EMILIO Y. HILADO, Petitioner, vs.

THE COLLECTOR OF INTERNAL REVENUE and THE COURT OF

TAX APPEALS, Respondents.
DECISION
BAUTISTA ANGELO, J.:
On March 31, 1952, Petitioner filed his income tax return for 1951 with the treasurer of Bacolod City
wherein he claimed, among other things, the amount of P12,837.65 as a deductible item from his gross
income pursuant to General Circular No. V-123 issued by the Collector of Internal Revenue. This circular
was issued pursuant to certain rules laid down by the Secretary of Finance On the basis of said return, an
assessment notice demanding the payment of P9,419 was sent toPetitioner, who paid the tax in monthly
installments, the last payment having been made on January 2, 1953.
Meanwhile, on August 30, 1952, the Secretary of Finance, through the Collector of Internal Revenue,
issued General Circular No. V-139 which not only revoked and declared void his general Circular No. V123 but laid down the rule that losses of property which occurred during the period of World War II from
fires, storms, shipwreck or other casualty, or from robbery, theft, or embezzlement are deductible in the
year of actual loss or destruction of said property. As a consequence, the amount of P12,837.65 was
disallowed as a deduction from the gross income ofPetitioner for 1951 and the Collector of Internal
Revenue demanded from him the payment of the sum of P3,546 as deficiency income tax for said yea r.
When the petition for reconsideration filed by Petitioner was denied, he filed a petition for review with the
Court of Tax Appeals. In due time, this court rendered decision affirming the assessment made
by Respondent Collector of Internal Revenue. This is an appeal from said decision.
It appears that Petitioner claimed in his 1951 income tax return the deduction of the sum of P12,837.65 as
a loss consisting in a portion of his war damage claim which had been duly approved by the Philippine
War Damage Commission under the Philippine Rehabilitation Act of 1946 but which was not paid and
never has been paid pursuant to a notice served upon him by said Commission that said part of his claim
will not be paid until the United States Congress should make further appropriation . He claims that said
amount of P12,837.65 represents a business asset within the meaning of said Act which he is entitled to
deduct as a loss in his return for 1951. This claim is untenable.
To begin with, assuming that said a mount represents a portion of the 75% of his war damage claim which
was not paid, the same would not be deductible as a loss in 1951 because, according to Petitioner, the
last installment he received from the War Damage Commission, together with the notice that no further
payment would be made on his claim, was in 1950. In the circumstance, said amount would at most be a
proper deduction from his 1950 gross income. In the second place, said amount cannot be considered as
a business asset which can be deducted as a loss in contemplation of law because its collection is not
enforceable as a matter of right, but is dependent merely upon the generosity and magnanimity of the U.
S. government. Note that, as of the end of 1945, there was absolutely no law under which Petitioner could
claim compensation for the destruction of his properties during the battle for the liberation of the
Philippines. And under the Philippine Rehabilitation Act of 1946, the payments of claims by the War
Damage Commission merely depended upon its discretion to be exercised in the manner it may see fit,
but the non-payment of which cannot give rise to any enforceable right, for, under said Act, All findings of
the Commission concerning the amount of loss or damage sustained, the cause of such loss or damage,
the persons to whom compensation pursuant to this title is payable, and the value of the property lost or
damaged, shall be conclusive and shall not be reviewable by any court. (section 113).
It is true that under the authority of section 338 of the National Internal Revenue Code the Secretary of
Finance, in the exercise of his administrative powers, caused the issuance of General Circular No. V-123
as an implementation or interpretative regulation of section 30 of the same Code , under which the amount
of P12,837.65 was allowed to be deducted in the year the last installment was received with notice that
no further payment would be made until the United States Congress makes further appropriation
therefor, but such circular was found later to be wrong and was revoked. Thus, when doubts arose as to
the soundness or validity of such circular, the Secretary of Finance sought the advice of the Secretary of

