nego - letters of credit - (3) bank of america v. ca (228 scra 357)

7/23/2019 NEGO - Letters of Credit - (3) Bank of America v. CA (228 SCRA 357)

http://slidepdf.com/reader/full/nego-letters-of-credit-3-bank-of-america-v-ca-228-scra-357 1/12

[G.R. No. 105395. December 10, 1993.]

BANK OF AMERICA, NT & SA, petitioner , vs. COURT OF

APPEALS, INTER-RESIN INDUSTRIAL CORPORATION,

FRANCISCO TRAJANO, JOHN DOE AND JANE DOE,

respondents.

Agcaoili & Associates for petitioner.

Valenzuela Law Center, Victor Fernandez and Ramon M. Guevara for private

respondents.

SYLLABUS

1.CO!RC"#$ $#%& COD! O' CO!RC!& $!((!R) O' CR!D"()&D!'"N!D #ND CON)(R*!D. + # etter of credit is a financia device deveoped b-

mercants as a convenient and reative- safe mode of deain/ it saes of /oods to

satisf- te seemin/- irreconciabe interests of a seer, o refses to part it is

/oods before e is paid, and a b-er, o ants to ave contro of te /oods before

pa-in/. (o brea2 te impasse, te b-er ma- be reired to contract a ban2 to isse a

etter of credit in favor of te seer so tat, b- virte of te etter of credit, te issin/

ban2 can atori4e te seer to dra drafts and en/a/e to pa- tem pon teir

presentment simtaneos- it te tender of docments reired b- te etter of credit.

(e b-er and te seer a/ree on at docments are to be presented for pa-ment, btordinari- te- are docments of tite evidencin/ or attestin/ to te sipment of te /oods

to te b-er. Once te credit is estabised, te seer sips te /oods to te b-er and in

te process secres te reired sippin/ docments or docments of tite. (o /et paid,

te seer eectes a draft and presents it to/eter it te reired docments to te

issin/ ban2. (e issin/ ban2 redeems te draft and pa-s cas to te seer if it finds tat

te docments sbmitted b- te seer conform it at te etter of credit reires. (e

ban2 ten obtains possession of te docments pon pa-in/ te seer. (e transaction is

competed en te b-er reimbrses te issin/ ban2 and acires te docments

entitin/ im to te /oods. *nder tis arran/ement, te seer /ets paid on- if e deiverste docments of tite over te /oods, ie te b-er acires te said docments and

contro over te /oods on- after reimbrsin/ te ban2.

6."D.& "D.& "D.& D")("NG*")7!D. + %at caracteri4es etters of credit, as

distin/ised from oter accessor- contracts, is te en/a/ement of te issin/ ban2 to

pa- te seer once te draft and te reired sippin/ docments are presented to it. "n



trn, tis arran/ement assres te seer of prompt pa-ment, independent of an- breac of

te main saes contract. 8- tis socaed :independence principe,: te ban2 determines

compiance it te etter of credit on- b- eaminin/ te sippin/ docments presented&

it is precded from determinin/ eter te main contract is acta- accompised or

not.

3."D.& "D.& "D.& ;#R("!) (7!R!(O. + (ere od at east be tree <3= parties> <a= te

buer , o procres te etter of credit and obi/es imsef to reimbrse te issin/ ban2

pon receipt of te docments of tite& <b= te ban! issuing te etter of credit, ic

nderta2es to pa- te seer pon receipt of te draft and proper docments of tites and to

srrender te docments to te b-er pon reimbrsement& and, <c= te seller , o in

compiance it te contract of sae sips te /oods to te b-er and deivers te

docments of tite and draft to te issin/ ban2 to recover pa-ment. (e nmber of te

parties, not infreent- and amost invariab- in internationa trade practice, ma- beincreased. (s, te services of an advising <notif-in/= ban2 ma- be tii4ed to conve- to

te seer te eistence of te credit& or, of a con"irming ban2 ic i end credence to

te etter of credit issed b- a esser 2non issin/ ban2& or, of a paing ban! ic

nderta2es to encas te drafts dran b- te eporter. 'rter, instead of /oin/ to te

pace of te issin/ ban2 to caim pa-ment, te b-er ma- approac anoter ban2, termed

te negotiating ban! , to ave te draft disconted.

