Transfield vs. Luzon Hydro

2/14/2017 SUPREMECOURTREPORTSANNOTATEDVOLUME443
VOL. 443, NOVEMBER 22, 2004 307

Transfield Philippines, Inc. vs. Luzon Hydro Corporation
*
G.R. No. 146717. November 22, 2004.
TRANSFIELD PHILIPPINES, INC., petitioner, vs. LUZON

HYDRO CORPORATION, AUSTRALIA and NEW
ZEALAND BANKING GROUP LIMITED and SECURITY
BANK CORPORATION, respondents.
Commercial Law Banks and Banking Letters of Credit

Standby Credits Words and Phrases In commercial transactions,
a letter of credit is a financial device developed by merchants as a
convenient and relatively safe mode of dealing with sales of goods
to satisfy the seemingly irreconcilable interests of a seller, who
refuses to part with his goods before he is paid, and a buyer, who
wants to have control of the goods before paying Generally, credits
in nonsale settings have come to be known as standby credits.
The letter of credit evolved as a mercantile specialty, and the only
way to understand all its facets is to recognize that it is an entity
unto itself. 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, yet strict
compliance with its terms is an enforceable right. Nor is it a third
party beneficiary contract, because the issuer must honor drafts
drawn against a letter regardless of problems subsequently
arising in the underlying contract. Since the banks customer
cannot draw on the letter, it does not function as an assignment
by the customer to the beneficiary. Nor, if properly used, is it a
contract of suretyship or guarantee, because it entails a primary
liability following a default. Finally, it is not in itself a negotiable
instrument, because it is not payable to order or bearer and is
generally conditional, yet the draft presented under it is often
negotiable. In commercial transactions, a letter of credit is a
financial device developed by merchants as a convenient and
relatively safe mode of dealing with sales of goods to satisfy the
seemingly irreconcilable interests of a seller, who refuses to part
with his goods before he is paid, and a buyer, who wants to have
control of the goods before paying. The use of credits in
commercial transactions serves to reduce the risk of nonpayment
of the purchase price under the contract for the sale of goods.
http://www.central.com.ph/sfsreader/session/0000015a3c5f2bc2d4bbf706003600fb002c009e/t/?o=False 1/14
However, credits are also used in nonsale settings where they

serve to reduce the risk of nonperfor
_______________
* SECOND DIVISION.
308
308 SUPREME COURT REPORTS ANNOTATED
mance. Generally, credits in the nonsale settings have come to be

known as standby credits.
Same Same Same Same Commercial Credits and Standby
Credits, Distinguished.There are three significant differences
between commercial and standby credits. First, commercial
credits involve the payment of money under a contract of sale.
Such credits become payable upon the presentation by the seller
beneficiary of documents that show he has taken affirmative steps
to comply with the sales agreement. In the standby type, the
credit is payable upon certification of a partys nonperformance of
the agreement. The documents that accompany the beneficiarys
draft tend to show that the applicant has not performed. The
beneficiary of a commercial credit must demonstrate by
documents that he has performed his contract. The beneficiary of
the standby credit must certify that his obligor has not performed
the contract.
Same Same Same A letter of credit changes its nature as
different transactions occur and if carried through to completion
ends up as a binding contract between the issuing and honoring
banks without any regard or relation to the underlying contract or
disputes between the parties thereto.By definition, a letter of
credit is a written instrument whereby the writer requests or
authorizes the addressee to pay money or deliver goods to a third
person and assumes responsibility for payment of debt therefor to
the addressee. A letter of credit, however, changes its nature as
different transactions occur and if carried through to completion
ends up as a binding contract between the issuing and honoring
banks without any regard or relation to the underlying contract or
disputes between the parties thereto.
Same Same Same Uniform Customs and Practice (UCP) for
Documentary Credits Since letters of credit have gained general
acceptability in international trade transactions, the International

