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    Land Bank Vs Monet

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    RyD
    Land Bank of the Philippines provided Monet's Export and Manufacturing Corporation with a credit line secured by export letters of credit, which was later increased to P5,000,000. When Monet failed to repay over P11,000,000, Land Bank filed a collection case. Monet alleged Land Bank failed to collect on a $33,434 export letter of credit and made unauthorized payments of $38,768 on an import letter. The Supreme Court found Land Bank was not liable for the import letter as it only examines documents, but was liable as Monet's attorney-in-fact for failing to diligently collect the export letter amount without evidence it exercised due care.

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    Land Bank Vs Monet

    Uploaded by

    RyD
    166 views2 pages
    Land Bank of the Philippines provided Monet's Export and Manufacturing Corporation with a credit line secured by export letters of credit, which was later increased to P5,000,000. When Monet failed to repay over P11,000,000, Land Bank filed a collection case. Monet alleged Land Bank failed to collect on a $33,434 export letter of credit and made unauthorized payments of $38,768 on an import letter. The Supreme Court found Land Bank was not liable for the import letter as it only examines documents, but was liable as Monet's attorney-in-fact for failing to diligently collect the export letter amount without evidence it exercised due care.

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    Case Digest

    Original Title

    Land Bank vs Monet

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    Land Bank of the Philippines provided Monet's Export and Manufacturing Corporation with a credit line secured by export letters of credit, which was later increased to P5,000,000. When Monet failed to repay over P11,000,000, Land Bank filed a collection case. Monet alleged Land Bank failed to collect on a $33,434 export letter of credit and made unauthorized payments of $38,768 on an import letter. The Supreme Court found Land Bank was not liable for the import letter as it only examines documents, but was liable as Monet's attorney-in-fact for failing to diligently collect the export letter amount without evidence it exercised due care.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    166 views2 pages

    Land Bank Vs Monet

    Uploaded by

    RyD
    Land Bank of the Philippines provided Monet's Export and Manufacturing Corporation with a credit line secured by export letters of credit, which was later increased to P5,000,000. When Monet failed to repay over P11,000,000, Land Bank filed a collection case. Monet alleged Land Bank failed to collect on a $33,434 export letter of credit and made unauthorized payments of $38,768 on an import letter. The Supreme Court found Land Bank was not liable for the import letter as it only examines documents, but was liable as Monet's attorney-in-fact for failing to diligently collect the export letter amount without evidence it exercised due care.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    of 2

    LAND BANK OF THE PHILIPPINES v s .

    MONET'S EXPORT
    FACTS:
    On June 25, 1981, petitioner, Land Bank of the Philippines (Land Bank), and Monet's Export and
    Manufacturing Corporation (Monet) executed an Export Packing Credit Line Agreement under which Monet
    was given a credit line in the amount of P250,000.00, secured by the proceeds of its export letters of credit,
    the continuing guaranty of the spouses Tagle and the third party mortgage executed by Mendigoria.
    The credit line agreement was renewed and amended several times until it was increased to
    P5,000,000.00. Owing to the continued failure and refusal of Monet, notwithstanding repeated demands, to
    pay its indebtedness to Land Bank, which have ballooned to P11,464,246.19 by August 31, 1992, a
    complaint for collection of sum of money was filed.
    Monet and the Tagle spouses alleged that Land Bank failed and refused to collect the receivables on their
    export letter of credit against Wishbone Trading Company of Hong Kong in the sum of US$33,434.00, while
    it made unauthorized payments on their import letter of credit to Beautilike (H.K.) Ltd. in the amount of
    US$38,768.40, which seriously damaged the business interests of Monet.
    Both RTC and CA find for the petitioner.
    ISSUE: WON Land Bank is liable for acts of mismanagement relative to Monets LOC.
    RULING:
    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 so-called "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.
    SC finds merit in the contention of Land Bank that, as the issuing bank in the Beautilike transaction
    involving an import letter of credit, it only deals in documents and it is not involved in the contract between
    the parties. The relationship between the beneficiary and the issuer of a letter of credit is not strictly
    contractual, because both privity and a meeting of the minds are lacking. Thus, upon receipt by Land Bank
    of the documents of title which conform with what the letter of credit requires, it is duty bound to pay the
    seller, as it did in this case. Thus, no fault or acts of mismanagement can be attributed to Land Bank
    relative to Monet's import letter of credit.
    A careful review of the records reveal that the trial court correctly considered Land Bank as the attorney-infact of Monet with regard to its export transactions with Wishbone Trading Company. As the attorney-in-fact
    of Monet in transactions involving its export letters of credit, such as the Wishbone account, Land Bank

    Letter of Credit

    should have exercised the requisite degree of diligence in collecting the amount due to the former. The
    records of this case are bereft of evidence showing that Land Bank exercised the prudence mandated by
    its contractual obligations to Monet. The failure of Land Bank to judiciously safeguard the interest of Monet
    is not without any repercussions vis--vis the viability of Monet as a business enterprise.

    Letter of Credit

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