?."D.& "D.& "D.& *N"'OR C*)(O) #ND ;R#C("C! 'OR DOC*!N(#R@

CR!D"() <*.C.;.=& #;;$"C#("ON (O ;7"$";;"N! COD! O' CO!RC!. +

8ein/ a prodct of internationa commerce, te impact of tis commercia instrment

transcends nationa bondaries, and it is ts not ncommon to find a deart of nationa

a tat can adeate- provide for its /overnance. (is contr- is no eception. Or

on Code of Commerce basica- introdces on- its concept nder #rtices 5AB5B6,

incsive, tereof. "t is no onder ten - /reat reiance as been paced on commercia

sa/e and practice, ic, in an- case, can be stified b- te niversa acceptance of te

atonom- of contracts re. (e res ere ater deveoped into at is no 2non as te

*niform Cstoms and ;ractice for Docmentar- Credits <:*.C.;.:= issed b- te

"nternationa Camber of Commerce. "t is b- no means a compete tet b- itsef, for, to be sre, tere are oter principes, ic, ato/ part of le# mercatoria, are not deat

it in te *.C.;. "n F$A% 'an! and %rust Compan v. Court o" Appeals, <G.R. No.

9?609, prom. 30 #pri 1991& 19A )CR# 5BA= te )preme Cort ave accepted, to te

etent of teir pertinenc-, te appication in or risdiction of tis internationa

commercia credit re/ator- set of res. "n 'an! o" ()il. slands v. *e +er, <G.R. No.

$6?61, 1A October 19B0& 35 )CR# 65A= te Cort as said tat te observance of te



*.C.;. is stified b- #rtice 6 of te Code of Commerce ic epresses tat, in te

absence of an- particar provision in te Code of Commerce, commercia transactions

sa be /overned b- sa/es and cstoms /enera- observed. (e Cort ave frter

observed tat tere bein/ no specific provisions ic /overn te e/a compeities

arisin/ from transactions invovin/ etters of credit not on- beteen or amon/ ban2stemseves bt aso beteen ban2s and te seer or te b-er, as te case ma- be, te

appicabiit- of te *.C.;. is ndeniabe.

5."D.& "D.& "D.& #DE")"NG OR NO("'@"NG 8#NF& CON)(R*!D& C#)! #( 8#R.

+ (e crcia point of dispte in tis case is eter nder te :etter of credit,: 8an2 of

#merica as incrred an- iabiit- to te :beneficiar-: tereof, an isse tat ar/e- is

dependent on te ban2s participation in tat transaction& as a mere advisin/ or notif-in/

ban2, it od not be iabe, bt as a confirmin/ ban2, ad tis been te case, it cod be

considered as avin/ incrred tat iabiit-. 8an2 of #merica as, on- been an advisin/,not confirmin/, ban2, and tis mc is cear- evident, amon/ oter tin/s, b- te

provisions of te etter of credit itsef, te petitioner ban2s etter of advice, its reest for

pa-ment of advisin/ fee, and te admission of "nterResin tat it as paid te same. (at

8an2 of #merica as as2ed "nterResin to sbmit docments reired b- te etter of

credit and eventa- as paid te proceeds tereof, did not obvios- ma2e it a

confirmin/ ban2. (e fact, too, tat te draft reired b- te etter of credit is to be dran

nder te accont of Genera Cemicas <b-er= on- means tat te same ad to be

presented to 8an2 of #-d-a <issin/ ban2= for pa-ment. "t ma- be si/nificant to reca

tat te etter of credit is an en/a/ement of te issin/ ban2, not te advisin/ ban2, to pa-te draft. No ess important is tat 8an2 of #mericas etter of 11 arc 191 as

epress- stated tat :[t]e encosre is solel an advise of credit opened b- te

abovementioned correspondent and conves no engagement b us.: (is ritten

reservation b- 8an2 of #merica in imitin/ its obi/ation on- to bein/ an advisin/ ban2

is in consonance it te provisions of *.C.;. #s an advisin/ or notif-in/ ban2, 8an2 of

