CASE TITLE: ALVIN PATRIMONIO vs.

NAPOLEON GUTIERREZ and OCTAVIO MARASIGAN III,

G.R. No. 187769, June 4, 2014

FACTS OF THE CASE:

Alvin Patrimonio, the petitioner, mutually entered into a business arrangement and established
Slam Dunk Corporation with Napoleon Gutierrez, one of the respondents. Patrimonio entrusted several
pre-signed checks to Gutierrez for the expenses of Slam Dunk Corporation, with the instruction to not fill
them out without notification and approval of Patrimonio. Without the petitioner's knowledge, in 1993,
Gutierrez secured a loan for the construction of his house from Marasigan, co-respondent, amounting to
200,000, and assured him of a 5 percent interest rate every month from March to May 1994.
As payment for Gutierrez's loan to Marasigan, Gutierrez delivered the pre-signed check of the
petitioner to Marasigan and filed out the blank portion of the check with the word cash and the amount of
200,000 with the date May 23, 1994. But as Marasigan deposited the instrument on May 24, 1994, the
check bounced because the petitioner's bank account was closed. Marasigan tried to get the money from
Gutierrez and sent letters to the petitioner but received no response, leading him to file a case under B.P.
22 (Bouncing Checks Law). On September 10, 1997, Patrimonio, the petitioner, also filed a case against
Gutierrez and Marasigan as co-respondents, denying knowledge of the loan or the check transaction.
Marasigan filed his answer to the complaint, but Gutierrez failed to submit a response within the given
time, leading to the court declaring him in default on December 22, 1997.

ISSUES:
1. Whether the contract of loan in the amount of ₱200,000.00 granted by respondent Marasigan to
petitioner, through respondent Gutierrez, may be nullified for being void;

2. Whether there is basis to hold the petitioner liable for the payment of the ₱200,000.00 loan;

3. Whether respondent Gutierrez has completely filled out the subject check strictly under the authority
given by the petitioner; and

4. Whether Marasigan is a holder in due course.

RULING:
1. Marasigan’s inability to ensure the validity of the transaction and relying only on the claims of
Guitierez’s without confirming it with Patrimonio shows a lack of due diligence on his part.

2. Patrimonio cannot be held liable for the loan because he did not authorize it, and Gutierrez lacked the
authority to act on his behalf.

3. Gutierrez has exceeded the authority to fill up the blanks and use the check, limited for the operation of
their business. No evidence is on record that Gutierrez ever secured prior approval from the petitioner to
fill up the blank or to use the check.

4. Marasigan does not hold the standing of a holder in due course. The Law of Negotiable Instruments's
Section 52(c) defines a holder in due course as someone who accepts the instrument "in good faith and for
value." Section 52(d) additionally stipulates that for an individual to qualify as a holder in due course, it is
imperative that, at the time of negotiation, he had no notice of any infirmity in the instrument or defect in
the title of the person negotiating it. The petitioner (Alvin) is entitled to raise a valid personal defense,
contending that the completion of blanks did not align with the granted authority. Given Marasigan's
awareness that Petitioner Alvin had no involvement or connection to the loan contract, and consequently
bore no responsibility or liability, the principle suggesting that a holder of the instrument is presumed to
be a holder in due course is not relevant in this instance. Despite knowing the fact that the Petitioner was
not a party to the loan, Marasigan's delay and failure to verify could be seen as outrageous carelessness
that amounted to bad faith.