FACTS:

Enrique Montinola sought to purchase from the Manila Post Office ten (10) money orders of P200.00. He offered them with private
checks that were not generally accepted in payment of money order. Apparently, he managed to leave with the money orders. After
the discovery of the disappearance of the unpaid money orders, a message was sent to all postmasters instructing them not to pay
anyone that holds the orders.

The Bank of America, then, received of the money orders from petitioner. Defendant then notified the bank that the money order
has been irregularly issued that the amount was deducted from petitioner's account. After asking the Postmaster General to
reconsider the deduction, which he denied, plaintiff filed an action against defendant.

The lower court decided that the notice be revoked that the plaintiff shall be indemnified.

ISSUE: Whether the money order was negotiable.

RULING:

The SC affirmed the lower court's decision. Postal money orders are not negotiable instruments. 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.

PECO vs. Soriano

Philippine Education Co. vs. Soriano

L-22405          June 30, 1971

Dizon, J.:

Facts:
            Enrique Montinola sought to purchase from Manila Post Office ten money orders of 200php each payable to E. P. Montinola.
Montinola offered to pay with the money orders with a private check. Private check 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 without the knowledge of the teller. Upon the disappearance of the unpaid money order, a message was sent to
instruct all banks that it must not pay for the money order stolen upon presentment. The Bank of America received a copy of said
notice. However, The Bank of America received the money order and deposited it to the appellant’s account upon clearance.
Mauricio Soriano, Chief of the Money Order Division notified the Bank of America that the money order deposited had been found
to have been irregularly issued and that, the amount it represented had been deducted from the bank’s clearing account. The Bank
of America debited appellant’s account with the same account and give notice by mean of debit memo.

Issue:
            Whether or not the postal money order in question is a negotiable instrument
           

Held:
No. It is not disputed that the Philippine postal statutes were patterned after similar statutes in force in United States. The
Weight of authority in the United States is that postal money orders are not negotiable instruments, the reason being that in
establishing and operating a postal money order system, the government is not engaged 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 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.

Philippine Education Co. Inc. v. Soriano [G.R. No. L-22405. June 30, 1971]

24MAR

FACTS
Enrique Montinola sought to purchase from the Manila Post Office ten (10) money orders each payable to E.P. Montinola. After the
postal teller had made out money orders, Montinola offered to pay for them with a 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 building with his own check and the ten(10) money orders without the knowledge of the teller. 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 aforesaid if presented for payment. The
Bank of America received a copy of said notice three days later. It debited appellant’s account with the same amount and gave it
advice thereof by means of a debit memo.
ISSUE
Whether or not postal money orders are negotiable instruments.

RULING
NO. Postal money orders are not negotiable instruments. Our postal statutes were patterned after statutes in force in the United
States. For this reason, ours 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 States is that postal money orders are not negotiable instruments, 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.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.

TIBAJIA v. CA G.R. No. 100290 June 4, 1993 Legal Tender, Cashier’s Check
JANUARY 27, 2019

FACTS:

A suit for collection of a sum of money filed by Eden Tan against petitioners, Tibajia spouses. A writ of attachment was issued, and
the Deputy Sheriff filed a return stating that a deposit made by the Tibajia spouses in the RTC of Kalookan City in the amount of
P442,750.00 in another case, had been garnished by him.

A decision was rendered in favor of the plaintiff, ordering the Tibajia spouses to pay her an amount in excess of P300,000.00.

Eden Tan thereafter filed the corresponding motion for execution and the garnished funds were levied upon.

The Tibajia spouses delivered the total money judgment in the following form:

Cashier’s Check P262,750.00

Cash 135,733.70

—-

Total P398,483.70

Eden Tan, refused to accept the payment made by the Tibajia spouses and instead insisted that the garnished funds deposited with
the cashier of the RTC Pasig be withdrawn to satisfy the judgment obligation.

Petitioners filed a motion to lift the writ of execution on the ground that the judgment debt had already been paid.

The motion was denied on the ground that payment in cashier’s check is not payment in legal tender and that payment was made by
a third party other than the defendant.

The appellate court dismissed the petition of the spouses, holding that payment by cashier’s check is not payment in legal tender as
required by Republic Act No. 529.

ISSUE:

Whether or not  a CASHIER’S CHECK is considered payment “LEGAL TENDER”.

 

RULING:

The provisions of law applicable to the case at bar are the following:chanrobles virtual law library

Article 1249 of the Civil Code which provides:

Art. 1249. The payment of debts in money shall be made in the currency stipulated, and if it is not possible to deliver such currency,
then in the currency which is legal tender in the Philippines.

The delivery of promissory notes payable to order, or bills of exchange or other mercantile documents shall produce the effect of
payment only when they have been cashed, or when through the fault of the creditor they have been impaired.

In the meantime, the action derived from the original obligation shall be held in abeyance.;

Section 1 of Republic Act No. 529, as amended, which provides:

Sec. 1. Every provision contained in, or made with respect to, any obligation which purports to give the obligee the right to require
payment in gold or in any particular kind of coin or currency other than Philippine currency or in an amount of money of the
Philippines measured thereby, shall be as it is hereby declared against public policy null and void, and of no effect, and no such
provision shall be contained in, or made with respect to, any obligation thereafter incurred. Every obligation heretofore and hereafter
incurred, whether or not any such provision as to payment is contained therein or made with respect thereto, shall be discharged
upon payment in any coin or currency which at the time of payment is legal tender for public and private debts.

Section 63 of Republic Act No. 265, as amended (Central Bank Act) which provides:

Sec. 63. Legal character – Checks representing deposit money do not have legal tender power and their acceptance in the payment of
debts, both public and private, is at the option of the creditor: Provided, however, that a check which has been cleared and credited
to the account of the creditor shall be equivalent to a delivery to the creditor of cash in an amount equal to the amount credited to
his account.

From the aforequoted provisions of law, it is clear that this petition must fail.

In two recent cases this Court held that –

A check, whether a manager’s check or ordinary check, is not legal tender, and an offer of a check in payment of a debt is not a valid
tender of payment and may be refused receipt by the obligee or creditor.

The ruling in these two cases merely applies the statutory provisions which lay down the rule that a check is not legal tender and
that a creditor may validly refuse payment by check, whether it be a manager’s, cashier’s or personal check.