Commissioner v. CA (G.R. # 119761; 08-29-1996) by yurei Facts: 1.

RA 7654 was enacted by Congress on June 10, 1993 and took effect July 3, 1993. It amended partly Sec. 142 (c) of the NIRC 1 2. Fortune Tobacco manufactured the following cigarette r brands: Hope, More and Champion. Prior to RA 7654, these 3 brands were considered local brands subjected to an ad valorem tax of 20 to 45%. Applying the amendment and nothing else, (see footnote below) the 3 brands should fall under Sec 142 (c) (2)NIRC and be taxed at 20 to 45%.3. However, on July 1, 1993 , petitioner Commissioner of Internal Revenue issued Revenue Memorandum Circular37-93 Which reclassified the 3 brands as locally manufactured cigarettes bearing a foreign brand subject to the 55% ad valorem tax. There classification was before RA 7654 took effect.4. In effect, the memo circular subjected the 3 brands to the provisions of Sec 142 (c) (1) NIRC imposing upon these brandsa rate of 55% instead of just 20 to 45% under Sec 142 (c) (2)NIRC.5. There was no notice and hearing. CIR argued that the memo circular was merely an interpretative ruling of the BIR which did not require notice and hearing. Issue: WON RMC 37-93 was valid and enforceable No; lack of notice and hearing violated due process required for promulgated rules. Moreover, it infringed on uniformity of taxation / equal protection since other local cigarettes bearing foreign brands had not been included within the scope of the memo circular. Ratio: 1. Contrary to petitioners contention, the memo was not a mereinterpretative rule but a legislative rule in the nature of subordinate legislation, designed to implement a primarylegislation by providing the details thereof. Promulgatedlegislative rules must be published.2. On the other hand, interpretative rules only provide guidelinesto the law which the administrative agency is in charge of enforcing.3. BIR, in reclassifying the 3 brands and raising their applicable taxrate, did not simply interpret RA 7654 but legislated under itsquasi-legislative authority.BELLOSILLO separate opinion : the administrative issuance was notquasi-legislative but quasi-judicial. Due process should still beobserved of course but use Ang Tibay v. CIR.

CIR V. CA, CTA, & Fortune Tobacco (BIR Rules and Regulations) Facts: CIR, through RMC 37-93, aims to collect deficiencies onad valorem taxes against Fortune Tobacco following are classification of foreign branded cigarettes, as per RA 7654.Fortune Tobacco raised the issue of the propriety of theassessment to the CTA, which decided against the CIR. CTAwas affirmed by CA. ISSUE: Is RMC 37-93 a mere interpretative ruling, therefore not requiring, for its effectivity, hearing and filing with the UP LawCenter? NO.Ratio Decidendi: 1. When an administrative rule is merely interpretative, itsapplicability needs nothing further than its bare issuance for it gives no real consequence more than what the law itself has already prescribed.2. When, upon the other hand, the administrative rule goesbeyond merely providing for the means that can facilitate or render least cumbersome the implementation of the law butsubstantially adds to or increases the burden of thosegoverned, it behooves the agency to accord at least tothose directly affected a chance to be heard, and thereafter to be duly informed, before that new issuance is given theforce and effect of law. 3. A reading of RMC 37-93, particularly considering thecircumstances under which it has been issued, convincesus that the circular cannot be viewed simply as a correctivemeasure or merely as construing Section 142(c)(1) of theNIRC, as amended, but has, in fact and most importantly,been made in order to place "Hope Luxury," "PremiumMore" and "Champion" within the classification of locallymanufactured cigarettes bearing foreign brands and tothereby have them covered by RA 7654.4. Specifically, the new law would have its amendatoryprovisions applied to locally manufactured cigarettes which at the time of its effectivity were not so classified as bearingforeign brands. (Prior to the issuance of the questionedcircular, "Hope Luxury," "Premium More," and "Champion"cigarettes were in the category of locally manufacturedcigarettes not bearing foreign brand subject to 45% ad valorem tax.)5. Hence, without RMC 37-93, the enactment of RA 7654,would have had no new tax rate consequence on privaterespondent's products.6. Evidently, in order to place "Hope Luxury," "Premium More,"and "Champion" cigarettes within the scope of theamendatory law and subject them to an increased tax rate,the now disputed RMC 37-93 had to be issued.7. In so doing, the BIR not simply intrepreted the law; verily, itlegislated under its quasi-legislative authority. The dueobservance of the requirements of notice, of hearing, and of publication should not have been then ignored.

Holding: CTA, CA affirmed