Академический Документы
Профессиональный Документы
Культура Документы
*
G.R. No. 105395. December 10, 1993.
_______________
* THIRD DIVISION.
358
authorize the seller to draw drafts and engage to pay them upon
their presentment simultaneously with the tender of documents
required by the letter of credit. The buyer and the seller agree on
what documents are to be presented for payment, but ordinarily
they are documents of title evidencing or attesting to the
shipment of the goods to the buyer. Once the credit is established,
the seller ships the goods to the buyer and in the process secures
the required shipping documents or documents of title. To get
http://central.com.ph/sfsreader/session/0000015ea301923029cc0577003600fb002c009e/t/?o=False 1/23
9/21/2017 SUPREME COURT REPORTS ANNOTATED VOLUME 228
paid, the seller executes a draft and presents it together with the
required documents to the issuing bank. The issuing bank
redeems the draft and pays cash to the seller if it finds that the
documents submitted by the seller conform with what the letter of
credit requires. The bank then obtains possession of the
documents upon paying the seller. The transaction is completed
when the buyer reimburses the issuing bank and acquires the
documents entitling him to the goods. Under this arrangement,
the seller gets paid only if he delivers the documents of title over
the goods, while the buyer acquires the said documents and
control over the goods only after reimbursing the bank.
Same; Same; Letters of Credit distinguished from other
accessory contracts.—What characterizes letters of credit, as
distinguished from other accessory contracts, is the engagement
of the issuing bank to pay the seller once the draft and the
required shipping documents are presented to it. In turn, this
arrangement assures the seller of prompt payment, independent
of any breach of the main sales contract. By this socalled
“independence principle,” the bank determines compliance with
the letter of credit only by examining the shipping documents
presented; it is precluded from determining whether the main
contract is actually accomplished or not.
Same; Same; Parties to a letter of credit.—There would at
least be three (3) parties: (a) the buyer, who procures the letter of
credit and obliges himself to reimburse the issuing bank upon
receipt of the documents of title; b) the bank issuing the letter of
credit, which undertakes to pay the seller upon receipt of the draft
and proper documents of titles and to surrender the documents to
the buyer upon reimbursement; and, (c) the seller, who in
compliance with the contract of sale ships the goods to the buyer
and delivers the documents of title and draft to the issuing bank
to recover payment.
Same; Same; Other parties to a letter of credit.—The number
of the parties, not infrequently and almost invariably in
international trade practice, may be increased. Thus, the services
of an advising (notifying) bank may be utilized to convey to the
seller the existence of
359
the credit; or, of a confirming bank which will lend credence to the
letter of credit issued by a lesser known issuing bank; or, of a
http://central.com.ph/sfsreader/session/0000015ea301923029cc0577003600fb002c009e/t/?o=False 2/23
9/21/2017 SUPREME COURT REPORTS ANNOTATED VOLUME 228
360
http://central.com.ph/sfsreader/session/0000015ea301923029cc0577003600fb002c009e/t/?o=False 4/23
9/21/2017 SUPREME COURT REPORTS ANNOTATED VOLUME 228
361
credit, the involved banks deal only with documents and not on
goods described in those documents.
Courts; Remedial Law; Where questions not raised surface as
necessary for the complete adjudication of the rights and
obligations of the parties, the interests of justice dictate that the
court should consider and resolve them.—In Insular Life
Assurance Co. Ltd. Employees AssociationNatu vs. Insular Life
Assurance Co., Ltd., the Court said: Where the issues already
raised also rest on other issues not specifically presented, as long
as the latter issues bear relevance and close relation to the former
and as long as they arise from matters on record, the court has
the authority to include them in its discussion of the controversy
and to pass upon them just as well. In brief, in those cases where
questions not particularly raised by the parties surface as
necessary for the complete adjudication of the rights and
obligations of the parties, and such questions fall within the
issues already framed by the parties, the interests of justice
dictate that the court should consider and resolve them. The rule
that only issues or theories raised in the initial proceedings may
be taken up by a party thereto on appeal should only refer to
independent, not concomitant matters, to support or oppose the
cause of action or defense. The evil that is sought to be avoided,
i.e., surprise to the adverse party, is in reality not existent on
matters that are properly litigated in the lower court and appear
on record.
