REPUBLIC OF THE PHILIPPINES vs PATANAO

GR No L-22356, July 21, 1967

Facts: Republic of the Philippines filed a complaint against Pedro B. Patanao, a holder of
an ordinary timber license with concession at Esperanza, Agusan, and as such was
engaged in the business of producing logs and lumber for sale during the years 1951-
1955. Defendant failed to file income tax returns for 1953, 1954, and although he filed
income tax returns for 1951,1952 and1955, the same were false and fraudulent because
he did not report substantial income earned by him from his business.

The BIR Deputy Commissioner of Internal Revenue, sent a letter of demand with
enclosed income tax assessment to the defendant requiring him to pay the said amount.
Repeated demands were made yet defendant refused, failed and neglected to pay said
taxes.

The assessment for the payment of the taxes in question has become final, executor and
demandable, because it was not contested before the Court of Tax Appeals in accordance
with the provisions of section 11 of Republic Act No. 1125

Defendant moved to dismiss the complaint on two grounds, namely: (1) that the action is
barred by prior judgment, defendant having been acquitted in criminal cases Nos. 2089
and 2090 of the same court, which were prosecutions for failure to file income tax returns
and non-payment of income taxes; (2) that the action has prescribed.

The lower court entered the order appealed from, holding that the only cause of action
left to the plaintiff in its complaint is the collection of the income tax due for the taxable
year 1955 and the residence tax (class B) for 1953, 1954 and 1955.

Issue: WON the action is barred by prior judgment?

Held: No. Under the Penal Code the civil liability is incurred by reason of the offender’s
criminal act. The situation under the income tax law is the exact opposite. Civil liability
to pay taxes arises from the fact that one has engaged himself in business and not because
of any criminal act committed by him. The acquittal in the said criminal case cannot
operate to discharge defendant from the duty of paying the taxes, which the law requires
to be paid, since that duty is imposed by statute prior to and independently of any
attempts by the taxpayer to evade payment.