LAW OF BASIC TAXATION IN THE PHILIPPINES theretofore made. Both the CTA and the Court of Appeals ruled in favor of the taxpayer. HELD: While the authority of the Secretary of Finance, in conjunction with the Commissioner of Internal Revenue, to promulgate all needful rules and regulations for the effective enforcement of internal revenue laws cannot be controverted and such rules and regulations as well as administrative opinions and rulings deserve respect by the courts, however, all such issuances must not override, but must remain consistent and in harmony with, the law they seek to apply and implement. Administrative rules and regulations are intended to carry out, neither to supplant nor to modify, the law. E.0. 41 is explicit and requires hardly anything beyond a simple ‘application of its provisions. E.0. 41, in its exclusionary clauses, did not include the 1981 to 1985 tax liabilities already assessed. Said executive order has been designed to be in the nature of a general grant of tax amnesty subject only to cases specifically ‘excepted by it. COMMISSIONER OF INTERNAL REVENUE v. COURT OF APPEALS, ET AL., G.R. NO. 119761, AUG. 29, 1996 FACTS: The Philippine Patent Office issued to private respondent Fortune Tobacco Corporation (Fortune Tobacco) separate certificates of trademark registration for “Champion,” “Hope,” and “More” cigarettes. It was the position of the Commissioner of Internal Revenue that said cigarette brands should be classified as foreign brands since they were listed in the World Tobacco Directory as belonging to foreign companies. Fortune Tobacco changed the name of “Hope” to “Hope Luxury,” and “More” to “More Premium” thereby removing them from the foreign brand category. R.A. 7654, amending Sec. 142(c)(1), NIRC, was enacted and became effective on July 3, 1993. A month later, Revenue ‘Memorandum Circular No. 37-93 (RMC 37-93) was issued by the BIR categorizing “Hope,” “More,” and “Champion” as locally manufactured cigarettes bearing a foreign brand subject to 55% ad valorem tax. A copy of RMC 87-93 was sent by fax to Fortune Tobacco without being addressed to anyone in particular. On July 15, 1993, a certified xerox copy of RMC 37-93 was received by Fortune Tobacco. On July 19, 1993, Fortune Tobacco wrote the BIR appellate division for a review, reconsideration and recall of RMC 37-93, and on the following day, the BIR assessed Fortune Tobacco an 158 ‘TAX LAWS AND REGULATIONS ad valorem tax deficiency of 9,598,334. Fortune Tobacco filed a petition for review with the CTA on ‘Aug. 3, 1994. The CTA ruled in favor of Fortune Tobacco and the decision of the tax court was affirmed by respondent Court of Appeals. HELD: The Supreme Court sustained the ruling of the appellate and tax courts. ‘There is no doubt that the BIR has wide and ample authority in the issuance of rulings for the effective implementation of the provisions of the NIRC. Like any government agency, however, the Commissioner of Internal Revenue may not disregard the legal requirements and applicable principles in the exercise of its quasi-legislative powers, A reading of RMC 37-93, particularly considering the {rcumstances under which it has been issued, shows that the circular cannot be viewed simply as a corrective measure (revoking in the process the previous holdings of past Commissioners) or merely as construing Sec. 142(c)(1), NIRC (now, Sec. 145, 1997 NIRC), as amended, but has, in fact and most importantly, been made in order to place “Hope Luxury,” “Premium More” and “Champion” within the classification of locally manufactured cigarettes bearing foreign brands and to thereby have them covered by R.A. 7654. Specifically, the new law would have its amendatory provisions applied to locally manufactured cigarettes which at the time of its effectivity were not so classified as bearing foreign brands. Prior to the issuance of the questioned circular, “Hope Luxury,” “Premium More,” and “Champion” cigarettes were in the category of locally manufactured cigarettes not bearing foreign brand subject to 45% ad valorem tax. Hence, without RMC 37-98, the enactment of R.A. 7654 would have had no new tax rate consequence on private respondent's products. 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 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, hearing and publication should not have been then ignored. RMC 37-98 likewise infringed on uniformity of taxation. Sec. 28(2), Art. VI of the 1987 Constitution mandates taxation to be uniform and equitable. Thus, all taxable articles or kinds of property of the same class must be taxed at the same rate and the tax must operate with the same force and effect where the subject may be found. 159