Definition

(h) Member any person mandatorily covered by the provisions of Presidential Decree No. 1752, as amended by Executive Order No. 35 and Republic Act No. 7742 or if not mandatorily covered, voluntarily opted to be covered by the provisions thereof and is registered in the Fund;

(i) Active Member a member who is updated in his monthly contributions;

(j) Member-Borrower a member who has an outstanding account under any of the Funds housing loan programs;

(k) Member-Saver a member who has no outstanding account under any of the Funds housing loan programs;

(l) Total Accumulated Value the sum of the employees contributions and the employers required contributions and the corresponding dividends credited thereto;

(m) Monthly Compensation shall mean the members basic monthly salary plus Cost of Living Allowance (COLA);

(n) Monthly the period from the end of the last payroll period of the preceding month to the end of the last payroll period of the current month if compensation is on hourly, daily or weekly basis; if on any other basis, monthly shall mean a period of one calendar month;

Dividends shall mean a corporate profit set aside, declared and ordered by the Board of Trustees to be paid to the members proportionately according to their respective interests which shall be credited to their Total Accumulated Value, payable out of the net income of the preceding year;

(p) Net Income shall mean the balance of realized or accrued earnings for a given period after deducting all costs and expenses, interests, taxes, losses and charges of every character, including depreciation and depletion for the period.

(q) Membership Term a period of 20 years commencing from the first day of the month to which the members initial contribution to the Fund applies;

(r) Permanent Total Disability loss or impairment of a physical or mental function resulting from injury or sickness which completely incapacitates a member to perform any work or engage in any business or occupation as determined by the Fund;

(s) Net Fund Asset the total assets of the Fund less current liabilities.

(t) Investible Funds shall mean funds available after deducting costs of operations and expenses, administrative and general expenses, reserves for benefit claims, provisions for a sinking fund for the return of members equity upon maturity, and provision for taxes.

(u) Superior Housing Plan means an employers housing plan for his employees existing as of the effectivity of Republic Act No. 7742 which is considered superior to the Pag-ibig Housing Loan Program in terms of 1) eligibility requirement

2) interest rate

3) repayment period

4) loanable amount, and

5) percentage of covered employees benefitted by the housing plan

(v) Superior Retirement/Provident Plan means an employers retirement/provident plan for his employees existing as of the effectivity of Republic Act No. 7742 which is considered superior to the benefits offered by the Fund to its members in terms of:

1) vesting features

2) retirement age and/or years of service required

3) employers contribution, and

4) amount of benefits extended

(w) Distressed Employer an employer who suffered at least twenty-five (25%) percent capital impairment for the past taxable year as evidenced by his Audited Financial Statement;

(x) Waiver of Coverage temporary exclusion from coverage under the Fund of an employer who is not yet registered with the Fund;

(y) Suspension of Coverage temporary exclusion from coverage under the Fund of an employer who is already registered with the Fund.

MembershipSECC.6. Membership Term. - Membership in the Fund shall be for a period of twenty (20) years, except when earlier terminated by reason of retirement, disability, insanity, death, departure from the country or other causes as may be provided for by the Board of Trustees: Provided, That those who become members of the Fund after the effectivity of this Act may withdraw the total accumulated value of their contributions to the Fund after the tenth or the fifteenth year of continuous membership: Provided, further, That said members have no outstanding housing loans with the Fund: provided, finally, That this option may be exercised only once and shall not prejudice the members continuing membership in the Fund. Resignation, lay-off or suspension from employment may not necessarily constitute a ground for membership termination, except for suspension of contributions.

SECTION 1. Coverage Membership in the Fund shall be mandatory upon all employees covered by the Social Security System and the Government Service Insurance System, and their respective employers; Provided however, that coverage of the employees whose monthly compensation is less than four thousand pesos (P4,000.00) shall be voluntary; Provided further, that upon membership with the Fund, their employer shall contribute an amount in accordance with Section 1 of Rule VI hereof.

