Allied Banking Corporation v Court of Appeals, GG Sportswear Manufacturing Corp., Sps etc. GR 12551 !acts" #etition for review on certiorari. Allied purc$ased %&port Bill fro' respondent GGs. ($e )ill, drawn under a letter of credit covered training suit t$at was in transit to *niger via Rotterda'. ($e %&por %&portt Bil Billl was issued issued )+ C$ekia C$ekiang ng !irst irst Bank. Bank. it$ t$e purc$ase of t$e )ill,
A--%/ A-- %/ cred credit ited ed GGS GGS t$e t$e peso peso e0ui e0uiva vale lent nt of t$e t$e afor afore' e'en enti tion oned ed )ill )ill a'ounting to #151,.52 and t$e receipt of w$ic$ was acknowledged )+ t$e latter in its letter dated 3une 22, 141. Alcron e&ecuted t$eir respective -etters of Guarant+, $olding t$e'selves lia)le on t$e e&port )ill if it s$ould )e dis$onored or retired )+ t$e drawee for an+ reason. Sps de illa and Gidwani e&ecuted a sure uret+ to guarant antee t$e pa+'ent of credit dit acco''odations w$ic$ allied 'a+ e&tent to GGS. $en A--%/ negotiated t$e e&por e&portt )ill )ill to C$ekia C$ekiang, ng, pa+'e pa+'ent nt was refused efused due to so'e so'e 'ater 'aterial ial discrepancies discrepancies in t$e docu'ents su)'itted )+ GGS relative to t$e e&portation covered )+ t$e letter of credit. Conse0uentl+, A--%/ de'anded pa+'ent fro' fro' all all t$e t$e respo espond nden ents ts )ase )ased d on t$e t$e -ett -etter ers s of Guar Guaran ant+ t+ and and Suret Suret+ + e&ecut ecuted ed in favo favorr of AA-- -%/ %/.. 6owe 6oweve ver, r, respo espond nden ents ts refus efused ed to pa+, pa+, pro'pting A--%/ to 7le an action for a su' of 'one+. ($e+ ad'itted due e&ecution of t$e e&port )ill )ut t$e+ clai' t$at it was )lank and it was onl+ 7lled up )+ Allied after t$e+ signed it. 8n t$e ot$er $and, t$e respondents, spouses de illa, clai'ed t$at t$e+ were not aware of t$e e&istence of t$e e&por e&portt )ill9 )ill9 t$e+ t$e+ sig signed ned )lank for's for's of t$e suret+9 suret+9 and averr averred ed t$at t$at t$e guarant+ was not 'eant to secure t$e e&port )ill.
ssue" 6%(6%R 8R :8( R%S#8:/%:(S :AR, /% --A A:/ A-CR8: AR%
-AB-% *:/%R (6% -%((%RS 8! G*ARA:(; G*ARA:(; A:/ (6% C8:(:*:G G*ARA:(;< C8M#R%6%:S% S*R%(; :8((6S(A:/:G (6% !AC( (6A( :8 #R8(%S( AS MA/% A!(%R (6% B--, B-- , A !8R%G: B-- 8! %= %=C6A:G%, C6A:G%, AS /S68:8R%/. Ruling"
8ur 8ur revie eview w of t$e t$e recor ecords ds s$ s$ow ows s t$at t$at w$at w$at tran transp spir ired ed in t$is t$is case case is a discou dis counti nting ng arran arrange' ge'ent ent of t$e su)>ec su)>ectt e&por e&portt )ill, )ill, )etwee )etween n petiti petitione onerr A--%/ and respondent GGS. #reviousl+, we ruled t$at in a letter of credit transaction, once t$e credit is esta)lis$ed, t$e seller s$ips t$e goods to t$e )u+er and in t$e process secures t$e re0uired s$ipping docu'ents of title. (o (o get get paid, paid, t$e t$e sell seller er e&ec e&ecut utes es a draf draftt and and pres presen ents ts it toge toget$ t$er er wit$ wit$ t$e t$e
re0uired docu'ents to t$e issuing )ank. ($e issuing )ank redee's t$e draft and pa+s cas$ to t$e seller if it 7nds t$at t$e docu'ents su)'itted )+ t$e seller confor' wit$ w$at t$e letter of credit re0uires. ($e )ank t$en o)tains possession of t$e docu'ents upon pa+ing t$e seller. ($e transaction is co'pleted w$en t$e )u+er rei')urses t$e issuing )ank and ac0uires t$e docu'ents entitling $i' to t$e goods. ?@ 6owever, in 'ost cases, instead of going to t$e issuing )ank to clai' pa+'ent, t$e )u+er or t$e )ene7ciar+ of t$e draft 'a+ approac$ anot$er )ank, ter'ed t$e negotiating )ank, to $ave t$e draft discounted.? $ile t$e negotiating )ank owes no contractual dut+ toward t$e )ene7ciar+ of t$e draft to discount or purc$ase it, it 'a+ still do so. :ot$ing can prevent t$e negotiating )ank fro' re0uiring additional re0uire'ents, like contracts of guarant+ and suret+, in consideration of t$e discounting arrange'ent. n t$is case, respondent GGS, as t$e )ene7ciar+ of t$e e&port )ill, instead of going to C$ekiang !irst Bank -td. issuing )ank, went to petitioner A--%/, to $ave t$e e&port )ill purc$ased or discounted. Before A--%/ agreed to purc$ase t$e su)>ect e&port )ill, it re0uired respondents :ari Gidwani and Alcron to e&ecute -etters of Guarant+, $olding t$e' lia)le on de'and, in case t$e su)>ect e&port )ill was dis$onored or retired for an+ reason.?
