Vinzons-Chato vs. Fortune Tobacco Corp.

Facts:

Petitioner Liwayway Vinzons‑Chato (then Commissioner of Internal Revenue) issued Revenue Memorandum Circular No. 37‑93 (RMC 37‑93) on July 1, 1993, reclassifying certain cigarette brands (“Champion,” “Hope,” and “More”) as locally manufactured cigarettes bearing foreign brands and subjecting them to a 55% ad valorem tax under the newly enacted Republic Act No. 7654 (enacted June 10, 1993; took effect July 3, 1993). Fortune Tobacco Corporation (respondent) received a telefaxed copy on July 2 and a certified xerox copy by ordinary mail on July 15, 1993. Fortune moved for reconsideration on July 20, 1993; the motion was denied on July 30, 1993, and an ad valorem tax deficiency of P9,598,334.00 was assessed.

Fortune filed a petition for review with the Court of Tax Appeals (CTA) on August 3, 1993; the CTA issued an injunction (Sept. 30, 1993) and, in a decision dated August 10, 1994, declared RMC 37‑93 defective, invalid and unenforceable and enjoined the Commissioner from collecting the assessed deficiency. That ruling was affirmed by the Court of Appeals and ultimately by this Court in Commissioner of Internal Revenue v. Court of Appeals (G.R. No. 119761, Aug. 29, 1996), which held RMC 37‑93 fell short of the requirements for a valid administrative issuance.

On April 10, 1997 Fortune filed a complaint for damages in the Regional Trial Court (RTC), Marikina City (Civil Case No. CV‑97‑341‑MK) alleging violations of constitutional rights (deprivation of property without due process and denial of equal protection) and seeking damages under Article 32 of the Civil Code. Petitioner moved to dismiss on grounds that she acted within official capacity (state liability), that malice was not alleged, and that the forum‑shopping certification was defective. The RTC denied the motion to dismiss on September 29, 1997.

Petitioner sought relief from the Court of Appeals via a petition for certiorari under Rule 65; the appellate court denied relief, holding that Article 32 may give rise to liability without proof of malice or bad faith and that the defective forum‑shopping certification was cured. This Court, in a June 19, 2007 decision, affirmed the Court of Appeals and directed the trial court to proceed. Petitioner’s motion for rehearing was denied (April 14, 2008), and she moved to refer the case to the En Banc Court (filed April 29, 2008). The Court, by resolution dated June 25, 20...(Pro-only)

Issues:

• Did Fortune state a valid cause of action against Commissioner Vinzons‑Chato for damages under Article 32 of the Civil Code such that the RTC properly denied the motion to dismiss?
• Can a public officer be held personally liable under Article 32 for issuing an administrative issuance that is defective or invalid absent an allegation of a particular or special injury (or bad faith), particularly where tax‑specific rem...(Pro-only)

Ruling:

• (Pro-only)

Ratio:

• (Pro-only)

Doctrine:

• (Pro-only)