SINCERE VILLANUEVA vs. MARLYN P.

NITE
GR No 148211. 25 July 2006

Facts:
 Nite took out a loan of P409,000 from Villanueva. To secure such, Nite issued Villanueva
an Asian Bank Corporation (ABC) check in the amount of P325,000 dated Feb 8, 1994.
This was later changed to June 8 1994 with Villanueva’s consent.
 Check was dishonored due to a material alteration when Villanueva deposited the
check. So on Aug 18, Nite, thru representative Emily Abojada, remitted P235,000 to
Villanueva as partial payment of the loan (bec she went out of town and even appeared
in print media about it). P174,000 was due on or before Dec 8, 1994.
 On Aug 24, however, Villanueva filed against ABC for the full amount of the dishonored
check. RTC ruled in his favor. So when Nite tried to withdraw, she couldn’t because the
trial court ordered ABC to pay Villanueva the value of Nite’s ABC check.
 ABC then remitted to the sheriff a manager’s check worth P325,000 drawn on Nite’s
account. Nite then appealed, and CA reversed decision. Hence this petition.

Issue: W/N Villanueva validly sued ABC

Held: No. Petition denied.

Ruling:
 Sec. 185. Check defined. – A check is a bill of exchange drawn on a bank payable on
demand. Except as herein otherwise provided, the provisions of this Act applicable to a
bill of exchange payable on demand apply to a check.
 Sec. 189. When check operates as an assignment. – A check of itself does not operate as
an assignment of any part of the funds to the credit of the drawer with the bank, and the
bank is not liable to the holder, unless and until it accepts or certifies the check.
 The payee cannot sue the bank, but must sue the drawer instead. This is because no
privity of contract exists between the drawee-bank (ABC) and the payee (Villanueva).
 No collection suit could prosper without Nite who was an indispensable party.
o An indispensable party is one whose interest in the controversy is such that a final
decree will necessarily affect his rights. The court cannot proceed without his presence.
 Nite’s remedy for this is an annulment of judgment, a remedy filed by one who was not
a party to the case in which the assailed judgment was rendered.
o The ordinary remedies of new trial, appeal and petition for relief were not available to
her for the simple reason that she was not made a party to the suit against ABC. Thus,
she was neither able to participate in the original proceedings nor resort to the other
remedies because the case was filed when she was abroad.