KAUFFMAN vs THE PHILIPPINE NATIONAL BANK G.R. No. 16454, September 29, 1921

Plaintiff, President of Philippine Fiber and Produce Company was entitled to dividend from the said company. The treasurer of the company Cabled transfer the said dividends through Respondent bank to New York, then upon the confirmation the New York branch of the receipt of the funds, communicated the said receipt to the plaintiff informing the availability of the fund. Subsequently, the respondent bank decided to withhold the said funds denying the plaintiff of its access. The plaintiff questioned the action of the respondent in the court. The respondent argued that the plaintiff has not cause of action because he is not a party in the contract of transferring funds and the transaction will not fall under the provisions of the Negotiable Instrument Law.

Whether the plaintiff has cause of action in with respect to the Negotiable Instrument Law?

No, the plaintiff has no cause of action with respect only to the Negotiable Instrument Law. The transaction of the Respondent and the Philippine Fiber and Produce Company is not a negotiable Instrument. The provisions of the Negotiable Instruments Law can come into operation there must be a document in existence of the character described in section 1 of the Law; and no rights properly speaking arise in respect to said instrument until it is delivered. In this case there was an order, it is true, transmitted by the defendant bank to its New York branch, for the payment of a specified sum of money to George A. Kauffman. But this order was not made payable “to order or “to bearer,” as required in subsection (d) of that Act; and inasmuch as it never left the possession of the bank, or its representative in New York City, there was no delivery in the sense intended in section 16 of the same Law. In this connection it is unnecessary to point out that the official receipt delivered by the bank to the purchaser of the telegraphic order, and already set out above, cannot itself be viewed in the light of a negotiable instrument, although it affords complete proof of the obligation actually assumed by the bank.


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