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TodayisWednesday,January25,2017

RepublicofthePhilippines
SUPREMECOURT
Manila
SECONDDIVISION
G.R.No.187769June4,2014
ALVINPATRIMONIO,Petitioner,
vs.
NAPOLEONGUTIERREZandOCTAVIOMARASIGANIII,Respondents.
DECISION
BRION,J.:
Assailedinthispetitionforreviewoncertiorari1underRule45oftheRevisedRulesofCourtisthedecision2dated
September 24, 2008 and the resolution3 dated April 30, 2009 of the Court of Appeals (CA) in CAG.R. CV No.
82301. The appellate court affirmed the decision of the Regional Trial Court (RTC) of Quezon City, Branch 77,
dismissingthecomplaintfordeclarationofnullityofloanfiledbypetitionerAlvinPatrimonioandorderinghimto
payrespondentOctavioMarasiganIII(Marasigan)thesumofP200,000.00.
TheFactualBackground
Thefactsofthecase,asshownbytherecords,arebrieflysummarizedbelow.
The petitioner and the respondent Napoleon Gutierrez (Gutierrez) entered into a business venture under the
nameofSlamDunkCorporation(SlumDunk),aproductionoutfitthatproducedminiconcertsandshowsrelated
tobasketball.PetitionerwasalreadythenadecoratedprofessionalbasketballplayerwhileGutierrezwasawell
knownsportscolumnist.
In the course of their business, the petitioner presigned several checks to answer for the expenses of Slam
Dunk.Althoughsigned,thesecheckshadnopayeesname,dateoramount.Theblankcheckswereentrustedto
Gutierrez with the specific instruction not to fill them out without previous notification to and approval by the
petitioner.Accordingtopetitioner,thearrangementwasmadesothathecouldverifythevalidityofthepayment
andmaketheproperarrangementstofundtheaccount.
In the middle of 1993, without the petitioners knowledge and consent, Gutierrez went to Marasigan (the
petitionersformerteammate),tosecurealoanintheamountofP200,000.00ontheexcusethatthepetitioner
neededthemoneyfortheconstructionofhishouse.Inadditiontothepaymentoftheprincipal,Gutierrezassured
Marasiganthathewouldbepaidaninterestof5%permonthfromMarchtoMay1994.
After much contemplation and taking into account his relationship with the petitioner and Gutierrez, Marasigan
accededtoGutierrezrequestandgavehimP200,000.00sometimeinFebruary1994.Gutierrezsimultaneously
deliveredtoMarasiganoneoftheblankchecksthepetitionerpresignedwithPilipinasBank,GreenhillsBranch,
Check No. 21001764 with the blank portions filled out with the words "Cash" "Two Hundred Thousand Pesos
Only",andtheamountof"P200,000.00".Theupperrightportionofthecheckcorrespondingtothedatewasalso
filledoutwiththewords"May23,1994"butthepetitionercontendedthatthesamewasnotwrittenbyGutierrez.
OnMay24,1994,Marasigandepositedthecheckbutitwasdishonoredforthereason"ACCOUNTCLOSED."It
waslaterrevealedthatpetitionersaccountwiththebankhadbeenclosedsinceMay28,1993.
MarasigansoughtrecoveryfromGutierrez,tonoavail.Hethereaftersentseveraldemandletterstothepetitioner
asking for the payment of P200,000.00, but his demands likewise went unheeded. Consequently, he filed a
criminalcaseforviolationofB.P.22againstthepetitioner,docketedasCriminalCaseNo.42816.
OnSeptember10,1997,thepetitionerfiledbeforetheRegionalTrialCourt(RTC)aComplaintforDeclarationof
NullityofLoanandRecoveryofDamagesagainstGutierrezandcorespondentMarasigan.Hecompletelydenied
authorizingtheloanorthechecksnegotiation,andassertedthathewasnotprivytothepartiesloanagreement.
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Only Marasigan filed his answer to the complaint. In the RTCs order dated December 22, 1997,Gutierrez was
declaredindefault.
TheRulingoftheRTC
TheRTCruledonFebruary3,2003infavorofMarasigan.4Itfoundthatthepetitioner,inissuingthepresigned
blankchecks,hadtheintentionofissuinganegotiableinstrument,albeitwithspecificinstructionstoGutierreznot
tonegotiateorissuethecheckwithouthisapproval.WhileunderSection14oftheNegotiableInstrumentsLaw
