Myline Cordial

Philippine Education Company inc.,  vs. Soriano
G.R.. No. L-22405 , June 30 1971

FACTS:
Enrique Montinola irregularly got hold of 10 money orders from Manila Post Office. Upon discovery of the disappearance of unpaid money orders, instructions to postmasters and banks were sent to not honor said my orders. Philippine Education Co. Inc. received one money order as part of its sales receipt and deposited same with Bank of America which was subsequently cleared with the Bureau of Posts. More than a year later, the appellee Chief of the Money Order Division of the Manila Post Office informed the bank about the irregularity and deducted the amount. Appellant requested the Postmaster General to reconsider but his request was denied. Montinola was charged with theft but was acquitted. Appellant filed an action for indemnification in the Municipal Court of Manila which rendered a decision favorable to appellant.

ISSUE:
Is postal money order a negotiable instrument?

RULING:
No, postal money orders are not negotiable instruments because in establishing and operating a postal money order system, the government is not engage in commercial transactions but merely exercises a governmental power for the public benefit. Moreover some of the restrictions imposed upon money orders by postal laws and regulations are inconsistent with the character of negotiable instrument. For instance, such laws and regulations usually provide for not more than one endorsement; payment of money orders may be withheld under a variety of circumstances