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NEGOTIABLE INSTRUMENTS LAW G.R. No. 187769. G.R. No. 187769.* ALVIN
PATRIMONIO, petitioner,
vs
. NAPOLEON GUTIERREZ and OCTAVIO MARASIGAN III, respondents.
Mercantile Law; Negotiable Instruments Law; Incomplete But Delivered Instruments; Inorder that
one who is not a holder in due course can enforce the instrument against a
party prior to the instruments completion, two requisites must exist: (1) that the blank must be filled strictly in acco
rdance with the authority given; and (2) it must be filled up within areasonable time.
This provision applies to an incomplete but delivered instrument. Underthis rule, if the maker or drawer
delivers a pre-signed blank paper to another person for thepurpose 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 possession of aperson other
than the drawer or maker and from such possession, together with the fact thatthe instrument is
wanting in a material particular, the law presumes agency to fill up theblanks.In order however
that one who is not a holder in due course can enforce theinstrument against a party prior to the
instruments completion, two requisites must exist:(1) that the blank must be filled strictly in
accordance with the authority given; and (2) itmust be filled up within a reasonable time. If it was
proven that the instrument had not beenfilled up strictly in accordance with the authority given
and within a reasonable time, themaker can set this up as a personal defense and avoid liability.
However, if the holder is aholder in due course, there is a conclusive presumption that authority to
fill it up had beengiven and that the same was not in excess of authority.
Same; Same; Holder in Due Course; Section 52(c) of the Negotiable Instruments Law(NIL) states
that a holder in due course is one who takes the instrument in good faith and forvalue.
Section 52(c) of the NIL states that a holder in due course is one who takes theinstrument in good faith and
for value. It also provides in Section 52(d) that in order thatone may be a holder in due course, it
is necessary that at the time it was negotiated to himhe had no notice of any infirmity in the
instrument or defect in the title of the personnegotiating it. Acquisition in good faith means taking
without knowledge or notice of equitiesof any sort which could be set up against a prior holder of
the instrument. It means that hedoes not have any knowledge of fact which would render it
dishonest for him to take anegotiable paper. The absence of the defense, when the instrument was
taken, is theessential element of good faith.
Same; Same; Same; The Negotiable Instruments Law (NIL) does not provide that aholder who is
not a holder in due course may not in any case recover on the instrument. Theonly disadvantage
of a holder who is not in due course is that the negotiable instrument issubject to defenses as if it
were non-negotiable.
Since he knew that the underlying obligationwas not actually for the petitioner, the rule that a
possessor of the instrument is
prima facie
a holder in due course is inapplicable. As correctly noted by the CA, his inaction andfailure to
verify, despite knowledge of that the petitioner was not a party to the loan, may beconstrued as
gross negligence amounting to bad faith. Yet, it does not follow that simplybecause he is not a
holder in due course, Marasigan is already totally barred from recovery.The NIL does not provide
that a holder who is not a holder in due course may not in any caserecover on the instrument. The
only disadvantage of a holder who is not in due course is thatthe negotiable instrument is subject
to defenses as if it were non-negotiable. Among suchdefenses is the filling up blank not within the
authority.

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Same; Same; Same; While under the law, Gutierrez had a prima facie authority tocomplete the
check, such prima facie authority does not extend to its use (i.e., subsequenttransfer or
negotiation) once the check is completed.
While under the law, Gutierrez hada
prima facie
authority
to complete the check
, such
prima facie
authority does not extendto its use (
i.e.
,subsequent transfer or negotiation) once the check is completed. In otherwords, only the authority
to complete the check is presumed. Further, the law used the term
prima facie
to underscore the fact that the authority which the law accords to a holder is apresumption
juris tantum
only; hence, subject to subject to contrary proof. Thus, evidencethat there was no authority or
that the authority granted has been exceeded may bepresented by the maker in order to avoid
liability under the instrument