Haystack: Philippine Education vs. Soriano (GR L-22405, 30 June 1971)

Philippine Education vs. Soriano
[G.R. No. L-22405. June 30, 1971.]
En Banc, Dizon (J): 8 concurring, 2 took no part

Facts: On 18 April 1958, Enrique Montinola sought to purchase from the Manila Post Office 10 money orders of P200.00 each payable to E. P. Montinola with address at Lucena, Quezon. After the postal teller had made out money orders numbered 124685, 124687-124695, Montinola offered to pay for them with a private check. As private checks were not generally accepted in payment of money orders, the teller advised him to see the Chief of the Money Order Division, but instead of doing so, Montinola managed to leave the building with his own check and the 10 money orders without the knowledge of the teller. On the same date, upon discovery of the disappearance of the unpaid money orders, an urgent message was sent to all postmasters, and the following day notice was likewise served upon all banks instructing them not to pay anyone of the money orders if presented for payment. The Bank of America received a copy of said notice 3 days later.

On 23 April 1958, money order 124688 was received by the Philippine Education Co. (the company) as part of its sales receipts. The following day it deposited the same with the Bank of America, and one day thereafter the latter cleared it with the Bureau of Posts and received from the latter its face value of P200. On 27 September 1961, Mauricio A. Soriano, Chief of the Money Order Division of the Manila Post Office, acting for and in behalf of his co-appellee, Post-master Enrico Palomar, notified the Bank of America that the money order attached to his letter had been found to have been irregularly issued and that, in view thereof, the amount it represented had been deducted from the bank's clearing account. For its part, on 2 August 2 1958, the Bank of America debited the company's account with the same amount and gave it advice thereof by means of a debit memo.

On 12 October 1961 the company requested the Postmaster General to reconsider the action taken by his office deducting the sum of P200 from the clearing account of the Bank of America, but his request was denied. So was its subsequent request that the matter be referred to the Secretary of Justice for advice. Thereafter, the company elevated the matter to the Secretary of Public Works and Communications, but the latter sustained the actions taken by the postal officers.

In connection with the events set forth above, Montinola was charged with theft in the CFI Manila (Criminal Case 43866) but after trial he was acquitted on the ground of reasonable doubt.

On 8 January 1962, the company filed an action against Soriano et.al. in the Municipal Court of Manila. On 17 November 1962, after the parties had submitted the stipulation of facts, the lower court rendered judgment, ordering Mauricop A. Soriano, Enrico Palomar and Rafael Contreras to countermand the notice given to the Bank of America on 27 September 1961, deducting from said Bank's clearing account the sum of P200 representing the amount of postal money order 124688, or in the alternative, to indemnify the company in the said sum of P200 with interest thereon at the rate of 8-1/2% per annum from 27 September 1961 until fully paid; without any pronouncement as to costs and attorney's fees.

The case was appealed to the CFI Manila where, after the parties had resubmitted the same stipulation of facts, rendered a decision dismissing the complaints with costs. Hence the appeal.

The Supreme Court affirmed the appealed decision being in accordance with law, with costs.

1. Philippine postal statutes patterned to those of the United States; Postal money orders are not negotiable instruments
Philippine postal statutes were patterned after similar statutes in force in the United States. For this reason, such statutes are generally construed in accordance with the construction given in the United States to their own postal statutes, in the absence of any special reason justifying a departure from this policy or practice. The weight of authority in the United Status is that postal money orders are not negotiable instruments (Bolognesi vs. U. S., 189 Fed. 395; U. S. vs. Stock Drawers National Bank, 30 Fed. 912), the reason behind this rule being 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 public benefit.

2. Restrictions imposed upon money orders inconsistent with character of negotiable instruments
It is to be noted in this connection that some of the restrictions imposed upon money orders by postal laws and regulations are inconsistent with the character of negotiable instruments. 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 (49 C. J. 1153).

3. Conditions laid down in the 26 October 1948 letter of the Director of Posts to the Bank of America
Of particular application to the postal money order are the conditions laid down in the letter of the Director of Posts of 26 October 1948 to the Bank of America for the redemption of postal money orders received by it from its depositors. 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.

4. Letter not within ambit of Section 79, but sanctioned under Section 1190 of the Revised Administrative Code
The company, not being a party to the understanding existing between the postal officers and the Bank of America, has no right to assail the terms and conditions thereof on the ground that the letter setting forth the terms and conditions is void because it was not issued by a Department Head in accordance with Sec. 79(B) of the Revised Administrative Code. 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 America to accept and pay postal money orders presented by its depositors, instead of the same being 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.

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