Justice who, accordingly, gave

follows:chanroblesvirtuallawlibrary

his

opinion

the

pertinent

portion

of

which

reads

as

Yet it might be argued that war losses were not included as deductions for the year when they were
sustained because the taxpayers had prospects that losses would be compensated for by the United
States Government; chan roblesvirtualawlibrarythat since only uncompensated losses are deductible,
they had to wait until after the determination by the Philippine War Damage Commission as to the
compensability in part or in whole of their war losses so that they could exclude from the deductions those
compensated for by the said Commission; chan roblesvirtualawlibraryand that, of necessity, such
determination could be complete only much later than in the year when the loss was sustained. This
contention falls to the ground when it is considered that the Philippine Rehabilitation Act which authorized
the payment by the United States Government of war losses suffered by property owners in the
Philippines was passed only on August 30, 1946, long after the losses were sustained. It cannot be said
therefore, that the property owners had any conclusive assurance during the years said losses were
sustained, that the compensation was to be paid therefor. Whatever assurance they could have had,
could have been based only on some information less reliable and less conclusive than the passage of
the Act itself. Hence, as diligent property owners, they should adopt the safest alternative by considering
such losses deductible during the year when they were sustained.
In line with this opinion, the Secretary of Finance, through the Collector of Internal Revenue, issued
General Circular No. V-139 which not only revoked and declared void his previous Circular No. V 123
but laid down the rule that losses of property which occurred during the period of World War II from fires,
storms, shipwreck or other casualty, or from robbery, theft, or embezzlement are deductible for income tax
purposes in the year of actual destruction of said property. We can hardly argue against this opinion.
Since we have already stated that the amount claimed does not represent a business asset that may be
deducted as a loss in 1951, it is clear that the loss of the corresponding asset or property could only be
deducted in the year it was actually sustained. This is in line with section 30 (d) of the National Internal
Revenue Code which prescribes that losses sustained are allowable as deduction only within the
corresponding taxable year.
Petitioners contention that during the last war and as a consequence of enemy occupation in the
Philippines there was no taxable year within the meaning of our internal revenue laws because during
that period they were unenforceable, is without merit. It is well known that our internal revenue laws are
not political in nature and as such were continued in force during the period of enemy occupation and in
effect were actually enforced by the occupation government. As a matter of fact, income tax returns were
filed during that period and income tax payment were effected and considered valid and legal . Such tax
laws are deemed to be the laws of the occupied territory and not of the occupying enemy.
Furthermore, it is a legal maxim, that excepting that of a political nature, Law once established continues
until changed by some competent legislative power. It is not changed merely by change of sovereignty.
(Joseph H. Beale, Cases on Conflict of Laws, III, Summary section 9, citing Commonwealth vs.
Chapman, 13 Met., 68.) As the same author says, in his Treatise on the Conflict of Laws (Cambridge,
1916, section 131):chanroblesvirtuallawlibrary There can be no break or interregnun in law. From the
time the law comes into existence with the first-felt corporateness of a primitive people it must last until
the final disappearance of human society. Once created, it persists until a change takes place, and when
changed it continues in such changed condition until the next change and so forever. Conquest or
colonization is impotent to bring law to an end; chan roblesvirtualawlibraryinspite of change of
constitution, the law continues unchanged until the new sovereign by legislative act creates a change.
(Co Kim Chan vs. Valdes Tan Keh and Dizon, 75 Phil., 113, 142-143.)
It is likewise contended that the power to pass upon the validity of General Circular No. V-123 is vested
exclusively in our courts in view of the principle of separation of powers and, therefore, the Secretary of
Finance acted without valid authority in revoking it and approving in lieu thereof General Circular No. V139. It cannot be denied, however, that the Secretary of Finance is vested with authority to revoke, repeal
or abrogate the acts or previous rulings of his predecessor in office because the construction of a statute
by those administering it is not binding on their successors if thereafter the latter become satisfied that a
different construction should be given. [Association of Clerical Employees vs. Brotherhood of Railways &
Steamship Clerks, 85 F. (2d) 152, 109 A.L.R., 345.]

