Victorias Milling Co., Inc. v.

Court of Appeals (2000)

No. L-16704. March 17, 1962.
Rule Interpretation

FACTS:
Social Security Commission issued Circular No. 22 which says:
o Effective November 1, 1958, all Employers in computing the premiums due the
System, will take into consideration and include in the Employee's remuneration
all bonuses and overtime pay, as well as the cash value of other media of
remuneration. All these will comprise the Employee's remuneration or earnings,
upon which the 3-1/2% and 2- 1/2% contributions will be based, up to a
maximum of P500 for any one month.
Because of this, petitioner Victorias Milling wrote the Social Security Commission
protesting against the circular as:
o Contradictory to previous Circular No. 7 which expressly excluded overtime and
bonuses in the computations of contributions
o That interpretation of the term compensation must be in line with RA 1161
o That such circular is not valid for SSCs lack of authority to promulgate it without
approval of the President and lack of publication
SSC: Circular No. 22 is not a rule or regulation that needed approval of the President but
a mere administrative interpretation of the statute, or an opinion as to how the law should
be construed.

ISSUE + RULING:

Is Circular No. 22 an administrative rule or regulation as contemplated in Sec. 4(a) of RA 1161?

No. It is a mere administrative interpretation of pre-existing law.
There is an important distinction between an administrative rule and an administrative
interpretation of a law whose enforcement is entrusted to an administrative body.

ADMINISTRATIVE RULES ADMINISTRATIVE INTERPRETATIONS OF LAW

In exercise of their delegated law making
power
Rules have the force and effect of valid law
Renders an opinion or gives a statement of
BINDING when promulgated in pursuance or
policy
procedure partake the nature of a statute and
Merely interprets pre-existing law
compliance may be enforced by a penal
At best merely advisory, for it is the courts
sanction provided in the law
which determine what the law means
Courts will have no say on their innate wisdom
and shall uphold it even if the Court is not in
agreement with the policy stated therein.
 Circular No. 22 was promulgated in light of the amendment to the SSS Law (by virtue of
RA 1792) defining the term compensation.
o Although the original law, Sec. 8 (f) of RA 1161, did not include bonuses,
overtime, etc. in the computation of compensation, RA 1792 already changed the
definition of compensation into:
(f) Compensation All remuneration for employment include the cash
value of any remuneration paid in any medium other than cash except that
part of the remuneration in excess of P500.00 received during the month.
Thus, the Circular was issued only to apprise those concerned of the interpretation or
understanding of the Commission of the law as amended.
o It did not add any duty or detail which was not already in the law as amended.
o It advises employer members of the System that they should already include
bonuses and overtime to the computation of their employees contributions
Anyway, Circular No. 22s interpretation of the word is correct.
o Generally, meaning of words are to be interpreted in accordance to their well-
accepted meanings in law
o But when such term or word is specifically defined in a particular law, such
interpretation must be adopted in enforcing that particular law
o Whatever prior executive or judicial construction may have been given to the
phrase in question should give way to the mandate of the new law.