Вы находитесь на странице: 1из 2

Philippine Virginia Tobacco Administration

v.
Judge Delos Santos
G.R. No. L-27829 August 19, 1988
Doctrine: An irrevocable letter of credit cannot, during its lifetime, be
cancelled or modified without the express permission of the beneficiary.

Facts: Timoteo Sevilla, proprietor and General Manager of the Philippine Associated
Resources (PAR) was awarded in a public bidding the right to import Virginia leaf
tobacco. Subsequently, the Philippine Virginia Tobacco Administration (PVTA) and
Sevilla entered into a contract for the importation of 85 million kilos of Virginia leaf
tobacco and a counterpart exportation of 2.53 million kilos of tobacco and 5.1
million kilos of farmers tobacco at P3.00 a kilo. In accordance with their contract
Sevilla purchased from PVTA and exported 2,101.470 kilos of tobacco, paying the
PVTA the sum of P2,482,938.50 and leaving a balance of P3,713,908.91. Before
respondent Sevilla could import the counterpart blending Virginia tobacco,
amounting to 525,560 kilos, Republic Act No. 4155 was passed and took effect on
June 20, 1964, authorizing the PVTA to grant import privileges at the ratio of 4 to 1
instead of 9 to 1 and to dispose of all its tobacco stock at the best price available.
Because of the prevailing export or world market price under which Sevilla will be
exporting at a loss, the agreement was further amended to require Sevilla open an
irrevocable letter of credit with the Prudential Bank and Trust Co. (Prudential) in
favor of the PVTA to secure the payment of said balance, drawable upon the release
from the Bureau of Customs of the imported Virginia blending tobacco. While Sevilla
was trying to negotiate the reduction of the procurement cost of the 2,101.470 kilos
of PVTA tobacco already exported which attempt was denied by PVTA and also by
the Office of the President. PVTA attempted to collect from the letter of Credit with
Prudential. Sevilla filed an injunction for the release of funds with Prudential in the
sala of Judge Delos Santos. Judge Delos Santos issued the injunction order and in a
subsequent petition, ordered the funds of the letter of credit released to Sevilla.
Issue: Whether or not Judge Delos Santos acted with grave abuse of discretion in
releasing the funds to the applicant of the letter of credit.

Held: Judge Delos Santos violated the irrevocability of the letter of credit issued by
respondent Bank in favor of Petitioner. An irrevocable letter of credit cannot, during
its lifetime, be cancelled or modified without the express permission of the
beneficiary. Consequently, if the finding on

the trial on the merits is that

respondent Sevilla has alleged unpaid balance due the petitioner, such unpaid
obligation would be unsecured.