55. Bicolandia Drug Corp. v.

CIR

FACTS:

In 1992, Republic Act No. 7432, otherwise known as "An Act to Maximize the Contribution of Senior
Citizens to Nation Building, Grant Benefits and Special Privileges and For Other Purposes," granted senior
citizens several privileges, one of which was obtaining a 20 percent discount from all establishments
relative to the use of transportation services, hotels and similar lodging establishments, restaurants and
recreation centers and purchase of medicines anywhere in the country. The law also provided that the
private establishments giving the discount to senior citizens may claim the cost as tax credit. The
respondent, Bicolandia Drug Corporation, a corporation engaged in the business of retailing
pharmaceutical products under the business style of "Mercury Drug," granted the 20% sales discount to
qualified senior citizens purchasing their medicines in compliance with R.A. No. 7432. Respondent filed a
claim for tax refund or credit in the amount of PhP 259,659.00 with the Appellate Division of the Bureau
of Internal Revenuebecause its net losses for the year 1995 prevented it from benefiting from the
treatment of sales discounts as a deduction from gross sales during the said taxable year. It alleged that
the petitioner Commissioner of Internal Revenue erred in treating the 20 percent sales discount given to
senior citizens as a deduction from its gross income for income tax purposes or other percentage tax
purposes rather than as a tax credit.

ISSUE:

WON the 20 percent sales discount granted to qualified senior citizens may be claimed as a tax
credit, instead of a deduction from gross income or gross sales.

HELD:

No. Under Revenue Regulations No. 2-94, the tax credit is "the amount representing the 20
percent discount granted to a qualified senior citizen by all establishments relative to their utilization of
transportation services, hotels and similar lodging establishments, restaurants, drugstores, recreation
centers, theaters, cinema houses, concert halls, circuses, carnivals and other similar places of culture,
leisure and amusement, which discount shall be deducted by the said establishments from their gross
income for income tax purposes and from their gross sales for value-added tax or other percentage tax
purposes." It equated "tax credit" with "tax deduction". The interpretation of an administrative
government agency, which is tasked to implement the statute, is accorded great respect and ordinarily
controls the construction of the courts. Be that as it may, the definition laid down in the questioned
Revenue Regulations can still be subjected to scrutiny. Courts will not hesitate to set aside an executive
interpretation when it is clearly erroneous. There is no need for interpretation when there is no ambiguity
in the rule, or when the language or words used are clear and plain or readily understandable to an
ordinary reader. The definition of the term "tax credit" is plain and clear, and the attempt of Revenue
Regulations No. 2-94 to define it differently is the root of the conflict. The Court of Appeals expressly
recognized the differences between a "tax credit" and a "tax refund," and stated that the same are not
synonymous with each other, which is why it modified the ruling of the Court of Tax Appeals.
56. The Provincial Board of Cebu vs. CFI

FACTS:

Sometime in June and July of 1965, respondents-appellees along with eight other provincial
guards were issued appointments as prison guards in the Province of Cebu by then Governor Rene Espina.
On March 17, 1967, the Commissioner of Civil Service sent a directive entitled "4th Indorsement" to the
Civil Service Regional Director of Cebu City returning certain appointments under the category of
temporary and provisional appointments for lack of approval by the Provincial Board which in his opinion
was required in view of the opinion of the Secretary of Justice to that effect. Pursuant thereto, Governor
Espina issued Administrative Order No. 22 recalling all appointments of provisional employees made
under Section 2081 of the Revised Administrative Code for approval by the Provincial Board.
Subsequently, the Provincial Board of Cebu passed several resolutions disapproving the appointments
made by the Governor, including those of respondents-appellees. Accordingly, Governor Espina advised
the Provincial Warden to inform the affected employees to stop reporting for duty. Aggrieved by the
dismissal, the eleven provincial guards instituted an action asking for their reinstatement, back salaries
and damages. They contended that their appointments were not subject to the approval of the Provincial
Board; that even granting that they were, the disapproval was illegal and void, that even if such approval
were valid, it is not a ground for their dismissal from the service because they have been occupying said
positions even before said appointments. The Presiding Judge rendered a decision dismissing the action
with regard to the eight other petitioners who had no civil service eligibility, reasoning that the
certification of their appointments as "provisional" was contrary to law, but granting it in so far as
respondents-appellees were concerned and ordering their reinstatement with back salaries. Petitioners
assail the conclusion as erroneous and contended that the appointments of respondents-appellees having
been correctly attested by the Civil Service Commissioner as provisional under Sec. 24(c) of RA 2260 are
in their nature or essence only temporary appointments to the classified positions made in the absence
of civil service eligibles and are, therefore, within the scope and operation of Sec. 2081 of the Revised
Administrative Code as last amended by RA 528. Respondents-appellees, on the other hand, argue that
provisional appointments are distinct and separate categories and cannot be confused with temporary
appointments under the Civil Service Law considering that provisional appointees must have civil service
eligibility albeit inappropriate to their positions, whereas temporary employees do not need any eligibility
at all.

