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    DBR V Sima Wei Digest

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    Reena Alekssandra Acop
    DB granted a loan to Sima Wei for 1.82M with 32% interest. Sima Wei made partial payments, leaving a balance of 1.032M. Sima Wei then issued two crossed checks payable to DB for 550k and 500k, allegedly to settle the loan. However, the checks came into the possession of Lee Kian Huat, who deposited them into his account at Producers Bank without DB's endorsement. The court ruled that (1) DB has no cause of action against respondents regarding the checks because the checks were never delivered to DB and (2) Sima Wei's obligation to DB was not extinguished since the checks were not encashed and DB was not at fault for their

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    DBR V Sima Wei Digest

    Uploaded by

    Reena Alekssandra Acop
    61 views1 page
    DB granted a loan to Sima Wei for 1.82M with 32% interest. Sima Wei made partial payments, leaving a balance of 1.032M. Sima Wei then issued two crossed checks payable to DB for 550k and 500k, allegedly to settle the loan. However, the checks came into the possession of Lee Kian Huat, who deposited them into his account at Producers Bank without DB's endorsement. The court ruled that (1) DB has no cause of action against respondents regarding the checks because the checks were never delivered to DB and (2) Sima Wei's obligation to DB was not extinguished since the checks were not encashed and DB was not at fault for their

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    Negotiable instruments

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    DBR v Sima Wei Digest

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    DB granted a loan to Sima Wei for 1.82M with 32% interest. Sima Wei made partial payments, leaving a balance of 1.032M. Sima Wei then issued two crossed checks payable to DB for 550k and 500k, allegedly to settle the loan. However, the checks came into the possession of Lee Kian Huat, who deposited them into his account at Producers Bank without DB's endorsement. The court ruled that (1) DB has no cause of action against respondents regarding the checks because the checks were never delivered to DB and (2) Sima Wei's obligation to DB was not extinguished since the checks were not encashed and DB was not at fault for their

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    61 views1 page

    DBR V Sima Wei Digest

    Uploaded by

    Reena Alekssandra Acop
    DB granted a loan to Sima Wei for 1.82M with 32% interest. Sima Wei made partial payments, leaving a balance of 1.032M. Sima Wei then issued two crossed checks payable to DB for 550k and 500k, allegedly to settle the loan. However, the checks came into the possession of Lee Kian Huat, who deposited them into his account at Producers Bank without DB's endorsement. The court ruled that (1) DB has no cause of action against respondents regarding the checks because the checks were never delivered to DB and (2) Sima Wei's obligation to DB was not extinguished since the checks were not encashed and DB was not at fault for their

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 1

    G.R. No.

    85419 March 9, 1993

    DEVELOPMENT BANK OF RIZAL, plaintiff-petitioner,


    vs.
    SIMA WEI and/or LEE KIAN HUAT, MARY CHENG UY, SAMSON TUNG, ASIAN INDUSTRIAL PLASTIC
    CORPORATION and PRODUCERS BANK OF THE PHILIPPINES, defendants-respondents.

    CAMPOS, JR., J.:

    DB granted a loan to Sima Wei worth 1.82M, 32% pa. . Sima Wei made partial payments on the note, leaving a balance
    of P1,032,450.02. Two crossed checks payable to petitioner Bank drawn against China Banking Corporation for the
    amount of P550k and P500k. The said checks were allegedly issued in full settlement of the loan.

    For reasons not shown, these checks came into the possession of respondent Lee Kian Huat, who deposited the checks
    without the DBs indorsement (forged or otherwise) to the account of Plastic Corporation of the Producers Bank. Cheng
    Uy, Branch Manager, relying on the assurance of respondent Samson Tung, President of Plastic Corporation, that the
    transaction was legal and regular, instructed the cashier to accept the checks for deposit and to credit them to the said
    account, inspite of the fact that the checks were crossed and payable to petitioner Bank and bore no indorsement of the
    latter.

    DB then filed a complaint seeking to enforce the ff:

    (1) To enforce payment of the balance of P1,032,450.02 on a promissory note

    (2) To enforce payment of two checks executed by Sima Wei

    Issue: 1. WN DBP has a cause of action against Respondents? No.

    The normal parties to a check are the drawer, the payee and the drawee bank. Courts have long recognized the business
    custom of using printed checks where blanks are provided for the date of issuance, the name of the payee, the amount
    payable and the drawer's signature. All the drawer has to do when he wishes to issue a check is to properly fill up the
    blanks and sign it. However, the mere fact that he has done these does not give rise to any liability on his part, until
    and unless the check is delivered to the payee or his representative. A negotiable instrument, of which a check is, is not
    only a written evidence of a contract right but is also a species of property. Just as a deed to a piece of land must be
    delivered in order to convey title to the grantee, so must a negotiable instrument be delivered to the payee in order to
    evidence its existence as a binding contract. Section 16 of the Negotiable Instruments Law, which governs checks,
    provides in part:

    Every contract on a negotiable instrument is incomplete and revocable until delivery of the instrument for the
    purpose of giving effect thereto. . . .

    Thus, the payee of a negotiable instrument acquires no interest with respect thereto until its delivery to him. Delivery of
    an instrument means transfer of possession, actual or constructive, from one person to another. Without the initial
    delivery of the instrument from the drawer to the payee, there can be no liability on the instrument. Moreover, such
    delivery must be intended to give effect to the instrument.

    Without the delivery of said checks to petitioner-payee, the former did not acquire any right or interest therein and
    cannot therefore assert any cause of action, founded on said checks, whether against the drawer Sima Wei or against
    the Producers Bank or any of the other respondents.

    2. Is the obligation of Sima Wei to DB extinguished? No. Sima Wei is not relieved from liability, especially that checks
    do not produce the effect of payment until they have been encashed or through the fault the payee they have been
    impaired.

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