Romulo, Mabanta, Buenaventura, Sayoc & De Los Angeles vs. Home Development Mutual Fund

An administrative agency cannot, in the exercise of its rule-making power, issue regulations that override, supplant, or modify the law it seeks to implement. The Court held that the HDMF Board of Trustees exceeded its delegated authority by requiring the concurrence of both a superior provident/retirement plan and a housing plan for exemption from Fund coverage, whereas the enabling law, P.D. No. 1752, as amended by R.A. No. 7742, used the term "and/or," signifying that the existence of either plan suffices for exemption.

Petitioner Romulo, Mabanta, Buenaventura, Sayoc and De Los Angeles, a law firm, maintained a superior retirement plan and was exempted from Pag-IBIG Fund coverage for the year 1995 pursuant to Section 19 of P.D. No. 1752. On 1 September 1995, the HDMF Board of Trustees issued Board Resolution No. 1011, amending the Rules and Regulations Implementing R.A. No. 7742 to require that employers possess both a provident/retirement plan and a housing plan to qualify for a waiver or suspension of Fund coverage. Petitioner subsequently applied for a waiver based on its superior retirement plan, which the HDMF disapproved, prompting this litigation.

• Initial Exemption: Petitioner, a law firm, was exempted from Pag-IBIG Fund coverage from 1 January to 31 December 1995 because it maintained a superior retirement plan under Section 19 of P.D. No. 1752.
• The 1995 Amendments: On 1 September 1995, the HDMF Board of Trustees issued Board Resolution No. 1011, amending Section 1, Rule VII of the implementing rules. The amendment required employers to have both a provident/retirement plan and a housing plan superior to those of the Pag-IBIG Fund to qualify for a waiver or suspension of coverage.
• Application and Disapproval: On 16 November 1995, petitioner filed an application for waiver of Fund coverage based on its superior retirement plan, simultaneously challenging the validity of the 1995 Amendments. On 18 March 1996, the HDMF President and CEO disapproved the application, interpreting the law to require both plans.
• The 1996 Amendments: Petitioner appealed to the HDMF Board of Trustees. The Board denied the appeal, declaring it moot and academic due to Board Resolution No. 1208, Series of 1996, which removed the waiver of mandatory coverage entirely, except for distressed employers.

• Petitioner argued that the 1995 Amendments were inconsistent with the enabling law, P.D. No. 1752, as amended by R.A. No. 7742, which required only a superior provident/retirement plan or a superior housing plan for exemption, not the concurrence of both.
• Petitioner contended that the 1996 Amendments were void insofar as they abolished the exemption granted by Section 19 of P.D. No. 1752, because the repeal of such an exemption involves the exercise of legislative power that cannot be delegated to the HDMF.
• Petitioner asserted that the amendments were void for lack of a prior public hearing, violating Section 9(1), Chapter 2, Book VII of the Administrative Code of 1987, which requires public participation when an imposition of an additional burden is involved.
• Petitioner claimed that HDMF failed to comply with Section 3, Chapter 2, Book VII of the Administrative Code of 1987, which requires agencies to file three certified copies of every adopted rule with the University of the Philippines Law Center.

• Respondent HDMF countered that in promulgating the amendments, it was merely exercising its rule-making power under Section 13 of P.D. No. 1752, and that choosing "and" instead of "or" clarified the confusion brought about by the use of "and/or" in the enabling law.
• Respondent maintained that a public hearing is not mandatory under Section 9(1) of the Administrative Code unless specifically required by law, and P.D. No. 1752 only requires publication, which HDMF satisfied by publishing the amendments in a newspaper of general circulation.
• Respondent claimed that it had filed certified true copies of the amendments with the U.P. Law Center on 18 October 1996.

• Procedural Issues:
  • Whether the 1995 and 1996 Amendments are invalid for lack of a prior public hearing.
  • Whether the amendments are invalid for failure to file certified copies with the U.P. Law Center.
• Substantive Issues:
  • Whether the HDMF Board of Trustees exceeded its rule-making authority by requiring the concurrence of both a provident/retirement plan and a housing plan for exemption from Fund coverage.
  • Whether the HDMF Board of Trustees exceeded its rule-making authority by entirely abolishing the exemption from Fund coverage.