SECTION 2. Effectivity of Coverage Subject to the provisions of the preceding section, for employees covered by the GSIS or SSS who are not yet members of the Fund prior to the effectivity of Republic Act No. 7742 as well as for those who suspended their membership under the provisions of Executive Order No. 90 and their respective employers, mandatory coverage shall take effect on the date of effectivity of Republic Act No. 7742: Provided, That implementation thereof shall start on January 1, 1995.

Thereafter, mandatory coverage of the employer shall take effect on the first day of his business operation, and that of the employee on the date of his employment.

SECTION 3. Portability of Membership A member who transfers to another employer or who becomes self-employed carries with him his Total Accumulated Value.

SECTION 4. Termination of Membership Membership shall be terminated anytime upon the occurrence of any of the following:

a) Membership Term Maturity;

b) Death;

c) Retirement;

d) Permanent Total Disability or Insanity;

e) Departure from the Country permanently;

f) Termination from the service by reason of health.

Occurrences other than the above shall not constitute termination of membership except as may otherwise be provided by the Board of Trustees.

SECTION 5. Retirement Any member shall be compulsorily retired under the Fund upon reaching age sixty-five (65). He may, however, opt to retire earlier under the Fund upon the occurrence of any of the following:

1. His actual retirement from the SSS, GSIS or separate employer provident/retirement plan, provided, however, that under the latter case, the member has at least reached age forty-five (45);

2. Notwithstanding his continued employment or service upon reaching age sixty (60); provided, he is not a member-borrower.

SECTION 6. Permanent Total Disability The following disabilities shall be deemed total and permanent:

1. Temporary total disability lasting continuously for more than one hundred twenty days;

2. Complete loss of sight of both eyes;

3. Loss of two limbs at or over the ankle or wrist;

4. Permanent complete paralysis of two limbs;

5. Brain injury resulting in incurable imbecility or insanity; and

6. Such other cases which are adjudged to be total and permanent disability by a duly licensed physician and approved by the Board of Trustees.

REGISTRATION

SECTION 1. Registration of Members It shall be the duty of every employer to register all his covered employees by submitting to the Fund all data and information the Fund may require in relation to their respective businesses and employees in such forms as the President of the Fund may prescribe for the purpose.

SECTION 2. Obligation of Employer to Voluntary Members Any employee whose monthly compensation is less than four thousand (P4,000.00) pesos who opts to voluntarily join the Fund shall be registered by his employer within thirty (30) days from the date he signifies in writing his intention to join the Fund.

SECTION 3. Liability of Employer for Non-Compliance Any employer found guilty of non-compliance of Sections 1 and 2 of this Rule shall be liable under Section 1 of Rule XIII. An employer found guilty of coercing and/or compelling any employee under his employ, whose monthly compensation is less than four thousand (P4,000.00) pesos not to join the Fund shall likewise be liable under Section 1 of Rule XIII.

BENEFITS

SECTION 1. Return of Contributions A member shall be entitled to receive his Total Accumulated Value upon termination of his membership in accordance with Section 4 of Rule IV, free from any pending obligation with the Fund or any of its loan programs. In the event of his death, his legal heir shall likewise receive the same free from any pending obligation with the Fund or any of its loan programs.

SECTION 2. Optional Withdrawal of Contributions A new member of the Fund after the effectivity of Republic Act No. 7742 shall have the option to withdraw his total accumulated value after the tenth or fifteenth year of continuous membership: Provided that said member has no outstanding housing loan with the Fund at the time of withdrawal. This option may be exercised only once and shall not prejudice his continuing membership in the Fund.

The exercise of this option by the member shall not be considered as a ground to terminate his membership with the Fund. He shall continue to be mandatorily covered by the Fund and his employer is mandated to deduct and remit the employees required contribution together with his employer contribution pursuant to these Rules.

The provision shall likewise apply to all members who voluntarily joined the Fund under provisions of Executive Order No. 90 prior to the effectivity of Republic Act No. 7742.

SECTION 3. Dividend Benefit The Board of Trustees shall set aside annually an amount which in no case shall be less than seventy (70%) percent of the annual net income of the Fund, to be paid in the form of dividends to members and credited proportionately to their Total Accumulated Value.

