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Court of

SECOND DIVISION

[G.R. No. 130584. June 27, 2006.]

YAZAKI TORRES MANUFACTURING, INC., petitioner, vs.

THE COURT OF APPEALS, THE HOME DEVELOPMENT
MUTUAL FUND, through its Board of Trustees, and
HONORABLE ZORAYDA AMELIA C. ALONZO, in her
capacity as President of the Home Development Mutual
Fund, respondents.

DECISION

SANDOVAL-GUTIERREZ, J : p

This is a petition for certiorari under Rule 65 of the 1997 Rules of

Civil Procedure, as amended, seeking to annul the Decision 1 of the Court
of Appeals (Special Eighth Division), dated February 5, 1997, in CA-G.R.
SP No. 41487 for having been issued with grave abuse of discretion.
The Home Development Mutual Fund (HDMF) is the government
agency tasked with the administration of the PAG-IBIG 2 Fund (Fund)
created under Presidential Decree (P.D.) No. 1530, signed into law on June
11, 1978. The Fund has been intended for housing purposes to be sourced
from voluntary contributions from its members.
On December 14, 1980, P.D. No. 1530 was amended by P.D. No.
1752 providing that membership in the Fund is mandatory for all gainfully-
employed Filipinos.
On June 17, 1994, P.D. No. 1752 was amended by Republic Act
(R.A.) No. 7742 which took effect on January 1, 1995. Under the new law,
the coverage of the Fund extends to all members of the Social Security
System and Government Service Insurance System, as well as their
employers. However, membership is voluntary for employees earning less
than P4,000.00 a month.
On July 18, 1994, the HDMF Board of Trustees promulgated Rules
and Regulations implementing R.A. No. 7742. Rule VII provides:
RULE VII
WAIVER OR SUSPENSION
SEC. 1. Waiver or Suspension, Existing Provident or
Retirement Plan. — An employer and/or employee group who has
an existing provident or retirement plan as of the effectivity of
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Republic Act No. 7742, qualified under Republic Act No. 4917 and
actuarially determined to be sound and reasonable by an
independent actuary duly accredited by the Insurance
Commission may apply with the Fund for waiver or suspension of
coverage. Such waiver or suspension may be granted by the
President of the Fund on the basis of verification that the waiver
or suspension does not contravene any effective collective
bargaining or other existing agreement and that the features of
the plan or plans are superior to the Fund and continue to be
so. The certificate of waiver or suspension of coverage issued
therein shall only be for a period of one (1) year but the same may
be renewed for another year upon the filing of a proper application
within a period of sixty (60) days prior to the expiration of the
existing waiver or suspension. CacEID

SEC. 2. Waiver or Suspension, Existing Housing Plan.

— An employer and/or employee group who has an existing
housing plan as of the effectivity of Republic Act No. 7742 may
apply with the Fund for waiver or suspension of coverage. Such
waiver or suspension may be granted by the President of the
Fund on the basis of verification that the waiver or suspension
does not contravene any effective collective bargaining or other
existing agreement and that the features of the plan or plans are
superior to the Fund and continue to be so. The certificate of
waiver or suspension of coverage issued therein shall only be for
a period of one (1) year but the same may be renewed for another
year upon the filing of a proper application within a period of sixty
(60) days prior to the expiration of the existing waiver or
suspension.
xxx xxx xxx
SEC. 4. Effects of Waiver or Suspension, Existing
Provident or Retirement/Housing Plan. — Waiver or suspension of
coverage granted to an employer under Sections 1 and 2 of this
Rule shall likewise apply to his employees who are members of
the employer's private plan; Provided, That such members are not
member-borrowers of the Fund. A member-borrower shall
continue to pay and remit to the fund his monthly contributions
together with the employer contributions to be shouldered by him.
A member-saver may opt to remain in good standing by remitting
to the Fund his monthly contributions with or without employer
contribution.
Employees who are non-members of the employer's
private plan at the time of the certificate of waiver or suspension
of coverage is granted shall continue to be mandatorily covered
by the Fund and their employer is required to set aside and remit
to the Fund the employee contributions together with the
employer contributions.
Yazaki Torres Manufacturing, Inc., petitioner herein, a corporation
organized under Philippine laws, applied for and was granted by the HDMF
a waiver from the Fund coverage for the period from January 1 to
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December 31, 1995. The HDMF found that petitioner's retirement plan for
its employees is superior to that offered by the Fund.
On September 1, 1995, the HDMF Board of Trustees amended Rule
VII of the Rules and Regulations implementing R.A. No. 7742. The
amended Rule provides:
SEC. 1. Waiver or Suspension Because of Existing
Provident/Retirement and Housing Plan. — An employer with a
plan providing both for a provident/retirement and housing
benefits for all his employees and existing as of December 14,
1980, the effectivity date of Presidential Decree No. 1752, may
apply with the Fund for waiver or suspension of the coverage. The
provident/retirement aspect of the plan must be qualified under
Republic Act No. 4917 and actuarially determined to be sound
and reasonable by an independent actuary duly accredited by the
Insurance Commission. The provident/retirement and housing
benefits as provided for under the plan must be superior to the
provident/retirement and housing benefits offered by the
Fund.
Such waiver or suspension may be granted by the Fund on
the basis of actual certification that the waiver or suspension does
not contravene any collective bargaining agreement, any other
existing agreement or clearly spelled out management policy and
that features of the plan or plans are superior to the Fund and
continue to be so.
Provided further, That the application must be endorsed by
the labor union representing a majority of the employees or in the
absence thereof by at least a majority vote for all the employees
in the said establishment in a meeting specifically called for the
purpose; Provided furthermore, That such a meeting be held or
conducted under the supervision of an authorized representative
from the Fund. CTaIHE

