Alvin Patrimonio Vs Napoleon Gutierrez and Octavio Marasigan III

ALVIN PATRIMONIO vs NAPOLEON GUTIERREZ and Petitioner is Not Bound by the Contract of Loan; The
OCTAVIO MARASIGAN III. Contract of Loan Entered Into by Gutierrez in Behalf of the
Petitioner Should be Nullified for Being Void
 Patrimonio, a professional basketball player, and Gutierrez, a
well-known sports columnist entered into a business venture Article 1878 paragraph 7 of the Civil Code expressly
under the name of Slam Dunk Corporation, a production outfit requires a special power of authority before an agent can
that produced mini-concerts and shows related to basketball. loan or borrow money in behalf of the principal, to wit:
 In the course of their business, Patrimonio pre-signed several
checks to answer for the expenses of Slam Dunk. Although “Art. 1878. Special powers of attorney are necessary in the
signed, these checks had no payee’s name, date or amount. following cases:
 The blank checks were entrusted to Gutierrez with the specific
instruction not to fill them out without previous notification to
xxxx
and approval by Patrimonio.
 Without Patrimonio’s knowledge and consent, Gutierrez went
to Marasigan (the petitioner’s former teammate), to secure a (7) To loan or borrow money, unless the latter act be urgent and
loan in the amount of ₱200,000.00 on the excuse that the indispensable for the preservation of the things which are under
petitioner needed the money for the construction of his house. administration. “
In addition to the payment of the principal, Gutierrez assured
Marasigan that he would be paid an interest of 5% per month Article 1878 does not state that the authority be in writing.
 After much contemplation and taking into account his As long as the mandate is express, such authority may be
relationship with the petitioner and Gutierrez, Marasigan either oral or written. the requirement under Article 1878 of
acceded to Gutierrez’ request and gave him ₱200,000.00. the Civil Code refers to the nature of the authorization and
 Gutierrez simultaneously delivered to Marasigan one of the not to its form. Be that as it may, the authority must be duly
blank checks the petitioner pre-signed with the blank portions established by competent and convincing evidence other
filled out . than the self serving assertion of the party claiming that
 Marasigan deposited the check but it was dishonored for the such authority was verbally given.
reason "ACCOUNT CLOSED."
 Marasigan sought recovery from Gutierrez, to no avail. He A review of the records reveals that Gutierrez did not have
thereafter sent several demand letters to the petitioner asking any authority to borrow money in behalf of the
for the payment of ₱200,000.00, but his demands likewise petitioner.Records do not show that the petitioner executed any
went unheeded. special power of attorney (SPA) in favor of Gutierrez. In fact, the
 Consequently, he filed a criminal case for violation of B.P. 22 petitioner’s testimony confirmed that he never authorized
against the petitioner, Gutierrez (or anyone for that matter), whether verbally or in
 the petitioner then filed before the RTC a Complaint for writing, to borrow money in his behalf, nor was he aware of any
Declaration of Nullity of Loan and Recovery of Damages such transaction:
against Gutierrez and co-respondent Marasigan. He
completely denied authorizing the loan or the check’s
Another significant point that the lower courts failed to consider
negotiation, and asserted that he was not privy to the parties’
is that a contract of loan, like any other contract, is subject to the
loan agreement.
rules governing the requisites and validity of contracts in
general. Article 1318 of the Civil Codeenumerates the essential
The Ruling of the RTC - It ordered the petitioner to pay requisites for a valid contract, namely: 1. consent of the
Marasigan the face value of the check with a right to claim contracting parties; 2. object certain which is the subject matter
reimbursement from Gutierrez. Declared Marasigan as a of the contract; and 3. cause of the obligation which is
holder in due course (and so there is a conclusive presumption established.
that authority to fill it up had been given and that the same was
not in excess of authority) and accordingly dismissed the
In this case, the petitioner denied liability on the ground that the
petitioner’s complaint for declaration of nullity of the loan.
contract lacked the essential element of consent. We agree with
the petitioner. As we explained above, Gutierrez did not have
The Ruling of the CA - It held that the loan may not be nullified the petitioner’s written/verbal authority to enter into a
and ruled that the petitioner is still liable to pay Marasigan the contract of loan. While there may be a meeting of the minds
sum of ₱200,000.00. It however ruled that Marasigan is not a between Gutierrez and Marasigan, such agreement cannot
holder in due course as he did not receive the check in good bind the petitioner whose consent was not obtained and
faith. But it concluded that the check had been strictly filled out who was not privy to the loan agreement. Hence, only
by Gutierrez in accordance with the petitioner’s authority. Gutierrez is bound by the contract of loan.
ISSUE/RULING 3.W/N petitioner’s acts of pre-signing the blank checks and