VITUG, J.:
http://central.com.ph/sfsreader/session/0000015ea301923029cc0577003600fb002c009e/t/?o=False 5/23
9/21/2017 SUPREME COURT REPORTS ANNOTATED VOLUME 228
_______________
1 Decision in Civil Case No. 41021 of Regional Trial Court, Branch 134,
Makati, p. 15.
2 The Bank of Ayudhya expressed impossibility of availment against
the abovementioned letter of credit because the same had been issued, for
the account of Siam Union Metal L.P. (not General Chemicals of
Thailand), for a different amount covering “zinc highgrade,” and
363
_______________
http://central.com.ph/sfsreader/session/0000015ea301923029cc0577003600fb002c009e/t/?o=False 7/23
9/21/2017 SUPREME COURT REPORTS ANNOTATED VOLUME 228
364
_______________
365
http://central.com.ph/sfsreader/session/0000015ea301923029cc0577003600fb002c009e/t/?o=False 9/23
9/21/2017 SUPREME COURT REPORTS ANNOTATED VOLUME 228
_______________
366
http://central.com.ph/sfsreader/session/0000015ea301923029cc0577003600fb002c009e/t/?o=False 10/23
9/21/2017 SUPREME COURT REPORTS ANNOTATED VOLUME 228
_______________
367
12
There would at least be three (3) parties: (a) the buyer,
who procures the letter of credit and obliges himself to
reimburse the issuing bank upon receipt of the documents
13
of title; (b) the bank issuing the letter of credit, which
undertakes to pay the seller
_______________
http://central.com.ph/sfsreader/session/0000015ea301923029cc0577003600fb002c009e/t/?o=False 11/23
9/21/2017 SUPREME COURT REPORTS ANNOTATED VOLUME 228
looking at papers that are presented to him determine whether the bank
is obliged to make payment or not. He is not obligated and, indeed, is
foreclosed from donning his overalls and going into the field to determine
whether the underlying contract has been performed. This is the principal
reason why careful courts and lawyers state that the letter of credit is not
a guarantee. In a typical guarantee the guarantor will agree to make
payments if, and only if, the customer has failed to fulfill his obligation on
the underlying contract. If his obligation has been avoided because of the
acts of the beneficiary, typically there would be no obligation to guarantee
and thus no duty on the guarantor to pay. Letters of credit are different,
and they are explicitly and consciously designed to be different in this
respect. In effect, the beneficiary under a letter of credit has bargained for
the right to be paid and thus often to be the defendant instead of the
plaintiff in the ensuing litigation on the underlying contract, to be sued at
home instead of being a plaintiff abroad x x x x.”
12 “The buyer of the merchandise, who is also the buyer of the credit
instrument, is the party who initiates the operation. His contract is with
the bank which is to issue the instrument and is represented by the
Commercial Credit of Agreement form which he signs, supported by the
mutually made promises contained in the Agreement” (Shaterian, op. cit.
pp. 291292).
13 “The Opening Bank, usually the buyer’s bank, is the bank which
actually issues the instrument. It is also known as the Issuing Bank. The
selection of the opening banks is important. It should be a strong bank,
well known and well regarded in international trading circles. This is the
reason x x x smaller banks do not attempt to issue their own commercial
credit instruments but take advantage of the facilities of x x x much
larger, stronger, and better known correspondent banks x x x The
purposes of commercial credit may not be readily accomplished unless the
opening bank is well known and well regarded” (Shaterian, op. cit., p.
292).
368
________________
369
17
lesser known issuing bank; or, of a paying bank which
undertakes to encash the drafts drawn by the exporter.
