Liwayway Vinzonz-Chato v.

Fortune Tabacco Corporation

GR No. 141398
December 23, 2008’

NACHURA, J.:

FACTS:
Prior to RA 7654, cigarette brands Champion, Hope, and More were considered local brands
and were subjected to ad valorem tax at the rate of 20-45% however, 2 days before RA 7654 took
effect, then commissioner of internal revenue Liwayway Vinzons-Chato (Liwayway) enacted RMC
37-93 (RMC) took effect which subjected the 3 cigarette brands to the effects of RA 7654 subjecting
the goods to a 55% ad valorem Tax.
BIR Deputy Commissioner Victor Deoferio, Jr. (Deoferio, Jr.) sent a telefax copy to Fortune
Tobacco (Fortune) and upon receiving it, they filed a motion for reconsideration for the recall of
RMC. The same was denied and in the same letter was demanded to pay an ad valorem tax
deficiency worth P9,598,334.00 pesos to which they filed to be reviewed with the Court of Tax
appeals.
The CTA deemed RMC to be defective, invalid, and unenforceable, thus enjoined Liwayway
from collecting the deficiency. The ruling was affirmed by the CA as RMC had fallen short of the
requirements of a valid administrative issuance.
Do to the favorable decision and feeling aggrieved, Fortuen filed a complaint for damages
was filed before the RTC against Liwayway in her private capacity, to which she filed a motion to
dismiss. RTC denied the motion to dismiss, to which the CA affirmed, to which the SC also affirmed
and remanded the case back to RTC. Liwayway filed a motion for reconsideration which was then
denied and then filed here motion before the SC.

ISSUE:
Whether a public officer may be liable for damages in the performance of her duty
Whether Fortune was deprived of due process.

RULING:
NO, because according to the SC, there are 2 kinds of duties exercised by public officers.
Duty to the public, where officers whose duty is owing primarily to the public collectively, and duty
to individuals where the duty to of a proper administration is demanded of a public officer. As long
as one is present, the public officer cannot be held liable for damages while in the performance of
duty.
The only exception to the rule is when the individual suffers a particular or special injury on
account of the public officer’s improper performance or non-performance of his public duty. Such
an injury must be proven by evidence and not mere assumptions. In relation to Art. 32 of the Civil
Code, the principle may now translate into the rule that an individual can hold a public officer
personally liable for damages on account of an act or omission that violates a constitutional right
only if it results in a particular wrong or injury to the former, be it done in bad or good faith.
In the case at hand Fortune failed to prove such damages, and by only merely alleging that
there was “financial and business difficulties” is rather vague to be granted damages.
 NO, Fortune was not denied due process because it had committed and error in in its
argument and the remedy it seeks. Fortune rests on the argument based on the Biven’s Action
where a person may sue a public officer for damages due to flagrant and unconstitutional abuses of
administrative power. However, the SC held that a Biven’s action is only available if no other
remedies are present. In the case at hand, Fortune had the remedy of challenging the assessment
administrativelt and judicially, and may sue the government for a tax refund.

Wherefore, premises considered, we GRANT petitoner’s motion for reconsideration of the

June 19, 2007 Decision and DENY respondent’s motion for reconsideration of the Juen 25, 2008
Resolution. Civil Case No. CV-97-341-MK, pending with the Regional Trial Court of Marikina City, is
DISMISSED.