Gutierrezhadtheprimafacieauthoritytocompletethechecksbyfillinguptheblankstherein,theRTCruledthat
he deliberately violated petitioners specific instructions and took advantage of the trust reposed in him by the
latter.
Nonetheless,theRTCdeclaredMarasiganasaholderinduecourseandaccordinglydismissedthepetitioners
complaint for declaration of nullity of the loan. It ordered the petitioner to pay Marasigan the face value of the
checkwitharighttoclaimreimbursementfromGutierrez.
The petitioner elevated the case to the Court of Appeals (CA), insisting that Marasigan is not a holder in due
course.HecontendedthatwhenMarasiganreceivedthecheck,heknewthatthesamewaswithoutadate,and
hence, incomplete. He also alleged that the loan was actually between Marasigan and Gutierrez with his check
beingusedonlyasasecurity.
TheRulingoftheCA
On September 24, 2008, the CA affirmed the RTC ruling, although premised on different factual findings. After
careful analysis, the CA agreed with the petitioner that Marasigan is not a holder in due course as he did not
receivethecheckingoodfaith.
TheCAalsoconcludedthatthecheckhadbeenstrictlyfilledoutbyGutierrezinaccordancewiththepetitioners
authority.Itheldthattheloanmaynotbenullifiedsinceitisgroundedonanobligationarisingfromlawandruled
thatthepetitionerisstillliabletopayMarasiganthesumofP200,000.00.
After the CA denied the subsequent motion for reconsideration that followed, the petitioner filed the present
petitionforreviewoncertiorariunderRule45oftheRevisedRulesofCourt.
ThePetition
The petitioner argues that: (1) there was no loan between him and Marasigan since he never authorized the
borrowing of money nor the checks negotiation to the latter (2) under Article 1878 of the Civil Code, a special
powerofattorneyisnecessaryforanindividualtomakealoanorborrowmoneyinbehalfofanother(3)theloan
transaction was between Gutierrez and Marasigan, with his check being used only as a security (4) the check
hadnotbeencompletelyandstrictlyfilledoutinaccordancewithhisauthoritysincetheconditionthatthesubject
checkcanonlybeusedprovidedthereispriorapprovalfromhim,wasnotcompliedwith(5)evenifthecheck
wasstrictlyfilledupasinstructedbythepetitioner,Marasiganisstillnotentitledtoclaimthechecksvalueashe
wasnotaholderinduecourseand(6)byreasonofthebadfaithinthedealingsbetweentherespondents,heis
entitledtoclaimfordamages.
TheIssues
Reducedtoitsbasics,thecasepresentstousthefollowingissues:
1. Whether the contract of loan in the amount of P200,000.00 granted by respondent Marasigan to
petitioner,throughrespondentGutierrez,maybenullifiedforbeingvoid
2.WhetherthereisbasistoholdthepetitionerliableforthepaymentoftheP200,000.00loan
3. Whether respondent Gutierrez has completely filled out the subject check strictly under the authority
givenbythepetitionerand
4.WhetherMarasiganisaholderinduecourse.
TheCourtsRuling
Thepetitionisimpressedwithmerit.
We note at the outset that the issues raised in this petition are essentially factual in nature. The main point of
inquiryofwhetherthecontractofloanmaybenullified,hingesontheveryexistenceofthecontractofloana
questionthat,aspresented,isessentially,oneoffact.Whetherthepetitionerauthorizedtheborrowingwhether
GutierrezcompletelyfilledoutthesubjectcheckstrictlyunderthepetitionersauthorityandwhetherMarasiganis
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a holder in due course are also questions of fact, that, as a general rule, are beyond the scope of a Rule 45
petition.
Therulethatquestionsoffactarenotthepropersubjectofanappealbycertiorari,asapetitionforreviewunder
Rule 45 is limited only to questions of law, is not an absolute rule that admits of no exceptions. One notable
exception is when the findings off act of both the trial court and the CA are conflicting, making their review
