Requirement of a Public Hearing for the Validity of DO 20-2010 to Implement RA No. 245

DOJ OPINION NO. 051 , s. 2011 October 18, 2011 Secretary Cesar V. Purisima Department of Finance Roxas Blvd. corner Vito Cruz Street City of Manila 1004 Dear Secretary Purisima : This refers to your request for confirmatory opinion that "(i) a prior public hearing is not required for the validity, legality and enforceability of Department Order (D.O.) No. 20-2010 to implement Republic Act (R.A.) No. 245, 1 as amended, (ii) the provision of D.O. No. 20-2010 to allow the engagement of sub-registry by the Bureau of Treasury is compliant with Republic Act No. 1405, and (iii) D.O. No. 20-2010 is a valid, legal and enforceable administrative issuance." The subject D.O. 20-2010, it appears, was issued pursuant to Section 4 of R.A. No. 245, as amended, which authorized the Secretary of Finance to "prepare and issue such rules, regulations and instructions as he considers necessary for the successful achievement of (the) Act", in relation to Republic Act No. 7653, 2 which transferred "all fiscal agency functions" of the Bangko Sentral ng Pilipinas to the Department of Finance. Apart from stressing that a public hearing is needed only when specifically required by law, it is your view that the exercise by the Secretary of Finance of his rule-making power is quasi legislative in nature and, therefore, does not require as a pre-requisite for its validity the conduct of prior hearing. In support of said view, you quoted from the ruling in Abella vs. CSC ,G.R. No. 152574, Nov. 17, 2004. Quoting pertinent provisions of R.A. No. 1405, you also assert that Section 13 of D.O. No. 20-2010, which covers "sub-registrar and sub-registry records" is compliant with R.A. No. 1405. Finally, you aver that the D.O. is valid, legal and enforceable as the same was issued pursuant to your rule-making power and in view of the settled presumption on the validity of laws and administrative issuances. ICcaST The first and third queries being interrelated shall be discussed jointly. At the outset, it may be stated that, as you rightfully quoted, the Administrative Code of 1987, 3 insofar as material, provides: "SEC. 50. General Classification of Issuances . The administrative issuances of Secretaries and heads of bureaus, offices or agencies shall be in the form of circulars or orders. "(1) Circulars shall refer to issuances prescribing policies, rules and regulations, and procedures promulgated pursuant to law, applicable to individuals and organizations outside of the Government and designed to supplement provisions of the law or to prove means for carrying them out, including information relating thereto; and "(2) Orders shall refer to issuances directed to particular offices, officials, or employees, concerning specific matters including assignments, detail and transfer of personnel, for observance or compliance by all concerned." 4 It is basic in statutory interpretation that when the words and phrases of the statute are clear and unequivocal, their meaning must be determined from the language employed and the statute must be taken to mean exactly what it says ( Baranda vs. Gustilo ,165 SCRA 757, 770, citing cases).The reason is because when the law is clear, interpretation does not apply only application ( Pascual vs. Pascual-Bautista , 207 SCRA 561, 568). 5 Applied to the subject D.O. No. 20-2010, it appears indubitable from a reading of the provisions thereof that the rules and regulations contained therein should have been issued through a Department Circular, not a Department Order. The rationale is because, contrary to the Secretary's assertion, the provisions contained in the D.O. undeniably apply "to individuals and organizations outside of the Government and designed to supplement provisions of the law or to provide means for carrying them out, including information relating thereto".As such, they squarely fall within the coverage of a Department Circular. This view finds support in the fact that D.O. No. 20-2010 was issued by the Secretary in the exercise of the legislative power granted to him by Congress 6 to create new or additional provisions that have the effect of law. 7 Such regulations are intended to supplement the statute and fill in the details necessary to effectively and efficiently implement the law they seek to implement, subject only to the conditions that the rules are germane to the objects and purposes of the law, conform to the standards that the law prescribes, and must relate solely to carrying into effect the general provisions of the law. 8 DISHEA Moreover, to be valid, the administrative regulations must comply with the following requisites: a) they were promulgated by authority of the legislature; b) they were within the scope of the legislative authority granted; c) they were promulgated in accordance with the prescribed procedure; and d) they must be reasonable. 9 A reading of the provisions of R.A. No. 245 and R.A. No. 1000, both as amended, in relation to the pertinent provisions of R.A. 7653, tends to support the view that there is indeed legal basis for the issuance of the regulations contained in the D.O. and that the same were not ultra vires but within the scope of the authority granted by the legislature. The regulations also appear to be reasonable. Anent the requirement of prior notice and hearing, the rule, as the DOF Secretary rightfully argues, is that the promulgation of administrative regulations of general application does not require previous notice and hearing. 