Kauffman vs PNB, GR No.

16454 September 29, 1921, digested

Facts: Plaintiff was entitled to the sum of P98,000 from the surplus earnings of
Philippine Fiber & Produce Company (PFPC) which was placed to his credit on the
companys books. The PFPC treasurer requested from PNB Manila that a telegraphic
transfer of S45,000 should be made to the plaintiff in NY upon account of PFPC. The
treasurer drew and delivered a check for the amount of P90,355 on the PNB which is
the total costs o said transfer. As evidence, a document was made out and delivered
to the PFPC treasurer which is referred to by the banks assistant cashier as its
official receipt.
On the same day the Philippine National Bank dispatched to its New York agency a
cablegram to the following effect:
Pay George A. Kauffman, New York, account Philippine Fiber Produce Co., $45,000.
(Sgd.) PHILIPPINE NATIONAL BANK, Manila.
Upon receipt of the telegraphic message, the banks representative advised the
withholding of the money from Kauffman, in view of his reluctance to accept certain
bills of the PFPC. The PNB agreed and sent to its NY agency another message to
withhold the payment as suggested.
Upon advice of the PFPC treasurer that S45,000 had been placed to his credit, he
presented himself at the PNB NY and demanded the money but was refused due to
the direction of the withholding of payment.
Issue: WON plaintiff has a right over the money withhold.
Held: No. Provisions of the NIL 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.
The order transmitted by PNB to its NY branch, for the payment of a specified sum
of money to the plaintiff was not made payable to order or to bearer, as
required in subsection (d) of that Act; and inasmuch as it never left he possession of
the bank, or its representative in NY, there was no delivery in the sense intended in
section 16 of the same Law.
In connection, it is unnecessary to point out that the official receipt delivered by the
bank to the purchaser of the telegraphic order cannot itself be viewed in the light of
a negotiable instrument, although it affords complete proof of the obligation
actually assumed by the bank.