CIR vs. Fortune Tobacco (G.R. No. 167274)
FACTS: The Tax Reform Code imposed a new rate effective January 1, 2000, affecting cigars and cigarettes. There was a shift away from the ad valorem system. During the transition period, the law states that the excise tax to be paid must not be lower than the tax due from each brand on October 1, 1996. However, the CIR issued a revenue regulation (RR) fixing the rates prior to January 1, 2000.
ISSUE: Is the RR valid?
HELD: No, the RR is not valid.
Fortune Tobacco was erroneously assessed and collected from. Implementing rules and regulations must be in harmony with the law they seek to interpret and enforce. Otherwise, they are ultra vires and taxes collected not supported by the clear language of the law but by additions made by RR must be refunded to the taxpayer.
ISSUE: Is the RR valid?
HELD: No, the RR is not valid.
Fortune Tobacco was erroneously assessed and collected from. Implementing rules and regulations must be in harmony with the law they seek to interpret and enforce. Otherwise, they are ultra vires and taxes collected not supported by the clear language of the law but by additions made by RR must be refunded to the taxpayer.