MANILA, Philippines — The Supreme Court (SC) has clarified that an acquittal in criminal tax violation cases does not automatically exempt a taxpayer from paying any unpaid taxes, reiterating that a taxpayer’s obligation to settle tax dues stems directly from the law, not from criminal liability.

In a Decision penned by Associate Justice Mario V. Lopez, the SC’s Second Division dismissed the criminal charges against E & D Parts and Supply, Inc. (the company) and its Treasurer, Margaret L. Uy, due to a lack of sufficient evidence.

The case stemmed from a complaint filed by the Office of the Solicitor General (OSG), accusing the company and Uy of failing to file their income tax return and pay the corresponding income and value-added taxes. 

The criminal charges were initially filed before the Court of Tax Appeals (CTA), which later dismissed the case on the grounds of insufficient evidence to prove Uy’s criminal responsibility.

The CTA’s decision also led to the dismissal of a related civil case that sought to determine the amount of taxes owed by the company. 

The court’s ruling focused on the lack of proof regarding Uy’s role as a responsible officer, which rendered her not liable for the company’s alleged actions. Furthermore, Uy’s acquittal eliminated the element of willfulness in the company’s failure to pay taxes.

Despite the acquittal, the OSG maintained that the company still had an obligation to pay the taxes due, arguing that tax liability is independent of criminal charges.

The SC agreed with this argument, emphasizing that a taxpayer’s duty to pay taxes is established by law and is not contingent on the outcome of criminal cases. 

However, in this instance, the high court ruled that the company was not required to settle the assessed tax due to the invalidity of the tax assessment in question.