Commissioner of Internal Revenue vs CA G.R. No. 119761 [1996] Case Digest

 

Commissioner of Internal Revenue vs CA

G.R. No. 119761 [1996]

Facts:

            CIR initial position of the Commission was to classify 'Champion,' 'Hope,' and 'More' as foreign brands since they were listed in the World Tobacco Directory as belonging to foreign companies. However, Fortune Tobacco changed the names of 'Hope' to 'Hope Luxury' and 'More' to 'Premium More,' thereby removing the said brands from the foreign brand category.

            Commissioner Chato issued a Revenue Memorandum Circular [RMC 37-93] holding that the said cigarettes brands shall be considered foreign brand for purposes of determining the ad valorem tax.

            Fortune Tobacco filed a petition for review with the CTA.  CTA upheld the position of Fortune Tobacco.  Petitioner opines that RMC 37-93 is merely an interpretative ruling of the BIR which can thus become effective without any prior need for notice and hearing, nor publication, and that its issuance is not discriminatory since it would apply under similar circumstances to all locally manufactured cigarettes.

 

Issue:

            Whether or not RMC 37-93 violates the due process clause when there is no notice and hearing, nor publication of the said circular.

 

Held:

            Yes.

 

Ratio:

            Evidently, in order to place "Hope Luxury," "Premium More," and "Champion" cigarettes within the scope of the amendatory law and subject them to an increased tax rate, the now disputed RMC 37-93 had to be issued. In so doing, the BIR not simply interpreted the law; verily, it legislated under its quasi-legislative authority. The due observance of the requirements of notice, of hearing, and of publication should not have been then ignored.