Patrimonio v. Gutierrez c.

Such was the arrangement so that the petitioner can verify payment
G.R. No. 187769 | 724 SCRA 636 | June 4, 2014 | Brion, J. and make proper arrangements to fund the accont.
Petition: Petition for review on certiorari of the decision and resolution of the 4. In the middle of 1993, without petitioner’s knowledge and consent,
Court of Appeals Respondent Gutierrez went to Marasigan (the petitioner’s former
Petitioner: Alvin Patrimonio teammate) to secure a loan in the amount of P200,000.00 on the excuse
Respondents: Napoleon Gutierrez and Octavio Marasigan III that the petitioner needed the money for the construction of his house.
Section 14, Negotiable Instruments Law (NIL) a. Resp. Gutierrez assured Marasigan he would be paid 5% per month
from March to May 1994.
DOCTRINE b. Marasigan acceded and gave respondent P200,000 in February
• In order that one who is not a holder in due course can enforce the 1994.
instrument against a party prior to the instrument’s completion, two c. Gutierrez simultaneously delivered one of the blank checks to
requisites must exist: (1) that the blank must be filled strictly in Marasigan.
accordance with the authority given; and (2) it must be filled up within a i. The check was pre-signed with Pilipinas Bank, Greenhills Branch,
reasonable time. Check No. 21001764 with the blank portions filled out with the
• The Negotiable Instruments Law (NIL) does not provide that a holder words “Cash” “Two Hundred Thousand Pesos Only,” and the
who is not a holder in due course may not in any case recover on the amount of “P200,000.00.” The upper right portion of the check
instrument. The only disadvantage of a holder who is not in due course is corresponding to the date was also filled out with the words “May
that the negotiable instrument is subject to defenses as if it were non- 23, 1994” but the petitioner contended that the same was not
negotiable. written by Gutierrez.
5. May 24, 1994: Marasigan deposited the check but was dishonored for
Relevant Provision being “Account Closed.”
Section 14, NIL: “Sec. 14. Blanks; when may be filled.—Where the instrument is wanting in any material a. It was later revealed that the petitioner’s bank account had been
particular, the person in possession thereof has a prima facie authority to complete it by filling up the closed since May 28, 1993.
blanks therein. And a signature on a blank paper delivered by the person making the signature in order b. Marasigan sought recovery from Gutierrez, asking for the payment
that the paper may be converted into a negotiable instrument operates as a prima facie authority to fill it of P200,000, but his demands were unheededso he filed a criminal
up as such for any amount. In order, however, that any such instrument when completed may be case for violation of B.P. 22 against tehe petitioner.
enforced against any person who became a party thereto prior to its completion, it must be filled up 6. September 10, 1997: petitioner filed before RTC a Complaint for
strictly in accordance with the authority given and within a reasonable time. But if any such Declaration of Nullity of Loan and Recovery of Damages against
instrument, after completion, is negotiated to a holder in due course, it is valid and effectual for all Gutierrez and co-respondent Marasigan.
purposes in his hands, and he may enforce it as if it had been filled up strictly in accordance with the
a. Petitioner completely denied authorizing the loan or the check’s
authority given and within a reasonable time.”
negotiation, and asserted that he was not privy to the parties’ loan
agreement.
FACTS
b. Only respondent Marasigan filed his answer to the complaint.
1. The petitioner and the respondent Napoleon Gutierrez (Gutierrez)
Meanwhile, Respondnet Gutierrez was declared in default.
entered into a business venture under the name of Slam Dunk
7. Court Proceedings / Procedural History
Corporation (Slam Dunk), a production outfit that produced mini-concerts
a. RTC: in favor of Respondnet Marasigan
and shows related to basketball.
i. RTC: the petitioner, in issuing the pre-signed blank checks, had
2. Petitioner Patrimonio was already then a decorated professional
the intention of issuing a negotiable instrument, though with
basketball player while Respondent Gutierrez was a well-known sports
specific instructions to Gutierrez not to negotiate or issue the
columnist.
check without his approval.
3. While doing business, Petitioner Patrimonio pre-signed several checks to
ii. RTC: While under Section 14 of the Negotiable Instruments Law
answer for Slam Dunk’s expenses.