Chamber of Commerce (ICC) has published from time to time
updates on the Uniform Customs and Practice for Documentary
Credits to standardize practices in the letter of credit area The
observance of the UCP is justified by Article 2 of the Code of
Commerce which provides that in the absence of any particular
provision in the Code of Commerce, commercial transactions shall
be governed by usages and customs generally observed.Since
letters of credit have gained general acceptability in international
trade transactions, the ICC
309
VOL. 443, NOVEMBER 22, 2004 309
has published from time to time updates on the Uniform Customs

and Practice (UCP) for Documentary Credits to standardize
practices in the letter of credit area. The vast majority of letters of
credit incorporate the UCP. First published in 1933, the UCP for
Documentary Credits has undergone several revisions, the latest
of which was in 1993. In Bank of the Philippine Islands v. De
Reny Fabric Industries, Inc., this Court ruled that the observance
of the UCP is justified by Article 2 of the Code of Commerce which
provides that in the absence of any particular provision in the
Code of Commerce, commercial transactions shall be governed by
usages and customs generally observed. More recently, in Bank of
America, NT & SA v. Court of Appeals, this Court ruled that there
being no specific provisions which govern the legal complexities
arising from transactions involving letters of credit, not only
between or among banks themselves but also between banks and
the seller or the buyer, as the case may be, the applicability of the
UCP is undeniable.
Same Same Same Independence Principle Under the
independence principle, banks assume no liability or
responsibility for the form, sufficiency, accuracy, genuineness,
falsification or legal effect of any documents, or for the general
and/or particular conditions stipulated in the documents or
superimposed thereon, nor do they assume any liability or
responsibility for the description, quantity, weight, quality,
condition, packing, delivery, value or existence of the goods
represented by any documents, or for the good faith or acts and/or
omissions, solvency, performance or standing of the consignor, the
carriers, or the insurers of the goods, or any other person
whomsoever.Article 3 of the UCP provides that credits, by their
nature, are separate transactions from the sales or other

contract(s) on which they may be based and banks are in no way
concerned with or bound by such contract(s), even if any reference
whatsoever to such contract(s) is included in the credit.
Consequently, the undertaking of a bank to pay, accept and pay
draft(s) or negotiate and/or fulfill any other obligation under the
credit is not subject to claims or defenses by the applicant
resulting from his relationships with the issuing bank or the
beneficiary. A beneficiary can in no case avail himself of the
contractual relationships existing between the banks or between
the applicant and the issuing bank. Thus, the engagement of the
issuing bank is to pay the seller or beneficiary of the credit once
the draft and the required documents are presented to it. The so
called independence principle assures the seller or the
310
beneficiary of prompt payment independent of any breach of the

main contract and precludes the issuing bank from determining
whether the main contract is actually accomplished or not. Under
this principle, banks assume no liability or responsibility for the
form, sufficiency, accuracy, genuineness, falsification or legal
effect of any documents, or for the general and/or particular
conditions stipulated in the documents or superimposed thereon,
nor do they assume any liability or responsibility for the
description, quantity, weight, quality, condition, packing,
delivery, value or existence of the goods represented by any
documents, or for the good faith or acts and/or omissions,
solvency, performance or standing of the consignor, the carriers,
or the insurers of the goods, or any other person whomsoever.
Same Same Same Same 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 or (b) independence
may be only as to the justification aspect, though in both cases the
payment may be enjoined if in the light of the purpose of the credit
the payment of the credit would constitute fraudulent abuse of the
credit.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 payment of the credit would
constitute fraudulent abuse of the credit.
Same Same Same Same The independence principle
liberates the issuing bank from the duty of ascertaining
compliance by the parties in the main contract As it is, the
independence doctrine works to the benefit of both the issuing bank
and the beneficiary.As discussed above, in a letter of credit
transaction, such as in this case, where the credit is stipulated as
irrevocable, there is a definite undertaking by the issuing bank to
pay the beneficiary provided that the stipulated documents are
presented and the conditions of the credit are complied with.
Precisely, the independence principle liberates the issuing bank
from the duty of ascertaining compliance by
311
VOL. 443, NOVEMBER 22, 2004 311
the parties in the main contract. As the principles nomenclature