#merica did not incr an- obi/ation more tan st notif-in/ "nterResin of te etter of

credit issed in its favor, et aone to confirm te etter of credit. 8rin/in/ te etter of

credit to te attention of te seer is te primordia obi/ation of an advisin/ ban2. (e

vie tat 8an2 of #merica sod ave first cec2ed te atenticit- of te etter ofcredit it 8an2 of #-d-a, b- sin/ advanced mode of bsiness commnications,

before dispatcin/ te same to "nterResin finds no rea spport in *.C.;. #rtice 1 of

te *.C.;. states tat> :8an2s assme no iabiit- or responsibiit- for te conseences

arisin/ ot of te dea- andHor oss in transit of an- messa/es, etters or docments, or for

dea-, mtiation or oter errors arisin/ in te transmission of an-



teecommnication . . .: #s advisin/ ban2, 8an2 of #merica is bond on- to cec2 te

:apparent atenticit-: of te etter of credit, ic it did.

A."D.& "D.& "D.& "D.& R"G7( O' R!CO*R)!, %7!N #E#"$#8$!. + a- 8an2 of

#merica ten recover at it as paid nder te etter of credit en te correspondin/

draft for partia avaiment terender and te reired docments terefor ere ater

ne/otiated it it b- "nterResinI (e anser is -es. (is 2ind of transaction is at is

common- referred to as a discontin/ arran/ement. (is time, 8an2 of #merica, as

acted independent- as a ne/otiatin/ ban2, ts savin/ "nterResin from te ardsip of

presentin/ te docments direct- to 8an2 of #-d-a to recover pa-ment. <"nterResin,

of corse, cod ave cosen oter ban2s it ic to ne/otiate te draft and te

docments.= #s a ne/otiatin/ ban2, 8an2 of #merica as a ri/t of recorse a/ainst te

isser ban2 and nti reimbrsement is obtained, "nterResin, as te draer of te draft,

contines to assme a contin/ent iabiit- tereon.

B."D.& "D.& "D.& N#(*R! O' O;!R#("ON. + "n te operation of a etter of credit, te

invoved ban2s dea on- it docments and not on /oods described in tose

docments.

D E C I S I O N

VITUG, p>

# :fiasco,: invovin/ an irrevocabe etter of credit, as fond te distressed partiescomin/ to cort as adversaries in see2in/ a definition of teir respective ri/ts or

iabiities terender.

On 05 arc 191, petitioner 8an2 of #merica, N( J )#, ania, received b-

re/istered mai an "rrevocabe $etter of Credit No. 606B6H1 prported- issed b- 8an2

of #-d-a, )am-ae2 8ranc, for te accont of Genera Cemicas, $td., of (aiand in

te amont of *)K6,B6,000.00 to cover te sae of pastic ropes and :a/rictra fies,:

it te petitioner as advisin/ ban2 and private respondent "nterResin "ndstria

Corporation as beneficiar-. prcd

On 11 arc 191, 8an2 of #merica rote "nterResin informin/ te atter of te

fore/oin/ and transmittin/, aon/ it te ban2s commnication, te etter of credit.

*pon receipt of te etteradvice it te etter of credit, "nterResin sent #tt-. !miiano

(ana- to 8an2 of #merica to ave te etter of credit confirmed. (e ban2 did not.



Re-nado DeLas, ban2 empo-ee in car/e of etters of credit, oever, epained to

#tt-. (ana- tat tere as no need for confirmation becase te etter of credit od not

ave been transmitted if it ere not /enine.

