Primary Holding

CMO No. 27-2003 was declared unconstitutional for violating procedural due process, substantive due process, and the equal protection clause. It also exceeded the Commissioner of Customs' delegated authority.

Background

Hypermix Feeds Corporation challenged CMO No. 27-2003, which classified wheat imports as either food grade (3% tariff) or feed grade (7% tariff) based on factors like importer identity, country of origin, and port of discharge. Hypermix argued that the regulation unfairly classified its wheat as feed grade despite being food grade, subjected it to higher tariffs, and violated constitutional rights.

Facts

• 1. CMO No. 27-2003 classified wheat imports based on importer identity, country of origin, and port of discharge.
• 2. Hypermix imported Chinese milling wheat classified as food grade but was subjected to a higher feed-grade tariff under CMO No. 27-2003.
• 3. The regulation was issued without public notice or hearings and was not filed with the University of the Philippines Law Center as required by law.

Arguments of the Petitioners

• 1. The RTC lacked jurisdiction over the case.
• 2. A declaratory relief action was improper.
• 3. CMO No. 27-2003 was an internal administrative rule not subject to procedural requirements.
• 4. The claims were speculative since no actual injury had occurred.

Arguments of the Respondents

• 1. CMO No. 27-2003 violated procedural due process because it lacked notice and publication.
• 2. The regulation discriminated against non-flour millers in violation of equal protection rights.
• 3. Retroactive application of the regulation was confiscatory and unconstitutional.

Issues

• 1. Did the RTC have jurisdiction over the case?
• 2. Was a declaratory relief action proper?
• 3. Was CMO No. 27-2003 valid under constitutional and statutory requirements?

Ruling

• 1. Procedural Due Process Violations: CMO No. 27-2003 was a legislative rule that affected substantive rights but was issued without compliance with procedural requirements like notice, hearing, and publication under the Revised Administrative Code.
• 2. Equal Protection Clause Violations: The classification criteria (importer type, country of origin, port) were arbitrary and lacked substantial distinctions relevant to tariff purposes.
• 3. Exceeding Delegated Authority: The Commissioner preempted customs officers' duties to examine and classify goods under Section 1403 of the Tariff and Customs Code.

Doctrines

• 1. Legislative vs Interpretative Rules: Legislative rules affecting substantive rights require compliance with procedural safeguards; interpretative rules do not.
• 2. Equal Protection Clause: Classifications must rest on substantial distinctions germane to their purpose and apply equally to all members within a class.

Precedents Cited

• 1. Tañada v. Tuvera: Emphasized publication requirements for laws affecting public rights.
• 2. Smart Communications v. NTC: Affirmed judicial review over administrative regulations affecting substantive rights.
• 3. Misamis Oriental Association v. Department of Finance: Distinguished legislative rules requiring publication from interpretative rules.

Statutory and Constitutional Provisions

• 1. Equal Protection Clause (Article III, Section 1).
• 2. Revised Administrative Code (Book VII, Chapter II).
• 3. Tariff and Customs Code (Section 1403).