Kauffman vs PNB, GR No.

16454 September 29, 1921

Digested by: Gerardo, Desmund A.

Facts:
The plaintiff was supposed to receive P98,000 from Philippine Fiber & Produce Company's
(PFPC) surplus earnings, which was credited to him in the company's records. PFPC's treasurer
asked PNB Manila to transfer $45,000 to the plaintiff in NY, covering the cost of the transfer.
PFPC's treasurer then drew a check for P90,355 to pay for the transfer and received an official
receipt from the bank's assistant cashier.

PNB Manila sent a cablegram to its New York branch to pay the plaintiff $45,000. However, the
NY branch withheld the payment due to the plaintiff's reluctance to accept certain bills from
PFPC. PFPC's treasurer, upon learning that the money was credited to his account, demanded it
from PNB NY but was refused based on the withholding directive.

Issue: Whether the plaintiff has a right to the withheld money.

Held:
No. The Negotiable Instruments Law (NIL) requires the existence of a document described in
Section 1 of the law for its provisions to apply. Since the order transmitted by PNB to its NY
branch was not payable "to order" or "to bearer" as required, and it never left the bank's
possession, there was no proper delivery as intended by the law. Additionally, the official
receipt provided by the bank cannot be considered a negotiable instrument, although it
confirms the bank's obligation.