necessary.5Inthepresentcase,thetribunalsbelowarrivedattwoconflictingfactualfindings,albeitwiththesame
conclusion,i.e.,dismissalofthecomplaintfornullityoftheloan.Accordingly,wewillexaminethepartiesevidence
presented.
I.LiabilityUndertheContractofLoan
Thepetitionerseekstonullifythecontractofloanonthegroundthatheneverauthorizedtheborrowingofmoney.
HepointstoArticle1878,paragraph7oftheCivilCode,whichexplicitlyrequiresawrittenauthoritywhentheloan
is contracted through an agent. The petitioner contends that absent such authority in writing, he should not be
heldliableforthefacevalueofthecheckbecausehewasnotapartyorprivytotheagreement.
ContractsofAgencyMaybeOralUnlessTheLawRequiresaSpecificForm
Article 1868 of the Civil Code defines a contract of agency as a contract whereby a person "binds himself to
rendersomeserviceortodosomethinginrepresentationoronbehalfofanother,withtheconsentorauthorityof
thelatter."Agencymaybeexpress,orimpliedfromtheactsoftheprincipal,fromhissilenceorlackofaction,or
hisfailuretorepudiatetheagency,knowingthatanotherpersonisactingonhisbehalfwithoutauthority.
Asageneralrule,acontractofagencymaybeoral.6However,itmustbewrittenwhenthelawrequiresaspecific
form,forexample,inasaleofapieceoflandoranyinterestthereinthroughanagent.
Article 1878 paragraph 7 of the Civil Code expressly requires a special power of authority before an agent can
loanorborrowmoneyinbehalfoftheprincipal,towit:
Art.1878.Specialpowersofattorneyarenecessaryinthefollowingcases:
xxxx
(7)Toloanorborrowmoney,unlessthelatteractbeurgentandindispensableforthepreservationofthethings
whichareunderadministration.(emphasissupplied)
Article1878doesnotstatethattheauthoritybeinwriting.Aslongasthemandateisexpress,suchauthoritymay
be either oral or written. We unequivocably declared in Lim Pin v. Liao Tian, et al.,7thattherequirementunder
Article1878oftheCivilCodereferstothenatureoftheauthorizationandnottoitsform.Bethatasitmay,the
authoritymustbedulyestablishedbycompetentandconvincingevidenceotherthantheselfservingassertionof
thepartyclaimingthatsuchauthoritywasverballygiven,thus:
TherequirementsofaspecialpowerofattorneyinArticle1878oftheCivilCodeandofaspecialauthorityinRule
138 of the Rules of Court refer to the nature of the authorization and not its form. The requirements are met if
thereisaclearmandatefromtheprincipalspecificallyauthorizingtheperformanceoftheact.Asearlyas1906,
thisCourtinStrongv.GutierrezRepide(6Phil.680)statedthatsuchamandatemaybeeitheroralorwritten,the
one vital thing being that it shall be express. And more recently, We stated that, if the special authority is not
written,thenitmustbedulyestablishedbyevidence:
xxxtheRulesrequire,forattorneystocompromisethelitigationoftheirclients,aspecialauthority.Andwhilethe
same does not state that the special authority be in writing the Court has every reason to expect that, if not in
writing, the same be duly established by evidence other than the selfserving assertion of counsel himself that
such authority was verbally given him.(Home Insurance Company vs. United States lines Company, et al., 21
SCRA863866:Vicentevs.Geraldez,52SCRA210225).(emphasissupplied).
The Contract of Loan Entered Into by Gutierrez in Behalf of the Petitioner Should be Nullified for Being Void
PetitionerisNotBoundbytheContractofLoan.
A review of the records reveals that Gutierrez did not have any authority to borrow money in behalf of the
petitioner. Records do not show that the petitioner executed any special power of attorney (SPA) in favor of
Gutierrez. In fact, the petitioners testimony confirmed that he never authorized Gutierrez (or anyone for that
matter),whetherverballyorinwriting,toborrowmoneyinhisbehalf,norwasheawareofanysuchtransaction:
1 w p h i1

