SIXTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
Second Regular Session 
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INTRODUCED BY SENATOR ALAN PETER "COMPANERO" S. CAYETANO 
AN ACT IMPOSING A CIGARETTE FLOOR PRICE ON TOBACCO PRODUCTS 
TO PREVENT ACCESS THERETO BY THE YOUTH AND TO ADDRESS THE 
ILLICIT TRADE OF TOBACCO PRODUCTS TO CHILDREN 
EXPLANATORY NOTE 
Children are a gift from the Lord; they are a reward from him. 
Psalm 127:3 (NLT) 
Decades from now, today' s children will be the leaders and movers in society. They will 
assume leadership positions and shape the direction of the nation. However, some children may 
already face a bleak future due to circumstances that they are in at the moment. For instance, 
children like Joshua and Gian, aged nine and six respectively, who make a living scouring 
mountains of trash for recyclable items to sell. In a news report, they were featured as hardly 
being able to make enough money for themselves, yet every day, after spending hours clawing 
through garbage, they visit a sari-sari store to buy cigarettes out of their own hard-earned 
money.' Not only does this deprive them of enough resources to buy essentials like food; it also 
puts their health at risk. 
According to the Global Youth Tobacco Survey conducted by the World Health 
Organization (WHO), as of 2011, nearly 3 out of 10 high school students have smoked 
cigarettes.2 The percentage of Filipino teens aged 13 to 15 who smoke rose from 19.6% in 2003 
to 27.3% in 2011. 3 In the data from the Department of Health (DOH) and WHO, as of2012, 17 
years old is the average age of young smokers in the Philippines. One in lOnon-smoking 
Filipino youth intends to smoke the following year. Half of youth smokers have purchased 
cigarettes from a store; while the rest got their sticks from informal sources such as dole-outs 
from close relatives and peers. 
·http://www.gmanetwork.com/llews/story/261506/newstv/reportersnotebooklpinoy-child-smokers-on-the-rise-aided-
by-cheap-cigarettes 
'Global Youth Tobacco Survey Fact Sheet 2011, available at 
http://www, wpro.who.intiphilippilles/mediacelltre/factsheetlGYTS 2011. pdf?ua= 1. 
3Supra note 1. 
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Despite the increase in sin taxes and other-anti-tobacco measures, Nielsen Corporation 
(formerly AC Nielsen), a global marketing research firm, reveals that smoking has not 
significantly decreased. In fact, it posted a 7% increase in 2014 and prevalence is projected to 
increase by 5.9% in 2015. What happened was there was a mere shift in the use of economy-
priced brands.4 
In the Philippines, Filipino smokers consume over 3.5 billion packs of cigarettes a year, 
according to WHO-Tobacco Free Initiative. Due in part to anti-tobacco legislation, industry 
estimates reveal that the average daily consumption declined slightly from 2012 to 2013 as 
consumers reacted to changes in prices brought about by increases in excise taxes. While 
cigarette prices increased, downtrading or switching from a high priced brand to a cheaper brand 
increased to an all-time high of more than 70% based on tobacco industry data. The proliferation 
of cheap brands in the market exacerbates downtrading, which is fueled by the smuggling of 
cheap cigarettes into the country. 
Article II, Section 13 of the Philippine Constitution provides that, "The State recognizes 
the vital role of the youth in nation-building and shall promote and protect their physical, moral, 
spiritual, intellectual, and social well-being." Article II, Section 15 further provides, "The State 
shall protect and promote the right to health of the people and instill health consciousness among 
them." 
Under this proposed legislation, setting a Minimum Cigarette Price (MCP) per pack of 
cigarettes will decisively deny youth access to cheap and affordable cigarettes and support the 
beneficial health impact of the current legal reforms by delivering the following: 
1) Tobacco players who resort to tax evasion will no longer be able to sell their products at 
cheap affordable prices; 
2) There will be no more price discounting or offers of cheap affordable cigarettes below 
MCP; 
3) Increased revenue for government through higher tax and VAT collection; and 
4) Robust enforcement of significant financial penalties and imprisomnent for offenders. 
