G.R. No.

148211 July 25, 2006

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.