Case Summary (G.R. No. L-16704)
Procedural Posture
The Commission rejected the objections, holding that Circular No. 22 was merely an administrative interpretation of the amended law—not a rule or regulation requiring Presidential approval or Official Gazette publication. Victorias Milling Company appealed to the Supreme Court.
Legal Issue
Whether Circular No. 22 constitutes a “rule or regulation” under Section 4(a) of Republic Act No. 1161—thereby requiring the President’s approval and publication in the Official Gazette—or is simply an interpretative circular that becomes effective upon issuance.
Nature of Rules versus Interpretations
A rule or regulation “makes” new law with binding effect and may carry penal sanctions if violated; it requires observance of the promulgation procedure and is enforceable like a statute. An administrative interpretation, by contrast, is advisory, stating policy or opinion on how a pre-existing law should be construed, but lacking the force of law beyond the underlying statute.
Amendment of “Compensation” Definition
Original RA 1161 §8(f) defined “compensation” as all remuneration for employment, excluding (1) amounts over P500, (2) bonuses, allowances, overtime pay, and (3) discretionary payments. RA 1792 deleted the express exclusions for bonuses, allowances, and overtime pay, leaving only the P500 cap. The deletion necessitated clarification on whether items formerly exempted now constitute compensation.
Analysis of Circular No. 22
Circular No. 22 merely announced the Commission’s interpretation of the amended statutory definition of compensation. It did not introduce duties or details beyond those imposed by RA 1161 as amended by RA 1792. Thus, it neither created new legal obligations nor exceeded the scope of the enactment.
Applicability of Precedents
People v. Jolliffe (G.R. No. L-9553) recognizes that a regulation’s substance, not its form, determines its character; it does not establish that all circulars are rules. People v. Que Po Lay (50 O.G. 2850) involved penaltie
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Facts
- On October 15, 1958, the Social Security Commission (SSC) promulgated Circular No. 22, effective November 1, 1958.
- Circular No. 22 directed all employers to include bonuses, overtime pay, and the cash value of other media of remuneration in the computation of employees’ remuneration for purposes of SSC premium contributions, up to a P500 monthly ceiling.
- Victorias Milling Company, Inc. (“petitioner”) protested Circular No. 22 as contradicting earlier Circular No. 7 (October 7, 1957), which expressly excluded bonuses and overtime from the premium base.
Petitioner’s Objections
- Petitioner argued that Circular No. 22 conflicted with Circular No. 7 and statutory definitions in Republic Act No. 1161 (the Social Security Act).
- Petitioner contended that SSC lacked authority to issue Circular No. 22 without (a) the President’s approval under Section 4(a) of R.A. 1161, and (b) publication in the Official Gazette.
Commission’s Response
- The SSC overruled the objections, holding that Circular No. 22 was not a “rule or regulation” requiring presidential assent or Gazette publication.
- The Commission characterized Circular No. 22 as an administrative interpretation or statement of policy—merely advising how to construe the amended statutory definition of “compensation.”
Issue
- Whether Circular No. 22 constitutes a “rule or regulation” under Section 4(a) of R.A. 1161—thus requiring submission to the President for approval and publication in the Official Gazette be