Further, instead of going to the place of the issuing bank to
claim payment, the buyer may 18
approach another bank,
termed the negotiating bank, to have the draft discounted.
http://central.com.ph/sfsreader/session/0000015ea301923029cc0577003600fb002c009e/t/?o=False 13/23
9/21/2017 SUPREME COURT REPORTS ANNOTATED VOLUME 228
_________________
370
_______________
371
21
Nery, we have said that the observance of the U.C.P. is
justified by Article 2 of the Code of Commerce which
http://central.com.ph/sfsreader/session/0000015ea301923029cc0577003600fb002c009e/t/?o=False 15/23
9/21/2017 SUPREME COURT REPORTS ANNOTATED VOLUME 228
_______________
372
_______________
373
http://central.com.ph/sfsreader/session/0000015ea301923029cc0577003600fb002c009e/t/?o=False 17/23
9/21/2017 SUPREME COURT REPORTS ANNOTATED VOLUME 228
_______________
374
http://central.com.ph/sfsreader/session/0000015ea301923029cc0577003600fb002c009e/t/?o=False 18/23
9/21/2017 SUPREME COURT REPORTS ANNOTATED VOLUME 228
_______________
http://central.com.ph/sfsreader/session/0000015ea301923029cc0577003600fb002c009e/t/?o=False 19/23
9/21/2017 SUPREME COURT REPORTS ANNOTATED VOLUME 228
375
“Between the seller and the negotiating bank there is the usual
relationship existing between a drawer and purchaser of drafts.
Unless drafts drawn in pursuance of the credit are indicated to be
without recourse therefore, the negotiating bank has the ordinary
right of recourse against the seller in the event of dishonor by the
issuing bank x x x The fact that the correspondent and the
negotiating bank may be one and the same does not affect its
rights and obligations in either capacity,
33
although a special
agreement is always a possibility x x x”
_______________
32 In this respect, its belated theory before us and in its motion for
reconsideration of the assailed decision should be rejected for being
iniquitous under the circumstances. In fact, Bank of America has failed to
present the draft and, more substantially, InterResin has not been
afforded full opportunity to refute by evidence this new argument of Bank
of America. In short, we find the records insufficient to arrive at a just
determination on this fact that can allow us to apply the Negotiable
Instruments Law thereon.
http://central.com.ph/sfsreader/session/0000015ea301923029cc0577003600fb002c009e/t/?o=False 20/23
9/21/2017 SUPREME COURT REPORTS ANNOTATED VOLUME 228
376
________________
of the seller, he should not open the credit but buy on open account basis,
or subject the draft terms with the additional requirement that the draft
need not be paid until after the buyer has had an opportunity to examine
the goods to make sure that he has received exactly what he ordered”
(Shaterian, op. cit., pp. 352354).
377
ings.
In fine, we hold that—
First, given the factual findings of the courts below, we
conclude that petitioner Bank of America has acted merely
as a notifying bank and did not assume the responsibility of
a confirming bank; and
Second, petitioner bank, as a negotiating bank, is
entitled to recover on InterResin’s partial availment as
beneficiary of the letter of credit which has been disowned
by the alleged issuer bank.
No judgment of civil liability against the other
defendants, Francisco Trajano and other unidentified
parties, can be made, in this instance, there being no
sufficient evidence to warrant any such finding.
WHEREFORE, the assailed decision is SET ASIDE, and
respondent InterResin Industrial Corporation is ordered to
refund to petitioner Bank of America NT & SA the amount
of P10,219,093.20 with legal interest from the filing of the
complaint until fully paid.
No costs.
SO ORDERED.
http://central.com.ph/sfsreader/session/0000015ea301923029cc0577003600fb002c009e/t/?o=False 22/23
9/21/2017 SUPREME COURT REPORTS ANNOTATED VOLUME 228
——o0o——
378
© Copyright 2017 Central Book Supply, Inc. All rights reserved.
http://central.com.ph/sfsreader/session/0000015ea301923029cc0577003600fb002c009e/t/?o=False 23/23