clearly suggests, the obligation under the letter of credit is
independent of the related and originating contract. In brief, the
letter of credit is separate and distinct from the underlying
transaction. Given the nature of letters of credit, petitioners
argumentthat it is only the issuing bank that may invoke the
independence principle on letters of creditdoes not impress this
Court. To say that the independence principle may only be
invoked by the issuing banks would render nugatory the purpose
for which the letters of credit are used in commercial
transactions. As it is, the independence doctrine works to the
benefit of both the issuing bank and the beneficiary.
Same Same Same Same Guarantee Jurisprudence has laid
down a clear distinction between a letter of credit and a guarantee
in that the settlement of a dispute between the parties is not a
prerequisite for the release of funds under a letter of credit.
Petitioners argument that any dispute must first be resolved by
the parties, whether through negotiations or arbitration, before
the beneficiary is entitled to call on the letter of credit in essence
would convert the letter of credit into a mere guarantee.
Jurisprudence has laid down a clear distinction between a letter
of credit and a guarantee in that the settlement of a dispute
between the parties is not a prerequisite for the release of funds
under a letter of credit. In other words, the argument is

incompatible with the very nature of the letter of credit. If a letter
of credit is drawable only after settlement of the dispute on the
contract entered into by the applicant and the beneficiary, there
would be no practical and beneficial use for letters of credit in
commercial transactions.
Same Same Same Same Owing to the nature and purpose
of standby letters of credit, banks are left with little or no
alternative but to honor the credit or the call for payment.While
it is the bank which is bound to honor the credit, it is the
beneficiary who has the right to ask the bank to honor the credit
by allowing him to draw thereon. The situation itself emasculates
petitioners posture that LHC cannot invoke the independence
principle and highlights its puerility, more so in this case where
the banks concerned were impleaded as parties by petitioner
itself. Respondent banks had squarely raised the independence
principle to justify their releases of the amounts due under the
Securities. Owing to the nature and purpose of the standby letters
of credit, this Court rules that the
312
respondent banks were left with little or no alternative but to

honor the credit and both of them in fact submitted that it was
ministerial for them to honor the call for payment.
Same Same Same Same Contracts A contract once
perfected, binds the parties not only to the fulfillment of what has
been expressly stipulated but also to all the consequences which
according to their nature, may be in keeping with good faith,
usage, and law. A contract once perfected, binds the parties not
only to the fulfillment of what has been expressly stipulated but
also to all the consequences which according to their nature, may
be in keeping with good faith, usage, and law. A careful perusal of
the Turnkey Contract reveals the intention of the parties to make
the Securities answerable for the liquidated damages occasioned
by any delay on the part of petitioner. The call upon the
Securities, while not an exclusive remedy on the part of LHC, is
certainly an alternative recourse available to it upon the
happening of the contingency for which the Securities have been
proffered. Thus, even without the use of the independence
principle, the Turnkey Contract itself bestows upon LHC the
right to call on the Securities in the event of default.
Same Same Same Same Injunction Requisites Most

writers agree that fraud is an exception to the independence
principle The remedy for fraudulent abuse is an injunction.
Most writers agree that fraud is an exception to the
independence principle. Professor Dolan opines that the
untruthfulness of a certificate accompanying a demand for
payment under a standby credit may qualify as fraud sufficient to
support an injunction against payment. The remedy for
fraudulent abuse is an injunction. However, injunction should not
be granted unless: (a) there is clear proof of fraud (b) the fraud
constitutes fraudulent abuse of the independent purpose of the
letter of credit and not only fraud under the main agreement and
(c) irreparable injury might follow if injunction is not granted or
the recovery of damages would be seriously damaged.
Same Same Same Same Same The issuance of the writ of
preliminary injunction as an ancillary or preventive remedy to
secure the rights of a party in a pending case is entirely within the
discretion of the court taking cognizance of the case, the only
limitation being that this discretion should be exercised based
upon the grounds and in the manner provided by law.Generally,
injunction is a preservative remedy for the protection of ones
substantive right or interest
313
VOL. 443, NOVEMBER 22, 2004 313
it is not a cause of action in itself but merely a provisional

