G.R. No. L-22405 June 30, 1971 DIZON, J.

PHILIPPINE EDUCATION CO., INC., plaintiff-appellant, An appeal from a decision of the Court of First Instance of Manila
vs. dismissing the complaint filed by the Philippine Education Co.,
MAURICIO A. SORIANO, ET AL., defendant-appellees. Inc. against Mauricio A. Soriano, Enrico Palomar and Rafael
Contreras.
Marcial Esposo for plaintiff-appellant.
On April 18, 1958 Enrique Montinola sought to purchase from the
Office of the Solicitor General Arturo A. Alafriz, Assistant Solicitor Manila Post Office ten (10) money orders of P200.00 each
General Antonio G. Ibarra and Attorney Concepcion Torrijos- payable to E.P. Montinola withaddress at Lucena, Quezon. After
Agapinan for defendants-appellees. the postal teller had made out money ordersnumbered 124685,
124687-124695, Montinola offered to pay for them with a private
Statutes; Interpretation of statutes; Philippine Postal statutes checks were not generally accepted in payment of money orders,
being patterned after United, States postal statutes are generally the teller advised him to see the Chief of the Money Order
construed according to the latter.—It is not disputed that our Division, but instead of doing so, Montinola managed to leave
postal statutes were patterned after similar statutes in force in building with his own check and the ten(10) money orders
the United States. For this reason, ours are generally construed without the knowledge of the teller.
in accordance with the construction given in the United States to
their own postal statutes, in the absence of any special reason On the same date, April 18, 1958, upon discovery of the
justifying a departure from this policy or practice. disappearance of the unpaid money orders, an urgent message
was sent to all postmasters, and the following day notice was
Negotiable instruments laws; Postal money order is not a likewise served upon all banks, instructing them not to pay
negotiable instrument.—The weight of authority in the United anyone of the money orders aforesaid if presented for payment.
States is that postal money orders are not negotiable The Bank of America received a copy of said notice three days
instruments, the reason being that in establishing and operating later.
a postal money order system, the government is not engaged in
commercial transactions but merely exercises a governmental On April 23, 1958 one of the above-mentioned money orders
power for the public benefit. Moreover, some of the restrictions numbered 124688 was received by appellant as part of its sales
imposed upon money orders by postal laws and regulations are receipts. The following day it deposited the same with the Bank
inconsistent with the character of negotiable instruments. For of America, and one day thereafter the latter cleared it with the
instance, such laws and regulations usually provide for not more Bureau of Posts and received from the latter its face value of
than one endorsement; payment of money orders may be P200.00.
withheld under a variety of circumstances (49 C.J., 1153).
Philippine Education Co., Inc. vs. Soriano, 39 SCRA 587, No. L- On September 27, 1961, appellee Mauricio A. Soriano, Chief of
22405 June 30, 1971 the Money Order Division of the Manila Post Office, acting for and
in behalf of his co-appellee, Postmaster Enrico Palomar, notified

Page 1 of 4
the Bank of America that money order No. 124688 attached to rate of interest being paid by plaintiff on its
his letter had been found to have been irregularly issued and overdraft account;
that, in view thereof, the amount it represented had been
deducted from the bank's clearing account. For its part, on (b) To pay to the plaintiff out of their own personal
August 2 of the same year, the Bank of America debited funds, jointly and severally, actual and moral
appellant's account with the same amount and gave it advice damages in the amount of P1,000.00 or in such
thereof by means of a debit memo. amount as will be proved and/or determined by
this Honorable Court: exemplary damages in the
On October 12, 1961 appellant requested the Postmaster amount of P1,000.00, attorney's fees of
General to reconsider the action taken by his office deducting the P1,000.00, and the costs of action.
sum of P200.00 from the clearing account of the Bank of
America, but his request was denied. So was appellant's Plaintiff also prays for such other and further relief
subsequent request that the matter be referred to the Secretary as may be deemed just and equitable.
of Justice for advice. Thereafter, appellant elevated the matter to
the Secretary of Public Works and Communications, but the On November 17, 1962, after the parties had submitted the
latter sustained the actions taken by the postal officers. stipulation of facts reproduced at pages 12 to 15 of the Record
on Appeal, the above-named court rendered judgment as
In connection with the events set forth above, Montinola was follows:
charged with theft in the Court of First Instance of Manila
(Criminal Case No. 43866) but after trial he was acquitted on the WHEREFORE, judgment is hereby rendered,
ground of reasonable doubt. ordering the defendants to countermand the notice
given to the Bank of America on September 27,
On January 8, 1962 appellant filed an action against appellees in 1961, deducting from said Bank's clearing account
the Municipal Court of Manila praying for judgment as follows: the sum of P200.00 representing the amount of
postal money order No. 124688, or in the
WHEREFORE, plaintiff prays that after hearing alternative, to indemnify the plaintiff in the said
defendants be ordered: sum of P200.00 with interest thereon at the rate of
8-½% per annum from September 27, 1961 until
(a) To countermand the notice given to the Bank fully paid; without any pronouncement as to cost
of America on September 27, 1961, deducting and attorney's fees.
from the said Bank's clearing account the sum of
P200.00 represented by postal money order No. The case was appealed to the Court of First Instance of Manila
124688, or in the alternative indemnify the where, after the parties had resubmitted the same stipulation of
plaintiff in the same amount with interest at 8-½% facts, the appealed decision dismissing the complaint, with costs,
per annum from September 27, 1961, which is the was rendered.

