G.R. No. L-22405 – 148-A Phil. 521 – 39 SCRA 587 – Mercantile Law – Negotiable Instruments Law – Postal Money Orders Are Not Negotiable Instruments
In April 1958, a certain Enrique Montinola was purchasing ten money orders from the Manila Post Office. Each money order was worth P200.00. Montinola offered to pay the money orders via a private check but the cashier told him he cannot pay via a private check. But still somehow, Montinola was able to leave the post office with the money orders without him paying for them.
Days later, the missing money orders were discovered. Meanwhile, the Philippine Education Co., Inc. (PECI) presented one of the missing postal money orders before the Bank of America. The money order was initially credited and so P200.00 was deposited in PECI’s account with the bank. But then later the post office, through Mauricio Soriano (Chief of the Money Order Division of the Post Office), advised the bank that the money order was irregularly issued hence the P200.00 was debited back from PECI’s account.
PECI is now invoking that the money order was duly negotiated to them and thus they are entitled to the amount it represents.
ISSUE: Whether or not postal money orders are negotiable instruments.
HELD: No. Postal money orders are not negotiable instruments. The rationale behind this rule is the fact that in establishing and operating a postal money order system, the government is not engaging in commercial transactions but merely exercises a governmental power for the public benefit. In fact, postal money orders are subject to a lot of restrictions limiting their negotiability. Particularly in this case, as far back as 1948, there was already an agreement between Bank of America and the Manila Post Office, that in case the post office would have an adverse claim against any Bank of America depositor involving postal money orders issued by the post office, all amounts cleared in relation thereto shall be refunded back to the post office’s account with the bank – this in itself is already a limitation in the negotiability and nature of the postal money orders issued by the post office because of the special conditions attached.
