Alvin Patrimonio v.

Napoleon Guttierez & OCTAVIO MARASIGAN III

FACTS:

Herein petitioner and respondent Guttierez entered into a business venture under the name Slam
Dunk Corporation. To start it up, petitioner pre-signed several check for the expenses of the business.
Although signed, however, there was no payees name, date or amount indicated in the said checks.
The blank checks were entrusted to Guttierez with the instruction that he cannot fill them out
without petitioners approval.

In 1993, without petitioners knowledge and consent, Guttierez borrowed money from co-
respondent Marasigan in the amount of 200,000php. The latter aceded to Guttierez request and
gave him the amount. Simultaneously, Guttierez deliverd to Marasigan one of the blank checks pre-
signed by petitioner. However, the same was dishonored by the bank on the reason of closed
account.

Marasigan sought recovery from Guttierez, but to no avail. Hence, he sent several demand letters to
petitioner, but to no avail as well. Thus, he filed a criminal case under BP 22 against petitioner. On the
other hand, Petitioner filed with the Regional Trial Court (RTC) a Complaint for Declaration of Nullity
of Loan and Recovery of Damages against Respondents, invoking that he never authorized the loan.

The trial court ruled in favor of Marasigan and found petitioner, in issuing the pre-signed blank
checks, had the intention of issuing the check even without his approval. On appeal to the Court of
Appeals (CA), the appellate court affirmed the decision of the RTC. Hence, this present case.

ISSUE:

Whether or not petitioner is liable to the loan contracted by Guttierez to Marasigan?

RULING:

The court held no.

That under Article 1878, paragraph 7 of the Civil Code, a written authority is required when the loan
is contracted through an agent.

In the present case, the petitioner is not bound by the contract of loan since the records reveal that
Guttierez did not have any authority to borrow money in behalf of petitioner. Records do not show
that the petitioner executed any special power of attorney in favor of Guttierez to borrow in his
behalf, hence, the act of Guttierez is in violation of the said provision, and thus, he should be the
only one liable for the loan he was not able to settle.

In the present case, the petitioner is not bound by the contract of loan since the records reveal that
Guttierez did not have any authority to borrow money in behalf of petitioner. Records do not show
that the petitioner executed any special power of attorney in favor of Guttierez to borrow in his
behalf, hence, the act of Guttierez is in violation of the said provision, and thus, he should be the
only one liable for the loan he was not able to settle.