DBR v Sima Wei

Facts:
Sima Wei obtained a loan from Development Bank of Rizal in the amount of P1.8 million based on a PN
delivered to Sima Wei. Sima Wei made partial payments on the note leaving a balance of P1.03 million
for which the checks were issued: 1 for P550,000 and one for P500,000. They were not delivered to the
payee but were obtained by one Lee Kian Huat who deposited them into the account of Plastic Corp.
with Producers Bank. The President of Plastic Corp assured the manager of Producers that though they
were not the payee nor were they endorsed to them, they were legal and regular. The Development
Bank of Rizal filed a complaint for the payment of the balance loaned to Sima Wei, and against all parties
to enforce the payment of the checks.

Held:
The normal parties to a check are the drawer, payee and the drawee bank. The printed check is filled out
by the maker, and delivery is essential. A negotiable instrument, of which a check is, is not only a written
evidence of a contract, but is also a species of property. The instrument must be delivered to the payee
in order to evidence its existence as a valid contract. Under the NIL, every contract on a negotiable
instrument is incomplete and revocable until delivery of the instrument for the purpose of giving effect
thereto. A payee acquires no interest with respect to the instrument until it is delivered to him. DBR did
not acquire any right or interest, thus they cannot assert any cause of action until then, as THEY NEVER
RECEIVED THE CHECKS. Sima Wei must still pay the unpaid balance on the PN to DBR, but he has a right
to seek repayment from the other respondents.