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Company X vs. Bank B: Tax Check Fraud Case

Company X issued a check for P500,000 to the Bureau of Internal Revenue (BIR) for taxes. The check was deposited in Bank B, where the BIR has an account, and the amount was deducted from Company X's balance. However, Company X was later notified by the BIR that the taxes were unpaid. An investigation revealed that Company X's chief accountant was part of a scheme with the Bank B branch manager to divert the check funds - the check was replaced with a worthless one and the amount was credited to fake accounts and withdrawn. Company X sued Bank B for the P500,000 deducted from its account. Bank B argued that Company X was contributorily negligent since its employee was involved

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49 views1 page

Company X vs. Bank B: Tax Check Fraud Case

Company X issued a check for P500,000 to the Bureau of Internal Revenue (BIR) for taxes. The check was deposited in Bank B, where the BIR has an account, and the amount was deducted from Company X's balance. However, Company X was later notified by the BIR that the taxes were unpaid. An investigation revealed that Company X's chief accountant was part of a scheme with the Bank B branch manager to divert the check funds - the check was replaced with a worthless one and the amount was credited to fake accounts and withdrawn. Company X sued Bank B for the P500,000 deducted from its account. Bank B argued that Company X was contributorily negligent since its employee was involved

Uploaded by

suigeneris28
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd

TAKE HOME: PART II

Instructions: With the use of the table of warranties being tasked for you to
create, answer the following question.

QUESTION:
Company X issued a Bank A Check No. 12345 in the amount of P500,000.00
payable to the Bureau of Internal Revenue (BIR) for the company's taxes for the
third quarter of 1997. The check was deposited with Bank B, the collecting bank
with which the BIR has an account. The check was subsequently cleared and the
amount of P500,000.00 was deducted from the company's balance. Thereafter,
Company X was notified by the BIR of its non-payment of its unpaid taxes despite
the P500,000.00 debit from its account. This prompted the company to seek
assistance from the proper authorities to investigate on the matter.

The results of the investigation disclosed that unknown then to Company X, its
chief accountant Bonifacio Santos is part of a syndicate that devised a scheme to
syphon its funds. It was discovered that though deposited, the check was never
paid to the BIR but was passed on by Santos to Winston Reyes, Bank B's branch
manager and Santos' co-conspirator. Instead of bringing the check to the clearing
house, Reyes replaced Check No. 12345 with a worthless check bearing the same
amount, and tampered documents to cover his tracks. No amount was then
credited to the BIR. Meanwhile, Check No. 12345 was subsequently cleared and
the amount therein credited into the accounts of fictitious persons, to be later
withdrawn by Santos and Reyes.

Company X then sued Bank B for the amount of P500,000.00 representing the
amount deducted from its account. Bank B interposed the defense that Company
X was guilty of contributory negligence since its confidential employee Santos was
an integral part of the scheme to divert the proceeds of Check No. 12345. Is
Company X entitled to reimbursement from Bank B, the collecting bank? Explain.

GOOD LUCK!

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