Page 2 of 4
The first, second and fifth assignments of error discussed in depositors. Among others, the condition is imposed that "in
appellant's brief are related to the other and will therefore be cases of adverse claim, the money order or money orders
discussed jointly. They raise this main issue: that the postal involved will be returned to you (the bank) and the,
money order in question is a negotiable instrument; that its corresponding amount will have to be refunded to the
nature as such is not in anyway affected by the letter dated Postmaster, Manila, who reserves the right to deduct the value
October 26, 1948 signed by the Director of Posts and addressed thereof from any amount due you if such step is deemed
to all banks with a clearing account with the Post Office, and that necessary." The conditions thus imposed in order to enable the
money orders, once issued, create a contractual relationship of bank to continue enjoying the facilities theretofore enjoyed by its
debtor and creditor, respectively, between the government, on depositors, were accepted by the Bank of America. The latter is
the one hand, and the remitters payees or endorses, on the therefore bound by them. That it is so is clearly referred from the
other. fact that, upon receiving advice that the amount represented by
the money order in question had been deducted from its clearing
It is not disputed that our postal statutes were patterned after account with the Manila Post Office, it did not file any protest
statutes in force in the United States. For this reason, ours are against such action.
generally construed in accordance with the construction given in
the United States to their own postal statutes, in the absence of Moreover, not being a party to the understanding existing
any special reason justifying a departure from this policy or between the postal officers, on the one hand, and the Bank of
practice. The weight of authority in the United States is that America, on the other, appellant has no right to assail the terms
postal money orders are not negotiable instruments (Bolognesi and conditions thereof on the ground that the letter setting forth
vs. U.S. 189 Fed. 395; U.S. vs. Stock Drawers National Bank, 30 the terms and conditions aforesaid is void because it was not
Fed. 912), the reason behind this rule being that, in establishing issued by a Department Head in accordance with Sec. 79 (B) of
and operating a postal money order system, the government is the Revised Administrative Code. In reality, however, said legal
not engaging in commercial transactions but merely exercises a provision does not apply to the letter in question because it does
governmental power for the public benefit. not provide for a department regulation but merely sets down
certain conditions upon the privilege granted to the Bank of
It is to be noted in this connection that some of the restrictions Amrica to accept and pay postal money orders presented for
imposed upon money orders by postal laws and regulations are payment at the Manila Post Office. Such being the case, it is
inconsistent with the character of negotiable instruments. For clear that the Director of Posts had ample authority to issue it
instance, such laws and regulations usually provide for not more pursuant to Sec. 1190 of the Revised Administrative Code.
than one endorsement; payment of money orders may be
withheld under a variety of circumstances (49 C.J. 1153). In view of the foregoing, We do not find it necessary to resolve
the issues raised in the third and fourth assignments of error.
Of particular application to the postal money order in question
are the conditions laid down in the letter of the Director of Posts WHEREFORE, the appealed decision being in accordance with
of October 26, 1948 (Exhibit 3) to the Bank of America for the law, the same is hereby affirmed with costs.
redemption of postal money orders received by it from its

Page 3 of 4
Page 4 of 4