January 17, 1985 LA SUERTE CIGAR AND CIGARETTE FACTORY, BATAAN CIGAR AND CIGARETTE FACTORY, INC., LA PERLA INDUSTRIES, INC., PIONEER TOBACCO CORPORATION, INSULAR-YEBANA TOBACCO CORPORATION, LAS BUENAS FABRICA DE CIGARILLOS, INC., LA DICHA CIGAR & CIGARETTE FACTORY, CONSOLIDATED TOBACCO INDUSTRIES OF THE PHILIPPINES, INC., LA CAMPANA FABRICA DE TABACOS, INC., ASSOCIATED ANGLO-AMERICAN TOBACCO CORPORATION, FORTUNE TOBACCO CORPORATION, BAGUMBUHAY CIGAR AND CIGARETTE FACTORY, STANDARD CIGARETTE MANUFACTURING CO., INC., and D.L. TERUEL TOBACCO CO., INC., INC. , petitioners, petitioners, vs. COURT OF TAX APPEALS and HON. MISAEL P. VERA, IN HIS CAPACITY AS COMMISSIONER OF INTERNAL REVENUE, REVENUE, respondents. respondents. [G.R. NO. L-36131] ALHAMBRA INDUSTRIES, INC., LA FLOR DE LA ISABELA, INCOR PORADA AND COLUMBIA TOBACCO COMPANY, INC., INC., petitioners, petitioners, vs. COURT OF TAX APPEALS and HON. MISAEL P. VERA, IN HIS CAPACITY AS COMMISSIONER OF INTERNAL REVENUE, REVENUE, respondents. respondents. Cuevas, J.: J.: SUMMARY: To SUMMARY: To orre! orre! an error "n an ear#"er "ru#ar $ %&"& os! !&e Govern'en! #o!s o( 'oney), !&e *+R ro'u#a!e a ne% Revenue /e'oranu' C"ru#ar %&"& #ar"("e !&e (or's o( !o0ao rou!s !o 0e &are %"!& "nse!"on (ees. e!"!"oner "are!!e 'anu(a!urers %ere a'on !&ose %&o %ere 'ae !o ay !&e (ees, so !&ey assa"#e !&e R/C (or o"n 0eyon !&e rov"s"ons o( !&e #a% %&"& rov"e (or !&e (or's o( !o0ao rou!s !o 0e &are %"!& "nse!"on (ees. CT2 an C &e# !&a! !&e "ru#ar %as no! u#!ra v"res, s"ne !&e #a% "n 4ues!"on %as enera# "n soe a## a#on, !&us "are!!es %ere $an are s!"##) "n#ue. C a#so &e# !&a! !&e R/C %as a 'ere "n!erre!a!"ve ru#e %&"& nee no! 0e u0#"s&e "n !&e OG $s"ne "! %as us! 'ean! !o orre! !&e o# "ru#ar an !&e "are!!e 'anu(a!urers !&e'se#ves a'"!!e !&a! !&e ru#e %as "n!erna# "n na!ure #us !&ey %ere (urn"s&e o"es). DOCTRINE: When an administrative agency renders an opinion by means of a circular or Memorandum, it merely interprets a pre-existing law, and no publication is necessary for its validity. validity. rrors or o'"ss"ons 0y "!s !a o##e!"on aen!s "n !&e er(or'ane o( !&e"r u!"es o no! es!o overn'en! (ro' o##e!"n !a #ea##y ue. NATURE: e!"!"on NATURE: e!"!"on (or rev"e% on er!"orar". Or""na# a!"on (or !a re(un 0e(ore !&e CT2. FACTS •
