DY PEH, AND/OR VICTORY RUBBER MANUFACTURING, PETITIONER, VS. COLLECTOR OF INTERNAL REVENUE, RESPONDENT.

Petition filed by Dy Peh for the review of the decision and resolution of the
Court of Tax Appeals dated April 29 and December 23, 1961, respectively, in
C.T.A. Case No. 538, ordering him to pay deficiency percentage taxes in the
total amount of P51,939.27.

The following facts are not disputed:

Petitioner, during all the time material to this case, was
engaged in the business of manufacturing and selling rubber shoes and allied
products in the city of Cebu, under the re­gistered
firm name Victory Rubber Manufacturing.

Sometime in the year 1955 the Bureau of Internal Revenue
unearthed anomalies committed in the office of the Treasurer of the city of Cebu in connection with the payment of taxes by some
taxpayers, amongst them petitioner herein. 
As a result the respondent assessed against, and demanded from
petitioner the payment of the following sums: 
P4,725, in­cluding P100 as penalty, P29,980,
including P50 as penalty, and P17,425 including P50 as penalty, on January 27,
1956, November 12, 1955 and November 12, 1955, respectively.  This assessment was based upon short payments
in connection with taxes due from petitioner during the periods covered by the
assessment.  The investigation of the
anomalies disclosed that the amounts of the taxes allegedly paid by him, as
appear­ing in the original of every official receipt he had in his possession,
were bigger than the amounts appearing in the corresponding duplicate,
triplicate and quadruplicate copy thereof kept in the office of the City
Treasurer of Cebu. 
Such discrepancies are hereunder tabulated as follows:

Official                     Appearing
in the                   Appearing in the
Duplicate,

Receipt                         Original                           Triplicate and/or
Quadruplicate

Number                   Date            Amount

Re 1st cause of action                                        Date       Amount         Difference

Re 2nd cause of
action

Re 3rd cause of
action

Petitioner’s contention below and here is this: since the checks
issued by him covered in full the amount due for each quarter, and were
accepted and deposited by the City Treasurer of Cebu;
since the originals of the official receipts issued by the latter show that the
full amount of the taxes due from him had been paid, he must be deemed to have
paid such taxes in full, and any anomaly in the application of
the amounts paid by him consisting in the diversion of part thereof to pay the
taxes of other taxpayers – whether attributable solely to employees in the
office of said Treasurer or to other parties – should not be held against him.

Respondent’s contention, on the other hand, is that the amounts actually
paid by petitioner were those appearing on the duplicates, triplicates and
quadruplicates of the official receipts mentioned heretofore; that the
originals thereof were falsified or altered to make them show payment in full
of the taxes due from petitioner.

In connection with the issues thus joined petitioner tried to
prove that the payments in question were made by him personally, while, on the
other hand, respondent claimed that said payments were made not by petitioner
personally but by Tan Chuan Liong, his authorized
agent in the matter of payment of his taxes; that Bartolome
Baguio, Chief of the Internal Revenue Division of the
City Treasurer’s Office of Cebu, had allowed the
wrongful practice of permitting Tan Chuan Liong to
prepare the official receipts in connection with tax payments made by him in
behalf of his merchant clients; that it was Tan Chuan Liong
who applied a portion of the amounts given to him by petitioner to pay tax obli­gations
of other taxpayers, also his clients, and that there­fore petitioner’s recourse
is against him.

Whether it was petitioner, in person, who made the pay­ment of
his taxes herein involved, or it was his aforesaid agent, is manifestly a
question of fact squarely resolved by the Court of Tax Appeals as follows:

“Petitioner sought to prove that he never em­ployed Tan Chuan Liong as a business agent in the payment of the tax in
question.  The preponderance of the
evidence shows otherwise. If as alleged, petitioner paid the tax personally,
why were the official receipts prepared by Tan Chuan Liong
and not by Bartolome Baguio
or any authorized employee in the office of the City Treasurer of Cebu? It appears that Tan Chuan Liong
prepared the official receipts of payments of taxpayers who employed him as
business agent. It has not been shown that Tan Chuan Liong
prepared any official receipt cover­ing payment of taxpayers other than those
who em­ployed him business agent.”

