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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.