Myline Cordial

Metropolitan Bank & Trust Company vs. Court of Appeals
G.R. No. 88866, February 18, 1991

FACTS:
In January 1979, a certain Eduardo Gomez opened an account with Golden Savings and Loan Association and deposited over a period of two months 38 treasury warrants which were drawn by the Philippine Fish Marketing Authority. Six of these were directly payable to Gomez while the others have been endorsed by their respective payees, followed by Gomez as second endorser. All these warrants were subsequently endorsed by Gloria Castillio as cashier of Golden Savings and deposited to its savings account with Metrobank.. They were then sent for clearing by Metrobank branch office to its principal office which forwarded them to the Bureau of Treasury for special clearing. More than two weeks after the deposits, Gloria Castillo went to Metrobank branch several times to ask whether the warrants had been cleared and she was told to wait. Meanwhile, Gomez was not allowed to withdraw from his account. Metrobank, exasperated over the persistent inquiries of Gloria Castillo about the clearance and also wanting to accommodate a valued client, allowed Golden Savings to withdraw from the uncleared treasury warrants. In turn, Golden Saving subsequently allowed Gomez to make withdrawals from his own account.

ISSUE:
Whether or not treasury warrants are negotiable instruments.

RULING:
No, an instrument to be negotiable must contain an unconditional promise or order to pay a sum certain in money. An unqualified order or promise to pay is unconditional within the meaning of the Negotiable Instruments Law though coupled with (a) 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 (b) a statement of the transaction which gives rise to the instrument. But an order or promise to pay out of a 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 unconditional” and the warrants themselves non-negotiable.