I dissent from the majority opinion.

First, the majority opinion does not annul a law but enacts a pending bill in Congress into law. The majority opinion invades the legislative domain by enacting into law a bill that the 13th Congress is now considering for approval. The majority opinion does this in the guise of annulling a proviso in Section 15(c), Article II of Republic Act No. 7653 (RA 7653).

Second, the majority opinion erroneously classifies the Bangko Sentral ng Pilipinas (BSP), a regulatory agency exercising sovereign functions, in the same category as non-regulatory corporations exercising purely commercial functions like Land Bank of the Philippines (LBP), Social Security System (SSS), Government Service Insurance System (GSIS), Development Bank of the Philippines (DBP), Small Borrowers Guarantee Fund Corporation (SBGFC), and Home Guarantee Corporation (HGC).

Usurpation of Legislative Power

There is a bill now pending in Congress, House Bill No. 123, seeking to exempt the rank-and-file employees of BSP from the Salary Standardization Law (SSL). A similar bill was filed in the 12th Congress together with the bill exempting from the SSL all officials and employees of Philippine Deposit Insurance Corporation (PDIC). The bill exempting PDIC employees from SSL was approved on 27 July 2004 in the dying days of the 12th Congress. However, due to lack of time, the bill exempting BSP rank-and-file employees did not reach third reading.

What the majority opinion wants is to preempt Congress by declaring through a judicial decision that BSP rank-and-file employees are now exempt from the SSL. The majority opinion seeks to legislate the exemption from SSL by declaring void the proviso in Section 15(c), Article II of RA 7653 (proviso), which states:

A compensation structure, based on job evaluation studies and wage surveys and subject to the Boards approval, shall be instituted as an integral component of the Bangko Sentrals human resource development program: Provided, That the Monetary Board shall make its own system conform as closely as possible with the principles provided for under Republic Act No. 6758. Provided, however, That compensation and wage structure of employees whose positions fall under salary grade 19 and below shall be in accordance with the rates prescribed under Republic Act No. 6758. (Emphasis supplied)

The majority opinion justifies its action by saying that while the proviso was valid when first enacted, it is now invalid because its continued operation is discriminatory against BSP rank-and-file employees. All officials and employees of other government financial institutions (GFIs) like GSIS, LBP, DBP, SSS, SBGFC, HGC and PDIC are now exempt from the SSL. Congress granted the exemptions over the years, for LBP in 1995, SSS in 1997, GSIS in 1997, SBGFC in 1997, DBP in 1998, HGC in 2000, and PDIC in 2004.

Among the GFIs granted exemption from SSL, only PDIC is a regulatory agency. PDIC received its SSL exemption only this year - 2004. PDIC is the first regulatory GFI whose rank-and-file employees are exempt from the SSL. Rank-and-file employees of BSP, a GFI exercising regulatory functions, cannot at this time claim any unreasonable or oppressive delay in securing legislative exemption from SSL, assuming Congress is disposed to grant an exemption.

At this time, this Court cannot say that the continued validity of the proviso in Section 15(c) of RA 7653 is unreasonable and oppressive on BSP rank-and-file employees. This Court cannot say that Congress gravely abused its jurisdiction in not exempting BSP rank-and-file employees from the SSL at the same time as PDIC. Congress is now considering BSPs exemption, and this Court cannot imperiously conclude that Congress had more than enough time to act on BSPs exemption.

Even if Congress does not act on BSPs exemption for more than one year, it does not follow that this Court should then exempt BSP rank-and-file employees from the SSL. As the law now stands, PDIC is the only regulatory GFI whose rank-and-file employees are exempt from SSL. All other GFIs exercising regulatory functions are not exempt from the SSL, including BSP whose rank-and file employees are subject to the SSL.

The grant of exemption to PDIC is the legislative act that is questionable for being discriminatory against all other self-sustaining government agencies exercising regulatory functions. Such grant to one regulatory agency, without a similar grant to other regulatory agencies whose incomes exceed their expenses, creates a class of exemption that has dubious basis. In short, the singular exemption of PDIC from the SSL discriminates against all other self-sustaining government agencies that exercise regulatory functions.

The grant of SSL exemption to GFIs has ramifications on the deepening budget deficit of the government. Under Republic Act No. 7656[1], all GFIs are required to remit to the National Treasury at least 50% of their annual net earnings. This remittance forms part of the government revenues that fund the annual appropriations act. If the remittances from GFIs decrease, the national revenues funding the annual appropriations act correspondingly decrease. This results in widening even more the budget deficit.

A bigger budget deficit means there are no revenues to fund salary increases of all government employees who are paid out of the annual appropriations act. The exemption of GFIs from SSL may delay or even prevent a general increase in the salary of all government employees, including rank-and-file employees in the judiciary. This Court cannot simply ordain an exemption from SSL without considering serious ramifications on fiscal policies of the government. This is a matter better left to the Executive and Legislative Departments. This Court cannot intrude into fiscal policies that are the province of the Executive and Legislative Departments.

Indeed, Congress should pass a law rationalizing the exemptions of all government agencies from the SSL. The piecemeal grant of exemptions is creating distortions in the salary structure of government employees similarly situated. Such rationalization, however, is not the function of the Court. Even as a practical matter, this Court does not have the necessary data to rationalize the exemptions of all government agencies from the SSL.

The power of judicial review of legislative acts presumes that Congress has enacted a law that may violate the Constitution. This Court cannot exercise its power of judicial review before Congress has enacted the questioned law. In this case, Congress is still considering the bill exempting BSP rank-and-file employees from the SSL. There is still no opportunity for this Court to exercise its review power because there is nothing to review.

