Development Bank vs. Sima Wei

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A negotiable instrument of which a check is, is not only a written amount of P1,820,000.00.

0. Sima Wei subsequently issued two crossed


evidence of a contract right but is also a species of property. checks payable to petitioner Bank drawn against China Banking
Corporation in full settlement of the drawer's account evidenced by
The payee of a negotiable instrument acquires no interest with the promissory note. These two checks however were not delivered
respect thereto until its delivery to him. to the petitioner-payee or to any of its authorized representatives but
instead came into the possession of respondent Lee Kian Huat, who
The delivery of checks in payment of an obligation does not deposited the checks without the petitioner-payee's indorsement to the
constitute payment unless they are cashed or their value is account of respondent Plastic Corporation with Producers Bank.
impaired through the fault of the creditor. Inspite of the fact that the checks were crossed and payable to
petitioner Bank and bore no indorsement of the latter, the Branch
Manager of Producers Bank authorized the acceptance of the checks
for deposit and credited them to the account of said Plastic
Development Bank vs. Sima Wei Corporation.
DEVELOPMENT BANK OF RIZAL, plaintiff-petitioner, ISSUE/s of the CASE
vs.
SIMA WEI and/or LEE KIAN HUAT, MARY CHENG UY, Whether petitioner Bank has a cause of action against Sima Wei for
SAMSON TUNG, ASIAN INDUSTRIAL PLASTIC the undelivered checks.
CORPORATION and PRODUCERS BANK OF THE
PHILIPPINES, defendants-respondents.
ACTION OF THE COURT
G.R. No. 85419 RTC: Motion to dismiss - Granted
March 9, 1993 CA: Dismissed
Ponente: CAMPOS, JR., J.: SC: affirmed

COURT RATIONALE ON THE ABOVE CASE


NATURE OF CASE
PETITION for review by certiorari of the decision of the Court of No. A negotiable instrument must be delivered to the payee in order
Appeals. to evidence its existence as a binding contract. Section 16 of the NIL
FACTS
provides that every contract on a negotiable instrument is incomplete
and revocable until delivery of the instrument for the purpose of
Respondent Sima Wei executed and delivered to petitioner Bank a giving effect thereto. Thus, the payee of a negotiable instrument
promissory note engaging to pay the petitioner Bank or order the acquires no interest with respect thereto until its delivery to him.
Without the initial delivery of the instrument from the drawer to the
payee, there can be no liability on the instrument. Petitioner however
has a right of action against Sima Wei for the balance due on the
promissory note.

SUPREME COURT RULING

In the light of the foregoing, the judgment of the Court of Appeals


dismissing the petitioner's complaint is AFFIRMED insofar as the
second cause of action is concerned. On the first cause of action, the
case is REMANDED to the trial court for a trial on the merits,
consistent with this decision, in order to determine whether
respondent Sima Wei is liable to the Development Bank of Rizal for
any amount under the promissory note allegedly signed by her.

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