SECTION 4. Death Benefits Upon the death of a member, his legal heirs shall be entitled to death benefits in an amount to be determined by the Board in addition to the total accumulated value as mentioned in Section 1 hereof.

ADJUDICATION AND CLAIMS

SECTION 1. Facility of Payment of Claims and Benefits The Board of Trustees shall prescribe such rules and regulations to facilitate payment of benefits, proceeds and claims under Presidential Decree No. 1752, as amended and all other laws pertinent thereto.

SECTION 2. Adjudication and Settlement of Claims and Disputes The Fund shall have original and exclusive jurisdiction over all claims and disputes on any matter relative to the implementation of the provisions of Presidential Decree No. 1752, as amended, affecting the rights and interest of the members. The decision of the President of the Fund shall be final and unappealable after the lapse of thirty (30) days from receipt of notice by the aggrieved party of such decision and without him taking the appropriate remedies available to him to the Board of Trustees. The decision of the Board of Trustees shall, unless appealed to a competent court, become final and unappealable after fifteen (15) days from notice of such decision.

The President shall prescribe the forms to be used and the procedure to be followed in the adjudication and settlement of the aforementioned claims and disputes.

SECTION 3. Proof of Death of a Member The proof of the death of the member shall be established by a duly certified death certificate or a certified extract from the Death Register issued by the Civil Registrar or by such other officer authorized to issue such extracts. The Fund may likewise accept as additional proof such other documents as it may, in its discretion, deem acceptable.

ROMULO, MABANTA, BUENAVENTURA, SAYOC & DE LOS ANGELES, petitioner, vs. HOME DEVELOPMENT MUTUAL FUND, respondent.

D E C I S I O N

DAVIDE, JR., C.J.: CODES

Once again, this Court is confronted with the issue of the validity of the Amendments to the Rules and Regulations Implementing Republic Act No. 7742, which require the existence of a plan providing for both provident/retirement and housing benefits for exemption from the Pag~IBIG Fund coverage under Presidential Decree No. 1752, as amended.

Pursuant to Section 19[1] of P.D. No. 1752, as amended by R.A. No. 7742, petitioner Romulo, Mabanta, Buenaventura, Sayoc and De Los Angeles (hereafter PETITIONER), a law firm, was exempted for the period 1 January to 31 December 1995 from the Pag~IBIG Fund coverage by respondent Home Development Mutual Fund (hereafter HDMF) because of a superior retirement plan.[2]

On 1 September 1995, the HDMF Board of Trustees, pursuant to Section 5 of Republic Act No. 7742, issued Board Resolution No. 1011, Series of 1995, amending and modifying the Rules and Regulations Implementing R.A. No. 7742. As amended, Section 1 of Rule VII provides that for a company to be entitled to a waiver or suspension of Fund coverage,[3] it must have a plan providing for both provident/ retirement and housing benefits superior to those provided under the Pag~IBIG Fund.

On 16 November 1995, PETITIONER filed with the respondent an application for Waiver or Suspension of Fund Coverage because of its superior retirement plan.[4] In support of said application, PETITIONER submitted to the HDMF a letter explaining that the 1995 Amendments to the Rules are invalid.[5] Jksm

In a letter dated 18 March 1996, the President and Chief Executive Officer of HDMF disapproved PETITIONER's application on the ground that the requirement that there should be both a provident retirement fund and a housing plan is clear in the use of the phrase "and/or," and that the Rules Implementing R.A. No. 7742 did not amend nor repeal Section 19 of P.D. No. 1752 but merely implement the law.[6]

PETITIONER's appeal[7] with the HDMF Board of Trustees was denied for having been rendered moot and academic by Board Resolution No. 1208, Series of 1996, removing the availment of waiver of the mandatory coverage of the Pag~IBIG Fund, except for distressed employers.[8]

On 31 March 1997, PETITIONER filed a petition for review[9] before the Court of Appeals. On motion by HDMF, the Court of Appeals dismissed[10] the petition on the ground that the coverage of employers and employees under the Home Development Mutual Fund is mandatory in character as clearly worded in Section 4 of P.D. No. 1752, as amended by R.A. No. 7742. There is no allegation that petitioner is a distressed employer to warrant its exemption from the Fund coverage. As to the amendments to the Rules and Regulations Implementing R.A. No. 7742, the same are valid. Under P.D. No. 1752 and R.A. No. 7742 the Board of Trustees of the HDMF is authorized to promulgate rules and regulations, as well as amendments thereto, concerning the extension, waiver or suspension of coverage under the Pag~IBIG Fund. And the publication requirement was amply met, since the questioned amendments were published in the 21 October 1995 issue of the Philippine Star, which is a newspaper of general circulation.