8eteen 6A arc to 10 #pri 191, "nterResin so/t to ma2e a partia avaiment nder

te etter of credit b- sbmittin/ to 8an2 of #merica invoices, coverin/ te sipment of

6?,000 baes of po-et-ene rope to Genera Cemicas vaed at *)K1,360,A00.00, te

correspondin/ pac2in/ ist, eport decaration and bi of adin/. 'ina-, after bein/

satisfied tat "nterResins docments conformed it te conditions epressed in te

etter of credit, 8an2 of #merica issed in favor of "nterResin a Casiers Cec2 for

;10,619,093.60, :te ;eso eivaent of te draft <for= *)K1,360,A00.00 dran b- "nter

Resin, after dedctin/ te costs for docmentar- stamps, posta/e and mai insrance.: 1

(e cec2 as pic2ed p b- "nterResins !ective Eice;resident 8arceina (io. On 10

#pri 191, 8an2 of #merica rote 8an2 of #-d-a advisin/ te atter of te avaimentnder te etter of credit and so/t te correspondin/ reimbrsement terefor.

eanie, "nterResin, tro/ s. (io, presented to 8an2 of #merica te docments

for te second avaiment nder te same etter of credit consistin/ of a pac2in/ ist, bi of

adin/, invoices, eport decaration and bis in set, evidencin/ te second sipment of

/oods. "mmediate- pon receipt of a tee from 8an2 of #-d-a decarin/ te etter of

credit fradent, 6 8an2 of #merica stopped te processin/ of "nterResins docments

and sent a tee to its branc office in 8an/2o2, (aiand, reestin/ assistance in

determinin/ te atenticit- of te etter of credit. 3 8an2 of #merica 2ept "nterResin

informed of te deveopments. )ensin/ a frad, 8an2 of #merica so/t te assistance of

te Nationa 8rea of "nvesti/ation <N8"=. %it te ep of te staff of te ;iippine

!mbass- at 8an/2o2, as e as te poice and cstoms personne of (aiand, te N8"

a/ents, o ere sent to (aiand, discovered tat te vans eported b- "nterResin did

not contain ropes bt pastic strips, rappers, ra/s and aste materias. 7ere at ome, te

N8" aso investi/ated "nterResins ;resident 'rancisco (raano and !ective Eice

;resident 8arceina (io, o, tereafter, ere crimina- car/ed for estafa tro/

fasification of commercia docments. (e case, oever, as eventa- dismissed b-

te Ri4a ;rovincia 'isca o fond no prima "acie evidence to arrant prosection. $$pr

8an2 of #merica sed "nterResin for te recover- of ;10,619,093.60 te peso eivaent

of te draft for *)K360,A00.00 on te partia avaiment of te no disoned etter of

credit. On te oter and, "nterResin caimed tat not on- as it entited to retain

;10,619,093.60 on its first sipment bt aso to te baance *)K1,?A1,?00.00 coverin/

te second sipment.

http://www.cdasiaonline.com/search/show_article/16952?search=gr%3A+(105395*)#footnotes








On 6 Mne 199, te tria cort red for "nterResin, ? odin/ tat> <a= 8an2 of #merica

made assrances tat enticed "nterResin to send te mercandise to (aiand& <b= te

tee decarin/ te etter of credit fradent as nverified and sefservin/, ence

earsa-, bt even assmin/ tat te etter of credit as fa2e, :te fat sod be borne b-

te 8# ic as careess and ne/i/ent: 5 for faiin/ to tii4e its modern means ofcommnication to verif- it 8an2 of #-d-a in (aiand te atenticit- of te etter

of credit before sendin/ te same to "nterResin& <c= te oadin/ of pastic prodcts into

te vans ere nder strict spervision, inspection and verification of /overnment officers

o ave in teir favor te presmption of re/arit- in te performance of officia

fnctions& and <d= 8an2 of #merica faied to prove te participation of "nterResin or its

empo-ees in te ae/ed frad as, in fact, te compaint for estafa tro/ fasification of

docments as dismissed b- te ;rovincia 'isca of Ri4a. A

On appea, te Cort of #ppeas B sstained te tria cort& ence, tis present recorse b- petitioner 8an2 of #merica.

