Case Digest: FEATI Bank and Trust Co. (now Citytrust Banking Corp.) vs. CA and Bernardo E. Villaluz (GR No. 94209, April 30, 1991)
Bernardo E. Villaluz agreed to sell 2,000 cubic meters of lauan logs at $27.00 per cubic meter to Axel Christiansen. Hanmi Trade Development, Ltd., de Santa Ana, California arranged for an Irrevocable Letter of Credit No. IC-46268 for $54,000.00 in favor of Villaluz, issued by Security Pacific National Bank of Los Angeles, California. The letter of credit was sent to Feati Bank and Trust Company (now Citytrust) with instructions to forward it to Villaluz. Feati Bank refused to negotiate with Villaluz due to the absence of a required certification from the buyer, Axel Christiansen. Villaluz filed a complaint for mandamus and specific performance against Christiansen and Feati Bank, seeking payment under the letter of credit. Is FEATI Bank liable under the letter of credit despite non-compliance by the beneficiary with the terms thereof? No FEATI Bank is not liable. The letter merely provided that the petitioner "forward the enclosed original credit to the beneficiary." ...