Metrobank vs CA

Metropolitan Bank & Trust Company vs. Court of Appeals 

G.R. No. 88866 February 18, 1991 

-negotiability

 

FACTS:

Eduardo Gomez opened an account with Golden Savings and Loan Association and deposited over a period of two months 38 treasury warrants with a total value of P1,755,228.37.  All  these warrants were subsequently indorsed by Gloria Castillo as Cashier of Golden Savings and deposited to its savings account in the Metrobank branch in Calapan, Mindoro. They were then sent for clearing by the branch office to the principal office of Metrobank, which forwarded them to the Bureau of Treasury for special clearing.  Before they were cleared,  petitioner decided to allow Golden Savings to withdraw from the proceeds of the warrants.  Golden Savings in turn subsequently allowed Gomez to make withdrawals from his own account.  Subsequently, Metrobank informed Golden Savings that 32 of the warrants had been dishonored by the Bureau of Treasury and demanded the refund by Golden Savings of the amount it had previously withdrawn, to make up the deficit in its account.  Metrobank contends that by indorsing the warrants in general, Golden Savings assumed that they were "genuine and in all respects what they purport to be," in accordance with Section 66 of the Negotiable Instruments Law.

ISSUE:

Whether petitioner can hold Golden Savings liable as an indorser of the treasury warrants based on the predication that the treasury warrants involved in this case are negotiable instruments.

RULING:

Clearly stamped on the face of the treasury warrants is the word "non-negotiable."  It is also indicated that they are payable from a particular fund, to wit, Fund 501.  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.  Petitioner cannot hold Golden Savings liable as an indorser under Section 66 of the NIL for the simple reason that this law is not applicable to the non-negotiable treasury warrants.