When the Commissioner determined in 1937 that the Petitioner was not exempt and never had been, it
was his duty to determine, assess and collect the tax due for all years not barred by the statutes of
limitation. The conclusion reached and announced by his predecessor in 1924 was not binding upon him.
It did not exempt the Petitioner from tax, This same point was decided in this way in Stanford University
Bookstore, 29 B. T. A., 1280; chan roblesvirtualawlibraryaffd., 83 Fed. (2d) 710. (Southern Maryland
Agricultural Fair Association vs. Commissioner of Internal Revenue, 40 B. T. A., 549, 554).
With regard to the contention that General Circular No. V-139 cannot be given retroactive effect because
that would affect and obliterate the vested right acquired by Petitioner under the previous circular, suffice
it to say that General Circular No. V-123, having been issued on a wrong construction of the law, cannot
give rise to a vested right that can be invoked by a taxpayer. The reason is
obvious:chanroblesvirtuallawlibrary a vested right cannot spring from a wrong interpretation. This is too
clear to require elaboration.
It seems too clear for serious argument that an administrative officer cannot change a law enacted by
Congress. A regulation that is merely an interpretation of the statute when once determined to have been
erroneous becomes nullity. An erroneous construction of the law by the Treasury Department or the
collector of internal revenue does not preclude or estop the government from collecting a tax which is
legally due. (Ben Stocker, et al., 12 B. T. A., 1351.)
Art. 2254. No vested or acquired right can arise from acts or omissions which are against the law or
which infringe upon the rights of others. (Article 2254, New Civil Code.)
Wherefore, the decision appealed from is affirmed Without pronouncement as to costs.
Paras, C.J

G.R. No. L-16704

March 17, 1962

VICTORIAS MILLING COMPANY, INC., petitioner-appellant,

vs.
SOCIAL SECURITY COMMISSION, respondent-appellee.
Ross, Selph and Carrascoso for petitioner-appellant.
Office of the Solicitor General and Ernesto T. Duran for respondent-appellee.
BARRERA, J.:
On October 15, 1958, 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, dated October 7, 1957 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.
Overruling these objections, the Social Security Commission ruled that 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.
Not satisfied with this ruling, petitioner comes to this Court on appeal.
The single issue involved in this appeal is 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."
There can be no doubt that there is a distinction between an administrative rule or regulation and an
administrative interpretation of a law whose enforcement is entrusted to an administrative body. When an
administrative agency promulgates rules and regulations, it "makes" a new law with the force and effect of
a valid law, while when it renders an opinion or gives a statement of policy, it merely interprets a preexisting law (Parker, Administrative Law, p. 197; Davis, Administrative Law, p. 194). Rules and regulations
when promulgated in pursuance of the procedure or authority conferred upon the administrative agency
by law, partake of the nature of a statute, and compliance therewith may be enforced by a penal sanction

