1) Respondent Marlyn Nite took out a loan from petitioner Sincere Villanueva and issued a dishonored bank check as security. Villanueva then sued the bank for the full amount.
2) The trial court ruled in favor of Villanueva and ordered the bank to pay him. Nite was then unable to withdraw from her account.
3) Nite filed a petition to annul the trial court's decision. The Supreme Court ruled that the trial court's decision could be annulled because no privity of contract exists between the bank and payee. The payee should have sued the drawer of the check instead of the bank.
1) Respondent Marlyn Nite took out a loan from petitioner Sincere Villanueva and issued a dishonored bank check as security. Villanueva then sued the bank for the full amount.
2) The trial court ruled in favor of Villanueva and ordered the bank to pay him. Nite was then unable to withdraw from her account.
3) Nite filed a petition to annul the trial court's decision. The Supreme Court ruled that the trial court's decision could be annulled because no privity of contract exists between the bank and payee. The payee should have sued the drawer of the check instead of the bank.
1) Respondent Marlyn Nite took out a loan from petitioner Sincere Villanueva and issued a dishonored bank check as security. Villanueva then sued the bank for the full amount.
2) The trial court ruled in favor of Villanueva and ordered the bank to pay him. Nite was then unable to withdraw from her account.
3) Nite filed a petition to annul the trial court's decision. The Supreme Court ruled that the trial court's decision could be annulled because no privity of contract exists between the bank and payee. The payee should have sued the drawer of the check instead of the bank.
SINCERE Z. VILLANUEVA, petitioner, vs. MARLYN P. NITE, * respondent. Facts: Respondent Marlyn P. Nite took out a loan from petitioner Sincere Z. Villanueva. o secure t!e loan, respondent Nite issued petitioner Villanueva an "sian #ank $orporation %"#$& c!eck. !e c!eck 'as, !o'ever, dis!onored due to a material alteration. Su(se)uently, petitioner Villanueva filed an action a*ainst "#$ for t!e full amount of t!e dis!onored c!eck. !e R$ ruled in favor of petitioner Villanueva. +!en respondent Nite 'ent to "#$ to 'it!dra' money from !er account, s!e 'as una(le to do so (ecause t!e trial court !ad ordered "#$ to pay petitioner Villanueva t!e value of respondent Nite,s "#$ c!eck. Respondent Nite t!en filed a petition seekin* to annul and set aside t!e trial court,s decision orderin* "#$ to pay petitioner Villanueva t!e value of t!e "#$ c!eck. -ssue: +!et!er or not t!e decision of t!e trial court may (e annulled. .eld: /es. -f a (ank refuses to pay a c!eck %not'it!standin* t!e sufficiency of funds&, t!e payee0!older cannot sue t!e (ank. !e payee s!ould instead sue t!e dra'er '!o mi*!t in turn sue t!e (ank. Section 123 of t!e N-4 is sound la' (ased on lo*ic and esta(lis!ed le*al principles: no privity of contract e5ists (et'een t!e dra'ee0(ank and t!e payee. -n t!e case at (ar, petitioner Villanueva s!ould not !ave sued "#$ (ecause no privity of contract e5ists (et'een t!em. $ontracts take effect only (et'een t!e parties, t!eir assi*ns and !eirs, e5cept in cases '!ere t!e ri*!ts and o(li*ations arisin* from t!e contract are not transmissi(le (y t!eir nature, or (y stipulation or (y provision of la'. 16 None of t!e fore*oin* e5ceptions to t!e relativity of contracts applies in t!is case. !us, t!e R$ decision may (e annulled for lack of 7urisdiction over t!e person of respondent Nite.