There are 2 kinds of defenses in negotiable instruments: personal and real

Real Defenses

1.) Minority
2.) Forgery
3.) Non-delivery of an incomplete instrument
4.) Material alteration
5.) Ultra vires act of the corporation
6.) Fraud in factum/esse contractus
7.) illegality (if declared void for any purpose)
8.) Force/violence
9.) Lack of authority
10.) Prescription
11.) Discharge in insolvency

Personal Defenses

1.) Failure/absence of consideration

2.) Illegal consideration
3.) Non-delivery of a complete instrument
4.) Conditional delivery of a complete instrument
5.) Fraud in inducement
6.) Filling up blank not within authority
7.) Duress/intimidation
8.) Filling up blank beyond reasonable time
9.) Transfer in breach of faith
10.) Mistake
11.) Insertion of wrong date
12.) Ante-dating or post-dating for illegal/fraudulent purposes

Real/absolute defenses attach to the instrument and are available against all holders, whether in
due course or not, but only the entitled party/ies can raise them. Personal/equitable defenses are
available only against the holder standing in privity with the party entitled to the defense or those
who don't have the rights of a holder in due course.

Sec. 52. What constitutes a holder in due course. - A holder in due

course is a holder who has taken the instrument under the following conditions:

(a) That it is complete and regular upon its face;

(b) That he became the holder of it before it was overdue, and without notice that it has been
previously dishonored, if such was the fact;

(c) That he took it in good faith and for value;

(d) That at the time it was negotiated to him, he had no notice of any infirmity in the
instrument or defect in the title of the person negotiating it.

PRESUMPTION HOLDER IN DUE COURSE

• Generally, every holder is prima facie a holder in due course
• Any one, therefore, who claims otherwise must prove that the holder in question acquired
the instrument with one or more of the conditions lacking
• Any holder proved to have taken an instrument with one of the conditions
enumerated lacking is not a holder in due course