(e fooin/ isses are raised b- 8an2 of #merica> <a= eter it as arranted te

/enineness and atenticit- of te etter of credit and, coroari-, eter it as acted

mere- as an advisin/ ban2 or as a confirmin/ ban2& <b= eter "nterResin as acta-

sipped te ropes specified b- te etter of credit& and, <c= fooin/ te disonor of te

etter of credit b- 8an2 of #-d-a, eter 8an2 of #merica ma- recover a/ainst "nter

Resin nder te draft eected in its partia avaiment of te etter of credit. cd

"n rebtta, "nterResin ods tat> <a= 8an2 of #merica cannot, on appea, beated- raise

te isse of bein/ on- an advisin/ ban2& <b= te findin/s of te tria cort tat te ropes

ave acta- been sipped is bindin/ on te Cort& and, <c= 8an2 of #merica cannot

recover from "nterResin becase te draer of te etter of credit is te 8an2 of #-d-a

and not "nterResin.

"f on- to nderstand o te parties, in te first pace, /ot temseves into te mess, it

ma- be e to start b- recain/ o, in its modern se, a etter of credit is empo-ed in

trade transactions.

# etter of credit is a financia device deveoped b- mercants as a convenient and

reative- safe mode of deain/ it saes of /oods to satisf- te seemin/- irreconciabe

interests of a seer, o refses to part it is /oods before e is paid, and a b-er, o

ants to ave contro of te /oods before pa-in/. 9 (o brea2 te impasse, te b-er ma-

be reired to contract a ban2 to isse a etter of credit in favor of te seer so tat, b-













virte of te etter of credit, te issin/ ban2 can atori4e te seer to dra drafts and

en/a/e to pa- tem pon teir presentment simtaneos- it te tender of docments

reired b- te etter of credit. 10 (e b-er and te seer a/ree on at docments are

to be presented for pa-ment, bt ordinari- te- are docments of tite evidencin/ or

attestin/ to te sipment of te /oods to te b-er.

Once te credit is estabised, te seer sips te /oods to te b-er and in te process

secres te reired sippin/ docments or docments of tite. (o /et paid, te seer

eectes a draft and presents it to/eter it te reired docments to te issin/ ban2.

(e issin/ ban2 redeems te draft and pa-s cas to te seer if it finds tat te

docments sbmitted b- te seer conform it at te etter of credit reires. (e

ban2 ten obtains possession of te docments pon pa-in/ te seer. (e transaction is

competed en te b-er reimbrses te issin/ ban2 and acires te docments

entitin/ im to te /oods. *nder tis arran/ement, te seer /ets paid on- if e deiverste docments of tite over te /oods, ie te b-er acires te said docments and

contro over te /oods on- after reimbrsin/ te ban2. $e$ib

%at caracteri4es etters of credit, as distin/ised from oter accessor- contracts, is te

en/a/ement of te issin/ ban2 to pa- te seer once te draft and te reired sippin/

docments are presented to it. "n trn, tis arran/ement assres te seer of prompt

pa-ment, independent of an- breac of te main saes contract. 8- tis socaed

:independence principe,: te ban2 determines compiance it te etter of credit on-

b- eaminin/ te sippin/ docments presented& it is precded from determinin/

eter te main contract is acta- accompised or not. 11

(ere od at east be tree <3= parties> <a= te buer , 16 o procres te etter of

credit and obi/es imsef to reimbrse te issin/ ban2 pon receipt of te docments of

tite& <b= te ban! issuing te etter of credit, 13 ic nderta2es to pa- te seer pon

receipt of te draft and proper docments of tites and to srrender te docments to te

b-er pon reimbrsement& and, <c= te seller , 1? o in compiance it te contract of

sae sips te /oods to te b-er and deivers te docments of tite and draft to te

issin/ ban2 to recover pa-ment.