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Ac N!. "#$% $!&e "#$% $!&e To0ao To0ao +nse!"on La%) %as asse 0y !&e &"#""ne Le"s#a!ure. +!s e. 6 rov"e: e. 6. T&e Co''"ss"oner o( +n!erna# Revenue s&a## &ave !&e o%er an "! s&a## 0e &"s u!y: o $) To re4u"re, %&enever "! s&a## 0e ee'e ee"en!, !&e "nse!"on o( an a(("!ure o( "nse!"on #a0e#s !o !o0ao re'ove (ro' !&e rov"ne o( "!s or""n !o ano!&er or o!&er rov"nes 0e(ore su& re'ova#.; O!. 1, 19<6 = RA %$ a' (a'')d, a*)nd+n Ac N!. "#$%. "#$% . >"!& !&e a'en'en!, e. 6 o( sa" #a% no% rea: ;e. 6. T&e Co''"ss"on o( +n!erna# Revenue s&a## &ave !&e o%er an "! s&a## 0e &"s u!y: o $) To re4u"re, %&enever "! s&a## 0e ee'e ee"en!, !&e "nse!"on o( an a(("!ure o( "nse!"on #a0e#s !o !o0ao re'ove (ro' rov"ne o( "!s or""n !o ano!&er or o!&er rov"nes 0e(ore su& re'ova# ! ! !acc! /! d!*)'+c 'a0) ! /ac!1 2'). 2') . T&e e#ana!ory no!e !o !&e ?ouse *"## %&"& even!ua##y 0ea'e R2 31 s!a!e that the amendment o was intended to widen the scope of the Commissioner’s regulatory power to leaf tobacco and manufactured tobacco for factory use regardless of which country it was being exported to . T&e soe o( !&e o# #a% %as on("ne !o !o0ao "n!ene (or eor! !o !&e @n"!e !a!es. O!. A9, 19<6 = G)n)a0 C+c20a N!. V-"3 %as V-"3 %as "ssue !o "'#e'en! es. 6, 7, an 1< o( 2! No. A613. T&"s c+c20a +nad4))n01 +nc02d)d 5) )* 60)a/7 $%&"& 60)a/7 $%&"& %as o'"!!e "n !&e ("na# vers"on o( R2 o 31).
2s a resu#!, !&e Govern'en! %as una0#e !o o##e! !o0ao "nse!"on (ees on "ars an "are!!es (or o'es!" sa#e, as %e## as on "'or!e #ea( an ar!"a##y 'anu(a!ure !o0ao $0eause aaren!#y !&ese %ere e#ue (ro' !&e !er' #ea( !o0ao). T&e error was discovered in !"# , %&en an 2ss"s!an! C&"e( o( !&e *+R To0ao +nse!"on erv"e aeare "n a &ear"n o( !&e Jo"n! Le"s#a!"ve-eu!"ve Ta Co''"ss"on. /ay 31, 1967 = To aress !&e overs"&!, R)'!02+!n "-#3 ao!e 0 y !&e &"#""ne To0ao *oar %as arove. +! ea#! %"!& "n!erre!a!"ons o( er!a"n &rases "n !&e #a% an reu#a!"ons on !o0ao "nse!"on. To0ao (or o'es!" sa#e = re(ers !o %&o#esa#e "sosa# o( !o0ao rou!s 0y "ar an o "are!!e (a!or"es !o "!s ea#ers To0ao (or (a!ory use = re(ers !o "'or!e #ea( !o0ao "n!ene (or use 0y "ar an "are!!e o o'an"es "n !&e 'anu(a!ure o( !o0ao rou!s. 2u. AA, 1967 = ursuan! !o Reso#u!"on A-67, *+R Co''"ss"oner /"sae# BR2 "ssue R)4)n2) M)*!and2* C+c20a 8RMC9 %-#3. +! re4u"re !&e "nse!"on o(: o $a) a## #oa##y roue #ea( !o0ao an ar!"a##y 'anu(a!ure !o0ao "n!ene (or o'es!" sa#e, (or (a!ory use or (or eor! $0) a## 'anu(a!ure rou!s o( !o0ao on!e'#a!e "n e. 19<$') o( !&e Ta Coe "n!ene (or o'es!" sa#e $) a## "'or!e (ore"n #ea( !o0ao an ar!"a##y 'anu(a!ure !o0ao (or o'es!" sa#e or (a!ory use, +! a#so 'ana!e !&e o##e!"on o( !&e orreson"n "nse!"on (ees. o T&e "ru#ar rov"e !&a! "! %"## !ae e((e! on e. 1, 1967. o ursuan! !o !&e R/C, !&e *+R o##e!e !o0ao "nse!"on (ees (ro' !&e e!"!"oner TO*2CCO CO/2N+ $over !&e"r o0e!"ons) "n !&e (o##o%"n a'oun!s: 199,63A.19 (or !&e er"o e!. 1967-2r"# 1969 "n CT2 Case no. AD31 o 1,