The majority opinion, however, claims that because of the failure of Congress to enact the bill exempting BSP rank-and-file employees from the SSL, this Court should now annul the proviso in Section 15(c) of RA 7653 to totally exempt BSP from the SSL. This is no longer an exercise of the power of judicial review but an exercise of the power of legislation - a power that this Court does not possess. The power to exempt a government agency from the SSL is a legislative power, not a judicial power. By annulling a prior valid law that has the effect of exempting BSP from the SSL, this Court is exercising a legislative power.

The power of judicial review is the power to strike down an unconstitutional act of a department or agency of government, not the power to initiate or perform an act that is lodged in another department or agency of government. If this Court strikes down the law exempting PDIC from the SSL because it is discriminatory against other government agencies similarly situated, this Court is exercising its judicial review power. The effect is to revert PDIC to its previous situation of being subject to the SSL, the same situation governing BSP and other agencies similarly situated.

However, by annulling the proviso in Section 15(c) of RA 7653, BSP is not reverted to its previous situation but brought to a new situation that BSP cannot attain without a new legislation. Other government agencies similarly situated as BSP remain in their old situation still being subject to the SSL. This is not an annulment of a legislative act but an enactment of legislation exempting one agency from the SSL without exempting the remaining agencies similarly situated.

The majority opinion cites Rutter v. Esteban[2] as precedent for declaring the proviso in Section 15(c) of RA 7653 unconstitutional. Rutter is not applicable to the present case. In Rutter, the Court declared on 18 May 1953 that while the Debt Moratorium Law was valid when enacted on 26 July 1948, its continued operation and enforcement x x x is unreasonable and oppressive, and should not be prolonged a minute longer. With the discontinuance of the effectivity of the Debt Moratorium Law, the debtors who benefited from the law were returned to their original situation prior to the enactment of the law. This meant that the creditors could resume collecting from the debtors the debts the payment of which was suspended by the Debt Moratorium Law. The creditors and debtors were restored to their original situation before the enactment of the Debt Moratorium Law. No debtor or creditor was placed in a new situation that required the enactment of a new law.

In the present case, declaring the proviso in Section 15(c) of RA 7653 no longer legally effective does not restore the BSP rank-and-file employees to their original situation, which subjected them to the SSL. Instead, the discontinuance of the validity of the proviso brings the BSP rank-and-file employees to a new situation that they are not entitled without the enactment of a new law. The effect of the majority decision is to legislate a new law that brings the BSP rank-andfile employees to a new situation. Clearly, the Rutter doctrine does not apply to the present case.

Erroneous Classification of BSP as GFI

Similar to LBP, DBP and Others

The majority opinion classifies BSP as a GFI just like GSIS, LBP, DBP, SSS, SBGFC, HGC and PDIC. Here lies the basic error of the majority opinion. GSIS, LBP, DBP, SSS, SBGFC and HGC are GFIs but are not regulatory agencies. BSP and PDIC are GFIs but are also regulatory agencies just like other governmental regulatory agencies. The majority opinion is comparing apples with oranges. GFIs that do not exercise regulatory functions operate just like commercial financial institutions. However, GFIs that exercise regulatory functions, like BSP and PDIC, are unlike commercial financial institutions. BSP and PDIC exercise sovereign functions unlike the other non-regulatory GFIs.

Non-regulatory GFIs derive their income solely from commercial transactions. They compete head on with private financial institutions. Their operating expenses, including employees salaries, come from their own self-generated income from commercial activities. However, regulatory GFIs like BSP and PDIC derive their income from fees, charges and other impositions that all banks are by law required to pay. Regulatory GFIs have no competitors in the private sector. Obviously, BSP and PDIC do not belong to the same class of GFIs as LBP, SSS, GSIS, SBGFC, DBP and HGC.

Exempting non-regulatory GFIs from the SSL is justified because these GFIs operate just like private commercial entities. Their revenues, from which they pay the salaries of their employees, come solely from commercial operations. None of their revenues comes from mandatory government exactions. This is not the case of GFIs like BSP and PDIC which impose regulatory fees and charges.


Under the Constitution, Congress is an independent department that is a co-equal of the Supreme Court. This Court has always accorded Congress the great respect that it deserves under the Constitution. The power to legislate belongs to Congress. The power to review enacted legislation belongs to the Supreme Court. The Supreme Court has no power to declare a pending bill in Congress as deemed enacted into law. That is not the power to review legislation but the power to usurp a legislative function.

The majority opinion is leading this Court into usurping the primary jurisdiction of Congress to enact laws. The majority opinion brings this Court and Congress into a needless clash of powers - whether the power of judicial review of legislative acts includes the power to initiate legislative acts if this Court becomes impatient with the pace of legislative process. Clearly, this Court does not have the power to legislate. Congress has a right to guard zealously its primary power to enact laws as much as this Court has a right to guard zealously its power to review enacted legislations.

Accordingly, I vote to dismiss the petition.

[1] Sections 2 and 3 of Republic Act No. 7656 provide:

Section 3. Dividends. All government-owned or -controlled corporations shall declare and remit at least fifty percent (50%) of their annual net earnings as cash, stock or property dividends to the National Government. This section shall also apply to those government-owned or -controlled corporations whose profit distribution is provided by their respective charters or by special law, but shall exclude those enumerated in Section 4 hereof: Provided, That such dividends accruing to the National Government shall be received by the National Treasury and recorded as income of the General Fund.

Section 4. Exemptions. The provisions of the preceding section notwithstanding, government-owned or -controlled corporations created or organized by law to administer real or personal properties or funds held in trust for the use and the benefit of its members, shall not be covered by this Act such as, but not limited to: the Government Service Insurance System, the Home Development Mutual Fund, the Employees Compensation Commission, the Overseas Workers Welfare Administration, and the Philippine Medical Care Commission.

[2] 93 Phil. 68 (1953).