Gutierrez had the prima facie authority to complete the checks
a. Although signed, the checks had no payee’s name, date or amount.
by filling up the blanks therein, the RTC ruled that he deliberately
b. These blank checks were entrusted to Respondent Gutierrez with
violated petitioner’s specific instructions and took advantage of
clear instructions not to fill them out without previous notification
the trust reposed in him by the latter. But in any case, the RTC
and approval by petitioner.
declared Marasigan as a holder in due course and accordingly
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 dismissed the petitioner’s complaint for the declaration of nullity a. Section 14 of the Negotiable Instruments Law (NIL) [SEE
of the loan. The RTC ordered the petitioner to pay Marasigan the PROVISION ON PAGE 1] applies to an incomplete but delivered
face value of the check with a right to claim reimbursement from instrument.
Gutierrez. b. Under this rule, if the maker or drawer delivers a pre-signed
b. CA: affirmed the RTC ruling blank paper to another person for the purpose of converting it
i. Petitioner: insisted that Marasigan is not a holder in due course, into a negotiable instrument, that person is deemed to have
contending that when Marasigan received the check, he knew prima facie authority to fill it up. It merely requires that the
that the same was without a date, and hence, incomplete. He instrument be in the possession of a person other than the
also alleged that the loan was actually between Marasigan and drawer or maker and from such possession, together with the
Gutierrez with his check being used only as a security. fact that the instrument is wanting in a material particular, the law
ii. CA: Though the CA agreed with petitioner that Marasign is not a presumes agency to fill up the blanks.
holder in due course as he did not receive the check in good c. In order however that one who is not a holder in due course can
faith and that the check had been strictly filled out by Gutierrez enforce the instrument against a party prior to the instrument’s
per petitioner’s authority, the CA held that the loan may not be completion, two requisites must exist:
nullified since it is grounded on an obligation arising from law i. (1) that the blank must be filled strictly in accordance
and ruled that the petitioner is still liable to pay Marasigan the with the authority given; and
sum of P200,000.00. ii. (2) it must be filled up within a reasonable time.
iii. CA denied the MR that followed. d. If it was proven that the instrument had not been filled up strictly
8. Hence, this petition. in accordance with the authority given and within a reasonable
9. Petitioner’s contentions: time, the maker can set this up as a personal defense and avoid
a. (1) there was no loan between him and Marasigan since he never authorized the liability. However, if the holder is a holder in due course, there is
borrowing of money nor the check’s negotiation to the latter; a conclusive presumption that authority to fill it up had been
b. (2) under Article 1878 of the Civil Code, a special power of attorney is necessary for
an individual to make a loan or borrow money in behalf of another; given and that the same was not in excess of authority.
c. (3) the loan transaction was between Gutierrez and Marasigan, with his check being e. The Court’s examination of the records show that Gutierrez has
used only as a security; exceeded the authority to fill up the blanks and use the check.
d. (4) the check had not been completely and strictly filled out in accordance with his
f. While under the law, Gutierrez had a prima facie authority to
authority since the condition that the subject check can only be used provided there
is prior approval from him, was not complied with; complete the check, such prima facie authority does not extend
e. (5) even if the check was strictly filled up as instructed by the petitioner, Marasigan is to its use (i.e., subsequent transfer or negotiation) once the
still not entitled to claim the check’s value as he was not a holder in due course; and check is completed. In other words, only the authority to
f. (6) by reason of the bad faith in the dealings between the respondents, he is entitled complete the check is presumed.
to claim for damages.
g. No evidence is on record that Gutierrez even secured prior
approval from the petitioner, as may be gleaned from the
ISSUES (see notes for the Agency-related issues)
petitioner’s testimony wherein he asserted he never authorized
1. W/N respondent Gutierrez has completely filled out the subject check
nor approved filling up of the blank checks.
strictly under the authority given by the petitioner. – NO.
h. In this case, Gutierrez was only authorized to use the check for
2. W/N Marasigan is a holder in due course. –NO.
business expenses; thus, he exceeded the authority when he
(In the present case, the RTC and CA arrived at two conflicting factual findings, albeit with the
used the check to pay the loan he supposedly contracted for the
same conclusion, i.e., dismissal of the complaint for nullity of the loan. Accordingly, we will construction of petitioner’s house. This is a clear violation of the
examine the parties’ evidence presented and rule on questions of fact which are normally not the petitioner’s instruction to use the checks for the expenses of
proper subject of an appeal by certiorari.) Slam Dunk. It cannot therefore be validly concluded that the
check was completed strictly in accordance with the authority
RULING & RATIO given by the petitioner.