The certificate of waiver or suspension of coverage issued

herein shall only be for a period of one (1) year effective upon
issuance thereof. No certificate of waiver issued by the President
of the Fund shall have retroactive effect. Application for renewal
must be filed within sixty (60) days prior to the expiration of the
existing waiver or suspension and such application for renewal
shall only be granted based on the same conditions and
requirements under which the original application was approved.
Pending the approval of the application for waiver or
suspension of coverage or the application for renewal, the
employer and his covered employees shall continue to be
mandatorily covered by the Fund as provided for under Republic
Act No. 7742.
xxx xxx xxx

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SEC. 3. Effects of Waiver or Suspension; Existing

Provident or Retirement/Housing Plan. — Waiver or suspension of
coverage granted to an employer under Section 1 shall likewise
apply to his employees who are members of the employer's
private plan; Provided, That such members are not member-
borrowers of the Fund. A member-borrower shall continue to pay
and remit to the Fund his monthly contributions together with the
employer contribution to be shouldered by him. A member-saver
may opt to remain in good standing by remitting to the Fund his
monthly contributions with or without employer contributions.
Notwithstanding the certificate of waiver or suspension granted to
the employer, it is still the obligation of the employer to service this
type of contributing employee-member by deducting through
salary deductions and remitting to the Fund the contribution as
required herein.
Employees who are non-members of the employer's
private plan at the time the certificate of waiver or suspension of
coverage is granted shall continue to be mandatorily covered by
the Fund and their employer is required to set aside and remit to
the Fund the employee contributions together with the employer's
required contributions.
xxx xxx xxx
After its waiver from the Fund coverage lapsed, petitioner applied for
a renewal. The ground relied upon was once again its "superior retirement
plan" to that of the Fund.
On February 16, 1996, the HDMF Chief Executive Officer
disapproved petitioner's application on the ground that its retirement plan is
not superior to that provided by the Fund. Petitioner was then directed "to
register its employees with the Fund and to remit their monthly
contributions together with the mandatory employer's share."
Petitioner interposed an appeal to the HDMF Board of Trustees, but
in a Resolution dated May 29, 1996, the Board denied the appeal.
Thereupon, petitioner filed with the Court of Appeals a petition for
review, docketed as CA-G.R. SP No. 41487.
In a Decision dated February 5, 1997, the Court of Appeals (Special
Eighth Division) denied the petition, holding that:
Petitioner contends that the existing rules and regulations
cannot be amended unless and until R.A. No. 7742 is likewise
amended and since the September 1, 1995 amendment on Rule
VII of the HDMF rules and regulations was beyond the 60-day
period required under Section 5 of R.A. No. 7742, the same is
invalid. To uphold these arguments would render the
administrative agency inutile to correct the rules and regulations
duly promulgated by it. A contario, such rules and regulations or
orders may be amended, modified or revoked to conform to the
requirements of the law or the demands of justice (Benito v. Public
Service Commission, 86 Phil. 624 [1950]; Raymundo
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Transportation Co. v. Tanay Transit Co., 63 Phil. 1064 [1936]). The

only limitation is that the administrative regulations cannot extend
the law and amend a legislative enactment for settled is the rule
that administrative regulations must be in harmony with the
provisions of the law (Land Bank of the Philippines v. Court of
Appeals, 249 SCRA 149 [1995]). In case of discrepancy between
the basic law and an implementing rule or regulation, the former
prevails (Shell Philippines, Inc. v. Central Bank of the Philippines,
162 SCRA 628 [1988]). cda