10 The only exception is when the legislature itself requires it and mandates that the regulation shall be based on certain facts as determined at an investigation. 11 Not one of the legal bases cited for the issuance of the regulations requires prior notice and hearing or otherwise ordains that the regulations should be based on certain facts as determined at an investigation for them to fall within the said exception. True, in Commissioner of Internal Revenue vs. Court of Appeals ,261 SCRA 236, the Supreme Court stated, in part, thus: "...When, upon the other hand, goes beyond merely providing for the means that can facilitate or render least cumbersome the implementation of the law but substantially adds to or increases the burden of those governed, it behooves the agency to accord at least those directly affected a chance to be heard, and thereafter to be duly informed, before the new issuance is given the force and effect of law." 12 However, traversing the provisions of the D.O.,Section 13 thereof included, does not show that the regulations, while undeniably would affect the public, especially those engaged in investments in government securities, would substantially add or increase the burden of those affected thereby such that the requirement of previous notice and hearing should have been complied with. DaESIC Moreover, and as particularly applied to the engagement of sub-registrar, the fact that the recording of the investment data is for auditing purposes only, while the absolute confidentiality of the information relative thereto remains and attaches to the sub-registrar engaged, are proof that subject regulations cannot increase the burden of those affected thereby. What is indispensable, pursuant to Executive Order No. 200, 13 s. 1987, and settled doctrinal pronouncements of the Supreme Court, 14 is that the administrative regulations, 15 like laws, should be "duly published" in the Official Gazette or in a newspaper of general circulation in the country for them to become effective. Relative to the second query, the same is resolved in the affirmative. The pertinent provisions of R.A. No. 1405, 16 quoted in your request, are clear and categorical, to wit: "Section 2. All deposits of whatever nature with banks or banking institutions in the Philippines including investments in bonds issued by the Government of the Philippines, its political subdivisions and its instrumentalities, are hereby considered as of an absolutely confidential nature and may not be examined, inquired or looked into by any person, government official, bureau or office, except upon written permission of the depositor, or in cases of impeachment, or upon order of a competent court in cases of bribery or dereliction of duty of public officials, or in cases where the money deposited or invested is the subject matter of the litigation. "Section 3. It shall be unlawful for any official or employee of a banking institution to disclose to any person other than those mentioned in Section two hereof any information concerning said deposits." Construing the provisions of Section 13 of the D.O., in the light of the above-quoted provisions, it appears evident that, as you have opined, the former is compliant with the latter. As stated earlier, the absolute confidentiality of the amount of investment in government securities remains and the recording by the Registry of Scripless Securities (RoSS) is essential for audit purposes only. Coupled with the fact that the engagement of sub-registry service will not give rise to any opportunity for a third party inquiry of the investment data of government securities holders, the logical conclusion appears to be that Section 13 of the administrative issuance is indeed R.A. No. 1405-compliant. Both the provisions of R.A. No. 1405, above-quoted and those of Section 13 of the D.O. are clear enough to arrive at a different conclusion. aDIHCT Please be guided accordingly. Very truly yours, (SGD.) LEILA M. DE LIMA Secretary Footnotes 1. Entitled, "An Act Authorizing the Secretary of Finance to Borrow to Meet Public Expenditures Authorized by Law, and for Other Purposes". 2. Also known as the "New Central Bank Act"; see, Sec. 129. 3. Executive Order No. 292. 4. Ibid. ,Chap. 11, Book IV. 5. Secretary of Justice Op. Nos. 31 & 23, current series; No. 23, s. 2010. 6. Provision 1.1 (Legal Basis),D.O. No. 20-2010. 7. Op cit., Nos. 45, 10, s. 2009; No. 6, s. 2008; case ref. Commissioner of Internal Revenue vs. Solidbank Corporation ,416 SCRA 436, 448; Yazaki Torres Manufacturing, Inc. vs. Court of Appeals ,493 SCRA 86, 97. 8. Id. , No. 1, current series; No. 45, s. 2010; case ref. Vda. De Pineda vs. Pena ,187 SCRA 22, 29, citing cases. 9. Cruz, Philippine Administrative Law, 1996 ed.,pp. 32-46, citing cases. 10. Abella vs. Civil Service Commission ,G.R. No. 152574, Nov. 17, 2004. 11. See also, Public Administrative Bodies, 73 C.J.S. 98. 12. At p. 247. 13. Entitled, "Providing for the Publication of Laws Either in the Official Gazette or in a Newspaper of General Circulation in the Philippines for their Effectivity". 14. Notably, Taada vs. Tuvera ,146 SCRA 446; Rubenecia vs. Civil Service Commission ,244 SCRA 640; Balbuena vs. Secretary of Education ,110 Phil. 150. 15. Pesigan vs. Angeles ,129 SCRA 174. 16. Otherwise known as "The Secrecy of Bank Deposits Act".