Law on Negotiable Instruments
Point of
Real Defenses
Distinction
As to – attached to the instrument
description itself and can be set up against
the whole world, including the
holder in due course.
– defense against everybody
because the right to be enforced
has never existed or ceased to
exist.
– instrument cannot be enforced
against a person to whom the legal
defenses are available.
As to
Examples
(1) As to date Material alteration or Fraudulent
alteration by holder - Sec. 124
(2) As to Want of delivery of incomplete
incompleteness instrument - Sec. 15
(3) As to want Want of authority - Sec. 20
(4) As to Discharge at or after maturity –
discharge Sec. 88, 118
(5) As to Illegality of contract
illegality
(6) As to fraud Fraud in factum or in esse
contractus
As to other Minority or other form of
Examples incapacity – Sec. 22
Forgery – Sec. 23
Duress amounting to forgery
Other infirmities appearing on the
face of the instrument – Sec. 52
Prescription – Art. 1140-1142;
1144-1147, Civil Code
Prepared by: Villena, Divina Victoria C., BSA5A
Submitted to: Atty. A. R. Villegas, Jr., LAW
Personal Defenses
– personal to the person or
subsequent holder against whom
the instrument is being enforced.
– grow out of the agreement or
conduct of a particular person
which renders it inequitable for
him to enforce it against the
party sought to be made liable,
but not available against the
holder in due course.
Insertion of wrong date - Sec. 13
Want of authority to complete
instrument - Sec. 14
Want of consideration - Sec. 28
Discharge by payment or
renunciation or release before
maturity – Sec. 50
Illegality in maker/drawer
Simple fraud or fraud in
inducement
Want of delivery of complete
instrument - Sec. 16
Innocent alteration or Spoliation
Set-off between immediate
parties – Sec. 58
Acquisition of instrument (not
signature) by duress, or force and
fear.
Acquisition of instrument by
unlawful means.
Acquisition of instrument for an
illegal consideration.
Negotiation in breach of faith.
Negotiation under circumstances
that amount to fraud.