Case Summary (G.R. No. 141309)
Applicable Law and Constitutional Basis
Applicable constitutional framework: 1987 Philippine Constitution (rights invoked include the right against deprivation of property without due process and the right to equal protection). Statutory and administrative sources: Article 32 of the Civil Code (creates a tort remedy for violations of specified constitutional rights); Sections 38 and 39, Book I, Administrative Code (civil liability of superior and subordinate public officers); Republic Act No. 7654 (tax law that became effective July 3, 1993); Revenue Memorandum Circular No. 37-93 (RMC 37-93), the administrative issuance at issue.
Statutory and Regulatory Background
RA 7654 (effective July 3, 1993) amended the National Internal Revenue Code provisions on cigarette taxation, including Section 142(c)(1), which imposed a 55% ad valorem tax (with a P5.00 minimum per pack) on certain locally manufactured cigarettes bearing a foreign brand. RMC 37-93, issued July 1, 1993 by petitioner, reclassified Fortune Tobacco’s "Champion," "Hope," and "More" cigarettes as locally manufactured cigarettes bearing foreign brands, thereby subjecting them to the 55% rate and precipitating a tax deficiency assessment.
Chronology of Key Events
- July 1, 1993: Petitioner issued RMC 37-93 reclassifying the three brands.
- July 2–15, 1993: RMC 37-93 was transmitted by BIR and received by Fortune Tobacco (telefax addressed generally on July 2; certified xerox copy by mail received July 15).
- July 20–30, 1993: Fortune Tobacco moved for reconsideration; denial followed and a deficiency assessment of P9,598,334.00 was issued.
- August 3, 1993: Fortune Tobacco petitioned the Court of Tax Appeals (CTA); CTA issued injunction on September 30, 1993.
- August 10, 1994 (CTA decision): RMC 37-93 declared defective, invalid, and unenforceable; injunction against collection of the assessed deficiency. Decision affirmed by Court of Appeals and by the Supreme Court in Commissioner of Internal Revenue v. Court of Appeals (holding RMC 37-93 invalid for failing to meet requirements for a valid administrative issuance).
- April 10, 1997: Fortune Tobacco filed a civil complaint for damages in the Regional Trial Court (RTC), Marikina, alleging violation of constitutional rights under Article 32 of the Civil Code.
- RTC denied petitioner’s motion to dismiss (Sept. 29, 1997); Court of Appeals affirmed (May 7, 1999); Supreme Court denied the petition for certiorari and directed continuation of trial proceedings (June 19, 2007).
Procedural Posture and Relief Sought
Fortune Tobacco sued the Commissioner in her private capacity for damages under Article 32, alleging deprivation of property without due process and denial of equal protection resulting from RMC 37-93 and the subsequent deficiency assessment. Petitioner moved to dismiss on grounds that: (1) acts were official and thus liability rests with the Republic under Section 38 (requiring bad faith/malice/gross negligence for superior officers); (2) complaint failed to allege malice or bad faith; and (3) defective certification against forum shopping (signed by counsel rather than the plaintiff). RTC and Court of Appeals denied dismissal; Supreme Court affirmed denial and ordered the case to proceed.
Issues Presented
- May a public officer be validly sued in his/her private capacity for acts done in connection with the discharge of official functions?
- Which provision governs whether the complaint states a cause of action: Article 32 of the Civil Code or Section 38, Book I, Administrative Code?
- Should the complaint be dismissed for non‑compliance with the certification against forum shopping rule?
- May the petitioner be held liable for damages?
Legal Principles on Public Officer Liability
General rule: A public officer is not civilly liable for acts done in the just performance of official duties and within the scope of authority, absent a clear showing of bad faith, malice, or gross negligence (Section 38, Book I, Administrative Code for superior officers; Section 39 for subordinate officers). Exception: A public officer who directly or indirectly violates another’s constitutional rights may be sued in his/her private capacity under Article 32 of the Civil Code without the need to prove malice or bad faith. Article 32 creates a tort remedy specifically aimed at protecting constitutional rights, and liability under it may attach irrespective of the actor’s motive or good faith, since the purpose is effective protection of individual rights.
Special Law vs. General Law Analysis
The Court reasoned that Article 32 is a special and specific provision addressing a particular species of actionable conduct—violations of enumerated constitutional rights (including due process and equal protection)—whereas Sections 38 and 39 of the Administrative Code address civil liability for acts done in performance of duties in a general manner. Under principles of statutory construction, a special provision addressing a particular subject matter governs over a more general statute on the same matter. Consequently, where a complaint is grounded specifically on Article 32 allegations (violation of constitutional rights), Article 32 is the decisive provision to determine whether a cause of action is stated. The timing of enactment (special earlier or later than the general) does not alter this rule.
Application to the Case and Holding on Cause of Action
Fortune Tobacco’s complaint alleged violation of constitutional rights protected under Article
...continue readingCase Syllabus (G.R. No. 141309)
Case Citation and Panel
- Reported as 552 Phil. 101; G.R. No. 141309; decided June 19, 2007.
- Decision authored by Justice Ynares‑Santiago.
- Petition denied; Decision of the Court of Appeals dated May 7, 1999 affirmed.
- Concurring: Justices Austria‑Martinez, Chico‑Nazario, and Nachura.
Parties and Capacities
- Petitioner: Liwayway Vinzons‑Chato — then Commissioner of Internal Revenue (sued in her private capacity).
- Respondent: Fortune Tobacco Corporation — manufacturer of cigarette brands including "Champion," "Hope," and "More."
