Case Summary (G.R. No. 247589)
Administrative action and bank debit
On September 27, 1961, the Chief of the Money Order Division (Soriano), on behalf of the Postmaster (Palomar), notified the Bank of America that money order No. 124688 had been irregularly issued and that the corresponding amount had been deducted from the bank’s clearing account. The bank, on August 2 of the same year, debited petitioner’s account for that amount and advised petitioner by debit memo.
Procedural history and relief sought
Petitioner sought judicial relief in the Municipal Court of Manila (filed January 8, 1962), asking that the postal office be ordered to countermand the deduction from the bank’s clearing account or, alternatively, indemnify petitioner for P200 plus interest; petitioner also sought damages, exemplary damages, attorney’s fees, and costs. The Municipal Court entered judgment ordering the defendants to countermand the notice or indemnify petitioner for P200 plus interest (8.5% per annum from September 27, 1961). The appellees appealed to the Court of First Instance of Manila, which dismissed the complaint with costs. Petitioner appealed to the Supreme Court.
Issue presented on appeal
The primary legal issue before the Court was whether the postal money order here is a negotiable instrument and whether its negotiable character (and the consequent rights of the holder) was affected by the Director of Posts’ October 26, 1948 letter to banks establishing conditions for redemption of postal money orders presented by bank depositors.
Court’s legal analysis: nature of postal money orders and relevant authority
The Court observed that Philippine postal statutes were modeled after U.S. statutes and, absent reasons to depart from U.S. construction, are generally construed in accordance with U.S. authorities. The Court cited the weight of U.S. authority holding that postal money orders are not negotiable instruments (citing Bolognesi v. U.S. and U.S. v. Stock Drawers National Bank). The rationale is that the postal money order system is an exercise of governmental power for public benefit, not a commercial operation, and that statutory and regulatory restrictions applicable to money orders (e.g., limits on endorsements and circumstances allowing withholding of payment) are inconsistent with the characteristics of negotiable instruments.
Court’s application of the Director of Posts’ 1948 letter and bank’s acceptance of conditions
The Court examined the October 26, 1948 letter (Exhibit 3), which set conditions under which the Bank of America could accept and pay postal money orders for its depositors instead of having payees present them at the Manila Post Office. Among the conditions was that in cases of adverse claim the money order would be returned to the bank and the corresponding amount would have to be refunded to the Postmaster, who reserved the right to deduct the value from any amount due the bank if necessary. The Court treated these conditions as lawful limitations attached to the bank’s privilege to present money orders for payment through the post office clearing mechanism.
The Court concluded that the Bank of America accepted these conditions and was bound thereby. Support for this conclusion included: (a) the bank received advice that the post office had deducted the amount from the clearing account and did not protest, and (b) petitioner, not being a party to the understanding between the postal officers and the bank, had no standing to assail the terms of that arrangement on procedural grounds (for example, arguing that the letter was void for not being issued by a Department Head under Sec. 79(B) of the Revised Administrative Code).
On applicability of Section 79(B) and Section 1190
The Court held that the letter of October 26, 1948 was not a department regulation requiring issuance by a Department Head
...continue readingCase Syllabus (G.R. No. 247589)
Court and Decision
- Reported at 148-A Phil. 521; G.R. No. L-22405; decision dated June 30, 1971.
- Decision authored by Justice Dizon.
- The Supreme Court affirmed the appealed decision of the Court of First Instance of Manila, and rendered judgment "with costs."
- Justices Concepcion (C.J.), Reyes, J.B.L., Makalintal, Zaldivar, Fernando, Teehankee, Barredo, and Villamor concurred; Justices Ruiz Castro and Makasiar took no part.
Parties and Posture
- Plaintiff-Appellant: Philippine Education Co., Inc. (appellant).
- Defendants-Appellees: Mauricio A. Soriano (Chief of the Money Order Division of the Manila Post Office), Enrico Palomar (Postmaster), and Rafael Contreras (named in caption).
- The appeal contested the dismissal by the Court of First Instance of Manila of the plaintiff-appellant's complaint which had prevailed in the Municipal Court of Manila.
Relevant Dates and Case Numbers
- April 18, 1958: Enrique Montinola sought to purchase ten (10) postal money orders at the Manila Post Office.
- April 23–25, 1958: Money order No. 124688 was received by appellant (April 23), deposited with the Bank of America (April 24), and cleared with the Bureau of Posts (April 25).
- September 27, 1961: Notice by Mauricio A. Soriano to the Bank of America notifying that money order No. 124688 was irregularly issued and that the amount was deducted from the bank’s clearing account.
- August 2, 1961: Bank of America debited appellant’s account with the amount and advised by debit memo (date as stated in source).
- October 12, 1961: Appellant requested reconsideration from the Postmaster General; request denied.
- January 8, 1962: Appellant filed the civil action in the Municipal Court of Manila.
- November 17, 1962: Municipal Court rendered judgment in favor of appellant (countermand or indemnity).
- Criminal Case No. 43866: Montinola was charged with theft and later acquitted on the ground of reasonable doubt.
- Appeal to the Court of First Instance resulted in dismissal of the complaint, with costs; that dismissal was the subject of the present appeal.
Factual Background — Sequence of Events
- On April 18, 1958, Enrique Montinola attempted to purchase ten (10) money orders of P200.00 each, payable to E. P. Montinola, address Lucena, Quezon.
- The postal teller prepared money orders numbered 124685, and 124687–124695.
- Montinola offered to pay with a private check. Because private checks were not generally accepted, the teller advised him to see the Chief of the Money Order Division.
- Instead of complying with the teller’s advice, Montinola left the post office building with his private check and the ten money orders without the teller’s knowledge.
- Upon discovery of the unpaid money orders on the same date, an urgent message was sent to all postmasters; the following day a notice was served upon all banks instructing them not to pay any of the said money orders.
- The Bank of America received a copy of that banking notice three days after issuance.
- On April 23, 1958, money order No. 124688 was received by Philippine Education Co., Inc. as part of its sales receipts.
- On April 24, 1958, the appellant deposited the money order with the Bank of America; on April 25, 1958, the Bank of America cleared it with the Bureau of Posts and received P200.00.
- On September 27, 1961, Mauricio A. Soriano, acting for and on behalf of Postmaster Enrico Palomar, notified the Bank of America that money order No. 124688 had been irregularly issued and that the amount had been deducted from the bank’s clearing account.
- The Bank of America, on August 2 of the same year (as stated in the record), debited appellant’s account for the same amount and issued a debit memo advising the appellant.
- Appellant sought administrative reconsideration from the Postmaster General (Oct. 12, 1961); the request was denied. Appellant then sought referral to the Secretary of Justice for advice; this was denied. Appellant elevated the matter to the Secretary of Public Works and Communications who sustained the postal officers’ actions.
- Montinola was criminally charged for theft (CFI Criminal Case No. 43866) but acquitted after trial for reasonable doubt.
Relief Sought by Appellant in the Municipal Court Action
- Countermand the notice given to the Bank of America on September 27, 1961, that deducted P200.00 from the bank’s clearing account for money order No. 124688; or alternatively, indemnify appellant in the amount of P200.00 with interest at 8½% per annum from September 27, 1961 (rate matching appellant’s overdraft interest).
- Pay actual and moral damages in the amount of P1,000.00 (or such amount proven and/or determined by the court).
- Pay exemplary damages of P1,000.00.
- Pay attorney’s fees of P1,000.00 and costs of action.
- Such other and further relief as may be just and equitable.
Municipal Court Judgment
- On November 17, 1962, after the parties submitted a stipulation of facts, the Municipal C