Case Summary (G.R. No. L-22405)
Petitioner
Philippine Education Co., Inc.
Respondents
Mauricio A. Soriano (Chief, Money Order Division), Enrico Palomar (Postmaster), Rafael Contreras
Key Dates
- April 18–19, 1958: Issue and unauthorized removal of ten P200 money orders
- April 23–25, 1958: Deposit and collection by Bank of America of No. 124688
- September 27, 1961: Postal notice debiting the bank’s clearing account for P200
- January 8, 1962: Civil complaint filed by petitioner
- November 17, 1962: Municipal Court judgment restoring P200
- June 30, 1971: Supreme Court decision
Applicable Law
- 1935 Philippine Constitution
- Postal statutes modeled on U.S. law
- Revised Administrative Code, Sec. 79(B)
- Revised Penal Administrative Code, Sec. 1190
- Director of Posts’ October 26, 1948 letter (Exhibit 3)
Facts of the Case
Enrique Montinola obtained ten P200 postal money orders at the Manila Post Office and left with them without payment. Postal authorities issued an urgent alert on April 18, 1958, warning banks against honoring these orders. Despite the warning, money order No. 124688 was deposited by petitioner’s bank on April 23 and paid on April 25. In September 1961, the Post Office identified No. 124688 as irregular and notified the Bank of America, which had its clearing account debited P200 and passed the charge to petitioner. Administrative appeals to the Postmaster General, Secretary of Justice, and Secretary of Public Works and Communications were denied. Montinola was acquitted criminally. Petitioner then sued for recovery or indemnity of P200, interest, damages, and fees.
Legal Issue
Whether a postal money order is a negotiable instrument and whether the Director of Posts’ October 26, 1948 conditions—accepted by the Bank of America—authorize deduction of the P200 value from the bank’s clearing account without exposing postal officers to liability.
Court’s Analysis
Postal Money Orders Are Non-Negotiable
– U.S. and Philippine postal statutes classify money orders as governmental instruments, not commercial negotiable instruments.
– Restrictions on endorsements and conditional suspensions of payment are inconsistent with negotiability.
– Precedents (Bolognesi v. U.S., 189 Fed. 395; U.S. v. Stock Drawers Nat’l Bank, 30 Fed. 912) uphold this view.Validity and Binding Effect of Director of Posts’ Letter
– Exhibit 3 prescribed conditions under which banks could redeem postal money orders for depositors.
– One condition grants postal authorities the right to return money orders and deduct their value from clearing accounts upon adverse claim.
– The Bank of America, by availing itself of these privileges and not protesting the deduction, is bound by those conditions.Appellant’s Lack of Standing to Challenge the Letter
– Revised Administrative Code Sec. 79(B) governs departmental regulations,
Case Syllabus (G.R. No. L-22405)
Facts
- On April 18, 1958, Enrique Montinola sought to purchase ten postal money orders of ₱200.00 each at the Manila Post Office, payable to “E. P. Montinola.”
- Montinola attempted to pay with a private check; the teller, noting private checks were not accepted, advised him to see the Chief of the Money Order Division.
- Instead of complying, Montinola left with both the check and ten unpaid money orders (Nos. 124685, 124687–124695) without the teller’s knowledge.
- Upon discovering the disappearance that same day, the Post Office issued an urgent alert to all postmasters; the following day banks were instructed not to pay any of the missing money orders.
- The Bank of America received a copy of the notice three days later.
- On April 23, 1958, Philippine Education Co., Inc. (“appellant”) received money order No. 124688 as part of its sales receipts.
- On April 24, 1958, the appellant deposited the money order with the Bank of America, which on April 25 cleared it with the Bureau of Posts and collected ₱200.00.
- On September 27, 1961, Mauricio A. Soriano, Chief of the Money Order Division, Manila Post Office, notified the Bank of America that money order No. 124688 had been irregularly issued and that ₱200.00 was deducted from the bank’s clearing account.
- On August 2, 1961, the Bank of America debited the appellant’s account for ₱200.00 and issued a debit memo.
- On October 12, 1961, appellant requested the Postmaster General to reconsider the deduction; the request was denied, as were subsequent appeals to the Secretary of Justice and the Secretary of Public Works and Communications.
- Montinola was criminally charged with theft (C.R. No. 43866) but was acquitted for reasonable doubt.
- On January 8, 1962, appellant filed suit in the Municipal Court of Manila seeking:
• Countermand of the Bank’s debit or, alternatively, indemnity of ₱200.00 with 8½% interest from September 2