ISSUE:

WON the appointments of respondents-appellees, duly certified as "provisional" by the Civil

Service Commissioner, are within the scope and contemplation of the category of "temporary employees
in the classified service made in the absence of eligibles" which require the approval of the Provincial
Board under Section 2081 of the Revised Administrative Code.
HELD:

Yes. In the case of Ata v. Namocatcat, the Court said, "What the law considers a provisional
appointment refers to an appointee with a civil service eligibility but other than an appropriate one for
the position to which he was appointed." And in the case of Festejos v. Barreras, the Court further ruled
that, "a provisional appointment is terminable only upon the certification of an appropriate eligible since
such an appointment takes into account that the appointee should necessarily be an eligible who is
supposed to have a permanent appointment and the nature of the work is such that only eligibles may
perform the same." In other words, a provisional appointee does not have the appropriate eligibility to
the position but the law gives him the privilege of occupying the position in the absence of an eligible and
until the availability of an appropriate eligible is certified. There is no question therefore, that the
appointments in question are covered by Section 2081 of the Administrative Code requiring the approval
of the Provincial Board. It is a cardinal principle of statutory construction that where the words and
phrases of a statute are not obscure or ambiguous, its meaning and the intention of the legislature must
be determined from the language employed, and where there is no ambiguity in the words, there is no
room for construction.
57. Vicencio vs. Villar

FACTS:

The City Council or the Sangguniang Panglungsod ng Malabon (SPM) adopted and approved City
Ordinance No. 15-2003, entitled "An Ordinance Granting Authority to the City Vice-Mayor, Hon. Jay Jay
Yambao, to Negotiate and Enter into Contract for Consultancy Services for Consultants in the Sanggunian
Secretariat Tasked to Function in their Respective Areas of Concern." During the May 2004 elections,
petitioner was elected City Vice-Mayor of Malabon. By virtue of this office, he also became the Presiding
Officer of the SPM and, at the same time, the head of the Sanggunian Secretariat. To complement the
manpower requirements of the existing Sanggunian Secretariat, petitioner deemed it necessary to hire
the services of consultants with the end view of augmenting and upgrading its performance capability for
the effective operation of the legislative machinery of the city. Petitioner, representing the City
Government of Malabon City, entered into Contracts for Consultancy. After the signing of their respective
contracts, the three consultants rendered consultancy services to the SPM. Thereafter, they were
correspondingly paid for their services pursuant to the contracts therefor.

An Audit Observation Memorandum was issued disallowing the amount of three hundred eighty-four
thousand nine hundred eighty pesos (P384,980) for being an improper disbursement. It also disclosed
that City Ordinance No. 15-2003 dated October 30, 2003 was used as basis of authority in hiring
consultants. Analysis of the said City Ordinance revealed that it specifically authorized the former Vice-
Mayor, Hon. Mark Allan Jay G. Yambao to enter into a contract for consultancy services in the Sangguniang
Secretariat covering the period June to December 2003 only. Said ordinance does not give authority to
the incumbent City Vice-Mayor Arnold D. Vicencio to hire consultants for CY 2005. Aggrieved by the
disallowance, petitioner appealed it to the Adjudication and Settlement Board. However, the Notice of
Disallowance was affirmed. Thereafter, herein petitioner filed a letter COA Chairperson. The letter prayed
for the reversal and setting aside of the earlier Decision of the ASB.

ISSUES:

1. WON the petitioner was authorized to enter into the 2005 Consultancy Contracts.
2. WON COA gravely abused its discretion when it affirmed the disallowance of disbursements
concerning the services rendered by hired consultants for the Sangguniang Panlungsod ng
Malabon.

HELD:

1. No. Ordinance No. 15-2003 is clear and precise and leaves no room for interpretation. It only
authorized the then City Vice-Mayor to enter into consultancy contracts in the specific areas of concern.
Further, the appropriations for this particular item were limited to the savings for the period June to
December 2003. This was an additional limitation to the power granted to Vice-Mayor Yambao to contract
on behalf of the city. The fact that any later consultancy contract would necessarily require further
appropriations from the city council strengthens the contention that the power granted under Ordinance
No. 15-2003 was limited in scope. Hence, petitioner was without authority to enter into the 2005
Consultancy Contracts. Where the words of a statute are clear, plain, and free from ambiguity, it must be
given its literal meaning and applied without attempted interpretation. Thus, the ordinance should be
applied according to its express terms, and interpretation would be resorted to only where a literal
interpretation would be either impossible or absurd or would lead to an injustice. In the instant case,
there is no reason to depart from this rule, since the subject ordinance is not at all impossible, absurd, or
unjust.

2. NO. The COA's assailed Decision was made in faithful compliance with its mandate and in
judicious exercise of its general audit power as conferred on it by the Constitution. The COA was merely
fulfilling its mandate in observing the policy that government funds and property should be fully protected
and conserved; and that irregular, unnecessary, excessive or extravagant expenditures or uses of such
funds and property should be prevented. Thus, no grave abuse of discretion may be imputed to the COA.