In RE: ENTITLEMENT TO HAZARD PAY OF SC MEDICAL AND DENTAL CLINIC PERSONNEL, the Supreme Court clarified that the Department of Health (DOH) cannot unilaterally alter hazard pay rates for public health workers established by law. The Court emphasized that administrative agencies, like the DOH, are bound by the statutes they implement and cannot issue regulations that contradict existing legislation. This ruling ensures that hazard pay for public health workers remains consistent with the standards set by Republic Act (R.A.) No. 7305, safeguarding the intended compensation structure based on salary grade and exposure to risks.

When Does Administrative Discretion Exceed Statutory Authority in Hazard Pay Determinations?

This case began with a request from members of the Supreme Court Medical and Dental Services (SCMDS) Division concerning the allocation of hazard pay. These employees questioned the fairness of Administrative Circular No. 57-2004, which classified SCMDS employees based on their level of exposure to health hazards, a classification later abolished by the DOH in favor of a uniform rate. This administrative back-and-forth set the stage for the central legal question: Can an administrative agency, like the DOH, modify the hazard pay rates established by law?

The employees sought an amendment to conform with Administrative Order (A.O.) No. 2006-0011, issued by the DOH, which prescribed different guidelines for hazard pay applicable to all public health workers. This order set a fixed amount for those with Salary Grade 20 and above, a departure from the percentage-based system in R.A. No. 7305. The Office of the Chief Attorney (OCAT) argued against amending the Circular, citing the doubtful validity of the administrative order and its non-conformity with R.A. No. 7305, which bases hazard pay on salary grade.

However, the Fiscal Management and Budget Office (FMBO) took a contrary position, arguing that amending the Circular according to A.O. No. 2006-0011 would resolve the personnel’s objections to the allegedly unfair allocation of hazard pay. At the heart of the legal matter is Section 21 of R.A. No. 7305, which explicitly states that hazard allowances should be equivalent to at least 25% of the monthly basic salary for health workers receiving salary grade 19 and below, and 5% for those with salary grade 20 and above.

In its analysis, the Supreme Court turned to well-established principles of administrative law. The Court reiterated that an administrative agency’s rule-making power is limited and defined by the statute conferring that power. In other words, administrative rules and regulations cannot contradict or expand upon the authority granted by the legislature. This is a fundamental principle of separation of powers, ensuring that executive agencies remain subordinate to the legislative branch.

SEC. 21. Hazard Allowance.—Public health workers in hospitals, sanitaria, rural health units…which expose them to great danger…shall be compensated hazard allowances equivalent to at least twenty-five percent (25%) of the monthly basic salary of health workers receiving salary grade 19 and below, and five percent (5%) for health workers with salary grade 20 and above.

The Court held that A.O. No. 2006-0011 exceeded the DOH’s authority. The DOH sought to modify the rates of hazard pay under the law and implementing rules by prescribing a uniform fixed amount for health workers with Salary Grade 20 and above. According to the Court, this contravenes the law’s intent to establish a scalar allocation of hazard allowances within each salary grade bracket. It violates the established principle that administrative issuances cannot amend an act of Congress.

The Supreme Court, in its analysis, looked at the Salary Standardization Act of 1989 and the applicable scalar salary scheduled it establishes to ensure the law is interpreted to mean exactly what it says. It cannot be extended by implication beyond what may be necessary for its just and reasonable execution. When an administrative agency exercises the specific power of implementing a statute, it is bound by what is provided in the same legislative enactment and its rule-making power is a delegated legislative power. The role is only to put it into effect.

In conclusion, the DOH cannot use its authority to create a predetermined amount as cash allowance for those with a Salary Grade of 20 and above. It issued rules and regulations implementing the provisions of R.A. 7305. Hence, the DOH, as the delegate administrative agency, cannot contravene the law from which its rule-making authority has emanated. Therefore, any such modifications are deemed void, because the power to prescribe rules and regulations is not an independent source of power to make laws.

FAQs

What was the key issue in this case?	The key issue was whether the Department of Health (DOH) could unilaterally modify the hazard pay rates for public health workers established by Republic Act (R.A.) No. 7305. The case questioned if an administrative agency can override a law passed by Congress.
What is hazard pay?	Hazard pay is additional compensation given to employees who are exposed to dangerous or hazardous working conditions, particularly in the healthcare sector, in recognition of the risks they face. This premium recognizes that these public health workers may suffer or incur harm because of their exposure and nature of work.
What did the Department of Health try to do?	The DOH issued Administrative Order (A.O.) No. 2006-0011, which set a fixed amount for hazard pay for health workers in Salary Grade 20 and above, rather than basing it on a percentage of their salary as stipulated in R.A. No. 7305. It also classified types of workers in a different manner, which had the impact of minimizing hazard pay for various health professions.
What was the Supreme Court’s ruling?	The Supreme Court ruled that the DOH’s administrative order was invalid because it exceeded the agency’s authority and contradicted the provisions of R.A. No. 7305, which mandates that hazard pay be calculated as a percentage of the employee’s basic salary. The court also noted that it is beyond the legislative power and that it could not adopt its own terms and implement the order.
What is the significance of R.A. No. 7305?	R.A. No. 7305, also known as the Magna Carta of Public Health Workers, provides the framework for the rights and benefits of public health workers, including hazard pay. It specifically states that hazard pay should be based on salary grade, with those in lower salary grades receiving a higher percentage of their salary as hazard pay.
Why did the Supreme Court reject the DOH’s attempt to change hazard pay rates?	The Supreme Court rejected the DOH’s attempt because administrative agencies cannot create laws. They are subject to the laws Congress has already made and they are implementing. An administrative body’s power of subordinate legislation cannot validate any type of arbitrary rules.
Can administrative agencies create laws?	No, administrative agencies cannot create laws. Administrative agencies can create implementing laws as long as they do not overstep what is already legislated by Congress. Their role is only to carry out existing laws in a just and reasonable way.
What happens next because of this ruling?	Because of this ruling, employees must be paid what R.A. No. 7305 legislates based on an employee’s appropriate pay scale. Moving forward, implementing rules must adhere to those standards to allocate the amounts appropriately.

This Supreme Court decision reinforces the importance of adhering to legislative mandates when implementing administrative regulations, safeguarding the rights and benefits of public health workers as intended by law. This ensures hazard pay will be paid based on their pay grade rather than some other discretionary number.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: RE: ENTITLEMENT TO HAZARD PAY OF SC MEDICAL AND DENTAL CLINIC PERSONNEL, A.M. No. 03-9-02-SC, November 27, 2008