Digest # 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.:
FACTS:
In consideration for a loan extended by petitioner Bank to respondent Sima Wei, the latter executed and delivered to the former a promissory note, engaging to pay the petitioner Bank or order the amount of P1,820,000.00 on or before June 24, 1983 with interest at 32% per annum. Sima Wei made partial payments on the note, leaving a balance of P1,032,450.02.
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.:
FACTS:
In consideration for a loan extended by petitioner Bank to respondent Sima Wei, the latter executed and delivered to the former a promissory note, engaging to pay the petitioner Bank or order the amount of P1,820,000.00 on or before June 24, 1983 with interest at 32% per annum. Sima Wei made partial payments on the note, leaving a balance of P1,032,450.02.
On November 18, 1983, Sima Wei issued two crossed checks payable to petitioner
Bank drawn against China Banking Corporation, bearing respectively the serial
numbers 384934, for the amount of P550,000.00 and 384935, for the amount of
P500,000.00. The said checks were allegedly issued in full settlement of the drawer's
account evidenced by the promissory note.
These two checks were not delivered to the petitioner-payee or to any of its authorized representatives. For reasons not shown, these checks came into the possession of respondent Lee Kian Huat, who deposited the checks without the petitioner-payee's indorsement (forged or otherwise) to the account of respondent Plastic Corporation, at the Balintawak branch, Caloocan City, of the Producers Bank.
Cheng Uy, Branch Manager of the Balintawak branch of Producers Bank, relying on the assurance of respondent Samson Tung, President of Plastic Corporation, that the transaction was legal and regular, instructed the cashier of Producers Bank to accept the checks for deposit and to credit them to the account of said Plastic Corporation, inspite of the fact that the checks were crossed and payable to petitioner Bank and bore no indorsement of the latter.
Hence, petitioner DBP filed the complaint as aforestated.
On July 6, 1986, the Development Bank of Rizal (petitioner Bank for brevity) filed a complaint for a sum of money against respondents Sima Wei and/or Lee Kian Huat, Mary Cheng Uy, Samson Tung, Asian Industrial Plastic Corporation (Plastic Corporation for short) and the Producers Bank of the Philippines, on two causes of action:
(1) To enforce payment of the balance of P1,032,450.02 on a promissory note executed by respondent Sima Wei on June 9, 1983; and
(2) To enforce payment of two checks executed by Sima Wei, payable to petitioner, and drawn against the China Banking Corporation, to pay the balance due on the promissory note.
Except for Lee Kian Huat, defendants filed their separate Motions to Dismiss alleging a common ground that the complaint states no cause of action.
DECISION OF LOWER COURTS:
*Trial Court: granted motion to dismiss.
*CA: affirmed the decision.
Thus, this Petition for Review by Certiorari.
ISSUE:
whether petitioner Bank has a cause of action against any or all of the defendants, in the alternative or otherwise.
HELD:
NO.
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
These two checks were not delivered to the petitioner-payee or to any of its authorized representatives. For reasons not shown, these checks came into the possession of respondent Lee Kian Huat, who deposited the checks without the petitioner-payee's indorsement (forged or otherwise) to the account of respondent Plastic Corporation, at the Balintawak branch, Caloocan City, of the Producers Bank.
Cheng Uy, Branch Manager of the Balintawak branch of Producers Bank, relying on the assurance of respondent Samson Tung, President of Plastic Corporation, that the transaction was legal and regular, instructed the cashier of Producers Bank to accept the checks for deposit and to credit them to the account of said Plastic Corporation, inspite of the fact that the checks were crossed and payable to petitioner Bank and bore no indorsement of the latter.
Hence, petitioner DBP filed the complaint as aforestated.
On July 6, 1986, the Development Bank of Rizal (petitioner Bank for brevity) filed a complaint for a sum of money against respondents Sima Wei and/or Lee Kian Huat, Mary Cheng Uy, Samson Tung, Asian Industrial Plastic Corporation (Plastic Corporation for short) and the Producers Bank of the Philippines, on two causes of action:
(1) To enforce payment of the balance of P1,032,450.02 on a promissory note executed by respondent Sima Wei on June 9, 1983; and
(2) To enforce payment of two checks executed by Sima Wei, payable to petitioner, and drawn against the China Banking Corporation, to pay the balance due on the promissory note.
Except for Lee Kian Huat, defendants filed their separate Motions to Dismiss alleging a common ground that the complaint states no cause of action.
DECISION OF LOWER COURTS:
*Trial Court: granted motion to dismiss.
*CA: affirmed the decision.
Thus, this Petition for Review by Certiorari.
ISSUE:
whether petitioner Bank has a cause of action against any or all of the defendants, in the alternative or otherwise.
HELD:
NO.
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 cause of action is defined as an act or omission of one party in violation of the legal right or rights of another. The essential elements are: (1) legal right of the plaintiff; (2) correlative obligation of the defendant; and (3) an act or omission of the defendant in violation of said legal right.
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.