remedy, an adjunct to a main suit. The issuance of the writ of
preliminary injunction as an ancillary or preventive remedy to
secure the rights of a party in a pending case is entirely within
the discretion of the court taking cognizance of the case, the only
limitation being that this discretion should be exercised based
upon the grounds and in the manner provided by law. Before a
writ of preliminary injunction may be issued, there must be a
clear showing by the complaint that there exists a right to be
protected and that the acts against which the writ is to be
directed are violative of the said right. It must be shown that the
invasion of the right sought to be protected is material and
substantial, that the right of complainant is clear and
unmistakable and that there is an urgent and paramount
necessity for the writ to prevent serious damage. Moreover, an
injunctive remedy may only be resorted to when there is a
pressing necessity to avoid injurious consequences which cannot

be remedied under any standard compensation.
Same Same Same Same It is premature and absurd to
conclude that the draws on the Securities were outright fraudulent
where the International Chamber of Commerce and the
Construction Industry Authority Commission have not ruled with
finality on the existence of default.The pendency of the
arbitration proceedings would not per se make LHCs draws on
the Securities wrongful or fraudulent for there was nothing in the
Contract which would indicate that the parties intended that all
disputes regarding delay should first be settled through
arbitration before LHC would be allowed to call upon the
Securities. It is therefore premature and absurd to conclude that
the draws on the Securities were outright fraudulent given the
fact that the ICC and CIAC have not ruled with finality on the
existence of default.
Same Same Same Same Actions Appeals Pleadings and
Practice Matters, theories or arguments not brought out in the
proceedings below will ordinarily not be considered by a reviewing
court as they cannot be raised for the first time on appeal.
Nowhere in its complaint before the trial court or in its pleadings
filed before the appellate court, did petitioner invoke the fraud
exception rule as a ground to justify the issuance of an injunction.
What petitioner did assert before the courts below was the fact
that LHCs draws on the Securities would be premature and
without basis in view of the
314
pending disputes between them. Petitioner should not be allowed

in this instance to bring into play the fraud exception rule to
sustain its claim for the issuance of an injunctive relief. Matters,
theories or arguments not brought out in the proceedings below
will ordinarily not be considered by a reviewing court as they
cannot be raised for the first time on appeal. The lower courts
could thus not be faulted for not applying the fraud exception rule
not only because the existence of fraud was fundamentally
interwoven with the issue of default still pending before the
arbitral tribunals, but more so, because petitioner never raised it
as an issue in its pleadings filed in the courts below. At any rate,
petitioner utterly failed to show that it had a clear and
unmistakable right to prevent LHCs call upon the Securities.
Same Same Same Same Obligations and Contracts

Obligations arising from contracts have the force of law between
the contracting parties and should be complied with in good faith.
Prudence should have impelled LHC to await resolution of the
pending issues before the arbitral tribunals prior to taking action
to enforce the Securities. But, as earlier stated, the Turnkey
Contract did not require LHC to do so and, therefore, it was
merely enforcing its rights in accordance with the tenor thereof.
Obligations arising from contracts have the force of law between
the contracting parties and should be complied with in good faith.
More importantly, pursuant to the principle of autonomy of
contracts embodied in Article 1306 of the Civil Code, petitioner
could have incorporated in its Contract with LHC, a proviso that
only the final determination by the arbitral tribunals that default
had occurred would justify the enforcement of the Securities.
However, the fact is petitioner did not do so hence, it would have
to live with its inaction.
Actions Injunction Settled is the rule that injunction would
not lie where the acts sought to be enjoined have already become
fait accompli or an accomplished or consummated act.In a
Manifestation, dated 30 March 2001, LHC informed this Court
that the subject letters of credit had been fully drawn. This fact
alone would have been sufficient reason to dismiss the instant
petition. Settled is the rule that injunction would not lie where
the acts sought to be enjoined have already become fait accompli
or an accomplished or consummated act. In Ticzon v. Video Post
Manila, Inc. this Court ruled that where the period within which
the former employees were
315
VOL. 443, NOVEMBER 22, 2004 315
prohibited from engaging in or working for an enterprise that

