Go Chioco v. Inchausti
REITERATIONFacts
The Antecedents: Esteban Lopez issued a document to Hacienda Consuelo, payable to the order of Chinaman Yap-Soco, for P800 at six days' sight. Inchausti & Co. accepted this order on February 7, 1906, making it payable on February 13, 1906. On February 12, 1906, Lopez instructed Inchausti & Co. to stop payment due to a telegram, citing a fire at La Carlota where Yap-Soco's properties were burned and stating that Lopez had not received the P800 from Yap-Soco. On February 13, 1906, the order was presented for collection but was not indorsed, and payment was stopped. A protest was made on February 14, 1906, and Yap-Soco was notified. Go Chioco filed a complaint for the value of the protested order, claiming it was indorsed in blank and delivered to him. Procedural History: The trial court rendered judgment in favor of the plaintiff, Go Chioco, ordering the payment of P800 and costs. The Petition: The defendants excepted to the judgment and appealed to the Supreme Court, assigning as error the court's consideration of the indorsement by Yap-Soco in favor of Go Chioco as valid.
Issue(s)
Whether the indorsement in blank by Yap-Soco in favor of Go Chioco validly transferred ownership of the order of payment. Whether the document in question constitutes a bill of exchange or a promissory note.
Ruling
The Supreme Court reversed the judgment of the trial court. It held that the indorsement in blank, lacking a date, did not transfer ownership of the instrument and was merely a commission for collection. Therefore, Go Chioco was not considered the owner of the bill of exchange.
Ratio Decidendi
On the validity of the indorsement and transfer of ownership: The Court held that the indorsement in blank by Yap-Soco, which consisted of a signature on the side of the draft without a date, did not effectively transfer ownership of the instrument to Go Chioco. Citing its previous rulings, the Court stated that if the date is omitted in the indorsement, the ownership of the draft shall not be transferred, and it shall be understood as simply a commission for collection. Therefore, the trial court erred in considering Go Chioco as the owner of the bill by virtue of such an undated indorsement in blank. On the classification of the document: The Court noted that the document could not be admitted as a bill of exchange because its value was not expressed, classifying it instead as a promissory note according to Article 450 of the Code of Commerce. However, the primary issue revolved around the validity of the indorsement for the transfer of ownership, regardless of its precise classification as a bill of exchange or promissory note, as the indorsement in blank without a date was insufficient for such transfer under established jurisprudence.
Main Doctrine
An indorsement in blank on a bill of exchange, without a date, does not transfer ownership of the instrument and is considered merely a commission for collection.