ALVINPATRIMONIO(witness)
ATTY.DEVERA:DidyougiveNapGutierrezanySpecialPowerofAttorneyinwritingauthorizinghimtoborrow
usingyourmoney?
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WITNESS:No,sir.(T.S.N.,AlvinPatrimonio,Nov.11,1999,p.105)8
xxxx
Marasigan however submits that the petitioners acts of presigning the blank checks and releasing them to
GutierrezsufficetoestablishthatthepetitionerhadauthorizedGutierreztofillthemoutandcontracttheloanin
hisbehalf.
Marasiganssubmissionfailstopersuadeus.
Intheabsenceofanyauthorization,Gutierrezcouldnotenterintoacontractofloaninbehalfofthepetitioner.As
heldinYasumav.HeirsofDeVilla,9involvingaloancontractedbydeVillasecuredbyrealestatemortgagesin
thenameofEastCordilleraMiningCorporation,intheabsenceofanSPAconferringauthorityondeVilla,thereis
nobasistoholdthecorporationliable,towit:
Thepowertoborrowmoneyisoneofthosecaseswherecorporateofficersasagentsofthecorporationneeda
special power of attorney. In the case at bar, no special power of attorney conferring authority on de Villa was
ever presented. x x x There was no showing that respondent corporation ever authorized de Villa to obtain the
loansonitsbehalf.
xxxx
Therefore,onthefirstissue,theloanwaspersonaltodeVilla.Therewasnobasistoholdthecorporationliable
since there was no authority, express, implied or apparent, given to de Villa to borrow money from petitioner.
Neitherwasthereanysubsequentratificationofhisact.
xxxx
TheliabilityarisingfromtheloanwasthesoleindebtednessofdeVilla(orofhisestateafterhisdeath).(citations
omittedemphasissupplied).
ThisprinciplewasalsoreiteratedinthecaseofGozunv.Mercado,10wherethiscourtheld:
PetitionersubmitsthathisfollowingtestimonysufficestoestablishthatrespondenthadauthorizedLiliantoobtain
aloanfromhim.
xxxx
Petitionerstestimonyfailedtocategoricallystate,however,whethertheloanwasmadeonbehalfofrespondent
orofhiswife.WhilepetitionerclaimsthatLilianwasauthorizedbyrespondent,thestatementofaccountmarked
asExhibit"A"statesthattheamountwasreceivedbyLilian"inbehalfofMrs.AnnieMercado.
ItbearsnotingthatLiliansignedinthereceiptinhernamealone,withoutindicatingthereinthatshewasactingfor
andinbehalfofrespondent.Shethusboundherselfinherpersonalcapacityandnotasanagentofrespondent
oranyoneforthatmatter.
Itisageneralruleinthelawofagencythat,inordertobindtheprincipalbyamortgageonrealpropertyexecuted
byanagent,itmustuponitsfacepurporttobemade,signedandsealedinthenameoftheprincipal,otherwise,it
willbindtheagentonly.Itisnotenoughmerelythattheagentwasinfactauthorizedtomakethemortgage,ifhe
hasnotactedinthenameoftheprincipal.xxx(emphasissupplied).
In the absence of any showing of any agency relations or special authority to act for and in behalf of the
petitioner,theloanagreementGutierrezenteredintowithMarasiganisnullandvoid.Thus,thepetitionerisnot
boundbythepartiesloanagreement.
Furthermore, that the petitioner entrusted the blank presigned 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
fiduciaryrelationshipinherentinthiscontractmustexistasamatteroffact.Thepersonallegingithastheburden
ofprooftoshow,notonlythefactofagency,butalsoitsnatureandextent.11AsweheldinPeoplev.Yabut:12
ModestoYambao'sreceiptofthebadchecksfromCeciliaQueYabutorGeminianoYabut,Jr.,inCaloocanCity
cannot, contrary to the holding of the respondent Judges, be licitly taken as delivery of the checks to the
complainant Alicia P. Andan at Caloocan City to fix the venue there. He did not take delivery of the checks as
holder,i.e.,as"payee"or"indorsee."AndthereappearstobenocontractofagencybetweenYambaoandAndan
so as to bind the latter for the acts of the former. Alicia P. Andan declared in that sworn testimony before the
investigatingfiscalthatYambaoisbuther"messenger"or"parttimeemployee."Therewasnospecialfiduciary
relationship that permeated their dealings. For a contract of agency to exist, the consent of both parties is
essential,theprincipalconsentsthattheotherparty,theagent,shallactonhisbehalf,andtheagentconsentsso
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toact.Itmustexistasafact.Thelawmakesnopresumptionthereof.Thepersonallegingithastheburdenof
prooftoshow,notonlythefactofitsexistence,butalsoitsnatureandextent.Thisismoreimperativewhenitis