provided in the law. This is so because statutes are usually couched in general terms, after expressing
the policy, purposes, objectives, remedies and sanctions intended by the legislature. The details and the
manner of carrying out the law are often times left to the administrative agency entrusted with its
enforcement. In this sense, it has been said that rules and regulations are the product of a delegated
power to create new or additional legal provisions that have the effect of law. (Davis,op. cit., p. 194.) .
A rule is binding on the courts so long as the procedure fixed for its promulgation is followed and its scope
is within the statutory authority granted by the legislature, even if the courts are not in agreement with the
policy stated therein or its innate wisdom (Davis, op. cit., 195-197). On the other hand, administrative
interpretation of the law is at best merely advisory, for it is the courts that finally determine what the law
means.
Circular No. 22 in question was issued by the Social Security Commission, in view of the amendment of
the provisions of the Social Security Law defining the term "compensation" contained in Section 8 (f) of
Republic Act No. 1161 which, before its amendment, reads as follows: .
(f) Compensation All remuneration for employment include the cash value of any remuneration
paid in any medium other than cash except (1) that part of the remuneration in excess of P500
received during the month; (2) bonuses, allowances or overtime pay; and (3) dismissal and all
other payments which the employer may make, although not legally required to do so.
Republic Act No. 1792 changed the definition of "compensation" to:
(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.
It will thus be seen that whereas prior to the amendment, bonuses, allowances, and overtime pay given in
addition to the regular or base pay were expressly excluded, or exempted from the definition of the term
"compensation", such exemption or exclusion was deleted by the amendatory law. It thus became
necessary for the Social Security Commission to interpret the effect of such deletion or elimination.
Circular No. 22 was, therefore, issued to apprise those concerned of the interpretation or understanding
of the Commission, of the law as amended, which it was its duty to enforce. It did not add any duty or
detail that was not already in the law as amended. It merely stated and circularized the opinion of the
Commission as to how the law should be construed.1wph1.t
The case of People v. Jolliffe (G.R. No. L-9553, promulgated on May 30, 1959) cited by appellant, does
not support its contention that the circular in question is a rule or regulation. What was there said was
merely that a regulation may be incorporated in the form of a circular. Such statement simply meant that
the substance and not the form of a regulation is decisive in determining its nature. It does not lay down a
general proposition of law that any circular, regardless of its substance and even if it is only interpretative,
constitutes a rule or regulation which must be published in the Official Gazette before it could take effect.
The case of People v. Que Po Lay (50 O.G. 2850) also cited by appellant is not applicable to the present
case, because the penalty that may be incurred by employers and employees if they refuse to pay the
corresponding premiums on bonus, overtime pay, etc. which the employer pays to his employees, is not
by reason of non-compliance with Circular No. 22, but for violation of the specific legal provisions
contained in Section 27(c) and (f) of Republic Act No. 1161.

We find, therefore, that Circular No. 22 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, and that
such circular did not require presidential approval and publication in the Official Gazette for its effectivity.
It hardly need be said that the Commission's interpretation of the amendment embodied in its Circular No.
22, is correct. The express elimination among the exemptions excluded in the old law, of all bonuses,
allowances and overtime pay in the determination of the "compensation" paid to employees makes it
imperative that such bonuses and overtime pay must now be included in the employee's remuneration in
pursuance of the amendatory law. It is true that in previous cases, this Court has held that bonus is not
demandable because it is not part of the wage, salary, or compensation of the employee. But the question
in the instant case is not whether bonus is demandable or not as part of compensation, but whether, after
the employer does, in fact, give or pay bonus to his employees, such bonuses shall be considered
compensation under the Social Security Act after they have been received by the employees. While it is
true that terms or words are to be interpreted in accordance with their well-accepted meaning in law,
nevertheless, when such term or word is specifically defined in a particular law, such interpretation must
be adopted in enforcing that particular law, for it can not be gainsaid that a particular phrase or term may
have one meaning for one purpose and another meaning for some other purpose. Such is the case that is
now before us. Republic Act 1161 specifically defined what "compensation" should mean "For the
purposes of this Act". Republic Act 1792 amended such definition by deleting same exemptions
authorized in the original Act. By virtue of this express substantial change in the phraseology of the law,
whatever prior executive or judicial construction may have been given to the phrase in question should
give way to the clear mandate of the new law.
IN VIEW OF THE FOREGOING, the Resolution appealed from is hereby affirmed, with costs against
appellant. So ordered.
Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Paredes, Dizon and De
Leon, JJ., concur.

G.R. No. 95832 August 10, 1992

MAYNARD R. PERALTA, petitioner,
vs.
CIVIL SERVICE COMMISSION, respondent.
Tranquilino F. Meris Law Office for petitioner.

