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RULING:
In the case at bar, the drawee was necessarily the
herein petitioner. It was to the latter that the drafts
were presented for payment. There was in fact no
need for acceptance as the issued drafts are sight
drafts. Presentment for acceptance is necessary
only in the cases expressly provided for in Section
143 of the Negotiable Instruments Law (NIL). The
said section provides that presentment for
acceptance must be made:
(a) Where the bill is payable after sight, or in
any other case, where presentment for acceptance is
necessary in order to fix the maturity of the
instrument; or
(b) Where the bill expressly stipulates that it
shall be presented for acceptance; or
(c) Where the bill is drawn payable elsewhere
than at the residence or place of business of the
drawee.
In no other case is presentment for acceptance
necessary in order to render any party to the bill
liable. Obviously then, sight drafts do not require
presentment for acceptance.
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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 receipts 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 document 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.
Facts : Bank of America received an
Irrevocable Letter of Credit issued by Bank of
Metropolitan Waterworks
and Sewerage System V.
Hon. Reynaldo B. Daway G.R.
No. 160732. June 21, 2004
MARCH 15, 2014
LEAVE A COMMENT
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The prohibition under Sec 6 (b) of Rule 4 of
the Interim Rules does not apply to the the
CA
Facts:
On October 16, 1981, defendant submitted
to plaintiff the list of bus spare parts he
wanted to purchase to its counterpart in
Hamburg. Plaintiff sent an offer on the
items listed. On December 4, 1981,
defendant informed plaintiff that he
preferred genuine to replacement parts,
and requested a 15% discount. On
December 17, plaintiff submitted its formal
offer.
On
December
24,
defendant
submitted a purchase order, and submitted
the quantity on December 29. Plaintiff
immediately ordered the items from
Schuback Hamburg, which thereafter
ordered the same from NDK, a supplier in
Germany. Plaintiff sent a pro-forma invoice
to be used in applying for letter of credit.
On February 16, 1982, plaintiff reminded
defendant to open a letter of credit to avoid
delay in shipment. Defendant mentioned
the difficulty he was encountering in
procuring the same. Plaintiff continued
receiving invoices and partial deliveries
from NDK. On October 18, 1982, plaintiff
acceptance
absolute.
A
qualified
acceptance constitutes a counter offer."
The facts presented to us indicate that
consent
on
both
sides
has
been
manifested. The offer by petitioner was
manifested on December 17, 1981 when
petitioner submitted its proposal containing
the item number, quantity, part number,
description, the unit price and total to
private respondent. On December 24,
1981,
private
respondent
informed
petitioner of his desire to avail of the prices
of
the
parts
at
that
time
and
simultaneously enclosed its Purchase
Order. At this stage, a meeting of the minds
between vendor and vendee has occurred,
the object of the contract: being the spare
parts and the consideration, the price
stated in petitioner's offer dated December
17, 1981 and accepted by the respondent
on December 24, 1981.
Transfield Philippines vs
Luzon Hydro Electric Corp.
GR No 146717, Nov 22, 2004
MARCH 15, 2014
LEAVE A COMMENT
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The independent nature of the letter of
credit may be: (a) independence in toto where
the credit is independent from the justification
aspect and is a separate obligation from the
underlying agreement like for instance a
typical standby; or (b) independence may be
only as to the justification aspect like in a
commercial letter of credit or repayment
standby, which is identical with the same
obligations under the underlying agreement.
In both cases the payment may be enjoined if
in the light of the purpose of the credit the
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In case of a notifying bank, the correspondent
bank assumes no liability except to notify
and/or transmit to the beneficiary the
existence of the letter of credit.
A negotiating bank, on the other hand, is a
correspondent bank which buys or discounts a
draft under the letter of credit. Its liability is
dependent upon the stage of the negotiation.
If before negotiation, it has no liability with
respect to the seller but after negotiation, a
contractual relationship will then prevail
between the negotiating bank and the seller.
In the case of a confirming bank, the
correspondent
bank assumes a direct
obligation to the seller and its liability is a
primary one as if the correspondent bank itself
had issued the letter of credit.
Facts: Bernardo Villaluz entered into a
contract of sale with Axel Christiansen in
which Villaluz agreed to deliver to Christiansen
2,000 cubic meters of lauan logs at $27.00 per
cubic meter FOB. On the arrangements made
and upon the instructions of consignee, Hanmi
Trade Development, Ltd., the Security Pacific
National Bank of Los Angeles, California issued
an irrevocable letter of credit available at sight
in favor of Villaluz for the sum of $54,000.00,
the total purchase price of the lauan logs.
below.
A notifying bank is not a privy to the contract
of sale between the buyer and the seller, its
relationship is only with that of the issuing
bank and not with the beneficiary to whom he
assumes no liability. It follows therefore that
when the petitioner refused to negotiate with
the private respondent, the latter has no
cause of action against the petitioner for the
enforcement of his rights under the letter.
Since the Feati was only a notifying bank, its
responsibility was solely to notify and/or
transmit the documentary of credit to the
private respondent and its obligation ends
there.
At the most, when the petitioner extended the
loan to the private respondent, it assumed the
character of a negotiating bank. Even then,
the petitioner will still not be liable, for a
negotiating bank before negotiation has no
contractual relationship with the seller.
Whether therefore the petitioner is a notifying
bank or a negotiating bank, it cannot be held
liable. Absent any definitive proof that it has
confirmed the letter of credit or has actually
negotiated with Feati, the refusal by the
petitioner to accept the tender of the private
respondent is justified.