PETITIONER's motion for reconsideration[11] was denied.[12] Hence, on 6 November 1997, PETITIONER filed a petition before this Court assailing the 1995 and the 1996 Amendments to the Rules and Regulations Implementing Republic Act No. 7742 for being contrary to law. In support thereof, PETITIONER contends that the subject 1995 Amendments issued by HDMF are inconsistent with the enabling law, P.D. No. 1752, as amended by R.A. No. 7742, which merely requires as a pre~condition for exemption from coverage the existence of either a superior provident/ retirement plan or a superior housing plan, and not the concurrence of both plans. Hence, considering that PETITIONER has a provident plan superior to that offered by the HDMF, it is entitled to exemption from the coverage in accordance with Section 19 of P.D. No. 1752. The 1996 Amendment are also void insofar as they abolished the exemption granted by Section 19 of P.D. 1752, as amended. The repeal of such exemption involves the exercise of legislative power, which cannot be delegated to HMDF. Kycalr

PETITIONER also cites Section 9 (1), Chapter 2, Book VII of the Administrative Code of 1987, which provides:

SEC. 9. Public Participation ~~ (1) If not otherwise required by law, an agency shall, as far as practicable, publish or circulate notices of proposed rules and afford interested parties the opportunity to submit their views prior to the adoption of any rule.

Since the Amendments to the Rules and Regulations Implementing Republic Act No. 7742 involve an imposition of an additional burden, a public hearing should have first been conducted to give chance to the employers, like PETITIONER, to be heard before the HDMF adopted the said Amendments. Absent such public hearing, the amendments should be voided.

Finally, PETITIONER contends that HDMF did not comply with Section 3, Chapter 2, Book VII of the Administrative Code of 1987, which provides that "[e]very agency shall file with the University of the Philippines Law Center three (3) certified copies of every rule adopted by it."

On the other hand, the HDMF contends that in promulgating the amendments to the rules and regulations which require the existence of a plan providing for both provident and housing benefits for exemption from the Fund Coverage, the respondent Board was merely exercising its rule-making power under Section 13 of P.D. No. 1752. It had the option to use "and" only instead of "or" in the rules on waiver in order to effectively implement the Pag-IBIG Fund Law. By choosing "and," the Board has clarified the confusion brought about by the use of "and/or" in Section 19 of P.D. No. 1752, as amended.

As to the public hearing, HDMF maintains that as can be clearly deduced from Section 9(1), Chapter 2, book VII of the Revised Administrative Code of 1987, public hearing is required only when the law so provides, and if not, only if the same is practicable. It follows that public hearing is only optional or discretionary on the part of the agency concerned, except when the same is required by law. P.D. No. 1752 does not require that pubic hearing be first conducted before the rules and regulations implementing it would become valid and effective. What it requires is the publication of said rules and regulations at least once in a newspaper of general circulation. Having published said 1995 and 1996 Amendments through the Philippine Star on 21 October 1995[13] and 15 November 1996,[14] respectively, HDMF has complied with the publication requirement.

