DEVELOPMENT BANK OF RIZAL v SIMA WEI and/or LEE
KIAN HUAT, MERY CHENG UY, SAMSON TUNG, ASIAN
INDUSTRIAL PLASTIC CORPORATIONS AND PRODUCERS
BANK OF THE PHILIPPINES
GR No. 85419
March 9, 1993
Doctrine:
- Art 1249 The delivery of promissory notes payable to order, or bills
of exchange or other mercantile documents shall produce the effect
of payment only when they have been cashed, or when through the
fault of hte creditor they have been impaired
Other doctrines:
- In order to have a cause of action, the essential elements of having
a legal right in favor of a plaintiff, correlative obligation of the
defendant and an act or omission of defendant in violation of said
legal right must all be present.
- Every contract on a negotiable instrument is incomplete and
revocable until delivery of the instrument. Thus the payee of a
negotiable instrument acquires no interest until its delivery to him.
RECIT-READY DIGEST:
This case is about 2 checks drawn by respondent Sima Wei
in favor of petitioner Development Bank of Rizal that came into the
possession of respondent company Plastic Corporations. As a result
of the confusion with regard to the checks, DBP filed a case for a the
collection of the sum of money owed by respondents but the SC held
that the petitioner had no cause of action against Plastic Corporation
since the check was not delivered to the former. As regards the
liability of Sima Wei, her obligation is still not extinguished since the
check was still not cashed by petitioner.
FACTS:
 In consideration of a loan extended by petitioner
Development Bank of Rizal to respondent Sima Wei,
Prepared By: Nicolo Bolinao
respondent executed and delivered to petitioner a
promissory note to pay the petitioner P1,820,000 on or
before June 24, 1983 with interest 32% per annum.
 Sima Wei made partial payments amounting to
P1,032,450.02.
 On November 18, 1983, respondent issued 2 checks payable
to petitioner bank drawn against China Banking Corporation
for the amounts of P550,000 and P500,000 respectively.
These checks were not delivered to the petitioner-payee or
any of its authorized representatives.
 For some reason it came into the possession of Lee Kian
Huat who deposited the checks without the indorsement of
petitioner to the account of Plastic Corporations.
 The branch manager of Producers Bank, relying on the
assurance of respondent Samson Tung, president of Plastic
Corporations instructed the cashiers of Producers Bank to
accept the checks inspite of the fact that the checks
were payable to petitioner bank and bore no
indorsement

ISSUE:
1. W/N the petitioner has a cause of action towards the
respondents other than Sima Wei
2. W/N the obligation between petitioner bank and Sima Wei was
extinguished.
HELD:
1. NO.
 In order to have a cause of action, the essential elements of
having a legal right in favor of a plaintiff, correlative obligation
of the defendant and an act or omission of defendant in
violation of said legal right must all be present.
 The normal parties to a check are the drawer, payee and the
drawee bank.
OBLICON DIGESTS 2016
  Every contract on a negotiable instrument is incomplete and
revocable until delivery of the instrument. Thus the payee of a
negotiable instrument acquires no interest until its delivery to
him.
 In this case it was shown that the 2 checks were not delivered
to the petitioner bank, thus said bank does not have a cause
of action against other respondents.
 It is Sima Wei who has a cause of action against co-
respondents

2. NO.
 Sima Wei's contention that she has paid the obligation with
the 2 payable checks has no merit, since they were not
delivered to petitioner bank
 Even if they were delivered, it would not constitute payment
unless those checks have been cashed or their value is
impaired through the fault of the creditor
 None of these exceptions were alleged by respondent

Prepared By: Nicolo Bolinao OBLICON DIGESTS 2016