PADILLA, J.:
Petitioner was appointed Trade-Specialist II on 25 September 1989 in the Department of Trade and
Industry (DTI). His appointment was classified as "Reinstatement/Permanent". Before said appointment,
he was working at the Philippine Cotton Corporation, a government-owned and controlled corporation
under the Department of Agriculture.
On 8 December 1989, petitioner received his initial salary, covering the period from 25 September to 31
October 1989. Since he had no accumulated leave credits, DTI deducted from his salary the amount
corresponding to his absences during the covered period, namely, 29 September 1989 and 20 October
1989, inclusive of Saturdays and Sundays. More specifically, the dates of said absences for which salary
deductions were made, are as follows:
1. 29 September 1989 Friday
2. 30 September 1989 Saturday
3. 01 October 1989 Sunday
4. 20 October 1989 Friday
5. 21 October 1989 Saturday
6. 22 October 1989 Sunday
Petitioner sent a memorandum to Amando T. Alvis (Chief, General Administrative Service) on 15
December 1989 inquiring as to the law on salary deductions, if the employee has no leave credits.
Amando T. Alvis answered petitioner's query in a memorandum dated 30 January 1990 citing Chapter
5.49 of the Handbook of Information on the Philippine Civil Service which states that "when an employee
is on leave without pay on a day before or on a day immediately preceding a Saturday, Sunday or
Holiday, such Saturday, Sunday, or Holiday shall also be without pay (CSC, 2nd Ind., February 12,
1965)."
Petitioner then sent a latter dated 20 February 1990 addressed to Civil Service Commission (CSC)
Chairman Patricia A. Sto. Tomas raising the following question:

Is an employee who was on leave of absence without pay on a day before or on a day
time immediately preceding a Saturday, Sunday or Holiday, also considered on leave of
absence without pay on such Saturday, Sunday or Holiday? 1
Petitioner in his said letter to the CSC Chairman argued that a reading of the General Leave Law as
contained in the Revised Administrative Code, as well as the old Civil Service Law (Republic Act No.
2260), the Civil Service Decree (Presidential Decree No. 807), and the Civil Service Rules and Regulation
fails to disclose a specific provision which supports the CSC rule at issue. That being the case, the
petitioner contented that he cannot be deprived of his pay or salary corresponding to the intervening
Saturdays, Sundays or Holidays (in the factual situation posed), and that the withholding (or deduction) of
the same is tantamount to a deprivation of property without due process of law.
On 25 May 1990, respondent Commission promulgated Resolution No. 90-497, ruling that the action of
the DTI in deducting from the salary of petitioner, a part thereof corresponding to six (6) days (September
29, 30, October 1, 20, 21, 22, 1989) is in order. 2 The CSC stated that:
In a 2nd Indorsement dated February 12, 1965 of this Commission, which embodies the
policy on leave of absence without pay incurred on a Friday and Monday, reads:
Mrs. Rosalinda Gonzales is not entitled to payment of salary
corresponding to January 23 and 24, 1965, Saturday and Sunday,
respectively, it appearing that she was present on Friday, January 22,
1965 but was on leave without pay beginning January 25, the
succeeding Monday. It is the view of this Office that an employee who
has no more leave credit in his favor is not entitled to the payment of
salary on Saturdays, Sundays or holidays unless such non-working days
occur within the period of service actually rendered. (Emphasis supplied)
The rationale for the above ruling which applies only to those employees who are being
paid on monthly basis, rests on the assumption that having been absent on either
Monday or Friday, one who has no leave credits, could not be favorably credited with
intervening days had the same been working days. Hence, the above policy that for an
employee on leave without pay to be entitled to salary on Saturdays, Sundays or
holidays, the same must occur between the dates where the said employee actually
renders service. To rule otherwise would allow an employee who is on leave of absent
(sic) without pay for a long period of time to be entitled to payment of his salary
corresponding to Saturdays, Sundays or holidays. It also discourages the employees who
have exhausted their leave credits from absenting themselves on a Friday or Monday in
order to have a prolonged weekend, resulting in the prejudice of the government and the
public in general. 3
Petitioner filed a motion for reconsideration and in Resolution No. 90-797, the respondent Commission
denied said motion for lack of merit. The respondent Commission in explaining its action held:
The Primer on the Civil Service dated February 21, 1978, embodies the Civil Service
Commission rulings to be observed whenever an employee of the government who has
no more leave credits, is absent on a Friday and/or a Monday is enough basis for the
deduction of his salaries corresponding to the intervening Saturdays and Sundays. What

