FACTS:

The case involves a Petition for Review concerning the nullification of Customs Memorandum Order (CMO) No. 27-2003 on the tariff classification of wheat by the Commissioner of Customs. CMO 27-2003 classified wheat as either food grade or feed grade, depending on the importer or consignee, country of origin, and port of discharge, with corresponding tariffs of 3% and 7% respectively.

A regular importer filed a Petition for Declaratory Relief challenging the validity of CMO 27-2003. The petitioner argued that the order lacked public participation, violated due process rights, resulted in unequal treatment, and retroactive application.

The Regional Trial Court (RTC) granted the petition, declaring CMO 27-2003 invalid. The Court of Appeals (CA) dismissed the appeal filed by the petitioners, leading to this present petition before the Supreme Court.

In this petition, the petitioner raises issues regarding the CA's decision and the jurisdiction of the trial court over the case.

ISSUES:

1. Whether the Court of Appeals erred in ruling that the respondent, as an importer of wheat, has sufficient legal and substantive interest to challenge the validity of a Customs Memorandum Order (CMO) imposing higher tariff rates.

2. Whether the CMO should have been published and subjected to public participation before its implementation.

3. Whether the publication requirement was violated in the issuance of CMO 27-2003.

4. Whether CMO 27-2003 violates the equal protection clause of the Constitution.

5. Whether the regulation limits the powers of customs officers as mandated by the Tariff and Customs Law.

6. Whether or not the regulation limiting the powers of customs officers to examine and assess imported articles is valid.

7. Whether or not the regulation infringes upon the constitutional authority of the Bureau of Customs.

RULING:

1. The Court of Appeals did not err in ruling that the respondent has sufficient legal and substantive interest to challenge the validity of the CMO. As a regular importer of wheat, the respondent would be directly affected by the imposition of higher tariff rates. The controversy between the parties involves the imposition of a tariff rate that the respondent refuses to pay.

2. The CMO should have been published and subjected to public participation before its implementation. Section 9 of Book VII, Chapter 2 of the Revised Administrative Code requires agencies to publish or circulate notices of proposed rules and to afford interested parties the opportunity to submit their views prior to the adoption of any rule. Failure to comply with this requirement renders the rule invalid. The CMO, which substantially increased the burden on importers, should have given those directly affected the chance to be heard and informed before it was given the force and effect of law.

3. The Court held that the publication requirement was violated, rendering CMO 27-2003 invalid. The lack of publication prevents the people from knowing the specific contents and texts of the decree, depriving them of their right to due process.

4. The Court ruled that CMO 27-2003 violates the equal protection clause of the Constitution because it creates an unreasonable classification. The regulation treats importers differently and imposes disparate tariffs without any substantial distinctions related to the quality of the wheat.

5. The Court found that CMO 27-2003 limits the powers of customs officers and diminishes their role in assessing and determining the classification of imported articles, in violation of the Tariff and Customs Law.

6. The Court denied the petition, thereby affirming the validity of the regulation limiting the powers of customs officers to examine and assess imported articles. The Court did not find any infringement upon the constitutional authority of the Bureau of Customs.

PRINCIPLES:

• Legislative rules are intended to supplement or implement a primary legislation, while interpretative rules provide guidelines for enforcing the law.

• Courts can inquire into the delegated authority, reasonableness, and procedural compliance of a legislative rule. However, courts cannot substitute their judgment for the legislative body's determination.

• For interpretative rules, the inquiry is into the correctness or propriety of the rule.

• A party with adverse interests, who has a legal and substantive interest in the implementation of a regulation, has standing to challenge its validity.

• Litigation is ripe for judicial determination when it is inevitable that a party will have to file a protest case to protect its rights.

• When an administrative rule substantially increases the burden on those governed, the agency must afford those directly affected a chance to be heard and informed before the rule is implemented.

• Publication and public participation in rule-making processes are necessary to provide the general public with notice of the laws that regulate their actions and conduct as citizens.

• The publication of laws is of vital significance to ensure that the people are informed of the specific contents and texts of laws and regulations, in accordance with the right to due process.

• The equal protection clause guarantees that no person or class of persons shall be deprived of the same protection of laws enjoyed by others in the same place and circumstances. A reasonable classification must have substantial distinctions, be germane to the purpose of the law, not limited to existing conditions, and apply equally to all members of the same class.

• Rules and regulations created through delegated power should be within the scope of the statutory authority granted by the legislature to the administrative agency. These regulations must be germane to the objects and purposes of the law and conform to the standards prescribed by law.

• Customs officers are empowered to examine and assess imported articles.

• The Bureau of Customs has constitutional authority over matters pertaining to the regulation of imported articles.