Title
Vinzons-Chato vs. Fortune Tobacco Corp.
Case
G.R. No. 141309
Decision Date
Dec 23, 2008
BIR reclassified cigarettes, taxed Fortune Tobacco; court ruled no specific injury, dismissed damages claim against commissioner.

Case Summary (G.R. No. 141309)

Key Dates

Republic Act No. 7654 enacted June 10, 1993 (effective July 3, 1993).
RMC No. 37‑93 issued July 1, 1993.
RMC transmission by telefax July 2, 1993; certified xerox copy received by respondent July 15, 1993.
Respondent’s motion for reconsideration filed July 20, 1993 and denied July 30, 1993 with an assessed deficiency.
Respondent filed petition for review with the Court of Tax Appeals (CTA) August 3, 1993; CTA issued injunction September 30, 1993; CTA decision of August 10, 1994 declared RMC defective.
Respondent filed civil complaint for damages April 10, 1997.
RTC denied motion to dismiss September 29, 1997; Court of Appeals decision and subsequent Supreme Court proceedings culminated in the Court’s en banc resolution denying respondent’s motion for reconsideration and granting the petitioner’s motion for reconsideration, resulting in dismissal of Civil Case No. CV‑97‑341‑MK.

Applicable Law and Constitutional Basis

Primary legal provisions and authorities invoked:

  • Article 32, Civil Code (liability for obstruction or impairment of specified rights, including deprivation of property without due process and equal protection).
  • Administrative Code (Section 38, Book I) as general law on civil liability of public officers.
  • National Internal Revenue Code (NIRC), including Section 228 referenced as providing due process safeguards for tax actions.
  • Republic Act No. 8424 (Tax Reform Act of 1997), Section 227 (satisfaction/reimbursement of judgments recovered against Internal Revenue officers).
    Because the decision is from 2008, the 1987 Constitution is the constitutional framework applied when addressing alleged violations of constitutional rights.

Factual Background

RA 7654 restructured taxation of certain cigarette products. Prior to RA 7654’s effectivity, some brands were taxed as local brands at lower ad valorem rates. On July 1, 1993, Commissioner Vinzons‑Chato issued RMC No. 37‑93 reclassifying the brands “Champion,” “Hope,” and “More” as locally manufactured cigarettes bearing foreign brands and subjecting them to a 55% ad valorem tax with a minimum per-pack tax. Fortune Tobacco received notice of the RMC only after issuance, sought administrative reconsideration which was denied, and was assessed for a tax deficiency calculated on the basis of the RMC. Fortune filed a petition with the CTA, obtained injunctive relief, and the CTA (affirmed on appeal) held RMC No. 37‑93 defective and unenforceable for failure to satisfy requirements for a valid administrative issuance.

Procedural History in Civil Suit

Respondent filed a civil action for damages under Article 32 of the Civil Code on April 10, 1997, alleging deprivation of property without due process and violation of equal protection arising from issuance and implementation of RMC No. 37‑93. Petitioner moved to dismiss asserting (1) she acted within official capacity and the Republic should be the proper defendant, (2) absence of allegations of malice or bad faith, and (3) procedural defect in the certification against forum shopping. The RTC denied the motion to dismiss. The Court of Appeals upheld that an action under Article 32 may lie without alleging malice or bad faith and that the forum‑shopping certification defect was cured. The Supreme Court initially affirmed the CA and directed trial to proceed, but upon reconsideration en banc reconsidered the legal principles, granted petitioner’s motion for reconsideration, and dismissed the civil case.

Legal Issue Presented

Whether a public officer who issues an administrative rule later found defective may be held personally liable under Article 32 for damages absent a showing that the complainant suffered a special and peculiar injury distinct from the public at large, and whether the complaint as pleaded stated a cause of action against the Commissioner.

Governing Principle: Duties of Public Officers

The Court restated the classical dichotomy of public‑office duties:

  • Duties owing to the public in general (body politic): violations of such duties, even if injurious to individuals, ordinarily do not give rise to individual civil liability because the duty is owed to the public at large, not to particular persons.
  • Duties owing to particular individuals: where an officer, by reason of a special relationship or employment, owes a duty to an individual (e.g., service of process, recording deeds), a breach may give rise to personal liability. The liability of a public officer to an individual is co‑extensive with the duty owed to that individual; without a particular duty or a special injury, there is no delict. The exception to nonliability for public duties is when the complaining party demonstrates a special and peculiar injury resulting from the officer’s improper performance or non‑performance.

Application of Principle to the Present Facts

The Court concluded RMC No. 37‑93 was a quasi‑legislative or rule‑making act, implicating a duty owed to the public generally. Fortune Tobacco failed to allege a particular or special injury unique to it as an individual—its complaint used general and vague phrases such as “financial and business difficulties,” which the Court found insufficient to establish the special injury necessary to sustain a delict claim against a public officer for breach of a public duty. Also, Fortune did not actually pay the assessed tax; the CTA injunction and administrative remedies were pursued, indicating that no pecuniary deprivation occurred that would support a private action in tort against the Commissioner.

Article 32, Constitutional Claims, and Sufficiency of Pleadings

Although Article 32 permits civil actions for impairment of specified constitutional rights and does not require a showing of malice or bad faith, the Court emphasized that an Article 32 action still requires proof that a plaintiff suffered a particular wrong or injury. The Court examined the complaint and determined that the bare allegations that respondent’s rights to due process and equal protection were violated were conclusory. Those legal conclusions were not deemed admitted for purposes of a motion to dismiss; the remaining factual allegations (primarily reclassification) were insufficient to permit a judgment in favor of the plaintiff under the relief prayed for. The prior Supreme Court pronouncement in Commissioner of Internal Revenue v. Court of Appeals, which found RMC No. 37‑93 deficient as an administrative issuance, did not equate to a judicial declaration that the RMC was unconstitutional under the due process or equal protection clauses; thus the complaint could not rely on that decision as establishing constitutional violation.

Availability and Use of Administrative and Tax Remedies

The Court took judicial notice of the NIRC and the statutory scheme, including remedies afforded by the Court of Tax Appeals, emphasizing that the respondent had in fact availed itself of administrative and CTA remedies (administrative appeal, CTA petition, injunction). The existence and successful use of those tax remedies undercut the contention of a deprivation of due process in a manner that would support an

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