The Social Security Commission issued its Circular No. 22 of the following tenor:
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.
Upon receipt of a copy thereof, petitioner Victorias Milling Company, Inc., through counsel, wrote the Social Security Commission in effect protesting against the circular as contradictory to a previous Circular No. 7, expressly excluding overtime pay and bonus in the computation of the employers’ and employees’ respective monthly premium contributions, and submitting, “In order to assist your System in arriving at a proper interpretation of the term ‘compensation’ for the purposes of” such computation, their observations on Republic Act 1161 and its amendment and on the general interpretation of the words “compensation”, “remuneration” and “wages”. Counsel further questioned the validity of the circular for lack of authority on the part of the Social Security Commission to promulgate it without the approval of the President and for lack of publication in the Official Gazette.
Whether or not Circular No. 22 is a rule or regulation as contemplated in Section 4(a) of Republic Act 1161 empowering the Social Security Commission “to adopt, amend and repeal subject to the approval of the President such rules and regulations as may be necessary to carry out the provisions and purposes of this Act.”
No. The Commission’s Circular No. 22 is not a rule or regulation that needed the approval of the President and publication in the Official Gazette to be effective, but a mere administrative interpretation of the statute, a mere statement of general policy or opinion as to how the law should be construed. The Circular purports merely to advise employers-members of the System of what, in the light of the amendment of the law, they should include in determining the monthly compensation of their employees upon which the social security contributions should be based. The Circular neither needs approval from the President nor publication in the Official Gazette.