Commissioner of Internal Revenue vs. Fortune Tobacco Corporation (July 21, 2008 and September 28, 2011)

Commissioner of Internal Revenue vs. Fortune Tobacco Corporation (July 21, 2008 an !eptember 28, 2011" #$C%&R')* F$CT!

Under Under our tax laws, laws, manufa manufactu cturer rers s of cigare cigarett ttes es are subject subject to pay excise excise taxes on their their produc products. ts. Prior Prior to Januar January y 1, 1997, 1997, the excises excises taxes on these these produc products ts were were in the form of ad valorem taxes, valorem taxes, pursuant to ection 1!" of the 1977 #ational $nternal %e&enue 'ode (1977 ( 1977 Tax Code). Code).

*eginn *eginnin ing g Januar January y 1, 1997, 1997, %epubl %epublic ic +ct #o. (RA) RA) "!"!-/0 too too effect effect and a shift shift from from ad valorem t valorem to o specific taxes taxes was made. ection ection 1!"(c) of the 1977 2ax 'ode, as amended amended by %+ "!-, reads in part3 ec. 1!".

Cigars and cigarettes. cigarettes. 4 x x x.

(c) 'igarett 'igarettes es paced paced by machine. machine. 4 2here 2here shall shall be le&ied, le&ied, assess assessed ed and collected on cigarettes paced by machine a tax at the rates prescribed below3 (1) $f the net retail retail price price (excluding (excluding the excise tax tax and the &alue5added &alue5added tax) is abo&e 2en pesos (P1-.--) per pac, the tax shall be 2wel&e pesos (P1".--) per pac6 (") $f the net net retail retail price (exclu (excluding ding the excise excise tax and and the &alue5add &alue5added ed tax) exceeds ix pesos and fifty centa&os (P.8-) but does not exceed 2en pesos (P1-.--) per pac, the tax shall be ight pesos (P.--) per pac6 (/) $f the net retail retail price price (excluding (excluding the excise tax tax and the &alue5added &alue5added tax) is :i&e pesos (P8.--) but does not exceed ix pesos and fifty centa&os ( P.8-) per pac, the tax shall be :i&e pesos (P8.--) per pac6 (!) $f the net retail retail price price (excluding (excluding the excise tax and the &alue05added tax) is is below :i&e pesos (P8.--) per pac, the tax shall be ;ne peso ( P1.--) per pac. xxxx T+e specific ta from any bran of ci-arettes it+in t+e net t+ree (/" years of effectivity of t+is $ct s+all not be loer t+an t+e ta +ic+ is ue from eac+ bran on 'ctober 1, 133 13 3 Pro&ided, howe&er, howe&er, 2hat in cases where where the specific tax rates imposed in paragraphs (1), ("), (/) and (!) hereinabo&e will result in an increase in excise tax of more than se&enty percent (7-