When may blanks be filled in a negotiable instrument?

Category: Law on Negotiable Instruments Sec. 14. Blanks; when may be filled. - Where the instrument is wanting in any material particular, the person in possession thereof has a prima facie authority to complete it by filling up the blanks therein. And a signature on a blank paper delivered by the person making the signature in order that the paper may be converted into a negotiable instrument operates as a prima facie authority to fill it up as such for any amount. In order, however, that any such instrument when completed may be enforced against any person who became a party thereto prior to its completion, it must be filled up strictly in accordance with the authority given and within a reasonable time. But if any such instrument, after completion, is negotiated to a holder in due course, it is valid and effectual for all purposes in his hands, and he may enforce it as if it had been filled up strictly in accordance with the authority given and within a reasonable time. SCOPE OF SECTION 14 > There are 2 steps in the execution of a negotiable instrument o The act of writing the instrument completely and in accordance with Section 1 of the Negotiable Instruments Law o The delivery of the instrument with the intention of giving effect to it THE MATERIAL PARTICULAR REFERRED TO IN THIS PROVISION MAY BE 1. A particular the omission of which will render the instrument nonnegotiable 2. A particular the omission of which will not render the instrument nonnegotiable FACTS FROM WHICH PRIMA FACIE AUTHORITY PRESUMED 1. 2. 3. Want of a material particular in the instrument Possession thereof by a person, a third fact That such person had authority to fill up the blank

THE LAW PRESUMES THE EXISTENCE OF AUTHORITY TO FILL THE INSTRUMENT UP TO ANY AMOUNT FROM THE FOLLOWING FACTS 1. A signature on blank paper 2. That the person signing in blank delivers it in order that the paper may be converted into a negotiable instrument REQUISITES TO HOLD PRIOR PARTIES LIABLE 1. 2. The blank must be filled strictly in accordance with the authority given It must be filled up within a reasonable time

RIGHT OF HOLDER OF DUE COURSE WHERE BLANK WRONGFULLY FILLED > First view: One who is not a holder in due course cannot enforce the instrument if the same is not filled up strictly in accordance with the authority given or within reasonable time > Second view: the holder can enforce the instrument accordance with the authorized tenor > According to Agbayani, the better view is the first view is the better view to have. The law provides that in order be one who is not a holder in due course may enforce mechanically incomplete but delivered instrument, the two requisites must exist. The implication is that one or both are not present, the instrument may not be enforced. REASONABLE TIME > Regard is had to the nature of the instrument, the usage of trade or business with respect to such instrument and the facts of the particular case > Term is very relative PERSONAL DEFENSE > Defense available only to holders who are not holders in due course SUMMARY OF RULES WHEN INSTRUMENT IS INCOMPLETE BUT DELIVERED 1. Where the holder is a holder in due course, he can enforce the instrument as completed against parties prior or subsequent to the completion

2. Where the holder is not a holder in due course, he can enforce the instrument as completed as against the parties subsequent to the completion but not against those prior thereto