(e nmber of te parties, not infreent- and amost invariab- in internationa trade

practice, ma- be increased. (s, te services of an advising <notif-in/= ban2 15 ma- be

tii4ed to conve- to te seer te eistence of te credit& or, of a con"irming ban2 1A

ic i end credence to te etter of credit issed b- a esser 2non issin/ ban2& or,

of a paing ban! 1B ic nderta2es to encas te drafts dran b- te eporter. 'rter,




















instead of /oin/ to te pace of te issin/ ban2 to caim pa-ment, te b-er ma-

approac anoter ban2, termed te negotiating ban! , 1 to ave te draft disconted. cd

8ein/ a prodct of internationa commerce, te impact of tis commercia instrment

transcends nationa bondaries, and it is ts not ncommon to find a deart of nationa

a tat can adeate- provide for its /overnance. (is contr- is no eception. Or

on Code of Commerce basica- introdces on- its concept nder #rtices 5AB5B6,

incsive, tereof. "t is no onder ten - /reat reiance as been paced on commercia

sa/e and practice, ic, in an- case, can be stified b- te niversa acceptance of te

atonom- of contracts re. (e res ere ater deveoped into at is no 2non as te

*niform Cstoms and ;ractice for Docmentar- Credits <:*.C.;.:= issed b- te

"nternationa Camber of Commerce. "t is b- no means a compete tet b- itsef, for, to

be sre, tere are oter principes, ic, ato/ part of le# mercatoria, are not deat

it in te *.C.;.

"n F$A% 'an! and %rust Compan v. Court o" Appeals, 19 e ave accepted,

to te etent of teir pertinenc-, te appication in or risdiction of tis internationa

commercia credit re/ator- set of res. 60 "n 'an! o" ()il. slands v. *e +er, 61

e ave said tat te observance of te *.C.;. is stified b- #rtice 6 of te Code of

Commerce ic epresses tat, in te absence of an- particar provision in te

Code of Commerce, commercia transactions sa be /overned b- sa/es and

cstoms /enera- observed. %e ave frter observed tat tere bein/ no specific

provisions ic /overn te e/a compeities arisin/ from transactions invovin/

etters of credit not on- beteen or amon/ ban2s temseves bt aso beteen ban2s

and te seer or te b-er, as te case ma- be, te appicabiit- of te *.C.;. is

ndeniabe.

(e first isse raised b- te petitioner, i.e., tat it as in tis instance mere- been an

advisin/ ban2, is otri/t- reected b- "nterResin and is ts so/t to be discarded for

avin/ been raised on- on appea. %e cannot a/ree. (e crcia point of dispte in tis

case is eter nder te :etter of credit,: 8an2 of #merica as incrred an- iabiit- to

te :beneficiar-: tereof, an isse tat ar/e- is dependent on te ban2s participation in

tat transaction& as a mere advisin/ or notif-in/ ban2, it od not be iabe, bt as a

confirmin/ ban2, ad tis been te case, it cod be considered as avin/ incrred tat

iabiit-. 66 $e$ib












"n nsular Li"e Assurance Co. Ltd. $mploees Association- +atu vs. nsular Li"e

Assurance Co., Ltd., 63 te Cort said> %ere te isses aread- raised aso rest on oter

isses not specifica- presented, as on/ as te atter isses bear reevance and cose

reation to te former and as on/ as te- arise from matters on record, te cort as te

atorit- to incde tem in its discssion of te controvers- and to pass pon tem stas e. "n brief, in tose cases ere estions not particar- raised b- te parties

srface as necessar- for te compete addication of te ri/ts and obi/ations of te

parties, and sc estions fa itin te isses aread- framed b- te parties, te

interests of stice dictate tat te cort sod consider and resove tem. (e re tat

on- isses or teories raised in te initia proceedin/s ma- be ta2en p b- a part- tereto

on appea sod on- refer to independent, not concomitant matters, to spport or oppose

te case of action or defense. (e evi tat is so/t to be avoided, i.e., srprise to te

adverse part-, is in reait- not eistent on matters tat are proper- iti/ated in te oer

cort and appear on record.

