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Case Doctrine
Postal money orders are not negotiable instruments. 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.
The negotiability or non-negotiability of an instrument is determined
from the writing, that is, from the face of the instrument itself. The
documents provided that the amounts deposited shall be repayable to
the depositor. The amounts are repayable to the bearer of the
documents.
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, in
accordance with Section 3 of the Negotiable Instruments Law.
An instrument though marked non-negotiable, may nevertheless be
assigned or transferred, absent an express prohibition against
assignment or transfer written on the face of the instrument. The words
not negotiable stamped on the face of the bill of lading did not destroy
its assignability, but the sole effect was to exempt the bill from the
statutory provisions relative thereto. A bill, though not negotiable, may
be transferred by assignment; the assignee taking subject to the
equities between the original parties.
As the withdrawal slips in question were non-negotiable, the rules
governing the giving of immediate notice of dishonor of negotiable
instruments do not apply. The respondent bank was under no obligation
to give immediate notice that it would not make payment on the subject
withdrawal slips. Citibank should have known that withdrawal slips
were not negotiable instruments. It could not expect these slips to be
treated as checks by other entities. Payment or notice of dishonor from
respondent bank could not be expected immediately, in contrast to the
situation involving checks. Citibank was not bound to accept the
Development Bank of Rizal, vs. Sima Wei and/or Lee Kian Huat,
Mary Cheng Uy, Samson Tung, Asian Industrial Plastic
Corporation and Producers Bank of the Philippines
was found out that the signature of the payee of the check was
forged by the one who previously encashed them.
b. It is the obligation of the collecting bank to reimburse the
drawee-bank for the value of the checks subsequently found to
contain the forged indorsement of the payee, since the bank with
which the check was deposited has no right to pay the sum
stated therein to the forger, or anyone else upon a forged
signature.
c. A depositor of a check as indorser warrants that it is genuine and
in all respects what it purports to be.
d. One who accepts and encashes a check from an individual
knowing that the payee is a corporation does so out of his own
peril.
a. Where a depositor is using its own personalized checks, its failure
to provide adequate security measures to prevent forgeries of its
checks constitutes gross negligence and bars it from setting up
the defense of forgery.
b. Failure of depositor to make prompt reconciliation of the monthly
bank statements furnished by the bank constitutes negligence for
which the bank cannot be blamed in case depositors checks are
forged.
It is only the negotiation predicated on the forged indorsement that
should be declared inoperative.
a. By stamping its guarantee at the back of the checks, petitioner is
now estopped from claiming that the checks under consideration
are not negotiable instruments. Petitioner can not now deny
liability because it has assumed the liabilities of an indorser by
stamping its guarantees at the back of the checks.
b. The collecting bank or last indorser generally suffers the loss
because it has the duty to ascertain the genuineness of all prior
indorsements.