consideredthatthetransactiondealtwithinvolveschecks,whicharenotlegaltender,andthecreditormayvalidly
refusethesameaspaymentofobligation.(atp.630).(emphasissupplied)
TherecordsshowthatMarasiganmerelyreliedonthewordsofGutierrezwithoutsecuringacopyoftheSPAin
favorofthelatterandwithoutverifyingfromthepetitionerwhetherhehadauthorizedtheborrowingofmoneyor
releaseofthecheck.HewasthusboundbytheriskaccompanyinghistrustonthemereassurancesofGutierrez.
No Contract of Loan Was Perfected Between Marasigan And Petitioner, as The Latters Consent Was Not
Obtained.
Anothersignificantpointthatthelowercourtsfailedtoconsideristhatacontractofloan,likeanyothercontract,is
subjecttotherulesgoverningtherequisitesandvalidityofcontractsingeneral.13Article1318oftheCivilCode14
enumeratestheessentialrequisitesforavalidcontract,namely:
1.consentofthecontractingparties
2.objectcertainwhichisthesubjectmatterofthecontractand
3.causeoftheobligationwhichisestablished.
Inthiscase,thepetitionerdeniedliabilityonthegroundthatthecontractlackedtheessentialelementofconsent.
We agree with the petitioner. As we explained above, Gutierrez did not have the petitioners written/verbal
authority to enter into a contract of loan. While there may be a meeting of the minds between Gutierrez and
Marasigan,suchagreementcannotbindthepetitionerwhoseconsentwasnotobtainedandwhowasnotprivyto
theloanagreement.Hence,onlyGutierrezisboundbythecontractofloan.
True, the petitioner had issued several presigned checks to Gutierrez, one of which fell into the hands of
Marasigan.Thisact,however,doesnotconstitutesufficientauthoritytoborrowmoneyinhisbehalfandneither
should it be construed as petitioners grant of consent to the parties loan agreement. Without any evidence to
prove Gutierrez authority, the petitioners signature in the check cannot be taken, even remotely, as sufficient
authorization,muchless,consenttothecontractofloan.Withouttheconsentgivenbyonepartyinapurported
contract,suchcontractcouldnothavebeenperfectedtheresimplywasnocontracttospeakof.15
Withtheloanissueoutoftheway,wenowproceedtodeterminewhetherthepetitionercanbemadeliableunder
thecheckhesigned.
II.LiabilityUndertheInstrument
The answer is supplied by the applicable statutory provision found in Section 14 of the Negotiable Instruments
Law(NIL)whichstates:
Sec. 14. Blanks when may be filled. Where the instrument is wanting in any material particular, the person in
possessionthereofhasaprimafacieauthoritytocompleteitbyfillinguptheblankstherein.Andasignatureona
blank paper delivered by the person making the signature in order that the paper may be converted into a
negotiableinstrumentoperatesasaprimafacieauthoritytofillitupassuchforanyamount.Inorder,however,
thatanysuchinstrumentwhencompletedmaybeenforcedagainstanypersonwhobecameapartytheretoprior
toitscompletion,itmustbefilledupstrictlyinaccordancewiththeauthoritygivenandwithinareasonabletime.
Butifanysuchinstrument,aftercompletion,isnegotiatedtoaholderinduecourse,itisvalidandeffectualforall
purposes in his hands, and he may enforce it as if it had been filled up strictly in accordance with the authority
givenandwithinareasonabletime.
Thisprovisionappliestoanincompletebutdeliveredinstrument.Underthisrule,ifthemakerordrawerdeliversa
presigned blank paper to another person for the purpose of converting it into a negotiable instrument, that
person is deemed to have prima facie authority to fill it up. It merely requires that the instrument be in the
possessionofapersonotherthanthedrawerormakerandfromsuchpossession,togetherwiththefactthatthe
instrumentiswantinginamaterialparticular,thelawpresumesagencytofilluptheblanks.16
Inorderhoweverthatonewhoisnotaholderinduecoursecanenforcetheinstrumentagainstapartypriorto
theinstrumentscompletion,tworequisitesmustexist:(1)thattheblankmustbefilledstrictlyinaccordancewith
theauthoritygivenand(2)itmustbefilledupwithinareasonabletime.Ifitwasproventhattheinstrumenthad
notbeenfilledupstrictlyinaccordancewiththeauthoritygivenandwithinareasonabletime,themakercanset
this up as a personal defense and avoid liability. However, if the holder is a holder in due course, there is a
conclusive presumption that authority to fill it up had been given and that the same was not in excess of
authority.17

