British American Tobacco Corporation v.

Finance Secretary Camacho, BIR

Commissioner Parayno (2009)

Doctrine: A levy of tax is not unconstitutional because it is not intrinsically equal and
uniform in its operation.The uniformity rule does not prohibit classification for purposes of
taxation

Facts:
 British American Tobacco filed a Motion for Reconsideration for the Court’s decision
in 2008
 Petitioner interposes that the assailed provisions:
(1) violate the equal protection and uniformity of taxation clauses of the Constitution,
(2) contravene Section 19,[1] Article XII of the Constitution on unfair competition, and
(3) infringe the constitutional provisions on regressive and inequitable taxation.
 Petitioner further argues that assuming the assailed provisions are constitutional, it
is entitled to a downward reclassification of Lucky Strike from the premium-priced
to the high-priced tax bracket.
 Lucky Strike reiterates in its MR that the classification freeze provision violates the
equal protection and uniformity of taxation clauses because older brands are taxed
based on their 1996 net retail prices while new brands are taxed based on their
present day net retail prices.

HELD: Petition is denied

 Without merit and a rehash of petitioner’s previous arguments before this Court
 The rational basis test was properly applied to gauge the constitutionality of the
assailed law in the face of an equal protection challenge
The classification is considered valid and reasonable provided that: (1) it
rests on substantial distinctions; (2) it is germane to the purpose of the
law; (3) it applies, all things being equal, to both present and future
conditions; and (4) it applies equally to all those belonging to the same
class.
 The classification freeze provision was inserted in the law for reasons of practicality
and expediency.
o since a new brand was not yet in existence at the time of the passage of RA
8240, then Congress needed a uniform mechanism to fix the tax bracket of a
new brand.
o The current net retail price, similar to what was used to classify the brands
under Annex “D” as of October 1, 1996, was thus the logical and practical
choice
 The classification freeze provision was in the main the result of Congress’s earnest
efforts to improve the efficiency and effectivity of the tax administration over sin
products while trying to balance the same with other State interests