In the original complaint, petitioner Bank, as plaintiff, sued respondent Sima Wei on the promissory note, and the alternative defendants, including Sima Wei, on the two checks. On appeal from the orders of dismissal of the Regional Trial Court, petitioner Bank alleged that its cause of action was not based on collecting the sum of money evidenced by the negotiable instruments stated but on quasi-delict — a claim for damages on the ground of fraudulent acts and evident bad faith of the alternative respondents. This was clearly an attempt by the petitioner Bank to change not only the theory of its case but the basis of his cause of action. It is well-settled that a party cannot change his theory on appeal, as this would in effect deprive the other party of his day in court.
However, Sima Wei is still liable to DBP since these checks were never delivered to petitioner Bank. And even granting, without admitting, that there was delivery to petitioner Bank, the delivery of checks in payment of an obligation does not constitute payment unless they are cashed or their value is impaired through the fault of the creditor. None of these exceptions were alleged by respondent Sima Wei.
Digest # 2
A cause of action is defined as an act or omission of one party in violation of the legal right or rights of another. The essential elements are: (1) legal right of the plaintiff; (2) correlative obligation of the defendant; and (3) an act or omission of the defendant in violation of said legal right.
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.
In the original complaint, petitioner Bank, as plaintiff, sued respondent Sima Wei on the promissory note, and the alternative defendants, including Sima Wei, on the two checks. On appeal from the orders of dismissal of the Regional Trial Court, petitioner Bank alleged that its cause of action was not based on collecting the sum of money evidenced by the negotiable instruments stated but on quasi-delict — a claim for damages on the ground of fraudulent acts and evident bad faith of the alternative respondents. This was clearly an attempt by the petitioner Bank to change not only the theory of its case but the basis of his cause of action. It is well-settled that a party cannot change his theory on appeal, as this would in effect deprive the other party of his day in court.
However, Sima Wei is still liable to DBP since these checks were never delivered to petitioner Bank. And even granting, without admitting, that there was delivery to petitioner Bank, the delivery of checks in payment of an obligation does not constitute payment unless they are cashed or their value is impaired through the fault of the creditor. None of these exceptions were alleged by respondent Sima Wei.
Digest # 2
Development Bank of Rizal v. Sima Wei, Lee
Kian Huat, Plastic Corporation
Facts:
·
Petitioner
bank loaned P1,820,000.00 to respondent Sima Wei, as evidenced by a promissory
note;
·
Respondent
Sima Wei made subsequent payments thereto resulting to a remaining unpaid
balance of P1,032,450.02;
·
Consequently,
Sima Wei made two crossed checks payable to petitioner Bank drawn against China
Banking Corporation, amounting to P550,000.00 and P500,000, respectively;
·
The
said checks were allegedly issued for the full settlement of the loan;
·
These
two checks were not delivered to petitioner;
·
For
reasons not shown, these checks came into the possession of respondent Lee Kian
Huat;
·
Lee
Kian Huat deposited said checks without petitioner’s indorsement (forged or
otherwise) to the account of respondent Plastic Corporation;
·
Cheng
Uy, branch manager of Producers bank, instructed the cashier to credit the
amount to said Plastic corporation, based on the reliance of Plastic
corporations’ President, Samson Tung, that it was from a legal and regular
transaction;
·
Hence,
petitioner filed a complaint for sum of money against Sima Wei, Lee Kian Huat,
Samson Tung, Asian Industrial Plastic Corporation based on the two causes:
(a)
Enforce
payment of balance of P1,032,000.00 on a promissory note executed by Sima Wei;
and
(b)
Enforce
payment of the two checks executed by Sima Wei to petitioner
·
Except
for Lee Kian Huat, defendants all filed separate motion to dismiss based on the
same ground: lack of cause of action;
Lower court decisions:
RTC:
Granted the motion to dismiss
CA:
Affirmed the RTC’s decision
Issue: WON petitioner has a sufficient cause of action against
the defendants, in the alternative or otherwise
Ruling: Yes, petitioner has a cause of action as against Sima Wei.
However, petitioner has no cause of action against the other defendants.
A cause
of action is an act or omission violating the rights of another. It has the
following elements:
(a) Legal right of the plaintiff;
(b)
Correlative
obligation of the defendant; and
(c) An act or omission of the defendant
violating the said legal right;
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.
The
allegations of the petitioner in the original complaint showed that the two (2)
China Bank checks were not delivered to him. Without delivery of the said
checks to petitioner, it 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 Producer Bank or any of the
respondents.
Petitioner
bank alleged that its cause of action was not based on collecting the sum of
money evidenced by the negotiable instruments but on quail-delict – a claim for
damages on the ground of fraudulent acts and evident bad faith of the
alternative respondents.
Notwithstanding
the above, it does not necessarily follow that the drawer Sima Wei is relieved
from liability on the promissory note by some other cause, petitioner has a
right of action against her for the balance due thereon.
However,
in so far as the other respondents are concerned, petitioner has no privity
with them. Petitioner had no right or interest in the checks which could have
been violated by said respondents. Petitioner Bank has therefore no cause of
action against said respondents, in the alternative or otherwise. If at all, it
is Sima Wei, the drawer, who would have cause of action against her
co-respondents, if the allegations in the complaint were true.
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