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Inthepresentcase,thepetitionercontendsthatthereisnolegalbasistoholdhimliablebothunderthecontract
and loan and under the check because: first, the subject check was not completely filled out strictly under the
authorityhehasgivenandsecond,Marasiganwasnotaholderinduecourse.
MarasiganisNotaHolderinDueCourse
TheNegotiableInstrumentsLaw(NIL)definesaholderinduecourse,thus:
Sec.52Aholderinduecourseisaholderwhohastakentheinstrumentunderthefollowingconditions:
(a)Thatitiscompleteandregularuponitsface
(b)Thathebecametheholderofitbeforeitwasoverdue,andwithoutnoticethatithadbeenpreviously
dishonored,ifsuchwasthefact
(c)Thathetookitingoodfaithandforvalue
(d)Thatatthetimeitwasnegotiatedtohimhehadnonoticeofanyinfirmityintheinstrumentordefectin
thetitleofthepersonnegotiatingit.(emphasissupplied)
Section52(c)oftheNILstatesthataholderinduecourseisonewhotakestheinstrument"ingoodfaithandfor
value."ItalsoprovidesinSection52(d)thatinorderthatonemaybeaholderinduecourse,itisnecessarythat
atthetimeitwasnegotiatedtohimhehadnonoticeofanyinfirmityintheinstrumentordefectinthetitleofthe
personnegotiatingit.
Acquisition in good faith means taking without knowledge or notice of equities of any sort which could beset up
against a prior holder of the instrument.18 It means that he does not have any knowledge of fact which would
render it dishonest for him to take a negotiable paper. The absence of the defense, when the instrument was
taken,istheessentialelementofgoodfaith.19
AsheldinDeOcampov.Gatchalian:20
In order to show that the defendant had "knowledge of such facts that his action in taking the instrument
amountedtobadfaith,"itisnotnecessarytoprovethatthedefendantknewtheexactfraudthatwaspracticed
upontheplaintiffbythedefendant'sassignor,itbeingsufficienttoshowthatthedefendanthadnoticethatthere
was something wrong about his assignor's acquisition of title, although he did not have notice of the particular
wrongthatwascommitted.
Itissufficientthatthebuyerofanotehadnoticeorknowledgethatthenotewasinsomewaytaintedwithfraud.It
isnotnecessarythatheshouldknowtheparticularsoreventhenatureofthefraud,sinceallthatisrequiredis
knowledgeofsuchfactsthathisactionintakingthenoteamountedbadfaith.
Thetermbadfaithdoesnotnecessarilyinvolvefurtivemotives,butmeansbadfaithinacommercialsense.The
manner in which the defendants conducted their Liberty Loan department provided an easy way for thieves to
dispose of their plunder. It was a case of "no questions asked." Although gross negligence does not of itself
constitutebadfaith,itisevidencefromwhichbadfaithmaybeinferred.Thecircumstancesthrustthedutyupon
the defendants to make further inquiries and they had no right to shut their eyes deliberately to obvious facts.
(emphasissupplied).
Inthepresentcase,Marasigansknowledgethatthepetitionerisnotapartyoraprivytothecontractofloan,and
correspondingly had no obligation or liability to him, renders him dishonest, hence, in bad faith. The following
exchangeissignificantonthispoint:
WITNESS:AMBETNABUS
Q:Now,Irefertothesecondcallafteryourbirthday.Telluswhatyoutalkedabout?
A: Since I celebrated my birthday in that place where Nap and I live together with the other crew, there were
several visitors that included Danny Espiritu. So a week after my birthday, Bong Marasigan called me up again
andhewasfumingmad.Nagmumuranasiya.HinahanapniyasihinahanapniyasiNap,dahilpinagtataguan
nasiyaatsinabinaniyanakailanganIsettlenaniyayungutangniNap,dahil
xxxx
WITNESS:Yes.Sinabiniyasaakinnakailanganayusinnabagopamauwisakungsaanangtsekengtumalbog
(Hetoldmethatwehavetofixitupbeforeit)mauwipakungsaan
xxxx
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Q:Whatwasyourreply,ifany?
A:Iactuallyaskedhim.Kaninobaangtsekenasinasabimo?
(Whosecheckisitthatyouarereferringtoortalkingabout?)
Q:Whatwashisanswer?
A:ItwasAlvinscheck.
Q:Whatwasyourreply,ifany?
A:ItoldhimdoyouknowthatitisnotreallyAlvinwhoborrowedmoneyfromyouorwhatyouwanttoappear
xxxx
Q:Whatwashisreply?
A:Yes,itwasNap,perotsekeparinniAlvinanghawakkoatsiAlvinangmaiipitdito.(T.S.N.,AmbetNabus,July
27,2000pp.6571emphasissupplied)21
Sinceheknewthattheunderlyingobligationwasnotactuallyforthepetitioner,therulethatapossessorofthe
instrument is prima facie a holder in due course is inapplicable. As correctly noted by the CA, his inaction and
failuretoverify,despiteknowledgeofthatthepetitionerwasnotapartytotheloan,maybeconstruedasgross
negligenceamountingtobadfaith.
Yet,itdoesnotfollowthatsimplybecauseheisnotaholderinduecourse,Marasiganisalreadytotallybarred
from recovery. The NIL does not provide that a holder who is not a holder in due course may not in any case
recover on the instrument.22 The only disadvantage of a holder who is not in due course is that the negotiable
instrumentissubjecttodefensesasifitwerenonnegotiable.23Amongsuchdefensesisthefillingupblanknot
withintheauthority.
Onthispoint,thepetitionerarguesthatthesubjectcheckwasnotfilledupstrictlyonthebasisoftheauthorityhe
gave.Hepointstohisinstructionnottousethecheckwithouthispriorapprovalandarguesthatthecheckwas
filledupinviolationofsaidinstruction.
CheckWasNotCompletedStrictlyUnderTheAuthorityGivenbyThePetitioner
OurownexaminationoftherecordstellsusthatGutierrezhasexceededtheauthoritytofilluptheblanksanduse
thecheck. Torepeat,petitionergaveGutierrezpresignedcheckstobeusedintheirbusinessprovidedthathe
couldonlyusethemuponhisapproval.HisinstructioncouldnotbeanyclearerasGutierrezauthoritywaslimited
to the use of the checks for the operation of their business, and on the condition that the petitioners prior
approvalbefirstsecured.
1 w p h i1