the Commission perceived to be without basis is the demand of Peralta for the payment
of his salaries corresponding to Saturdays and Sundays when he was in fact on leave of
absence without pay on a Friday prior to the said days. A reading of Republic Act No.
2260 (sic) does not show that a government employee who is on leave of absence
without pay on a day before or immediately preceding Saturdays, Sunday or legal holiday
is entitled to payment of his salary for said days. Further, a reading of Senate Journal No.
67 dated May 4, 1960 of House Bill No. 41 (Republic Act No. 2625) reveals that while the
law excludes Saturdays, Sundays and holidays in the computation of leave credits, it
does not, however, include a case where the leave of absence is without pay. Hence,
applying the principle of inclusio unius est exclusio alterius, the claim of Peralta has no
merit. Moreover, to take a different posture would be in effect giving more premium to
employees who are frequently on leave of absence without pay, instead of discouraging
them from incurring further absence without
pay. 4
Petitioner's motion for reconsideration having been denied, petitioner filed the present petition.
What is primarily questioned by the petitioner is the validity of the respondent Commission's policy
mandating salary deductions corresponding to the intervening Saturdays, Sundays or Holidays where an
employee without leave credits was absent on the immediately preceding working day.
During the pendency of this petition, the respondent Commission promulgated Resolution No. 91-540
dated 23 April 1991 amending the questioned policy, considering that employees paid on a monthly basis
are not required to work on Saturdays, Sunday or Holidays. In said amendatory Resolution, the
respondent Commission resolved "to adopt the policy that when an employee, regardless of whether he
has leave credits or not, is absent without pay on day immediately preceding or succeeding Saturday,
Sunday or holiday, he shall not be considered absent on those days." Memorandum Circular No. 16
Series of 1991 dated 26 April 1991, was also issued by CSC Chairman Sto. Tomas adopting and
promulgating the new policy and directing the Heads of Departments, Bureaus and Agencies in the
national and local governments, including government-owned or controlled corporations with original
charters, to oversee the strict implementation of the circular.
Because of these developments, it would seem at first blush that this petition has become moot and
academic since the very CSC policy being questioned has already been amended and, in effect,
Resolutions No. 90-497 and 90-797, subject of this petition for certiorari, have already been set aside and
superseded. But the issue of whether or not the policy that had been adopted and in force since 1965 is
valid or not, remains unresolved. Thus, for reasons of public interest and public policy, it is the duty of the
Court to make a formal ruling on the validity or invalidity of such questioned policy.
The Civil Service Act of 1959 (R.A. No. 2260) conferred upon the Commissioner of Civil Service the
following powers and duties:
Sec. 16 (e) with the approval by the President to prescribe, amend and enforce suitable
rules and regulations for carrying into effect the provisions of this Civil Service Law, and
the rules prescribed pursuant to the provisions of this law shall become effective thirty
days after publication in the Official Gazette;
xxx xxx xxx

