FACTS:

Montinola  purchased  money  orders  from  the  postal  office.    He  issued  a personal check to pay for the money orders and since it is irregular to have checks as payments, he was advised to see the Chief of the Money Order Division.  He didn’t do so but left the office with the money orders and the check.  A notice was thereafter issued to all post offices as well as the Bank of America, about the irregularly issued money orders and the order not to accept such orders.
 
Plaintiff  was  one  of  those  who  received  the  subject  money  orders  and encashed it with the Bank of America.  At first, it was given the money but later  on,  his  account  was  debited  in  pursuance  of  the  letter  given by  the Chief.
 

HELD:

Postal  money  orders  are  not  negotiable  instruments.    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 restrictions imposed money orders by
postal   laws   and   regulations   are   inconsistent   with   the   character   of negotiable instruments.