The September 1, 1995 amendment to the rules requiring

both provident/retirement and housing plans to the employees in
order that the employer may be granted a waiver or suspension of
the Pag-ibig Fund coverage is in harmony with WHEREAS
clauses of Presidential Decree No. 1752, thus:
WHEREAS, the Government, in pursuit of the
Constitutional mandates on the promotion of public welfare
through ample social services, as well as its humanist
commitment to the interests of the working group, in
relation particularly to their need for decent shelter has
established the Home Development Mutual Fund, under
Presidential Decree 1530, a system of employee-employer
contributions for housing purposes; and
WHEREAS, there is need to strengthen the Home
Development Mutual Funds and make it more effective
both as savings generation and home building program for
the gainfully-employed members of the Philippine society;
(Emphasis supplied)
The governing law which is Section 19 of Pres. Decree No.
1752 states:
SEC. 19. Existing Provident/Housing Plans —
An employer and/or employee — group who, at the time
this Decree becomes effective have their own provident
and/or employee — housing plans, may register with the
Fund, for any of the following purposes:
(a) For annual certification of waiver or
suspension from coverage or participation in the
Fund, which shall be granted on the basis of
verification that the waiver or suspension does not
contravene any effective collective bargaining
agreement and that the features of the plan or plans
are superior to the Fund or continue to be so; or
xxx xxx xxx
. . . The grant of the certification of waiver to the petitioner
was only for a specific period, i.e., from January 1, 1995 to
December 31, 1995 but subject to the condition that the same
may be renewed for another year upon the filing of the proper

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application within 60 days prior to the expiration of the existing

waiver or suspension. The grant is merely a privilege which the
State in the exercise of its police power has the right not to renew
the same as the exigency of the case warrants. After the lapse of
the specified period, the HDMF is not automatically required to
enter another contract with the petitioner as long as the latter
applies for renewal of certification. To reiterate, Section 1 of the
original HDMF rules, the law in force at the time of the granting of
the certification of waiver to the petitioner, provides "[s]uch waiver
or suspension may be granted by the President of the Fund on
the basis of verification that the waiver or suspension does not
contravene any effective collective bargaining or other existing
agreement and that the features of the plan or plans are superior
to the Fund and continue to be so." The word "may" is merely
permissive and operates to confer discretion upon a party (Capati
v. Ocampo, 113 SCRA 794 [1982]). The disapproval of the
petitioner's application for renewal of waiver from the Pag-ibig
Fund coverage was by reason that the petitioner's retirement plan
was not superior to Pag-ibig Fund (Annex "D", Petition, p. 30,
Rollo). It is well-settled principle that the finding of facts by the
administrative bodies which has acquired the expertise in the field
is entitled to great respect and, should not be disturbed on appeal
unless it is shown that it has patently misappreciated the facts.
Petitioner however failed to prove by sufficient evidence that the
findings of the President of the Fund was patently erroneous. 3
Petitioner filed its Motion for Reconsideration, but it was denied in a
Resolution dated June 17, 1997. CacTIE

Hence, the instant petition for certiorari. 4

Petitioner contends that the Court of Appeals acted with grave abuse
of discretion in upholding the HDMF's Resolution denying petitioner's
application for renewal of waiver of the Fund membership coverage; and in
confirming the authority of the HDMF to amend the implementing Rules of
the Fund. It claims that Section 5 of R.A. No. 7742 does not grant HDMF
the power to amend the implementing Rules and Regulations, contending
that "the power to make laws does not necessarily include the power to
alter or repeal the same." Since the HDMF is merely an administrative
agency tasked to implement the law, its authority to promulgate
implementing Rules does not include the power to amend or revise them.
It is a doctrine of long-standing that courts will not interfere in matters
which are addressed to the sound discretion of the government agency
entrusted with regulation of activities coming under the special and
technical training and knowledge of such agency. 5 For the exercise of
administrative discretion is a policy decision and a matter that best be
discharged by the government agency concerned and not by the courts. 6
In this case, there is no showing that the HDMF arbitrarily, whimsically or
capriciously denied petitioner's application for renewal of its waiver. It
conducted the necessary investigation, comparison, evaluation, and
deliberation of petitioner's retirement plan vis-à-vis the Fund. This Court
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thus holds that the Court of Appeals committed no grave abuse of

