British American

Tobacco
vs.
Camacho
G.R. No. 163583 April 15, 2009
YNARES-SANTIAGO, J.
 FACTS:
June 2001

“ sold Lucky Strike, Lucky Strike

Lights and Lucky Strike Menthol

British American
Lights cigarettes

Tobacco

British American Tobacco introduced and

sold Lucky Strike, Lucky Strike Lights and
Lucky Strike Menthol Lights cigarettes w/
SRP P 9.90/pack - Initial assessed excise
tax: P 8.96/pack (Sec. 145 [c])
 FACTS:
February 17, 2003:
RR 9-2003: Periodic
review every 2 years or
earlier of the current net
retail price of new brands
and variants thereof for
the purpose of the
establishing and updating
their tax classification
 FACTS:
March 11, 2003: RMO 6-2003:
Guidelines and procedures in
establishing current net retail prices
of new brands of cigarettes and
alcohol products

Guidelines and
procedures in
establishing
current net retail
 August 8, 2003
RR 22-2003: Implement the revised tax classification of certain
new brands introduced in the market after January 1, 1997 based
on the survey of their current net retail prices. This increased the
excise tax to P13.44 since the average net retail price is above P
10/pack. This cause petitioner to file before the RTC of Makati a
petition for injunction with prayer for issuance of a Temporary
Restraining Order and/or Writ of Preliminary Injunction sought
to enjoin the implementation of Sec. 145 of the NIRC, RR No. 1-
97, 9-2003, 22-2003 and 6-2003 on the ground that they
discriminate against new brands of cigarettes in violation of the
equal protection and uniformity provisions of the Constitution
 RTC: Dismissed
While petitioner's appeal was
pending, RA 9334 amending Sec. 145
of the 1997 NIRC among other took
effect on January 1, 2005 which in
effect increased petitioners excise tax
to P25/pack
Petitioner filed a Motion to Admit attached supplement and
a supplement to the petition for review assailing the
constitutionality of RA 9334 and praying a downward
classification of Lucky Strike products at the bracket
taxable at P 8.96/pack since existing brands are still taxed
based on their price as of October 1996 even though they
are equal or higher than petitioner's product price.

Filed a
motion
BA
Philip Morris Philippines Manufacturing
Incorporated, Fortune Tobacco Corp.,
Mighty Corp. and JT International
Intervened.

Fortune Tobacco claimed that the CTA

should have the exclusive appellate
jurisdiction over the decision of the BIR in
tax disputes
 Whether or not RA 9334 of the
classification freeze provision is
unconstitutional for violating the equal
protection and uniformity provisions
of the Constitution
 RULING:
No.
In Sison Jr. v. Ancheta, the court held that "xxx It suffices then that the
laws operate equally and uniformly on all persons under similar
circumstances or that all persons must be treated in the same manner,
the conditions not being different, both in the privileges conferred and
the liabilities imposed. If the law be looked upon in tems of burden on
charges, those that fall within a class should be treated in the same
fashion, whatever restrictions cast on some in the group equally
binding on the rest. xxx"
 RULING:
Thus, classification if rational in character is allowable. In Lutz v.
Araneta: "it is inherent in the power to tax that a state be free to select
the subjects of taxation, and it has been repeatedly held that
'inequalities which result from a singling out of one particular class for
taxation, or exemption infringe no constitutional limitation" SC
previously held: "Equality and uniformity in taxation means that all
taxable articles or kinds of property of the same class shall be taxed at
the same rate. The taxing power has the authority to make reasonable
and natural classifications for purposes of taxation"
 RULING:
Under the rational basis test, a legislative
classification, to survive an equal protection
challenge, must be shown to rationally further a
legitimate state interest. The classifications must
be reasonable and rest upon some ground of
difference having a fair and substantial relation to
the object of the legislation
 RULING:
A legislative classification that is reasonable does
not offend the constitutional guaranty of the equal
protection of the laws. 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.
 RULING:
Moreover, petitioner failed to clearly
demonstrate the exact extent of such
impact as the price is not the only
factor that affects competition.