American Tobacco v.
Camacho (2008) ISSUE:
G.R. No. 163583 August 20, 2008
YNARES-SANTIAGO, J.
Lessons Applicable: Court of Tax Appeals Jurisdiction,
Regional Trial Court Jurisdiction, Equal Protection and
Uniformity of Taxation (constitutional issue), BIR Power to
Conduct Resurvey and Reclassification (delegated by express
legislation)
Laws Applicable:
FACTS:
 June 2001, petitioner 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])
 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
 March 11, 2003: RMO 6-2003: Guidelines and
procedures in establishing current net retail prices of
new brands of cigarettes and alcohol products
 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 eventhough they are equal or higher than
petitioner's product price.
 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
1. W/N the RTC rather than the CTA has jurisdiction.
2. W/N RA 9334 of the classification freeze provision is
unconstitutional for violating the equal protection and
uniformity provisions of the Constitution
3. W/N RR Nos. 1-97, 9-2003, 22-2003 and RA 8243
even prior to its amendment by RA 9334 can authorize
the BIR to conduct resurvey and reclassification.
HELD:
1. Yes. The jurisdiction of the CTA id defined in RA 1125
which confers on the CTA jurisdiction to resolve tax disputes
in general. BUT does NOT include cases where the
constitutionality of a law or rule is challenged which is a
judicial power belonging to regular courts.
2. 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" 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"
Under the 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
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.
Moreover, petitioner failed to clearly demonstrate the exact
extent of such impact as the price is not the only factor that
affects competition.
3. NO. Unless expressly granted to the BIR, the power to
reclassify cigarette brands remains a prerogative of the
legislature which cannot be usurped by the former. These are
however modified by RA 9334.