- Nature of suit: Complaint for damages under Article 32 of the Civil Code for alleged violation of constitutional rights (deprivation of property without due process; equal protection).
Relevant Statutory and Regulatory Materials Quoted in the Record
- Republic Act No. 7654 — enacted June 10, 1993; took effect July 3, 1993.
- National Internal Revenue Code, Section 142(c)(1) (prior to amendment by RA 7654; as amended by R.A. No. 6956) — sets ad valorem tax rates for locally manufactured cigarettes bearing a foreign brand at 55%; provides that the World Tobacco Directory listing shall govern determination whether a brand is foreign.
- Revenue Memorandum Circular No. 37‑93 (RMC 37‑93) — administrative issuance reclassifying "Champion," "Hope," and "More" as locally manufactured cigarettes bearing a foreign brand subject to 55% ad valorem tax and minimum P5.00 per pack.
Chronology of Material Facts
- Prior to RA 7654: "Champion," "Hope," and "More" treated as local brands taxed at ad valorem rates of 20–45%.
- July 1, 1993: Petitioner issued RMC 37‑93 reclassifying "Champion," "Hope," and "More" as locally manufactured cigarettes bearing a foreign brand, subjecting them to the 55% ad valorem tax provided by Section 142(c)(1).
- July 2, 1993 (about 5:50 p.m.): BIR Deputy Commissioner Victor A. Deoferio, Jr. telefaxed a copy of RMC 37‑93 to Fortune Tobacco; the telefax was not addressed to any particular addressee.
- July 15, 1993: Fortune Tobacco received, by ordinary mail, a certified xerox copy of RMC 37‑93.
- July 20, 1993: Fortune Tobacco filed a motion for reconsideration requesting recall of RMC 37‑93; request denied by letter dated July 30, 1993.
- July 30, 1993 letter: Assessed Fortune Tobacco for an alleged ad valorem tax deficiency amounting to P9,598,334.00 (computed pursuant to RMC 37‑93) and demanded payment within ten days of receipt.
- August 3, 1993: Fortune Tobacco filed a petition for review with the Court of Tax Appeals (CTA).
- September 30, 1993: CTA issued an injunction enjoining implementation of RMC 37‑93.
- August 10, 1994: CTA decision declared RMC 37‑93 defective, invalid, and unenforceable; further enjoined petitioner from collecting the deficiency tax assessment issued pursuant to RMC 37‑93.
- CTA decision affirmed by Court of Appeals and finally by the Supreme Court in Commissioner of Internal Revenue v. Court of Appeals (329 Phil. 987, 1996); motion for reconsideration denied with finality October 7, 1996.
- April 10, 1997: Fortune Tobacco filed a complaint for damages against petitioner in RTC, Marikina, Branch 272 (Civil Case No. 97‑341‑MK), invoking Article 32 of the Civil Code for violation of constitutional rights (due process and equal protection).
- September 29, 1997: RTC denied petitioner’s motion to dismiss; ordered petitioner to file answer within ten days.
- Petitioner’s motion for reconsideration of the RTC order denied December 4, 1997.
- Petition for certiorari to the Court of Appeals via Rule 65 elevated the matter; Court of Appeals affirmed RTC order by Decision dated May 7, 1999.
- Petitioner elevated case to the Supreme Court via petition (G.R. No. 141309); Supreme Court denied the petition on June 19, 2007 and affirmed the decisions below; directed RTC to proceed with dispatch; costs awarded.
Procedural Posture Below
- RTC (Marikina, Branch 272): Denied motion to dismiss; held dismissal would prematurely decide merits and found defect in certification against forum shopping cured by later submission of corporate secretary’s certificate authorizing counsel to execute certification.
- Court of Appeals (CA‑G.R. SP No. 47167): Affirmed RTC; dismissed petitioner’s Rule 65 petition. CA reasoned Article 32 of the Civil Code (special law) governs and does not require pleading malice or bad faith to state a cause of action; Section 38, Book I of the Administrative Code (general law) is subordinate in the instant context. CA also sustained cure of defect in certification against forum shopping.
- Supreme Court: Considered petition asserting Section 38 should apply (requiring bad faith/malice/gross negligence) and urging strict construction of certification rule; held Article 32 governs and malice/bad faith need not be pleaded; affirmed RTC and CA; denied petition.
Issues Presented (as framed in the record)
- Whether a public officer may be validly sued in his/her private capacity for acts done in connection with the discharge of the functions of his/her office.
- Whether Article 32 of the Civil Code or Section 38, Book I of the Administrative Code should govern determination of whether the complaint states a cause of action.
- Whether the complaint should be dismissed for failure to comply with the rule on certification against forum shopping.
- Whether petitioner may be held liable for damages.
Parties’ Principal Contentions
- Petitioner:
- RMC 37‑93 was issued in performance of official function and within scope of authority; she acted as agent of the Republic, which is the proper respondent for monetary claims.
- Section 38, Book I of the Administrative Code (which requires clear showing of bad faith, malice, or gross negligence for superior officers to be civilly liable) should apply; since complaint does not allege malice or bad faith, it fails to state a cause of action.
- Certification against forum shopping was signed by Fortune Tobacco’s counsel rather than by the plaintiff/principal; this defect warrants dismissal; rules should be strictly construed.
- Respondent (Fortune Tobacco):
- Article 32 of the Civil Code is the applicable special provision for violations of constitutional rights and does not require allegation of malice or bad faith; thus complaint is suff