Finally, HDMF claims that as early as 18 October 1996, it had already filed certified true copies of the Amendments to the Rules and Regulations with the University of the Philippines Law Center. This fact is evidenced by certified true copies of the Certification from the Office of the National Administrative Register of the U.P. Law Center.[15]

We find for the PETITIONER. Calrky

The issue of the validity of the 1995 Amendments to the Rules and Regulations Implementing R.A. No. 7742, specifically Section I, Rule VII on Waiver and Suspension, has been squarely resolved in the relatively recent case of China Banking Corp. v. The Members of the Board of Trustees of the HDMF.[16] We held in that case that Section 1 of Rule VII of the Amendments to the Rules and Regulations Implementing R.A. No. 7742, and HDMF Circular No. 124~B prescribing the Revised Guidelines and Procedure for Filing Application for Waiver or Suspension of Fund Coverage under P.D. No. 1752, as amended by R.A. No. 7742, are null and void insofar as they require that an employer should have both a provident/ retirement plan and a housing plan superior to the benefits offered by the Fund in order to qualify for waiver or suspension of the Fund coverage. In arriving at said conclusion, we ruled:

The controversy lies in the legal signification of the words "and/or."

In the instant case, the legal meaning of the words "and/or" should be taken in its ordinary signification, i.e., "either and or; e.g. butter and/or eggs means butter and eggs or butter or eggs.

"The term and/or means that the effect shall be given to both the conjunctive "and" and the disjunctive "or"; or that one word or the other may be taken accordingly as one or the other will best effectuate the purpose intended by the legislature as gathered from the whole statute. The term 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."

It is accordingly ordinarily held that the intention of the legislature in using the term "and/or" is that the word "and" and the word "or" are to be used interchangeably.

It ... seems to us clear from the language of the enabling law that Section 19 of P.D. No. 1752 intended that an employer with a provident plan or an employee housing plan superior to that of the fund may obtain exemption from coverage. If the law had intended that the employee [sic] should have both a superior provident plan and a housing plan in order to qualify for exemption, it would have used the words "and" instead of "and/or." Notably, paragraph (a) of Section 19 requires for annual certification of waiver or suspension, that the features of the plan or plans are superior to the fund or continue to be so. The law obviously contemplates that the existence of either plan is considered as sufficient basis for the grant of an exemption; needless to state, the concurrence of both plans is more than sufficient. To require the existence of both plans would radically impose a more stringent condition for waiver which was not clearly envisioned by the basic law. By removing the disjunctive word "or" in the implementing rules the respondent Board has exceeded its authority. Slx

It is without doubt that the HDMF Board has rule~making power as provided in Section 5[17] of R.A. No. 7742 and Section 13[18] 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.[19] It is required that the regulation be germane to the objects and purposes of the law, and be not in contradiction to, but in conformity with, the standards prescribed by law.[20]

In the present case, when the Board of Trustees of the HDMF required in Section 1, Rule VII of the 1995 Amendments to the Rules and Regulations Implementing R.A. No. 7742 that employers should have both provident/retirement and housing benefits for all its employees in order to qualify for exemption from the Fund, it effectively amended Section 19 of P.D. No. 1752. And when the Board subsequently abolished that exemption through the 1996 Amendments, it repealed Section 19 of P.D. No. 1752. Such amendment and subsequent repeal of Section 19 are both invalid, as they are not within the delegated power of the Board. The HDMF cannot, in the exercise of its rule~making power, issue a regulation not consistent with the law it seeks to apply. Indeed, administrative issuances must not override, supplant or modify the law, but must remain consistent with the law they intend to carry out.[21] Only Congress can repeal or amend the law. Scslx

While it may be conceded that the requirement of having both plans to qualify for an exemption, as well as the abolition of the exemption, would enhance the interest of the working group and further strengthen the Home Development Mutual Fund in its pursuit of promoting public welfare through ample social services as mandated by the Constitution, we are of the opinion that the basic law should prevail. A department zeal may not be permitted to outrun the authority conferred by the statute.[22]

Considering the foregoing conclusions, it is unnecessary to dwell on the other issues raised.

WHEREFORE, the petition is GRANTED. The assailed decision of 31 July 1997 of the Court of Appeals in CA~G.R. No. SP~43668 and its Resolution of 15 October 1997 are hereby REVERSED and SET ASIDE. The disapproval by the Home Development Mutual Fund of the application of the petitioner for waiver or suspension of Fund coverage is SET ASIDE, and the Home Development Mutual Fund is hereby directed to refund to petitioner all sums of money it collected from the latter.