"t cannot serios- be dispted, oo2in/ at tis case, tat 8an2 of #merica as, in fact,

on- been an advisin/, not confirmin/, ban2, and tis mc is cear- evident, amon/

oter tin/s, b- te provisions of te etter of credit itsef, te petitioner ban2s etter of

advice, its reest for pa-ment of advisin/ fee, and te admission of "nterResin tat it

as paid te same. (at 8an2 of #merica as as2ed "nterResin to sbmit docments

reired b- te etter of credit and eventa- as paid te proceeds tereof, did not

obvios- ma2e it a confirmin/ ban2. (e fact, too, tat te draft reired b- te etter of

credit is to be dran nder te accont of Genera Cemicas <b-er= on- means tat tesame ad to be presented to 8an2 of #-d-a <issin/ ban2= for pa-ment. "t ma- be

si/nificant to reca tat te etter of credit is an en/a/ement of te issin/ ban2, not te

advisin/ ban2, to pa- te draft. $$r

No ess important is tat 8an2 of #mericas etter of 11 arc 191 as epress- stated

tat :[t]e encosre is solel an advise of credit opened b- te abovementioned

correspondent and conves no engagement b us.: 6? (is ritten reservation b- 8an2 of

#merica in imitin/ its obi/ation on- to bein/ an advisin/ ban2 is in consonance it

te provisions of *.C.;.

#s an advisin/ or notif-in/ ban2, 8an2 of #merica did not incr an- obi/ation more

tan st notif-in/ "nterResin of te etter of credit issed in its favor, et aone to

confirm te etter of credit. 65 (e bare statement of te ban2 empo-ee, aforementioned,

in respondin/ to te inir- made b- #tt-. (ana-, "nterResins representative, on te

atenticit- of te etter of credit certain- did not ave te effect of novatin/ te etter of










credit and 8an2 of #mericas etter of advise, 6A nor can it stif- te concsion tat te

ban2 mst no assme tota iabiit- on te etter of credit. "ndeed, "nterResin itsef

cannot caim to ave been a tat free from fat. #s te seer, te issance of te etter

of credit sod ave obvios- been a /reat concern to it. 6B "t od ave, in fact, been

stran/e if it did not, prior to te etter of credit, enter into a contract, or ne/otiated at tever- east, it Genera Cemicas. 6 "n te ordinar- corse of bsiness, te perfection

of contract precedes te issance of a etter of credit.

8rin/in/ te etter of credit to te attention of te seer is te primordia obi/ation of an

advisin/ ban2. (e vie tat 8an2 of #merica sod ave first cec2ed te atenticit-

of te etter of credit it 8an2 of #-d-a, b- sin/ advanced mode of bsiness

commnications, before dispatcin/ te same to "nterResin finds no rea spport in

*.C.;. #rtice 1 of te *.C.;. states tat> :8an2s assme no iabiit- or responsibiit- for

te conseences arisin/ ot of te dea- andHor oss in transit of an- messa/es, etters ordocments, or for dea-, mtiation or oter errors arisin/ in te transmission of an-

teecommnication . . .: #s advisin/ ban2, 8an2 of #merica is bond on- to cec2 te

:apparent atenticit-: of te etter of credit, ic it did. 69 Carif-in/ its meanin/,