The Department of Trade and Industry (DT!) and the Bureau of Internal Revenue (BIR) 
shall issue a price memorandum or advisory specifying the MCP on a per pack basis. This bill 
sets the minimum cigarette price at Forty-four Pesos (Php44.00) per pack effective January 1, 
2016, and Fifty-one Pesos (Php51.00) per pack effective January 1,2017. Thereafter, consistent 
with the increase in excise taxes under Republic Act No. 10351, the MCP shall likewise be 


increased annually by four percent (4%) effective January 1, 2018, through a similar price 
memorandum or advisory issued by the aforementioned agencies.In the computation of the MCP, 
the following components shall be taken into consideration: excise tax, V AT, production cost, 
operating cost, and annual inflation. This measure penalizes selling below the MCP and prohibits 
price promotions or discounts related to the MCP in order to strengthen enforcement. 
It is hoped that this measure will mitigate youth smoking and put a check on tobacco 
smuggling so that generations of youth leaders would be raised up as healthy and productive 
members of society. 
In view of the foregoing, approval of this bill is earnestly sought. 
~~ 
ALAN PETER "COMPANERO" S. CAYETANO 
Senator 


SIXTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
Second Regular Session 
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SENATE 
S. B. No. 2 8 0 3 
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INTRODUCED BY SENATOR ALAN PETER "COMP ANERO" S. CAYETANO 
AN ACT IMPOSING A CIGARETTE FLOOR PRICE ON TOBACCO PRODUCTS 
TO PREVENT ACCESS THERETO BY THE YOUTH AND TO ADDRESS THE 
ILLICIT TRADE OF TOBACCO PRODUCTS TO CHILDREN 
Be it enacted by the Senate and House of Representatives of the Philippines in Congress 
assembled: 
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Section 1. Short Title. - This Act shall be known as "The Minimum Cigarette Price Law." 
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SEC. 2. Declaration of Principles. - The State shall protect and promote the right to 
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health of the people and instill health consciousness among themo The State also recognizes the 
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vital role of the youth in nation-building and shall promote and protect their physical, moral, 
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spiritual, intellectual, and social well-being. 
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SEC. 3. Purpose. - The objectives oftms Act are: 
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a) To impose a Minimum Cigarette Price (MCP) per pack on cigarettes in order to 
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prevent the access of smokers, particularly the youth, to cheap cigarettes; 
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b) To address the smuggling of cigarettes which are sold at cheap prices; 
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c) To prevent discounting and price offers below the MCP; and 
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d) To bring in fresh revenues to government as tax evasion is averted and value added 
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tax (VAT) collection is increased with the corresponding increase in the prices of 
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cigarettes. 
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SEC. 4. Coverage. - This Act shall apply to all locally-manufactured and imported 
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cigarettes intended for sale in the Philippines. 
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SEC. 5. Definition of Terms. - As used in this Act: 
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a) Cigarette refers to any roll or tubular construction, which contains tobacco or its 
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derivatives and is intended to be burned or heated under ordinary conditions of use; 
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b) Minimum Cigarette Price (MCP) means the floor price of cigarettes per pack sold by 
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manufacturers, importers and retailers to consumers. When cigarettes are sold per 
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stick, the aggregate price of the individual sticks in a pack should not be less than the 
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MCP per pack. The MCP shall apply to cigarettes packed by machine in twenties 
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(20s); 
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c) Operating Cost refers to non-production cost such as marketing, distribution, selling 
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and other operating related expenses; and 
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d) Production Cost means the basic cost incurred in producing a pack of cigarettes, 
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including among others, all other costs associated with cigarette manufacturing such 
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as tax stamps, warehousing costs, freight, transportation, security, insurance and other 
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production-related expenses. 
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SEC. 6. Minimum Cigarette Price. - Within thirty (30) days after the effectivity of this 
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Act, the Department of Trade and Industry (DTI) and the Bureau ofIntemal Revenue (BIR) shall 
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issue a price memorandum or advisory specifYing the MCP on a per pack basis, as follows: 
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Effective January 1,2016, Forty-four Pesos (Php44.00) per pack; and 
Effective January 1,2017, Fifty-one Pesos (php51.00) per pack. 