Whileunderthelaw,Gutierrezhadaprimafacieauthoritytocompletethecheck,suchprimafacieauthoritydoes
notextendtoitsuse(i.e.,subsequenttransferornegotiation)oncethecheckiscompleted.Inotherwords,only
theauthoritytocompletethecheckispresumed.Further,thelawusedtheterm"primafacie"tounderscorethe
fact that the authority which the law accords to a holder is a presumption juris tantumonly hence, subject to
subject to contrary proof. Thus, evidence that there was no authority or that the authority granted has been
exceededmaybepresentedbythemakerinordertoavoidliabilityundertheinstrument.
Inthepresentcase,noevidenceisonrecordthatGutierrezeversecuredpriorapprovalfromthepetitionertofill
uptheblankortousethecheck.Inhistestimony,petitionerassertedthatheneverauthorizednorapprovedthe
fillingupoftheblankchecks,thus:
ATTY.DEVERA:DidyouauthorizeanyoneincludingNapGutierreztowritethedate,May23,1994?
WITNESS:No,sir.
Q:DidyouauthorizeanyoneincludingNapGutierreztoputthewordcash?Inthecheck?
A:No,sir.
Q:DidyouauthorizeanyoneincludingNapGutierreztowritethefigureP200,000inthischeck?
A:No,sir.
Q:Andlastly,didyouauthorizeanyoneincludingNapGutierreztowritethewordsP200,000onlyxxinthischeck?
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A:No,sir.(T.S.N.,AlvinPatrimonio,November11,1999).24
Notably,Gutierrezwasonlyauthorizedtousethecheckforbusinessexpensesthus,heexceededtheauthority
whenheusedthechecktopaytheloanhesupposedlycontractedfortheconstructionofpetitioner'shouse.This
is a clear violation of the petitioner's instruction to use the checks for the expenses of Slam Dunk. It cannot
thereforebevalidlyconcludedthatthecheckwascompletedstrictlyinaccordancewiththeauthoritygivenbythe
petitioner.
ConsideringthatMarasiganisnotaholderinduecourse,thepetitionercanvalidlysetupthepersonaldefense
thattheblankswerenotfilledupinaccordancewiththeauthorityhegave.Consequently,Marasiganhasnoright
toenforcepaymentagainstthepetitionerandthelattercannotbeobligedtopaythefacevalueofthecheck.
WHEREFORE,inviewoftheforegoing,judgmentisherebyrenderedGRANTINGthepetitionerAlvinPatrimonio's
petitionforreviewoncertiorari.TheappealedDecisiondatedSeptember24,2008andtheResolutiondatedApril
30,2009oftheCourtofAppealsareconsequentlyANNULLEDANDSETASIDE.Costsagainsttherespondents.
SOORDERED.
ARTUROD.BRION
AssociateJustice
WECONCUR:
ANTONIOT.CARPIO
AssociateJustice
Chairperson
MARIANOC.DELCASTILLO
AssociateJustice