%ebsters Nint Ne Coe/iate Dictionar- 30 epains tat te ord :#;;#R!N(

s//ests appearance to naided senses tat is not or ma- not be borne ot b- more

ri/oros eamination or /reater 2noed/e.: prcd

a- 8an2 of #merica ten recover at it as paid nder te etter of credit en te

correspondin/ draft for partia avaiment terender and te reired docments terefor

ere ater ne/otiated it it b- "nterResinI (e anser is -es. (is 2ind of transaction is

at is common- referred to as a discontin/ arran/ement. (is time, 8an2 of #merica,

as acted independent- as a ne/otiatin/ ban2, ts savin/ "nterResin from te ardsip

of presentin/ te docments direct- to 8an2 of #-d-a to recover pa-ment. <"nter

Resin, of corse, cod ave cosen oter ban2s it ic to ne/otiate te draft and te

docments.= #s a ne/otiatin/ ban2, 8an2 of #merica as a ri/t of recorse a/ainst te

isser ban2 and nti reimbrsement is obtained, "nterResin, as te draer of te draft,

contines to assme a contin/ent iabiit- tereon. 31

%ie 8an2 of #merica as indeed faied to ae/e materia facts in its compaint tat

mi/t ave i2eise arranted te appication of te Ne/otiabe "nstrments $a and

possib- ten aoed it to even /o after te indorsers of te draft, tis faire, 36

noneteess, does not precde petitioner ban2s ri/t <as a ne/otiatin/ ban2= of recover-

from "nterResin itsef. "nterResin admits avin/ received ;10,619.093.60 from 8an2 of

#merica on te etter of credit transaction and in avin/ eected te correspondin/



















draft. (at pa-ment to "nterResin as /iven, as aforesaid, 8an2 of #merica te ri/t of

reimbrsement from te issin/ ban2, 8an2 of #-d-a ic, in trn, cod ten see2

indemnification from te b-er <te Genera Cemicas of (aiand=. )ince 8an2 of

#-d-a disoned te etter of credit, oever, 8an2 of #merica ma- no trn to "nter

Resin for restittion.

:8eteen te seer and te ne/otiatin/ ban2 tere is te sa reationsip

eistin/ beteen a draer and prcaser of drafts. *ness drafts dran in

prsance of te credit are indicated to be itot recorse terefore, te

ne/otiatin/ ban2 as te ordinar- ri/t of recorse a/ainst te seer in te event

of disonor b- te issin/ ban2 . . . (e fact tat te correspondent and te

ne/otiatin/ ban2 ma- be one and te same does not affect its ri/ts and

obi/ations in eiter capacit-, ato/ a specia a/reement is aa-s a

possibiit- . . .: 33 $$pr

(e additiona /rond raised b- te petitioner, i.e., tat "nterResin sent aste instead of

its prodcts, is rea- of no conseence. "n te operation of a etter of credit, te

invoved ban2s dea on- it docments and not on /oods described in tose

docments. 3?

(e oter isses raised in te instant petition, for instance, eter or not 8an2 of

#-d-a did isse te etter of credit and eter or not te main contract of sae tat as

/iven rise to te etter of credit as been breaced, are not reevant to tis controvers-.

(e- are matters, instead, tat can on- be of concern to te erein parties in anappropriate recorse a/ainst tose o, nfortnate-, are not impeaded in tese

proceedin/s.

"n fine, e od tat +

'irst, /iven te facta findin/s of te corts beo, e concde tat petitioner 8an2 of

#merica as acted mere- as a noti"ing ban! and did not assme te responsibiit- of a

con"irming ban! & and

)econd, petitioner ban2, as a negotiating ban! , is entited to recover on "nterResins

partia avaiment as beneficiar- of te etter of credit ic as been disoned b- te

ae/ed isser ban2.





No d/ment of civi iabiit- a/ainst te oter defendants, 'rancisco (raano and oter

nidentified parties, can be made, in tis instance, tere bein/ no sfficient evidence to

arrant an- sc findin/.

%7!R!'OR!, te assaied decision is )!( #)"D!, and respondent "nterResin

"ndstria Corporation is ordered to refnd to petitioner 8an2 of #merica N( J )# te

amont of ;10,619,093.60 it e/a interest from te fiin/ of te compaint nti f-

paid. $ib$e

No costs.

)O ORD!R!D.

Feliciano, 'idin, Romero and Melo, . , concr.

nego - letters of credit - (3) bank of america v. ca (228 scra 357)

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