HDMF

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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.
Membership
SECC.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 NonCompliance Any employer found guilty of noncompliance 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.
DECISION
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 rulemaking 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.

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