(k) To perform other functions that properly belong to a central personnel agency. 5
Pursuant to the foregoing provisions, the Commission promulgated the herein challenged policy. Said
policy was embodied in a 2nd Indorsement dated 12 February 1965 of the respondent Commission
involving the case of a Mrs. Rosalinda Gonzales. The respondent Commission ruled that an employee
who has no leave credits in his favor is not entitled to the payment of salary on Saturdays, Sundays or
Holidays unless such non-working days occur within the period of service actually rendered. The same
policy is reiterated in the Handbook of Information on the Philippine Civil Service. 6 Chapter Five on leave
of absence provides that:
5.51. When intervening Saturday, Sunday or holiday considered as leave without pay
when an employee is on leave without pay on a day before or on a day immediately
preceding a Saturday, Sunday or holiday, such Saturday, Sunday or holiday shall also be
without pay. (CSC, 2nd Ind., Feb. 12, 1965).
It is likewise illustrated in the Primer on the Civil Service 7 in the section referring to Questions and
Answers on Leave of Absences, which states the following:
27. How is leave of an employee who has no more leave credits computed if:
(1) he is absent on a Friday and the
following Monday?
(2) if he is absent on Friday but reports
to work the following Monday?
(3) if he is absent on a Monday but
present the preceding Friday?
- (1) He is considered on leave without
pay for 4 days covering Friday to
Monday;
- (2) He is considered on leave without
pay for 3 days from Friday to Sunday;
- (3) He is considered on leave without
pay for 3 days from Saturday to Monday.
When an administrative or executive agency renders an opinion or issues a statement of policy, it merely
interprets a pre-existing law; and the administrative interpretation of the law is at best advisory, for it is the
courts that finally determine what the law means. 8 It has also been held that interpretative regulations
need not be published. 9
In promulgating as early as 12 February 1965 the questioned policy, the Civil Service Commission
interpreted the provisions of Republic Act No. 2625 (which took effect on 17 June 1960) amending the
Revised Administrative Code, and which stated as follows:

Sec. 1. Sections two hundred eighty-four and two hundred eighty-five-A of the
Administrative Code, as amended, are further amended to read as follows:
Sec. 284. After at least six months' continues (sic) faithful, and
satisfactory service, the President or proper head of department, or the
chief of office in the case of municipal employees may, in his discretion,
grant to an employee or laborer, whether permanent or temporary, of the
national government, the provincial government, the government of a
chartered city, of a municipality, of a municipal district or of governmentowned or controlled corporations other than those mentioned in Section
two hundred sixty-eight, two hundred seventy-one and two hundred
seventy-four hereof, fifteen days vacation leave of absence with full pay,
exclusive of Saturdays, Sundays and holidays, for each calendar year of
service.
Sec. 285-A. In addition to the vacation leave provided in the two
preceding sections each employee or laborer, whether permanent or
temporary, of the national government, the provincial government, the
government of a chartered city, of a municipality or municipal district in
any regularly and specially organized province, other than those
mentioned in Section two hundred sixty-eight, two hundred seventy-one
and two hundred seventy-four hereof, shall be entitled to fifteen days of
sick leave for each year of service with full pay, exclusive of Saturdays,
Sundays and holidays: Provided, That such sick leave will be granted by
the President, Head of Department or independent office concerned, or
the chief of office in case of municipal employees, only on account of
sickness on the part of the employee or laborer concerned or of any
member of his immediate family.
The Civil Service Commission in its here questioned Resolution No. 90-797 construed R.A. 2625 as
referring only to government employees who have earned leave credits against which their absences may
be charged with pay, as its letters speak only of leaves of absence with full pay. The respondent
Commission ruled that a reading of R.A. 2625 does not show that a government employee who is on
leave of absence without pay on a day before or immediately preceding a Saturday, Sunday or legal
holiday is entitled to payment of his salary for said days.
Administrative construction, if we may repeat, is not necessarily binding upon the courts. Action of an
administrative agency may be disturbed or set aside by the judicial department if there is an error of law,
or abuse of power or lack of jurisdiction or grave abuse of discretion clearly conflicting with either the
letter or the spirit of a legislative enactment. 10
We find this petition to be impressed with merit.
As held in Hidalgo vs. Hidalgo: 11
. . . . where the true intent of the law is clear that calls for the application of the cardinal
rule of statutory construction that such intent or spirit must prevail over the letter thereof,
for whatever is within the spirit of a statute is within the statute, since adherence to the