competed with their former employerthe very purpose of the
preliminary injunctionhas expired, any declaration upholding
the propriety of the writ would be entirely useless as there would
be no actual case or controversy between the parties insofar as the
preliminary injunction is concerned. In the instant case, the
consummation of the act sought to be restrained had rendered the
instant petition mootfor any declaration by this Court as to
propriety or impropriety of the nonissuance of injunctive relief
could have no practical effect on the existing controversy. The
other issues raised by petitioner particularly with respect to its
right to recover the amounts wrongfully drawn on the Securities,

according to it, could properly be threshed out in a separate
proceeding.
Same Pleadings and Practice Forum Shopping Considering
the seriousness of the charge of forum shopping and the severity of
the sanctions for its violation, the Court will refrain from making
any definitive ruling on the issue until the party alleged to have
committed forum shopping has been given ample opportunity to
respond to the charge.Forum Shopping is a very serious charge.
It exists when a party repetitively avails of several judicial
remedies in different courts, simultaneously or successively, all
substantially founded on the same transactions and the same
essential facts and circumstances, and all raising substantially
the same issues either pending in, or already resolved adversely,
by some other court. It may also consist in the act of a party
against whom an adverse judgment has been rendered in one
forum, of seeking another and possibly favorable opinion in
another forum other than by appeal or special civil action of
certiorari, or the institution of two or more actions or proceedings
grounded on the same cause on the supposition that one or the
other court might look with favor upon the other party. To
determine whether a party violated the rule against forum
shopping, the test applied is whether the elements of litis
pendentia are present or whether a final judgment in one case will
amount to res judicata in another. Forum Shopping constitutes
improper conduct and may be punished with summary dismissal
of the multiple petitions and direct contempt of court. Considering
the seriousness of the charge of forum Shopping and the severity
of the sanctions for its violation, the Court will refrain from
making any definitive ruling on this issue until after petitioner
has been given ample opportunity to respond to the charge.
316

PETITION for review on certiorari of a decision of the

Court of Appeals.
The facts are stated in the opinion of the Court.

Romulo, Mabanta, Buenaventura, Sayoc and Delos
Angeles and M. B. Tomacruz & Associates Law Offices for
petitioner.
Castro, Yan Binas, Ortile, Samillano & Mangrobang
for respondent Security Bank.
Quasha, Ancheta, Pea & Nolasco for respondent

ANZ Bank.
Sycip, Salazar, Hernandez & Gatmaitan for
respondent LHC.
TINGA, J.:
Subject of this case is the letter of credit which has evolved

as the ubiquitous and most important device in
international trade. A creation of commerce and
businessmen, the letter of credit is also unique in the
number of parties involved and its supranational 1
character.
Petitioner has appealed from the Decision of the Court
of Appeals in CAG.R. SP No. 61901 entitled Transfield
Philippines, Inc. v. Hon. Oscar 2
Pimentel, et al.,
promulgated on 31 January 2001.
On 26 March 1997, petitioner and respondent Luzon
Hydro Corporation3 (hereinafter, LHC) entered into a
Turnkey Contract whereby petitioner, as Turnkey
Contractor, undertook to construct, on a turnkey basis, a
seventy (70)Megawatt hydroelectric power station at the
Bakun River in the prov
_______________
1 Penned by Justice Candido V. Rivera, concurred in by Justices

Conchita CarpioMorales and Rebecca de GuiaSalvador.
2 Rollo, pp. 5261.
3 Id., at pp. 62252.
317
VOL. 443, NOVEMBER 22, 2004 317

inces of Benguet and Ilocos Sur (hereinafter, the Project).

