GR L 19375; (May, 1969) (Digest)
G.R. No. L-19375 May 21, 1969
DY PEH, AND/OR VICTORY RUBBER MANUFACTURING, petitioner, vs. COLLECTOR OF INTERNAL REVENUE, respondent.
FACTS
Petitioner Dy Peh, doing business as Victory Rubber Manufacturing in Cebu, was assessed deficiency percentage taxes totaling P51,939.27 by the Bureau of Internal Revenue. The assessment arose from an investigation uncovering anomalies in the Cebu City Treasurer’s Office, revealing that the amounts recorded as tax payments on the original official receipts held by Dy Peh were larger than the amounts recorded on the duplicate, triplicate, and quadruplicate copies retained by the Treasurer’s Office. The discrepancies indicated short payments. Dy Peh contended that his checks covered the full tax amounts due, were accepted and deposited by the City Treasurer, and the original receipts showed full payment; thus, he should be deemed to have paid in full, and any diversion of funds to pay other taxpayers’ liabilities should not prejudice him. The Collector argued the amounts actually paid were those on the duplicate copies and the originals were falsified. The Court of Tax Appeals found that Dy Peh employed Tan Chuan Liong as his business agent to pay taxes, that Tan Chuan Liong prepared the receipts and misapplied part of Dy Peh’s payments to other clients’ taxes, and that Dy Peh, by accepting the cancelled checks without protest despite notations of multiple receipt numbers on their backs, acquiesced to the misapplication.
ISSUE
Whether the Court of Tax Appeals erred in holding Dy Peh liable for the deficiency taxes based on the finding that his agent made short payments and that he was estopped from questioning the misapplication.
RULING
The Supreme Court affirmed the decision of the Court of Tax Appeals. It held that the findings of fact by the Court of Tax Appeals—that Tan Chuan Liong was Dy Peh’s agent, that the agent paid less than the full tax due, and that the original receipts in Dy Peh’s possession did not reflect the true payments—are conclusive, as only errors of law are reviewable. The Court sustained the ruling that Dy Peh, by accepting the cancelled checks without protest despite evidence of misapplication indicated thereon, was estopped from complaining. The acts of the agent bound the principal, without prejudice to the principal’s recourse against the agent. All assignments of error were resolved against the petitioner.