• Procedural: The Court found it unnecessary to dwell on the procedural issues raised by the petitioner in light of its rulings on the substantive issues.
• Substantive: The Court ruled in favor of the petitioner, holding that the HDMF Board of Trustees exceeded its delegated rule-making authority. The enabling law, Section 19 of P.D. No. 1752, uses the phrase "provident and/or employee-housing plans," which means that the existence of either a superior provident plan or a housing plan is sufficient basis for exemption. By requiring the concurrence of both plans, the 1995 Amendments effectively amended the law. Furthermore, by abolishing the exemption entirely, the 1996 Amendments effectively repealed the law. Administrative agencies cannot override, supplant, or modify the law they seek to implement; only Congress can repeal or amend the law.

• Principle of Administrative Law: Scope of Rule-Making Power — Rules and regulations issued by administrative agencies must be within the scope of the statutory authority granted by the legislature. They must be germane to the objects and purposes of the law and must not contradict, but conform with, the standards prescribed by law. Administrative issuances must not override, supplant, or modify the law, but must remain consistent with the law they intend to carry out. The Court applied this doctrine to invalidate the HDMF's 1995 and 1996 Amendments, as they effectively amended and repealed the statutory exemption provided in Section 19 of P.D. No. 1752.
• Statutory Construction: Interpretation of "And/Or" — The term "and/or" means that the effect shall be given to both the conjunctive "and" and the disjunctive "or." It is used to avoid a construction which by the use of the disjunctive "or" alone will exclude the combination of several of the alternatives or by the use of the conjunctive "and" will exclude the efficacy of any one of the alternatives standing alone. The Court applied this principle to interpret Section 19 of P.D. No. 1752, holding that the legislature intended that an employer with either a superior provident plan or a housing plan may obtain exemption.

• "It is without doubt that the HDMF Board has rule-making power as provided in Section 5 of R.A. No. 7742 and Section 13 of P.D. No. 1752. However, it is well-settled that rules and regulations, which are the product of a delegated power to create new and additional legal provisions that have the effect of law, should be within the scope of the statutory authority granted by the legislature to the administrative agency."
• "Administrative issuances must not override, supplant or modify the law, but must remain consistent with the law they intend to carry out. Only Congress can repeal or amend the law."
• "A department zeal may not be permitted to outrun the authority conferred by the statute."

• China Banking Corp. v. The Members of the Board of Trustees of the HDMF, G.R. No. 131787 (19 May 1999) — Controlling precedent. The Court relied on this case to rule that the 1995 Amendments requiring both plans for exemption were null and void for exceeding the Board's rule-making authority and misinterpreting the term "and/or."
• Victorias Milling Co., Inc. v. Social Security Commission, 114 Phil. 555 (1962) — Cited for the proposition that administrative rules must be within the scope of statutory authority.
• The Conference of Maritime Manning Agencies, Inc. v. Philippine Overseas Employment Administration, 243 SCRA 666 (1995) — Cited for the requirement that regulations be germane to the law and not in contradiction to it.
• Commissioner of Internal Revenue v. Court of Appeals, 240 SCRA 368 (1994) — Cited for the rule that administrative issuances must remain consistent with the law.
• Radio Communications of the Philippines v. Santiago, 58 SCRA 493 (1974) — Cited for the principle that a department's zeal may not outrun the authority conferred by statute.

• Section 19, Presidential Decree No. 1752 — Provides the conditions for waiver or suspension of Pag-IBIG Fund coverage, using the phrase "provident and/or employee-housing plans." The Court interpreted "and/or" to mean the existence of either plan is sufficient for exemption.
• Section 5, Republic Act No. 7742 / Section 13, Presidential Decree No. 1752 — Grants the HDMF Board of Trustees the rule-making power. The Court held this power does not authorize the Board to amend or repeal the statutory exemption provided in Section 19.
• Section 9(1), Chapter 2, Book VII, Administrative Code of 1987 — Requires public participation in rule-making. Not resolved by the Court.
• Section 3, Chapter 2, Book VII, Administrative Code of 1987 — Requires filing of rules with the U.P. Law Center. Not resolved by the Court.

Puno, Kapunan, and Ynares-Santiago, JJ. Pardo, J., took no part, being related to a party.