JOSEPORTUGALPEREZ
AssociateJustice

ESTELAM.PERLASBERNABE
AssociateJustice
ATTESTATION
I attest that the conclusions in the above Decision had been reached in consultation before the case was
assignedtothewriteroftheopinionoftheCourt'sDivision.
ANTONIOT.CARPIO
AssociateJustice
Chairperson,SecondDivision
CERTIFICATION
PursuanttoSection13,ArticleVIIIoftheConstitution,andtheDivisionChairperson'sAttestation,Icertifythatthe
conclusionsintheaboveDecisionhadbeenreachedinconsultationbeforethecasewasassignedtothewriterof
theopinionoftheCourt'sDivision.
MARIALOURDESP.A.SERENO
ChiefJustice

Footnotes
1

UnderRule45oftheRulesofCoui1,rollo,pp.931,

Id. at 3047 penned by Associate Justice Monina ArevaloZenarosa, and concurred in by Associate
JusticeRegaladoE.MaambongandAssociateJusticeSixtoC.Marella,Jr.
3

Id.at4850.

Rollo,pp.6772.

Republicv.Bellate,G.R.No.175685,August7,2013,703SCRA210,218.

Article1869,CivilCodeofthePhilippines.

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7

200Phil.685(1982).

Rollo,p.82.

G.R.No.150350,August22,2006,499SCRA466,472.

10

G.R.No.167812,December19,2006,511SCRA305,313314.

11

Peoplev.Yabut,G.R.No.L42847andL42902,April29,1977,167Phil.336,343.

12

Id.

13

PentacapitalInvestmentCorporationv.Mahinay,G.R.No.171736,July5,2010,623SCRA284,302.

14

Art.1318.Thereisnocontractunlessthefollowingrequisitesconcur:
(1)Consentofthecontractingparties
(2)Objectcertainwhichisthesubjectmatterofthecontract
(3)Causeoftheobligationwhichisestablished.(1261).

15

DehezaInamargav.Alano,G.R.No.171321,December18,2008,574SCRA651,660.

16

Dyv.People,G.R.No.158312,November14,2008,571SCRA59,7172.

17

T.B.Aquino,NotesandCasesonBanks,NegotiableInstrumentsandOtherCommercialDocuments,p.
234(2006ed.).
18

A.F. Agbayani, Commentaries and Jurisprudence on the Commercial Laws of the Philippines, p. 281
(1992ed.).
19

Id.

20

G.R.No.L15126,November30,1961,3SCRA596,598.

21

Rollo,pp.141142.

22

Dinov.Loot,G.R.No.170912,April19,2010,618SCRA393,404.

23

Id.

24

Rollo,p:117.

TheLawphilProjectArellanoLawFoundation

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