Case Summary (G.R. No. 187769)
Procedural History
Marasigan first sought payment from Gutierrez, then from petitioner via demand letters. A criminal B.P. 22 case ensued, followed by petitioner’s civil complaint (Sept. 10, 1997) against Gutierrez and Marasigan for nullity of loan and damages. Gutierrez defaulted. The RTC dismissed the nullity claim and ordered petitioner to pay. The CA affirmed on different grounds (Sept. 24, 2008). Petitioner filed this Rule 45 petition.
Trial Court Ruling
The RTC held that, under NIL Sec. 14, Gutierrez had prima facie authority to complete the blank check but violated petitioner’s instructions. Regardless, Marasigan was a holder in due course and entitled to payment of the face value, with petitioner’s right to seek reimbursement from Gutierrez.
Court of Appeals Ruling
The CA agreed that Marasigan was not a holder in due course (lack of good faith) but nevertheless ruled that the loan obligation could not be nullified because it arose from law. It also found that Gutierrez acted within the petitioner’s authority in filling the check.
Issues
- Whether the P200,000 loan contract is null for lack of petitioner’s authorization.
- Whether petitioner is liable for the loan.
- Whether Gutierrez filled the check within the scope of his authority.
- Whether Marasigan is a holder in due course.
Agency and Authority to Borrow
Under Civil Code Arts. 1868 and 1878(7), an agent needs express special authority to borrow on behalf of a principal. The form may be oral or written, but must be proven by clear, convincing evidence. Petitioner never granted Gutierrez any power of attorney or other authorization—express or implied—to borrow money or negotiate checks beyond business expenses.
Nullity of the Loan Contract
Consent is an essential element of contracts (Art. 1318). No consent or mandate from petitioner to borrow P200,000 existed; thus, the loan is void. The obligation is personal to Gutierrez and cannot bind petitioner. Entrustment of blank checks does not create authority to borrow.
Liability Under the Check
NIL Sec. 14 grants prima facie authority to complete blanks but requires strict compliance with the drawer’s instructions. Petitioner’s explicit condition—that checks be used only for Slam Dunk expenses with prior approval—was not observed. The check was completed and used for an unauthorized purpose.
Holder in Due Course Doctrine
A holder in due course (NIL Sec. 52) must take the instrument in good f
...continue readingCase Syllabus (G.R. No. 187769)
Case Citation
- Supreme Court of the Philippines, Second Division
- G.R. No. 187769; 735 Phil. 146
- Decision dated June 4, 2014 (Brion, J., ponente)
- Petition under Rule 45 of the Revised Rules of Court
- Petition for review on certiorari of CA decision (Sept. 24, 2008) and resolution (Apr. 30, 2009)
Factual Background
- Petitioner Alvin Patrimonio and respondent Napoleon Gutierrez formed “Slam Dunk Corporation,” a mini-concert and basketball show production outfit.
- Petitioner, a celebrated professional basketball player, pre-signed blank checks (no payee, date, amount) and entrusted them to Gutierrez with explicit instructions:
- Fill out or negotiate checks only after prior notification to and approval by petitioner
- Purpose limited to business expenses of Slam Dunk
- In mid-1993, without petitioner’s consent, Gutierrez approached Octavio Marasigan III for a P200,000 loan allegedly for petitioner’s house construction.
- Terms of loan: principal of P200,000 plus 5% monthly interest from March to May 1994.
- Gutierrez delivered pre-signed Check No. 21001764 (Pilipinas Bank, Greenhills) with blanks filled: “Cash,” “Two Hundred Thousand Pesos Only,” amount “P200,000.00,” date “May 23, 1994” (petitioner denied authoring the entries).
- On May 24, 1994, Marasigan deposited the check; it was dishonored “Account Closed.” Petitioner’s bank account had been closed since May 28, 1993.
- Marasigan’s demands for payment from petitioner were ignored; a criminal complaint under B.P. 22 was filed and later a civil complaint for nullity of loan and recovery of damages (Sept. 10, 1997, RTC Quezon City, Branch 77).
- Gutierrez was declared in default; only Marasigan answered the complaint.
RTC Ruling
- Date of decision: February 3, 2003
- Held:
- Petitioner intended issuance of negotiable instruments but expressly limited Gutierrez’s authority.
- Under Sec. 14, Negotiable Instruments Law (NIL), Gutierrez had prima facie authority to fill blanks but he breached specific instructions.
- Marasigan was a holder in due course; petitioner’s complaint for nullity dismissed.
- Petitioner ordered to pay P200,000 face value wit