discretion amounting to lack or excess of jurisdiction when it affirmed the
denial of petitioner's application for renewal of waiver by the HDMF.
Moreover, the grant of waiver or exemption from the coverage of the
Fund is but a mere privilege granted by the State. A privilege is a particular
and peculiar benefit or advantage enjoyed by a person, company, or class
beyond the common advantages of other citizens. 7 Like any other privilege
or exemption, it may be withdrawn by the State on a finding that the
recipient is no longer entitled to it. There is no provision whatsoever in R.A.
No. 7742 or its Implementing Rules and Regulations that the HDMF shall
automatically renew a waiver from the Fund coverage upon an application
for renewal. The task of determining whether such application should be
granted is best discharged by the HDMF, not by the courts. Absent a
showing that the denial of petitioner's application by the HDMF is tainted by
caprice, arbitrariness, or despotism, this Court will not interfere in the
exercise of its discretion.
Petitioner claims that under the original Implementing Rules and
Regulations of the HDMF, superior retirement plan and superior housing
plan were separate and alternative grounds for the waiver of the Fund
coverage. However, under the Amended Rules and Regulations, superior
retirement plan and superior housing plan are joint requirements. Since
petitioner does not have a housing plan, this is the reason why its
retirement plan was not considered superior to that of the Fund. Hence, its
application for renewal of waiver was denied. Consequently, it insists that
the HDMF exceeded its authority when it amended its original Rules and
Regulations.
The legislative power is granted pursuant to Section 1, Article VI of
the Constitution which provides:
SEC. 1. The legislative power shall be vested in the
Congress of the Philippines which shall consist of a Senate and a
House of Representatives, except to the extent reserved to the
people by the provision on initiative and referendum.
The legislative power has been described generally as the power to
make, alter, and repeal laws. 8 The authority to amend, change, or modify a
law is thus part of such legislative power. It is the peculiar province of the
legislature to prescribe general rules for the government of society.
However, the legislature cannot foresee every contingency involved in a
particular problem that it seeks to address. Thus, it has become customary
for it to delegate to instrumentalities of the executive department, known as
administrative agencies, the power to make rules and regulations. This is
because statutes are generally couched in general terms which express
the policies, purposes, objectives, remedies and sanctions intended by the
legislature. The details and manner of carrying out the law are left to the
administrative agency charged with its implementation. In this sense, rules
and regulations promulgated by an administrative agency are the product
of a delegated power to create new or additional legal provisions that have

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the effect of law. 9 Hence, in general, rules and regulations issued by an

administrative agency, pursuant to the authority conferred upon it by law,
have the force and effect, or partake of the nature, of a statute. 10
The law delegated to the HDMF the rule-making power since this is
necessary for the proper exercise of its authority to administer the Fund.
Following the doctrine of necessary implication, this grant of express
power to formulate implementing rules and regulations must necessarily
include the power to amend, revise, alter, or repeal the same. DHESca

WHEREFORE, the petition is DISMISSED. The Decision and

Resolution of the Court of Appeals dated February 5 and July 17, 1997 in
CA-G.R. SP No. 41487 are AFFIRMED IN TOTO. Costs against petitioner.
SO ORDERED.
Puno, Corona, Azcuna and Garcia, JJ., concur.

Footnotes
1. Rollo, pp. 36-54. Ponencia by Associate Justice Corona Ibay-Somera
(retired), with Associate Justice Romeo J. Callejo, Sr. (now a member of
this Court), and Associate Justice Salvador J. Valdez, Jr. (retired),
concurring.
2. The acronym stands for "PAGTUTULUNGAN SA KINABUKASAN:
IKAW, BANGKO, INDUSTRIYA, GOBYERNO."
3. Rollo, pp. 46-49, 52-53.
4. What petitioner should have filed was a petition for review on
certiorari. Considering that this Court required private respondents to file
their comment on the petition, and in the interest of justice, the same is
given due course.
5. Republic v. Express Telecommunications Co., Inc., G.R. Nos. 147096
& 147210, January 15, 2002, 373 SCRA 316, 346, citing Concerned
Officials of the Metropolitan Waterworks & Sewerage System (MWSS) v.
Vasquez, 240 SCRA 502 (1995).
6. First Lepanto Ceramics, Inc. v. Court of Appeals, G.R. No. 117680,
February 9, 1996, 253 SCRA 552, 558, citing Bureau Veritas v. Office of
the President, 205 SCRA 705 (1992).

7. BLACK'S LAW DICTIONARY (6th Ed. 1990) 1197.

8. Occeña v. Commission on Elections, G.R. No. 52265, January 28,
1980, 95 SCRA 755, 759.
9. Victorias Milling Co., Inc. v. Social Security Commission, 114 Phil.
555, 558 (1962).
10. Commissioner of Internal Revenue v. Solidbank Corp., G.R. No.
148191, November 25, 2003, 416 SCRA 436, 448, citing Victorias Milling
Co., Inc. v. Social Security Commission, supra.
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