219 SCRA 736



Sima  Wei  executed  a  promissory  note  in  consideration  of  a  loan  secured from petitioner bank.  She was able to pay partially for the loan but failed to  pay  for  the  balance.    She  then  issued  two  checks  to  pay  the  unpaid balance but for some unexplainable reason, the checks were not received by  the  bank  but  ended  up  in  the  hands  of  someone  else.    The  bank instituted  actions  against  Sima  Wei  and  other  people.    The  trial  court dismissed the case and the CA affirmed this decision.


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  provides  that 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  the  negotiable  instrument  acquires  no  interest  with  respect thereto until its delivery to him.  Delivery of an 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.