Philippine Education Co Inc.

VS Soriano
GR 22405; June 30, 1971
Dizon
Facts: On April 18, 1958, Enrique Montinola sought to purchase from the Manila Post
Office 10 money orders of 200 pesos each payable to EP Montinola at Lucena, Quezon.
After the postal teller had made out money orders, Montinola offered to pay with his
private checks. This was not accepted and the teller advised him to see the Chief of the
Money Order Division. Instead, Montinola managed to leave the building with his own
check and 10 money orders without the knowledge of the teller. On the same day, upon
discovery of the unpaid money orders, an urgent message was sent to all postmasters
instructing them not to pay anyone with the money order series. The Bank of America
received a copy of the notice three days later. 5 days later, 1124688 was received by
the appellant as its sales receipt. The following day it was deposited with the Bank of
America and one day after cleared it with the Bureau of Posts and received from the
latter its face value of 200 pesos. On September 27, 1961, Mauricio Sorino, Chied of
the Money Order Division of the Manila Post Oddice acting on behalf of Postmaster
Enrico Palomar notified the Bank of America that money order 124688 attached had
been found to be irregularly issued and that it would be deducted from the banks
clearing account. The Bank of America, as a result, debited appellants account with the
same amount and gave it advice by means of debit memo. Montinola, was later charged
with theft but was acquitted. Appellant raised the main issue that postal money order in
question is a negotiable instrument that its nature as such is not in any way affected by
the letter signed by the Director of Posts and addressed to all banks with a clearing
account with the Post Office and the money orders once issued, create a contractual
relationshio of debtor and creditor between the government and the remitters payees or
endorses
Issue: WON the postal money order in question is a negotiable instrument
Held: No. It is not disputed that the postal statutes is the Philippines were patterned
after statutes in force in the US. For this reason they are generally construed in
accordance with US postal statutes. As held by US authority, postal money orders are
not negotiable instrimments. The court holds 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 benefit of the public. The courts, as well,
holds that some of the restrictions imposed upon money orders by postal laws and
regulations are inconsistent with the character of negotiable instruments. For instance, it
usually provides for not more than one endorsement. An example of such is the

condition laid by the Director of Posts to the Bank of America for the redemption of
postal money orders received by it from its depositors.
Notes:
-Among others, the condition is imposed that "in cases of adverse claim, the money order or money orders involved

will be returned to you (the bank) and the, corresponding amount will have to be refunded to the Postmaster, Manila,
who reserves the right to deduct the value thereof from any amount due you if such step is deemed necessary." The
conditions thus imposed in order to enable the bank to continue enjoying the facilities theretofore enjoyed by its
depositors, were accepted by the Bank of America. The latter is therefore bound by them. That it is so is clearly
referred from the fact that, upon receiving advice that the amount represented by the money order in question had
been deducted from its clearing account with the Manila Post Office, it did not file any protest against such action.
-Moreover, not being a party to the understanding existing between the postal officers, on the one hand, and the Bank
of America, on the other, appellant has no right to assail the terms and conditions thereof on the ground that the letter
setting forth the terms and conditions aforesaid is void because it was not issued by a Department Head in
accordance with Sec. 79 (B) of the Revised Administrative Code. In reality, however, said legal provision does not
apply to the letter in question because it does not provide for a department regulation but merely sets down certain
conditions upon the privilege granted to the Bank of Amrica to accept and pay postal money orders presented for
payment at the Manila Post Office. Such being the case, it is clear that the Director of Posts had ample authority to
issue it pursuant to Sec. 1190 of the Revised Administrative Code.

Metrobank VS Court of Appeals

194 SCRA 168; February 18, 1991
Cruz
Facts: In Jnuary 1979, Eduardo Gomez opened an account with Golden Savings and Loan
Association and deposited over a period of two months 38 treasury warrants with a total value of
P 1, 755, 228.37. They were all drawn by the Philippine Fish Marketing Authority and
purportedly signed by its General Manager and countersigned by its Auditor. 6 of these were
directly payable to Gomez whole the others appeared to have been indorsed by their repective
payees followed by Gomez as second endorser. All these warranse were indorsed by Gloria
Castillo as Cashier of Golden Savings and deposited it to Metrobank branch in Calapan,
Mindoro. They were then sent for clearing by the branch office to the principal office of
Metrobank which forwarded them to the Bureau of Treasury for special clearing. After repeated
inquiries, petitioner final decided to allow Golden Savings to withdraw from the proceeds of the
warrants. Later, Metrobank informed Golden Savings that 32 of the warrants had been
dishonored by the Bureau of Treasury and demanded the refund by Golden Savings of the
amount withdrawn to make up the deficit in its account. The demand was rejected. Metrobank
sued the loan company in the RTC of Mindoro. Judgment was rendered in favor of Golden
Savings. The CA affirmed this decision thus this appeal which claims that the treasury warrants
involved in this case are negotiable instruments.
Issue: WON the instrument is negotiable.
Held: No. The treasury warrants are not negotiable instruments. Clearly stamped on their face is
the word: non negotiable. Moreover, and this is equal significance, it is indicated that they are
payable from a particular fund, to wit, Fund 501. An instrument to be negotiable instrument must