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ISSUES 8HELD9 1) >FN R/C 3D-67 "s u#!ra v"res (or unu#y e!en"n !&e soe o( 2! A613 8NO9 A) >FN R/C 3D-67 "s "nva#" (or non-u0#"a!"on "n !&e O((""a# Gae!!e an (or non-ro'u#a!"on 0y !&e H"nane ere!ary as rov"e 0y !&e N+RC 8NO9 3) >FN !&e *+R a!ua##y onu!e "nse!"ons so as !o %arran! !&e "'os! an o##e!"on o( !o0ao "nse!"on (ees 8YES9 R2T+O 1) $%&'(CC&) (* +* / (C% 0"1 /C2+* '&%3 2(4 (/ M(/+4(C%+5 %&'(CC&. +' 26 /&/ *%/7+%, /C /&* *%/7+5 'M&*. T!acc! C!*(an+)': To0ao (or o'es!" sa#e or (a!ory use as use "n 2! A613, e. 6$) re(ers on#y !o #ea( !o0ao an oes no! "n#ue 'anu(a!ure !o0ao. SC: >e o no! aree. ven %"!&ou! !&e a'en'en!, 2! A613 a#reay overe #ea( !o0ao, ar!"a##y 'anu(a!ure o !o0ao (or #oa# sa#e, an #ea( !o0ao rou!s (or eor!. T&e or""na# 2! A613 oes no! on!a"n !&e %or #ea(, %&"& Conress ou# %e## &ave "nser!e "( "! o rea##y "n!ene !o on("ne !&e oera!"on o( !&e #a% !o #ea( !o0ao. T&e o'"ss"on "s a #ear "n"a!"on !&a! Conress "n!ene !o "n#ue %"!&"n !&e urv"e% o( !&e #a% 'anu(a!ure !o0ao an #ea( !o0ao (or eor!. CT2: T&e ons!ru!"on o( !&e !o0ao o'an"es "s res!r"!"ve, '"s#ea"n an unsoun. o >e0s!erIs e("n"!"on o( !o0ao: !&e #eaves o( !&e !o0ao #an!, reare 0y ry"n an var"ous o 'anu(a!ur"n roesses, an use e"!&er (or s'o"n or s&o%"n, or as snu((, or !&e 'anu(a!ure rou!s (ro' !o0ao #eaves s'o"n or &e%"n !o0ao "ars, "are!!es, e!., o##e!"ve#y. +! "s #ear (ro' !&e (oreo"n e("n"!"on !&a! !o0ao "n#ues 'anu(a!ure "ars an "are!!es. o Ne"!&er 2! A613 nor R2 31 aen any 'o"(y"n or 4ua#"(y"n !er' !o !o0ao, ev"n"n !&e o "n!en!"on o( Conress !o use su& !er' "n "!s enera# sense. T&e our!s are !&us o%er#ess !o res!r"! "!s 'ean"n. +( Conress "n!ene !o res!r"! !&e #a%, "! s&ou# &ave u! !&e !er' #ea( "n R2 31 0u! "! " no!. •
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A) 5MC 18-"# * (/ /%595%(%: 5+2 W3C3 / /&% ' 9+'2*3 [see (a!s]. R/C 3D-67 "s a onse4uene o( !&e (a"#ure o( !&e Govern'en! !o o##e! !aes on 'anu(a!ure !o0ao an #ea( !o0ao (or eor! (ro' 19<6 !o 1967. T&e "naver!en! res!r"!"on o( !&e !er' !o0ao "n Genera# C"ru#ar B-A7 %as re'e"e 0y &"#. To0ao *oar Reso#u!"on A-67, %&"& "n !urn #e !o !&e ro'u#a!"on o( R/C 3D-67. T&e !o0ao o'an"es are reresen!e "n !&e &"#. To0ao *oar. Counsel for the tobacco companies admitted that each company was furnished a copy of 5MC 18-"#. %hus there was substantial compliance with the purpose of the law; to inform or notify the parties affected by the law or rule. Hur!&er'ore, !&e !acc! c!