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American Tobacco v.

Camacho (2008) ISSUE:


G.R. No. 163583 August 20, 2008
YNARES-SANTIAGO, J. 1. W/N the RTC rather than the CTA has jurisdiction.
2. W/N RA 9334 of the classification freeze provision is
Lessons Applicable: Court of Tax Appeals Jurisdiction, unconstitutional for violating the equal protection and
Regional Trial Court Jurisdiction, Equal Protection and uniformity provisions of the Constitution
Uniformity of Taxation (constitutional issue), BIR Power to 3. W/N RR Nos. 1-97, 9-2003, 22-2003 and RA 8243
Conduct Resurvey and Reclassification (delegated by express even prior to its amendment by RA 9334 can authorize
legislation) the BIR to conduct resurvey and reclassification.

Laws Applicable:
HELD:
1. Yes. The jurisdiction of the CTA id defined in RA 1125
FACTS:
which confers on the CTA jurisdiction to resolve tax disputes
in general. BUT does NOT include cases where the
 June 2001, petitioner British American Tobacco constitutionality of a law or rule is challenged which is a
introduced and sold Lucky Strike, Lucky Strike Lights judicial power belonging to regular courts.
and Lucky Strike Menthol Lights cigarettes w/ SRP P
9.90/pack - Initial assessed excise tax: P 8.96/pack 2. No. In Sison Jr. v. Ancheta, the court held that "xxx It suffices
(Sec. 145 [c]) then that the laws operate equally and uniformly on all persons
 February 17, 2003: RR 9-2003: Periodic review every under similar circumstances or that all persons must be treated
2 years or earlier of the current net retail price of new in the same manner, the conditions not being different, both in
brands and variants thereof for the purpose of the the privileges conferred and the liabilities imposed. If the law
establishing and updating their tax classification be looked upon in tems of burden on charges, those that fall
 March 11, 2003: RMO 6-2003: Guidelines and within a class should be treated in the same fashion, whatever
procedures in establishing current net retail prices of restrictions cast on some in the group equally binding on the
new brands of cigarettes and alcohol products rest. xxx" Thus, classification if rational in character is
 August 8, 2003: RR 22-2003: Implement the revised allowable. In Lutz v. Araneta: "it is inherent in the power to tax
tax classification of certain new brands introduced in that a state be free to select the subjects of taxation, and it has
the market after January 1, 1997 based on the survey been repeatedly held that 'inequalities which result from a
of their current net retail prices. This increased the singling out of one particular class for taxation, or exemption
excise tax to P13.44 since the average net retail price infringe no constitutional limitation" SC previously held:
is above P 10/pack. This cause petitioner to file before "Equality and uniformity in taxation means that all taxable
the RTC of Makati a petition for injunction with prayer articles or kinds of property of the same class shall be taxed at
for issuance of a Temporary Restraining Order and/or the same rate. The taxing power has the authority to make
Writ of Preliminary Injunction sought to enjoin the reasonable and natural classifications for purposes of taxation"
implementation of Sec. 145 of the NIRC, RR No. 1-
97, 9-2003, 22-2003 and 6-2003 on the ground that Under the the rational basis test, a legislative classification, to
they discriminate against new brands of cigarettes in survive an equal protection challenge, must be shown to
violation of the equal protection and uniformity rationally further a legitimate state interest. The classifications
provisions of the Constitution must be reasonable and rest upon some ground of difference
 RTC: Dismissed having a fair and substantial relation to the object of the
 While petitioner's appeal was pending, RA 9334 legislation
amending Sec. 145 of the 1997 NIRC among other
took effect on January 1, 2005 which in effect A legislative classification that is reasonable does not offend
increased petitioners excise tax to P25/pack the constitutional guaranty of the equal protection of the laws.
 Petitioner filed a Motion to Admit attached The classification is considered valid and reasonable provided
supplement and a supplement to the petition for review that: (1) it rests on substantial distinctions; (2) it is germane to
assailing the constitutionality of RA 9334 and praying the purpose of the law; (3) it applies, all things being equal, to
a downward classification of Lucky Strike products at both present and future conditions; and (4) it applies equally to
the bracket taxable at P 8.96/pack since existing all those belonging to the same class.
brands are still taxed based on their price as of October
1996 eventhough they are equal or higher than Moreover, petitioner failed to clearly demonstrate the exact
petitioner's product price. extent of such impact as the price is not the only factor that
 Philip Morris Philippines Manufacturing affects competition.
Incorporated, Fortune Tobacco Corp., Mighty Corp.
and JT International Intervened. 3. NO. Unless expressly granted to the BIR, the power to
 Fortune Tobacco claimed that the CTA should have reclassify cigarette brands remains a prerogative of the
the exclusive appellate jurisdiction over the decision legislature which cannot be usurped by the former. These are
of the BIR in tax disputes however modified by RA 9334.