Case Digest: Sincere Z. Villanueva vs. Marilyn P. Nite

G.R. No. 148211 :: 25 July 2006

Corona, J.

Facts:

Nite allegedly took out a loan of P409,000 from Villanueva.  As security, Nite provided Villanueva with an Asian Bank Corporation check of P325,500.00 originally dated 08 February 1994 and later on changed to 08 June 1994 with the consent of Villanueva.  The check was later on dishonoured for material alteration. On 24 August 1994, Nite paid P235,000 of her loan.  The balance is to be paid on 08 December.  Due to said dishonour, Villanueva filed an action for sum of money and damages against ABC for full amount of the dishonoured check.  ABC remitted to the sheriff a manager’s check amounting to P325,500 drawn on respondent’s account.

Issue:  Whether or not Villanueva has a cause of action against ABC.

Held:

NO, VILLANUEVA CANNOT SUE ABC.

Invoking Sections 185 and 189 of the Negotiable Instruments Law, if a bank refuses to pay a check, the payee-holder cannot sue the bank.  the payee should instead sue the holder who might in turn sue the bank.  there is no privity of contract that exists between the drawee-bank and the payee.