After ruling against petitioner on this question, the Court of
Tax Appeals said further:

“Even assuming that Tan Chuan Liong was
not employed by petitioner as business agent, peti­tioner is not entirely
blameless.  The records show that the
payments were made by checks. The numbers of the official receipts covering the
payments are indicated on the back of the checks.  After the checks had been deposited and the
amounts credited in favor of the Government, the cancelled checks were returned
to petitioner.  Petitioner is, therefore,
charged with knowledge of the fact that the amount covered by each check was
applied in payment not only of his tax but also of taxes of other taxpayers,
the numbers of the official receipts covering which are indicated on the back
of the check.  The fact that he accept­ed
the cancelled checks without protest is evidence of his acquiescence to the
manner in which the amount covered by each check was applied by the collecting
officer.  He cannot now be heard to com­plain.”

We can hardly add any other consideration to strengthen the lower
court’s ruling.

Another question of fact vital to this case is whether or not the
official receipts in petitioner’s possession were falsified, and if so by whom.

In this connection, We believe it
established as a fact that petitioner had employed Tan Chuan Liong as a business agent in the matter of payment of his
taxes. The testimonies of Bartolome Baguio, Isidro Badana and Lauro Abalos on this matter (T.s.n. pp. 200-201, 472-473, 483-484, 501-503, 508­-510,
525, 535-539) were corroborated by the statement and report of NBI handwriting
expert Felipe Logan.  That Tan Chuan Liong, as such petitioner’s agent, actually paid to the
government less than the amounts of the taxes due from petitioner is also fully
proven by their testimonies and the duplicate, triplicate and quadruplicate
copies of the official receipts which appear upon their face to be genuine or
authentic.  The same thing can not be
claimed for the official receipts in question, because the lower court found
that, as in the case of Tiu Bon Sin vs. Collector
etc., C.T.A. No. 286, and Yap Pe Giok
vs. Arenas, C.T.A. No. 533, appellant employed the same business agent who
misappropriated a portion of the amounts entrusted to him and paid less than
what was due from his principals.  In
plain words, the lower court expressed the view that the official receipts in
peti­tioner’s hands did not reflect the truth.

The trial court’s ruling upon these questions must be sustained
pursuant to our consistent ruling to the effect that in reviews of the nature
of the present, only errors of law are reviewable by
this Court (G. R. L-12174 Maria B. Castro vs. Collector, April 26, 1962; G. R.
L-9738 Blas Gutierrez, et al. vs. Court of Tax
Appeals; G. R. L-8556 Benito Sanchez vs. Commissioner of Customs, Sept. 30,
1957 and 54 O.G. No. 2, p. 361; Eugenio Perez vs.
Court of Tax Appeals, G. R. L-10507, May 30, 1958, G. R. No. L-13387 Sy Chiuco vs. Collector, March 23, 1960, G. R. No. L-11622 Collector vs. Fisher and G.R. No. L-1168 Fisher vs.
Collector, January 28, 1961).

The foregoing disposes of the first two assignments of error
submitted in petitioner’s brief.  In the
third, it is his contention that the Court a quo erred in holding that he is estopped from questioning the misapplication of his pay­ments.

This is only a corollary of the questions raised in the previous
assignments of error.  Inasmuch as We
have held in resolving the latter that, in point of fact, Tan Chuan Liong was petitioner’s agent, the conclusion must
necessarily be that the, agent’s acts bind his principal; without prejudice, of
course, to the latter seeking recourse against him in an appropriate civil or
criminal action.

The fourth and last assignment of error has been impliedly
resolved adversely to petitioner in our rulings upon the first three.

PREMISES CONSIDERED, the decision appealed from is hereby
affirmed, with costs.

Reyes, J.B.L., (Acting C.J.), Makalintal,
Zaldivar, Sanchez, Fernando, and Capistrano, JJ., concur.

Teehankee and Barredo, JJ.,
took no part.

Concepcion, C.J., and Ruiz Castro,
JJ., on official leave.