11. cir vs fortune tobacco

11. COMMISSIONER OF INTERNAL REVENUE vs COURT OF APPEALS FACTS: Fortune Tobacco Corporation ("Fortune Tobacco") is engaged in the manufacture of different brands of cigarettes. On various dates the !hi ip pi ne !atent Of fic e issued to the corporation separ ate certificates of trademar# registration over "Champion" "$ope" and "%ore" cigarettes. The Commiss ioner of &nte rna 'eve nue cassif ies Champio n $ope and %ore as foreign brands since the *ere isted in the +ord Tobacco ,irector as beonging to forei gn compa nie s. $o*ever Fortu ne Tobacco changed the names of $ope to $ope Luxury' and %ore to Premium %ore thereb removin g the said brands from the foreign brand categor. !roof *as aso submitted to the -ureau (of &nterna 'evenue -& '/) tha t Ch ampi on *as an orig ina Fort une Tob acco Corpor atio n regi ster and therefore a oca brand. 'A 023 *as enacted on 14 5une 1667 amending Section 138(c)(1) of the 9ationa &nterna 'ev enue Code ("9&' C") particuar on oca manufac tured cigaret tes *hich *ere currently classified and taxed at fifty-five percent (55%) or the eportation of *hich is not authori;ed b contract or other*ise fift<five (22=) provided that the minimum ta sha not be ess than Five !eso s (!2 .44) p er pac #. The t est fo r impo sition of the 22= ad valorem ta on cigarettes is that the oca manufactured cigarettes bear a foreign brand regardess of *hether or not the right to use or tite to the foreign brand *as sod or tran sfer red b its o*ner to the oca manufac ture r. The brand must be origina o*ned b a foreign manufacturer or producer . &f o*nership of the cigarette brand is ho* ever not defin ite deter minabe the isting of bra nds manufac tured in foreign countries appearing in the current +ord Tobacco ,irector sha govern. The -&' sent the Compan a month ater a cop 'evenue %emorandum Circuar 70<67 decaring >$ope? >%ore? and >Champion? as foreign brands and thus sub@ecting them to 22= as vaorem ta a revie* of '%C 7 0<67 *as denied. &SSB: +hether the p romugatio n of '%C 70<67 is v aid a nd * ithin the sc ope of the amendator a* ('A 023) $BD,: 9o. The Supreme Court is convinced that the hasti promugated '%C 70<67 has faen short of a vaid and effective administrative issuance. !rior to the issu ance of '%C 70 <67 the br an ds *ere in the cate gor of oca manufactured cigarettes not bearing foreign brands sub@ect to 32= ad vaorem ta. +ith ou t '%C 70<67 th e en ac tmen t of 'A0 23 *ou d not have ne * ta ra te conseEuences on the compans products. &n issuing '%C 70<67 the -&' egisated und er its Eua si< egis ati ve aut hori t and not simp inte rpre ted the a*. The C&' not simp interp reted the a*G veri it egisated unde r its Euasi<eg isative authorit . The due observance of the reEuirements of notice of hearing and of pubication shoud not have been then ignored. +hen an administrative rue goes beond mere providing for the means that can faciitate or render east cumberso me the impementation of the a* but substantia add s to or incr eases the burden of those governe d it beho ves the agenc to accord at east to those direct affected a chance to be heard and thereb be du informed before that ne* issuance is given the force and effect of a*.

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11. COMMISSIONER OF INTERNAL REVENUE vs COURT OF APPEALS

FACTS:

Fortune Tobacco Corporation ("Fortune Tobacco") is engaged in the manufacture ofdifferent brands of cigarettes.

On various dates the !hiippine !atent Office issued to the corporation separatecertificates of trademar# registration over "Champion" "$ope" and "%ore" cigarettes.The Commissioner of &nterna 'evenue cassifies Champion $ope and %ore asforeign brands since the *ere isted in the +ord Tobacco ,irector as beonging toforeign companies. $o*ever Fortune Tobacco changed the names of $ope to$ope Luxury' and %ore to Premium %ore thereb removing the said brands from theforeign brand categor. !roof *as aso submitted to the -ureau (of &nterna 'evenue-&'/) that Champion *as an origina Fortune Tobacco Corporation register andtherefore a oca brand.

'A 023 *as enacted on 14 5une 1667 amending Section 138(c)(1) of the 9ationa&nterna 'evenue Code ("9&'C") particuar on oca manufactured cigarettes *hich*ere currently classified and taxed at fifty-five percent (55%) or the eportation of *hichis not authori;ed b contract or other*ise fift<five (22=) provided that the minimum tasha not be ess than Five !esos (!2.44) per pac#. The test for imposition of the22= ad valorem ta on cigarettes is that the oca manufactured cigarettes bear aforeign brand regardess of *hether or not the right to use or tite to the foreign brand*as sod or transferred b its o*ner to the oca manufacturer. The brand must beorigina o*ned b a foreign manufacturer or producer. &f o*nership of the cigarettebrand is ho*ever not definite determinabe the isting of brands manufactured inforeign countries appearing in the current +ord Tobacco ,irector sha govern.

The -&' sent the Compan a month ater a cop 'evenue %emorandum Circuar 70<67decaring >$ope? >%ore? and >Champion? as foreign brands and thus sub@ecting themto 22= as vaorem ta a revie* of '%C 70<67 *as denied.

&SSB: +hether the promugation of '%C 70<67 is vaid and *ithin the scope of theamendator a* ('A 023)

$BD,:

9o. The Supreme Court is convinced that the hasti promugated '%C 70<67 has faenshort of a vaid and effective administrative issuance.

!rior to the issuance of '%C 70<67 the brands *ere in the categor of ocamanufactured cigarettes not bearing foreign brands sub@ect to 32= ad vaorem ta.+ithout '%C 70<67 the enactment of 'A023 *oud not have ne* ta rateconseEuences on the compans products. &n issuing '%C 70<67 the -&' egisatedunder its Euasi<egisative authorit and not simp interpreted the a*. The C&' notsimp interpreted the a*G veri it egisated under its Euasi<egisative authorit. Thedue observance of the reEuirements of notice of hearing and of pubication shoud nothave been then ignored. +hen an administrative rue goes beond mere providing forthe means that can faciitate or render east cumbersome the impementation of the a*but substantia adds to or increases the burden of those governed it behoves theagenc to accord at east to those direct affected a chance to be heard and therebbe du informed before that ne* issuance is given the force and effect of a*.