FACTS
In 1993, Republic Act No. 7654, which imposed a 55 percent ad valorem tax on locally produced cigarettes under foreign brands, was enacted by Congress. Consequently, the CIR issued RMC 3793, which imposed the said tax rate on HOPE, CHAMPION, MORE, and other cigarette brands owned by Fortune Tobacco.
The latter challenged the validity of the tax assessment, arguing that when RA No. 7654 took effect, the brands in question were not currently classified and taxed at 55 percent, but were instead still classified as other locally manufactured cigarettes and taxed at 45 percent or 20 percent as the case may be.
RULING
The Supreme Court ruled in favor of Fortune Tobacco.
RMC 37-93 is a legislative rule designed to implement a primary legislation by providing the details thereof. In the same way that laws must have the benefit of public hearing, it is generally required that before a legislative rule is adopted there must be hearing. Since it was enacted without regard to the required procedure, it is considered void.
The SC stressed that CIR may not disregard the legal requirements of publication, filing, and prior hearing in the exercise of its quasi-legislative powers.
