04 Victorias Milling Co., Inc.

vs Social Security Commission (SSC)

The case is about the distinction between an administrative rule and an administrative
interpretation of law.

This is an appeal from the resolution of the Social Security Commission.

Facts:

 The Social Security Commission issued Circular No. 22 providing for the definition
of remuneration which shall include “bonuses and overtime pay.” This is in relation
to the computation of the premium contributions of the members of SSC.
 Upon receipt of a copy, petitioner Victorias Milling Co. Inc. filed a protest against
Circular No. 22 before the Social Security Commission through counsel. Petitioner
contends that Circular No. 22 is contradictory to the provisions of Circular No. 7
expressly excluding overtime pay and bonuses in the computation of the
employer’s and employee’s monthly contributions. The counsel of petitioner also
questioned the validity of Circular No. 22 because it had no approval by the
President of the Philippines and was not published in the Official Gazette.
 The Social Security Commission ruled that Circular No. 22 is a mere interpretation
of the Administrative Statute, thus there is no need for its approval and publication.
Thus

Issue: Whether or not Circular No. 22 is a rule or regulation

Held: No. It is a mere interpretation of a rule and regulation.

Ruling:

 Administrative Rule
o These are promulgated pursuant to a procedure or authority conferred
upon the administrative agency by law, which thus have the nature of a
statute. Compliance to this may be enforced by a penal sanction provided
by law.
o When an administrative agency promulgates rules and regulations, it
“makes” a new law with the force and effect of a valid law.
 Administrative Interpretation
o When an administrative agency merely renders an opinion, or gives a
statement of policy
o This is merely advisory, for it is the courts who determine what the laws
mean.

RA 1161 expressly provides that: “Compensation - all remuneration for employment shall
include: (2) Bonuses, allowances and overtime pay.”

This was eventually amended by RA 1792 which now provides that

“f) Compensation—All remuneration for employment include the cash value of any
remuneration paid in any medium other than cash” (Thus, in the computation of premium
monthly contributions to the SSC, compensation now includes bonuses and overtime
pay)

It thus became necessary for the Social Security Commission to interpret the effect of
such deletion or elimination. Circular No. 22 was, therefore, issued to apprise those
concerned of the interpretation or understanding of the Commission, of the law as
amended, which it was its duty to enforce. It did not add any duty or detail that was not
already in the law as amended.