*(an+)' ad*+)d 5a RMC %-#3 +' an +n)na0 *)*!and2* re#a!"n !o !&e a'"n"s!ra!"on o( !&e *+R an no! a reu#a!"on %"!&"n !&e on!e'#a!"on o( N+RC es. < an 338 as %e## e. 79$0) o( !&e Rev"se 2'"n. Coe, %&"& e'o%ers 0ureau &eas $#"e Co''. Bera) !o "ssue "n!erna# ru#es an 'e'orana re#a!"n !o "n!erna# 'a!!ers %"!&ou! nee o( u0#"a!"on "n !&e O((""a# Gae!!e. Romualdez v. Arca: When an administrative agency renders an opinion by means of a circular or Memorandum, it merely interprets a pre-existing law, and no publication is necessary for its validity. R/C 3D-67 'ere#y serve !o orre! !&e error "n Genera# C"ru#ar B-A7. Salaria v. Buenviaje: 2#!&ou& !&e ons!ru!"on o( a #a% 0y !&e eeu!"ve 0ran& "s no! 0"n"n uon !&e our!s, su& ons!ru!"on 'us! 0e "ven %e"&! as o'"n (ro' !&e 0ran& %&"& "s !ase !o "'#e'en! !&e #a%. R/C 3D-67 &as 0een "ssue "n aorane %"!& !&e Rev"se 2'"n"s!ra!"ve Coe, %"!& !&e arova# o( !&e ere!ary o( H"nane !&ere(ore "! &as !&e (ore an e((e! o( #a%. •
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3) 54+/ /&% W(55(/% (* 5C&5 *3&W* %3(% %35 W(* /*9C%&/ To0ao "nse!"on (ees are a (or' o( Na!"ona# +n!erna# Revenue !a. +! "s one o( !&e '"se##aneous !aes rov"e (or "n !&e N+RC $as rov"e "n e. AA8, C&a. B++). T&e *+R Co''"ss"oner "s en!"!#e an e'o%ere !o o##e! "nse!"on (ees, even %"!&ou! "nse!"on, s&ou# !&e !o0ao rou!s 0e re'ove #anes!"ne#y or surre!"!"ous#y (ro' !&e re'"ses o( !&e 'anu(a!urer, %&o#esa#er, or reryer or "n !&e ase o( "'or!e !o0ao, (ro' !&e us!o's us!oy. 9hil. (merican rug v. Collector; rrors or o'"ss"ons 0y "!s !a o##e!"on aen!s "n !&e er(or'ane o( !&e"r u!"es o no! es!o overn'en! (ro' o##e!"n !a #ea##y ue. To0ao "nse!"on (ees are 0o!& reu#a!ory an revenue-enera!"n, s"ne "!s roees are "v"e 0e!%een !&e To0ao +nse!"on Hee Hun an !&e Cu#!ura# Cen!er o( !&e &"#""nes. CASE AT BAR: CT2 ("n"ns on !&e "ssue o( "nse!"on 'us! 0e u&e#. C oes no! ("n oen! reason !o "s!ur0 !&e' !&ey are !&us 0"n"n on !&e C. T&e !o0ao o'an"es aree !&a! !&e !es!"'ony o( La uer!eIs rou!"on /anaer, B"en!e o C&ua, s&ou# 0e ons"ere as !&e roeure o( +nse!"on "n a## !&e"r (a!or"es. *e(ore 0e"n re'ove (ro' !&e (a!ory, !&e "are!!es are "nvo"e, &ee, oun!e, an a(("e o %"!& s!r" s!a's. T&e "are!!e 0o00"ns %ere a#so &ee an "! %as 'ae sure !&a! "are!!es re'ove %ere roer#y reore "n !&e 0oos. T&e !es!"'on"es o( o!&er %"!nesses (or !&e !o0ao o'an"es s&o% !&a! *+R aen!s an !o0ao o "nse!ors reore !&e ra% 'a!er"a#s !o 0e use "n 'anu(a!ur"n !o0ao rou!s, an !&ose un("! (or sa#e %ere serea!e. • • •
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DISPOSITION: e!"!"on "s'"sse.