1. NO, the check was NOT completed strictly under the authority given by
the petitioner. 2. NO, Marasigan is NOT a holder in due course.
a. Petitioner’s claims: there is no legal basis to hold him liable both
under the contract and loan and under the check because: (1)
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 the subject check was not completely filled out strictly under the NOTES
authority he has given and (2) Marasigan was not a holder in due ISSUES RELATED TO AGENCY:
course. 1. W/N the contract of loan in the amount of P200,000.00 granted by
1
b. Section 52 of the NIL defines a holder in due course (emphasis respondent Marasigan to petitioner, through respondent Gutierrez, may
on Sec. 52 (c) and (d)). be nullified for being void. – YES.
c. Acquisition in good faith means that he does not have any 2. W/N there is basis to hold the petitioner liable for the payment of the
knowledge of fact which would render it dishonest for him to take P200,000.00 loan. – NO.
a negotiable paper. The absence of the defense, when the
instrument was taken, is the essential element of good faith. RULING & RATIO:
d. Marasigan’s knowledge that the petitioner is not a party or a 1. YES, the contract of loan entered into by Gutierrez on behalf of the
privy to the contract of loan, and correspondingly had no petitioner should be nullified for being void.
obligation or liability to him, renders him dishonest, hence, in bad a. Contracts of agency may be oral unless the law requires a specific form. Agency
faith. may be express or implied.
b. Records do not show that the petitioner executed any special power of attorney
e. Since Marasigan knew that the underlying obligation was not
(SPA) in favor of Gutierrez
actually for the petitioner, the rule that a possessor of the c. Respondent Marasigan: the petitioner’s acts of pre-signing the blank checks and
instrument is prima facie a holder in due course is inapplicable. releasing them to Gutierrez suffice to establish that the petitioner had authorized
f. Yet, it does not follow that simply because he is not a holder in Gutierrez to fill them out and contract the loan in his behalf.
i. SC: respondent’s claims are unpersuasive. In the absence of any
due course, Marasigan is already totally barred from recovery.
authorization, Gutierrez could not enter into a contract of loan in behalf
The NIL does not provide that a holder who is not a holder in due of the petitioner. This is provided for by jurisprudence (Yasuma v. Heirs
course may not in any case recover on the in-strument. The only of De Villa, reiteratd in Gozun v. Mercado)
disadvantage of a holder who is not in due course is that the d. In the absence of any showing of any agency relations or special authority to act
negotiable instrument is subject to defenses as if it were for and in behalf of the petitioner, the loan agreement Gutierrez entered into with
Marasigan is null and void. Thus, the petitioner is not bound by the parties’ loan
non-negotiable. Among such defenses is the filling up blank not agreement.
within the authority. e. Furthermore, that the petitioner entrusted the blank pre-signed checks to
g. Considering that Marasigan is not a holder in due course, the 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
petitioner can validly set up the personal defense that the blanks
inherent in this contract must exist as a matter of fact. The person alleging it has
were not filled up in accordance with the authority he gave. the burden of proof to show, not only the fact of agency, but also its nature and
Consequently, Marasigan has no right to enforce payment extent.
against the petitioner and the latter cannot be obliged to pay the 2. NO, there is no basis to hold the petitioner liable for the payment of the
face value of the check. P200,000.00 loan.
a. No contract of loan was perfected between Marasigan and the petitioner as the
latter’s consent was not obtained. Article 1318 of the Civil Code states that
consent of the contracting parties is an essential requisite for a valid contract. In
DISPOSITION this case, as correctly pointed out by the petitioner, consent was lacking.
• WHEREFORE, in view of the foregoing, judgment is hereby rendered b. While there may be a meeting of the minds between Gutierrez and Marasigan,
GRANTING the petitioner Alvin Patrimonio’s petition for review on such agreement cannot bind the petitioner whose consent was not obtained and
who was not privy to the loan agreement. Hence, only Gutierrez is bound by the
certiorari. The appealed Decision dated September 24, 2008 and the contract of loan.
Resolution dated April 30, 2009 of the Court of Appeals are consequently c. True, the petitioner had issued several pre-signed checks to Gutierrez, one of
ANNULLED AND SET ASIDE. Costs against the respondents. SO which fell into the hands of Marasigan. This act, however, does not constitute
ORDERED. sufficient authority to borrow money in his behalf and neither should it be
construed as petitioner’s grant of consent to the parties’ loan agreement.

1
Sec. 52.—A holder in due course is a holder who has taken the instrument under the following
conditions: (a) That it is complete and regular upon its face; (b) That he became the holder of it
before it was overdue, and without notice that it had been previously dishonored, if such was the
fact; (c) That he took it in good faith and for value; (d) 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
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