G.R. No. L-22405 - Philippine Education Co., Inc. vs. Soriano

On April 18, 1958, Enrique Montinola applied at the Manila Post Office for ten (10) postal money orders of ₱200 each, payable to “E. P. Montinola” at Lucena, Quezon.
The teller prepared money orders Nos. 124685, 124687–124695. Montinola tendered a personal check for payment, which was not customarily accepted, and instead of seeking the chief’s approval, he departed with both the check and the unpaid money orders.

Upon discovering the disappearance, postal authorities on April 18–19, 1958 sent urgent stop‐payment notices to all postmasters and, the next day, to all banks, instructing them not to honor the specified money orders. The Bank of America received the notice on April 22, 1958.
Despite the stop‐payment order, on April 23, 1958 the Philippine Education Co., Inc. (“appellant”) received Money Order No. 124688 among its receipts, deposited it with the Bank of America on April 24, and the bank cleared it with the Bureau of Posts on April 25, receiving ₱200.

On September 27, 1961, Mauricio A. Soriano, Chief of the Money Order Division, notified the Bank of America that No. 124688 was “irregularly issued” and that ₱200 had been deducted from the bank’s clearing account.
On August 2, 1961 (date appears earlier but was recorded later), the Bank of America debited appellant’s account for ₱200, issuing a debit memo.

On October 12, 1961, appellant petitioned the Postmaster General to withdraw the deduction; the request was denied.
Appellant then sought advice from the Secretary of Justice and, subsequently, from the Secretary of Public Works and Communications; both upheld the postal officers’ action.

Montinola was charged with theft (Criminal Case No. 43866) but acquitted for reasonable doubt.
On January 8, 1962, appellant filed suit in the Municipal Court of Manila against Soriano, Palomar, and Contreras, seeking either rescission of the debit or indemnity of ₱200 plus 8½% interest, moral and exemplary damages of ₱1,000, attorney’s fees of ₱1,000, and costs.
On November 17, 1962, the Municipal Court ordered defendants to rescind the notice or indemnify for ₱200 with interest, without pronouncing costs or fees.
The Court of First Instance of Manila, on remand, dismissed the complaint with costs. Appellant appealed to the Supreme Court.

Whether a postal money order constitutes a negotiable instrument under Philippine law and analogous U.S. statutes.
Whether restrictions in postal regulations, such as single endorsement and stop‐payment provisions, undermine negotiability.

Whether the October 26, 1948 letter from the Director of Posts imposing conditions on banks’ clearing privileges is binding on the Bank of America and third parties.
Whether appellant, not being party to that letter, may attack its validity on the ground it was not issued by a Department Head under Sec. 79(B) of the Revised Administrative Code.

Whether the Director had authority under Sec. 1190 of the Revised Penal Administrative Code to impose conditions on the bank’s privilege to clear money orders.