contain an unconditional promise or orders to pay a sum certain in money. As provided by Sec 3
of NIL an unqualified order or promise to pay is unconditional though coupled with: 1 st, an
indication of a particular fund out of which reimbursement is to be made or a particular account
to be debited with the amount; or 2 nd, a statement of the transaction which give rise to the
instrument. But an order to promise to pay out of particular fund is not unconditional. The
indication of Fund 501 as the source of the payment to be made on the treasury warrants
makes the order or promise to pay not conditional and the warrants themselves nonnegotiable. There should be no question that the exception on Section 3 of NIL is applicable in
the case at bar.
Firestone Tire and Rubber Co. VS CA
353 SCRA 601; March 5, 2001
Quisumbing
Facts: In January 1978, Firestone Tire and Rubber Corp. and Jojas Arca Enterprises Company
entered into a Franchised Dealership Agreement whereby Fojas Arca has the privilege to
purchase on credit and sell plaintiffs products. On January 14, 1978up to May 15, 1978, Fojas
Arca purchased on credit Firestone products from plaintiff. In payment, Fojas Arca delivered 6
special withdrawal slips drawn upon Firestone. In turn, these were deposited by the plaintiff with
its current account with the Citibank. All of them were honored and paid. This made plaintiff
believe that the succeeding special withdrawal slips were sufficiently funded. However, on
December 14, 1978, plaintiff was informed by Citibank that two specia; withdrawal slips were
dishonored and not paid for the reason no arrangement. As a consequence, plaintid account
was debited representing the aggregate amount of the above special withdral slips. Plaintiff
asserted that the transactions mentioned that the transactions were only between firestone and
Fojas arcas which the defendant is not involved. It claims that when the special withdrawal slips
were received it only verified whther or not the signatures were honore and treated as if were
checks, the truth being that when the pecial withdrawal slips were received by defendant it only
verified the signatures and wherher the deposit level in the passbook concurred with th savings
ledger, whether or not the deposit is sufficient to cover the withdrawal slips.
Issue: WON the instrument is negotiable
Held: No. The essence of negotiability which characterizes a negotiable paper as a credit
instrument lies in its freedom to circulate freely as a substitute for money. Withdrawal slips in
question lack this character. Petitioner themselves admit that withdrawal slips are non
negotiable. Hence the rules governing notice of dishonor of negotiable instruments do not apply
in this case. Respondent bank was, thus, in no obligation to give immediate notice that it would
make payment on the subject withdrawal slips.
Ang Tek Lian VS CA
282 SCRA 383; September 25, 1950
Bengzon

Facts: Knowing he had no funds, Ang Tek Lian drew a check upon China Banking Corporation
for 4,000 peses payable to the order of cash. He delivered it to Lee Hua Hong in exchange for
money which the latter handed in act. The nexg business day, the chech was presented by Lee
Hua Hong to the drawee bank for payment. But, it was dishonored for insufficiency of funds. The
balance of the deposit of Ang Tek Lian on both dates being 335 pesos only.
Issue: WON the instrument is payable to bearer
Held: Yes. Under the Negotiable Instruments Law, a check drawn payable to the order of cash
is a check payable to bearer and the bank may pay it to the person presenting it for payment
without the drawers indorsement. If the bank is not sure of the bearers identity or financial
solvency it has the right to demand identification or assurance against possible complications.
Notes:
-they used to borrow money from each other, even before the war, and appellant owns a hotel and
restaurant known as the North Bay Hotel, said complainant delivered to him, on the same date, the
sum of P4,000 in cash; that despite repeated efforts to notify him that the check had been
dishonored by the bank, appellant could not be located any-where, until he was summoned in the
City Fiscal's Office in view of the complaint for estafa filed in connection therewith; and that appellant
has not paid as yet the amount of the check, or any part thereof."