releasing them to Gutierrez suffice to establish that the
 LIABILITY UNDER THE CONTRACT OF LOAN petitioner had authorized Gutierrez to fill them out and
contract the loan in his behalf -NO
1)W/N the contract of loan can be nullifed on the ground that
petitioner never authorized the borrowing of money. YES In the absence of any showing of any agency relations or special
authority to act for and in behalf of the petitioner, the loan
agreement Gutierrez entered into with Marasigan is null and
2) W/N petitioner could be bound by the contract of loan – void. Thus, the petitioner is not bound by the parties’ loan
NO
agreement.
Furthermore, that the petitioner entrusted the blank pre-
signed checks to Gutierrez is not legally sufficient because
the authority to enter into a loan can never be presumed.
The contract of agency and the special fiduciary relationship
inherent in this contract must exist as a matter of fact. The
person alleging it has the burden of proof to show, not only the
fact of agency, but also its nature and extent.
 LIABILITY UNDER THE INSTRUMENT
4) W/N Marasigan is a Holder in Due Course- NO
Section 52(c) of the NIL states that a holder in due course is

one who takes the instrument "in good faith and for value."
It also provides in Section 52(d) that in order that one may be a
holder in due course, it is necessary that at the time it was
negotiated to him he had no notice of any infirmity in the
instrument or defect in the title of the person negotiating it.
In the present case, Marasigan’s knowledge that the petitioner

is not a party or a privy to the contract of loan, and
correspondingly had no obligation or liability to him, renders him
dishonest, hence, in bad faith.
Since he knew that the underlying obligation was not actually for
the petitioner, the rule that a possessor of the instrument is prima
facie a holder in due course is inapplicable. As correctly noted
by the CA, his inaction and failure to verify, despite knowledge
of that the petitioner was not a party to the loan, may be
construed as gross negligence amounting to bad faith.
Yet, it does not follow that simply because he is not a holder

in due course, Marasigan is already totally barred from
recovery. The only disadvantage of a holder who is not in due
course is that the negotiable instrument is subject to defenses
as if it were non-negotiable. Among such defenses is the filling
up blank not within the authority.
5) W/N THE Check Was Completed Strictly Under The

Authority Given by The Petitioner- NO
Our own examination of the records tells us that Gutierrez

has exceeded the authority to fill up the blanks and use the
check. To repeat, petitioner gave Gutierrez pre-signed
checks to be used in their business provided that he could
only use them upon his approval. His instruction could not
be any clearer as Gutierrez’ authority was limited to the use
of the checks for the operation of their business, and on the
condition that the petitioner’s prior approval be first
secured.
In the present case, no evidence is on record that Gutierrez

ever secured prior approval from the petitioner to fill up the
blank or to use the check. In his testimony, petitioner asserted
that he never authorized nor approved the filling up of the blank
checks
Notably, Gutierrez was only authorized to use the check for

business expenses; thus, he exceeded the authority when
he used the check to pay the loan he supposedly contracted
for the construction of petitioner's house. This is a clear
violation of the petitioner's instruction to use the checks for
the expenses of Slam Dunk. It cannot therefore be validly
concluded that the check was completed strictly in
accordance with the authority given by the petitioner.

Alvin Patrimonio Vs Napoleon Gutierrez and Octavio Marasigan III

Uploaded by

Copyright:

Available Formats

Alvin Patrimonio Vs Napoleon Gutierrez and Octavio Marasigan III

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Alvin Patrimonio Vs Napoleon Gutierrez and Octavio Marasigan III

Uploaded by

Copyright:

Available Formats

ALVIN PATRIMONIO vs NAPOLEON GUTIERREZ and Petitioner is Not Bound by the Contract of Loan; The

ISSUE/RULING 3.W/N petitioner’s acts of pre-signing the blank checks and

 LIABILITY UNDER THE INSTRUMENT

4) W/N Marasigan is a Holder in Due Course- NO

Section 52(c) of the NIL states that a holder in due course is

In the present case, Marasigan’s knowledge that the petitioner

Yet, it does not follow that simply because he is not a holder

5) W/N THE Check Was Completed Strictly Under The

Our own examination of the records tells us that Gutierrez

In the present case, no evidence is on record that Gutierrez

Notably, Gutierrez was only authorized to use the check for

You might also like