v. Gregorio Apsay, et. al., G.R. No. 81188, August 30, 1988). More importantly, it should be stressed that a well-established rule in statutory construction dictates that: "The legislative intent must be ascertained from a consideration of the Statute as a whole, and not of an isolated part or a particular provision alone. When construing a statute, the reason for its enactment should be kept in mind and the statute should be construed with reference to its intended scope and purpose and the evil sought to be avoided." (Maceda v. Executive Secretary, G.R. No. 88291, prom. May 31, 1991) A consideration of R.A. No. 6971 in its entirety discloses the legislative intent to cover "business enterprises" which are subject to ordinary labor laws, rather than civil service officers and employees. Thus, one of the officials vested with rule-making powers is the Secretary of Labor, and the assistance of the National Conciliation and Mediation Board of the Department of Labor and Employment may be sought by the labor-management committee in the resolution of disputes (Sec. 9 and 10). Furthermore, the law recognizes resort to a strike or lockout arising from any violation of productivity incentives programs (Sec. 7[b]). prcd Moreover, R.A. No. 6971 must be construed in relation to the constitutional provisions governing the civil service (Art. IX-B, 1987 Constitution). A settled canon of statutory construction requires the indulgence of every presumption in favor of the constitutionality of an act passed by Congress (Tipton v. sands, 60 P2d 662; 106 A.L.R. 474, 485 [1936]). In other words, the law must be construed in as manner that will harmonize it with the pertinent provisions of the constitution. The provisions of Article IX-B of the Constitution relevant to the subject matter under consideration are: "Sec. 2. (1)The civil service embraces all branches, subdivisions, instrumentalities, and agencies of the Government, including government-owned or controlled corporations with original charters . "Section 5. The Congress shall provide for the standardization of compensation of government officials and employees, including those in government-owned or controlled corporations with charters , with original charters , taking into account the nature of the responsibilities pertaining to, and the qualifications required for their positions." In fine, the Supplemental Rules appear to have applied the provisions of R.A. No. 6971 in harmony with the constitution and in accordance with the legislative intent to cover only "business enterprises", not government instrumentalities, like GOCCs with original charters. The latter properly falls within the ambit of P.D. No. 985, as amended by P.D. No. 1597 and R.A. No. 6758, referred to in the fourth preambulatory clause of E.O. No. 486. In view of the foregoing, I reiterate this Department's opinion sustaining the validity of E.O. No. 486 and the Supplemental Rules and Regulations implementing R.A. No. 6571. cdtai Very truly yours, (SGD.) EDUARDO G. MONTENEGRO Acting Secretary