The Supreme Court has declared as constitutional a section of the tax code that levies higher taxes on cigarette brands introduced to the market after 1996.

In a unanimous decision, the country's Supreme Court upheld the validity of section 145 of the National Internal Revenue Code (NIRC), which levies higher taxes on cigarette brands that entered the market after 1996. The petitioner, British American Tobacco (BAT), brought the case to the Supreme Court.
The case involves Republic Act 8240, which amended some sections of the 1997 tax code. Section 145 of the code provides for four tiers of tax rates based on the net retail price per pack of cigarettes. It also provides that new brands be taxed at their current net retail price and old brands at their net retail price as of 1 October 1996.
To implement RA 8240, the Bureau of Internal Revenue (BIR) issued regulations that classify old brands of cigarettes as those in existence prior to 1 January 1997, and new brands as those registered after that date. It later amended this issuance, providing for a periodic review every two years or earlier of the current net retail price of new brands and variants for establishing or updating their tax classification. The BIR issued guidelines to establish the net current retail prices of new brands and alcohol products, and to implement the revised tax classification of certain new brands introduced in the market after January 1997, based on a survey of their current net retail prices.
BAT said its rights to equal protection were violated when the BIR included Lucky Strike among the brands subject to higher tax rates. It said the tobacco excise law was discriminatory because it provided that brands which entered the market after 1996 were subject to taxes based on their current retail prices while older brands were subject to taxes based on their 1996 retail prices. (pi)