DOJ Opinion No. 177, s. 1980

DOJ OPINION NO. 177 , s. 1980 December 8, 1980 The Acting Director-General National Manpower and Youth Council Taguig, Metro Manila Sir : This is with reference to your letter, requesting clarification on a matter taken up in Opinion No. 82, series of 1978, of this Ministry, concerning the implementation of section 52 of the New Labor Code as amended by P.D. No. 850, which grants a certain tax incentive to persons or enterprises involved in development programs "approved by the Council [referring to the National Manpower and Youth Council]. dctai You state that the abovesaid Council has been implementing on a "dry-run" the Training Incentive Scheme (TIS) and has found that a majority of the applicant-firms "belong to the large-scale industry"; that the said scheme was institutionalized in July, 1980 and one of the thrusts of the program is "towards encouraging the small and medium scale industry to actively participate in manpower development undertakings"; and that you find difficulty in promoting said scheme among the abovesaid small and medium scale firms "where there is a dearth of skilled manpower" because, according to your findings, most of said firms "belong to the service sector". Hence, your query as to "what are those other business endeavors and similar establishments whose businesses do not involve direct labor in the production of goods and services on a consistent basis", referred to in subject Opinion. We take it that the portion of Opinion No. 82, supra , which you refer to is the second paragraph found on page 2 thereof which states: "However, in the case of businesses such as banks, building and loan associations, insurance and financing companies, stock brokerage houses educational institutions, consultancy groups and other business endeavors not involving direct labor in the production of goods or services the Bureau of Internal Revenue opines that they should be deemed not included in the scheme provided in Article 52 of the New Labor Code". (Emphasis supplied.) We also take it that you wish this Ministry to specifically identify those other business endeavors referred to in the above-quoted paragraph of Opinion 82. For the reasons stated hereunder, we are constrained to decline rendition of an Opinion on your query. The phrase "other business endeavors" is a generic term obviously used to embrace all other establishments the businesses of which are similar to those specifically enumerated. However, whether or not the establishments other than those already specifically enumerated are engaged in business similar to those specifically enumerated, is a question which can only be determined upon close examination the nature of the business engaged in by such other establishments, and which determination would have to involve an examination of facts not available from your letter. Hence, we are not in a position to give a definite answer to your query. Besides, the implementation of the tax incentive scheme provided for in Section 52 of the New Labor Code is ultimately a matter addressed to the tax authorities and their administrative interpretation/application of said provision commands much respect and weight (Tan v. Municipality of Pagbilao, Quezon, 7 SCRA 887 [1963]; Regalado v. Yulo, 61 Phil. 173 [1935]). LexLib We therefore suggest that whatever doubts are entertained by that Office as to whether or not any particular establishments is entitled to the benefits of the subject tax incentive scheme, the specific case should be referred to the Ministry of Finance for determination. Very truly yours, (SGD.) RICARDO C. PUNO Minister of Justice