BENJAMIN ABUBAKAR, Petitioner, v. THE AUDITOR GENERAL, Respondent.

Facts:
1. On December 10, 1941, a treasury warrant was issued in favor of Placido Urbanes.

2. It was originally made payable in his capacity as disbursing officer of the Food Administration for
"additional cash advance for Food Production Campaign in La Union".

3. The treasury warrant issued in favor of a public officer or employee held in possession by
Benjamin Abubakar a private individual, the petitioner.

4. Auditor General was not authorizing its redemption. This warrant was not issued in favor of a
private individual. It was issued in favor of a government employee.

5. The petitioner argues that he is a holder in good faith and for value of a negotiable instrument
and is entitled to the rights and privileges of a holder in due course, free from defenses.

Issue:

Whether or not a treasury warrant is a negotiable instrument.

No. A treasury warrant is not a negotiable instrument. One of the requirements of a negotiable
instrument is that it must be unconditional. In Section 3 of the Negotiable Instruments Law, an order
or promise to pay out of a particular fund makes the instrument conditional. A treasury
warrant, like the one in this case, comes from a particular fund, a particular appropriation. In this
case, it was written on the face of the treasury warrant that it is “payable from the appropriation for
food administration”. Thus, it is not negotiable for being conditional. NOT E t he di ff ere nc e:
H o w e v e r , a n i n s t r u m e n t i s n e g o t i a b l e i f i t m e r e l y mentions/indicates a particular fund
out of which reimbursement is to be made. This does not make the instrument conditional because
it does not say that such particular fund is the source of payment. It is only a notice to the drawee
that he can reimburse himself out of that particular fund after paying the payee. As to the source of
payment to the payee, there is no mention of it.

The petitioner argues that he is a holder in good faith and for value of a negotiable instrument and is
entitled to the rights and privileges of a holder in due course, free from defenses. But this treasury warrant
is not within the scope of the negotiable instrument law. For one thing, the document bearing on its face
the words "payable from the appropriation for food administration, is actually an Order for payment out
of "a particular fund," and is not unconditional and does not fulfill one of the essential requirements of a
negotiable instrument (Sec. 3 last sentence and section [1(b)] of the Negotiable Instruments Law).