letter would result in absurdity, injustice and contradictions and would defeat the plain and
vital purpose of the statute.
The intention of the legislature in the enactment of R.A. 2625 may be gleaned from, among others, the
sponsorship speech of Senator Arturo M. Tolentino during the second reading of House Bill No. 41 (which
became R.A. 2625). He said:
The law actually provides for sick leave and vacation leave of 15 days each year of
service to be with full pay. But under the present law, in computing these periods of
leaves, Saturday, Sunday and holidays are included in the computation so that if an
employee should become sick and absent himself on a Friday and then he reports for
work on a Tuesday, in the computation of the leave the Saturday and Sunday will be
included, so that he will be considered as having had a leave of Friday, Saturday, Sunday
and Monday, or four days.
The purpose of the present bill is to exclude from the computation of the leave those
days, Saturdays and Sundays, as well as holidays, because actually the employee is
entitled not to go to office during those days. And it is unfair and unjust to him that those
days should be counted in the computation of leaves. 12
With this in mind, the construction by the respondent Commission of R.A. 2625 is not in accordance with
the legislative intent. R.A. 2625 specifically provides that government employees are entitled to fifteen
(15) days vacation leave of absence with full pay and fifteen (15) days sick leave with full pay, exclusive
of Saturdays, Sundays and Holidays in both cases. Thus, the law speaks of the granting of a right and the
law does not provide for a distinction between those who have accumulated leave credits and those who
have exhausted their leave credits in order to enjoy such right. Ubi lex non distinguit nec nos distinguere
debemus. The fact remains that government employees, whether or not they have accumulated leave
credits, are not required by law to work on Saturdays, Sundays and Holidays and thus they can not be
declared absent on such non-working days. They cannot be or are not considered absent on non-working
days; they cannot and should not be deprived of their salary corresponding to said non-working days just
because they were absent without pay on the day immediately prior to, or after said non-working days. A
different rule would constitute a deprivation of property without due process.
Furthermore, before their amendment by R.A. 2625, Sections 284 and 285-A of the Revised
Administrative Code applied to all government employee without any distinction. It follows that the effect
of the amendment similarly applies to all employees enumerated in Sections 284 and 285-A, whether or
not they have accumulated leave credits.
As the questioned CSC policy is here declared invalid, we are next confronted with the question of what
effect such invalidity will have. Will all government employees on a monthly salary basis, deprived of their
salaries corresponding to Saturdays, Sundays or legal holidays (as herein petitioner was so deprived)
since 12 February 1965, be entitled to recover the amounts corresponding to such non-working days?
The general rule vis-a-vis legislation is that an unconstitutional act is not a law; it confers no rights; it
imposes no duties; it affords no protection; it creates no office; it is in legal contemplation as inoperative
as though it had never been passed. 13

But, as held in Chicot County Drainage District vs. Baxter State

Bank: 14
. . . . It is quite clear, however, that such broad statements as to the effect of a
determination of unconstitutionality must be taken with qualifications. The actual
existence of a statute, prior to such determination is an operative fact and may have
consequences which cannot always be ignored. The past cannot always be erased by a
new judicial declaration. The effect of the subsequent ruling as to invalidity may have to
be considered in various aspects with respect to particular relations, individual and
corporate; and particular conduct, private and official.
To allow all the affected government employees, similarly situated as petitioner herein, to claim their
deducted salaries resulting from the past enforcement of the herein invalidated CSC policy, would cause
quite a heavy financial burden on the national and local governments considering the length of time that
such policy has been effective. Also, administrative and practical considerations must be taken into
account if this ruling will have a strict restrospective application. The Court, in this connection, calls upon
the respondent Commission and the Congress of the Philippines, if necessary, to handle this problem with
justice and equity to all affected government employees.
It must be pointed out, however, that after CSC Memorandum Circular No. 16 Series of 1991
amending the herein invalidated policy was promulgated on 26 April 1991, deductions from salaries
made after said date in contravention of the new CSC policy must be restored to the government
employees concerned.
WHEREFORE, the petition is GRANTED, CSC Resolutions No. 90-497 and 90-797 are declared NULL
and VOID. The respondent Commission is directed to take the appropriate action so that petitioner shall
be paid the amounts previously but unlawfully deducted from his monthly salary as above indicated. No
costs.
SO ORDERED.