PATRIMONIO v. Gutierrez

PATRIMONIO v.
GUTIERREZ (2014)
Topic: Kinds of Agency
PARTIES:
 Petitioner: Alvin Patrimonio
 Respondent: Napoleon Gutierrez nd Octavio Marasigan III
FACTS:
 Patrimonio and Napoleon Gutierrez entered into a business venture under the name of Slam
Dunk Corporation, a production outfit that produced mini-concerts and shows related to
basketball. Patrimonio was already then a decorated professional basketball player while
Gutierrez was a well-known sports columnist.
 In the course of their business, Patrimonio pre-signed several checks to answer for the
expenses of Slam Dunk. Although signed, these checks had no payee’s name, date or
amount. The blank checks were entrusted to Gutierrez with the specific instruction not to fill
them out without previous notification and approval of Patrimonio.
 According to Patrimonio, the arrangement was made so that he could verify the validity of
the payment and make the proper arrangements to fund the account.
 In the middle of 1993, without Patrimonio’s knowledge and consent, Gutierrez went to
Marasigan (former teammate), to secure a loan in the amount of P200K on the excuse that
Patrimonio needed the money for the construction of his house. In addition to the payment
of the principal, Gutierrez assured Marasigan that he would be paid an interest of 5% per
month from March to May 1994.
 Marasigan acceded to Gutierrez’s request and gave him P200K sometime in Feb. 1994.
Gutierrez simultaneously delivered to Marasigan one of the blank checks Patrimonio pre-
signed with Pilipinas Bank. The blank portions filed out the words “cash” “two hundred
thousand pesos only” and the amount “P200K.” The date was also filled as “May 23, 1994”
but Patrimonio contended that the same was not written by Gutierrez.
 Marasigan deposited the check but it was dishonored for the reason “Account Closed.” It
was later revealed that Patrimonio’s account with the bank had been closed since May 1993.
 Marasigan sought recovery from Gutierrez, to no avail. He send several demand letters to
Patrimonio asking for the payment of P200K but his demands went unheeded. Marasigan
filed a criminal case for violation of BP 22 against Patrimonio.
 Patrimonio filed a Complaint for Declaration of Nullity of Loan and Recovery of Damages
against Gutierrez and Marasigan. He completely denied authorizing the loan or the check’s
negotiation, and asserted that he was not privy to the parties’ loan agreement.
 The RTC ruled in favor of Marasigan. It found that Patrimonio, in issuing the pre-signed blank
checks, had the intention of issuing a negotiable instrument, albeit with specific instructions
to Gutierrez not to negotiate or issue the check without his approval. While under Sec. 14 of
the NIL, Gutierrez had the prima facie authority to complete the checks by filling up the
blanks therein, the RTC ruled that he deliberately violated Patrimonio’s specific instructions
and took advantage of the trust reposed in him by the latter. Nonetheless, the RTC declared
Marasigan as a holder in due course and dismissed Patrimonio’s complaint for declaration of
the nullity of loan.
 The CA affirmed the decision of the RTC. It found that Marasigan was not a holder in due
course as he did not receive the checks in good faith. The CA also concluded that the check
had been strictly filled out by Gutierrez in accordance with Patrimonio’s authority.
 Patrimonio argues that there was no loan between him and Marasigan since he never
authorized the borrowing of the money nor the check’s negotiation to the latter, and under
Art. 1878 of the CC, an SPA is necessary for an individual to make a loan or borrow money in
behalf of another.
 Patrimonio seeks to nullify the contract of loan on the ground that he never authorized the
borrowing of money. He points to Art. 1878 (7) of the CC, which explicitly requires a written
authority when the loan is contracted through an agent. Patrimonio contends that absent
such authority in writing, he should not be held liable for the face value of the check because
he was not a party or privy to the agreement.
ISSUES/HELD:
 W/N Gutierrez has completely filled out the subject check strictly under the authority
given by Patrimonio.
o NO. Art. 1868 of the CC defines a contract of agency. Agency may be express, or
implied from the acts of the principal, from his silence or lack of action, or his failure
to repudiate the agency, knowing that another person is acting on his behalf without
authority.
o As a general rule, a contract of agency may be oral. However, it must be written
when the law requires a specific form, for example, in a sale of a piece of land or any
interest therein through an agent.
o Art. 1878, par. 7 of the CC expressly requires an SPA before an agent can loan or
borrow money in behalf of the principal.
o Art. 1878 does not state that the authority be in writing. As long as the mandate is
express, such authority may be either oral or written. The requirements of a special
power of attorney in Article 1878 of the Civil Code and of a special authority in Rule
138 of the Rules of Court refer to the nature of the authorization and not its form.
The requirements are met if there is a clear mandate from the principal specifically
authorizing the performance of the act. As early as 1906, this Court in Strong v.
Gutierrez-Repide (6 Phil. 680) stated that such a mandate may be either oral or
written, the one vital thing being that it shall be express.
o Thus, the contract of loan entered into by Gutierrez in behalf of petitioner should be
nullified for being void; Patrimonio is not bound by the contract of loan.
o A review of the records show that Gutierrez did not have any authority to borrow
money in behalf of Patrimonio. Records do not show that Patrimonio executed any
SPA in favor of Gutierrez.
o In the absence of any showing of any agency relations or special authority to act for
and in behalf of Patrimonio, the loan agreement Gutierrez entered into with
Marasigan is null and void. Thus, Patrimonio is not bound by the parties’ loan
agreement.
o 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.
o For a contract of agency to exist, the consent of both parties is essential, the
principal consents that the other party, the agent, shall act on his behalf, and the
agent consents so to act. It must exist as a fact. The law makes no presumption
thereof. The person alleging it has the burden of proof to show, not only the fact of
its existence, but also its nature and extent. This is more imperative when it is
considered that the transaction dealt with involves checks, which are not legal
tender, and the creditor may validly refuse the same as payment of obligation.
JUDGMENT: Petition is GRANTED.

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JUDGMENT: Petition is GRANTED.

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