I'm Giancarlo Enrico S. Pozon, a Wushu instructor, investor and Barrister... That's right, Barrister; I graduated from law school and took the Bar Exams, now I'm waiting for the results. I created this blog to make Philippine Law easy to understand for the average person. It's all about free legal advice. There are many law blogs. But the problem is that many of them are written for lawyers and law students. They use words that can't be understood by ordinary people.
Many lawyers, judges and law students consider themselves as superior to most human beings because of their knowledge of the law. It bothers me since the law is supposed to serve society. Since the law is meant to serve society as a whole, it is important that is must be understood by everybody.
This does not mean that we should all become lawyers. It means that although law is a highly specialized profession, the first duty of everybody in this profession is to make the law understandable to all; that's why all these articles are free legal advice.
Like I said, this blog is about law -but it's for the ordinary people, not the lawyers. It's for the ordinary folk so they will know what is good and bad for them, and that making them aware of the law will help us all improve society as a whole. This is free legal advice for everybody!
Here's another set of unique defenses in negotiable instruments.
1.) Incomplete, but delivered, instrument
The holder has the prima facie authority to fill up the instrument. This must be done strictly within the authority given and within reasonable time. A holder in due course can enforce the instrument as if it was filled up within the given authority and in reasonable time.
2.) Incomplete and undelivered instrument
This is a real defense. If completed and negotiated without authority, it's not a valid contract against a person who signed before delivery of the contract even in the hands of a holder in due course. Subsequent indorsers, however, are liable.
3.) Complete, but undelivered instrument
This is another real defense. Between the immediate parties and those similarly situated, delivery must go together with the intention to transfer the title of the instrument. Regarding a holder in due course, however, there is a conclusive presumption of a valid delivery. As against an immediate party and a remote party, valid and intentional delivery is a rebuttable presumption.
4.) Undated instrument
Filling up of the date won't make the instrument void. For a holder in due course who received the instrument after the date was filled up, the date will be considered as the true date. Incomplete instruments negotiated to a holder in due course is valid for all intents and purposes (see 1.)
5.) Absence/Failure of consideration or illegal consideration
These are personal defenses to the prejudiced party and available against a person who isn't a holder in due course. If the consideration is an illegal one, it is a real defense if the law declares the instrument void for any purpose.
6.) Minority, incapacity or lack/want of authority
A minor or incapacitated person can invoke minority or incapacity, as the case may be, as a real defense. It's personal only to the minor/incapacitate. Others can't invoke it. Transfer, however, by the minor constitutes effective negotiation.
If the issuance of the instrument constitutes an ultra vires act of a corporation, it is a real defense.
7.) Prescription
Real defense against a holder in due course. The prescriptive period is 10 years from the date the cause of action accrued. For checks, the action of the depositor against the drawee bank starts to run when he receives the notice of payment.
8.) Fraud
There are 2 kinds: fraud in inducement and fraud in execution. Fraud in inducement is a personal defense. It takes place when the maker of the instrument was induced to make the instrument and his consent to issue the instrument was vitiated by fraud. Fraud in execution, also known as fraud in factum or esse contractus, takes place when the person who signs the isntrument doesn't know that it's a negotiable instrument (ex. a blind person being asked to sign a letter he dictated, not knowing that a check was placed under his pen.
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