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Thereafter, consistent with the increase in excise taxes under Republic Act No.1 0351, the 
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MCP shaH likewise be increased annuaHy by four percent (4%) effective January 1, 2018, 
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through a similar price memorandum or advisory issued by the aforementioned agencies. 
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In the computation of the MCP, the following components shall be taken into 
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consideration: excise tax, VAT, production cost, operating cost, and annual inflation. 
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SEC. 7. Selling Below the MCP. - It shall be unlawful for any manufacturer, importer or 
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retailer to sell cigarettes less than the MCP. When cigarettes are sold per stick, the aggregate 
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price of the individual sticks in a pack should not be less than the MCP per pack. 
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SEC. 8. Prohibition on Price Promotions Related to MCP. - No manufacturer, importer 
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or retailer shall engage in price promotion that would undermine the purpose of this Act. 
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SEC. 9. Implementing Agencies. - The DTI, in coordiuation with the BIR, shall 
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implement the provisions of this Act and shall be vested with the following powers and functions: 
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a) Promulgate and publish, within three (3) months from the effectivity of this Act, the 
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necessary implementing rules and regulations; 
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b) Cause the immediate dissemination of the MCP, including liabilities, such as fmes and 
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penalties in case of violation, through publication in a newspaper of general circulation 
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or other means of communication deemed effective to convey 1he information to the 
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public, such as radio, television and o1her mass media; 
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c) Deputize law enforcement agencies such as 1he Philippine National Police, National 
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Bureau of Investigation and the Bureau of Customs, as well as local govermnent units, 
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to effectively implement 1his Act; 
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d) Wi1hout prejudice to the power to issue temporary closure or temporary restraining 
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order for a period which shall not be more than ten (10) days, the aforesaid 
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implementing agencies may, after due notice and hearing, issue cease and desist orders, 
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reprimand, censure, suspend, revoke or cancel any permit, license, au1hority or 
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registration, or order 1he permanent closure of any establishment violating the 
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provisions of this Act; and 
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e) Require tobacco manufacturers and importers to submit quarterly sworn declarations of 
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their selling prices or as frequently as may be required under 1he implementing rules 
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and regulations. 
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SEC. 10. Liability of Manufacturers, Importers and Retailers. - Tobacco manufacturers, 
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importers and retailers shall be directly liable for violations of Sections 6, 7, and 8 of this Act. In 
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1he case of a business entity or establishment, 1he owner, president, manager and corporate 
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officials 1hereof shall be directly responsible and liable for violation of 1his Act. 
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SEC. 11. Penalties for Non-Compliance. - Imprisonment for a period of not less than six 
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(6) months and not more 1han five (5) years and a fme ranging from Fifty Thousand Pesos 
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(php50,000.00) to Two Million Pesos (php2,000,000.00), depending on the quantity of the 
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cigarettes involved in the violation, shall be imposed upon any manufacturer, importer or retailer 
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who sells any cigarette less 1han 1he MCP, or who violates any provision ofthis Act or any order, 
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rule or regulation issued pursuant to this Act. In case of a business entity or establishment, bo1h 
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penalties shall apply in addition to the suspension or revocation of business licenses or permits. 
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Whenever any of the offenses described above is cormnitted by a corporation or 
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association, the president and each of the directors or managers of 1he said corporation or 
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association, or its agent Or representative in the Philippines in case of a foreign corporation or 
34 association, who shall have knowingly permitted or failed to prevent the commission of such 
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offenses, shall be held liable as principals 1hereof. 
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SEC. 12. Separability Clause. - If any provision or part of this Act is declared invalid or 
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unconstitutional, other provisions which are not affected thereby shall continue to be in full force 
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or effect. 
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SEC. 13. Repealing Clause. - All laws, orders, rules and regulations, or parts thereof 
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which are inconsistent with the provisions of this Act are hereby modified or repealed accordingly. 
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SEC. 14. Effectivity. - This Act shall take effect fifteen (15) days after its publication in the 
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Official Gazette or in at least two (2) newspapers of general circulation. 
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Approved, 
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