Petitioner was given the sole responsibility for the design,
construction,
4
commissioning, testing and completion of the
Project.
The Turnkey Contract provides that: (1) the target
completion date of the Project shall be on 1 June 2000, or
such later date as may be agreed upon between petitioner
and respondent LHC or otherwise determined in
accordance with the Turnkey Contract and (2) petitioner is
entitled to claim extensions of time (EOT) for reasons
enumerated in the Turnkey Contract, among which are5
variations, force majeure, and delays caused by LHC itself.
Further, in case of dispute, the parties are bound to settle
their differences through mediation, conciliation and such

other means
6
enumerated under Clause 20.3 of the Turnkey
Contract.
To secure performance of petitioners obligation on or
before the target completion date, or such time for
completion as may be determined by the parties
agreement, petitioner opened in favor of LHC two (2)
standby letters of credit both dated 20 March 2000
(hereinafter referred to as the Securities), to wit: Standby
Letter of Credit No. E001126/8400 with
_______________
4 Id., at pp. 7576.

5 Clause 1.1, Volume II of the Turnkey Contract, Rollo, p. 81.
6 20.3 Dispute Resolution.
If at anytime any dispute or difference shall arise between the
Employer and the Contractor in connection with or arising out of this
Contract or the carrying out of the Works, the parties together shall in
good faith exert all efforts to resolve such dispute or difference by
whatever means they deem appropriate, including conciliation, mediation
and seeking the assistance of technical, accounting or other experts. At
the request of any party, the chief executives of the Employer and the
Contractor shall meet in a goodfaith effort to reach an amicable
settlement of the dispute or difference. Any dispute or difference that the
parties are unable to resolve within a reasonable time may, at the option
of either party, be referred to arbitration in accordance with Clause 20.4.
(Id., at p. 179)
318

the local branch of respondent Australia

7
and New Zealand
Banking Group Limited (ANZ Bank) and Standby Letter of
Credit No. IBDIDSB00/4
8
with respondent Security Bank
Corporation (SBC)
9
each in the amount of
US$8,988,907.00.
In the course of the construction of the project,
petitioner sought various EOT to complete the Project. The
extensions were requested allegedly due to several factors
which prevented the completion of the Project on target
date, such as force majeure occasioned by typhoon Zeb,
barricades and demonstrations. LHC denied the requests,
however. This gave rise to a series of legal actions between
the parties which culminated in the instant petition.
The first of the actions was a Request for Arbitration

which LHC filed before the Construction10 Industry
Arbitration Commission (CIAC) on 1 June 1999. This was
followed by another Request for Arbitration, this time filed
by petitioner 11 before the International Chamber of
Commerce (ICC) on 3 November 2000. In both arbitration
proceedings, the common issues presented were: [1)
whether typhoon Zeb and any of its associated events
constituted force majeure to justify the extension of time
sought by petitioner and [2) whether LHC had the right to
terminate the Turnkey Contract for failure of petitioner to
complete the Project on target date.
Meanwhile, foreseeing that LHC would call on the
Securities pursuant12
to the pertinent provisions of the 13
Turnkey Contract, petitionerin two separate letters
both dated 10 August 2000advised respondent banks of
the arbitration
_______________
7 Annex C, Rollo, pp. 254256.

8 Annex D, Id., at pp. 257259.
9 Clause 4.2.1, Volume II of the Turnkey Contract, Id., at p. 94.
10 Id., at pp. 261265.
11 Id., at pp. 359382.
12 Turnkey Contract, Clause 4.2.5, Rollo, p. 94, in relation to Clause
8.7.1., Rollo, p. 132.
13 Annex H, Rollo, pp. 287289 Annex H1, Rollo, pp. 320322.
319
VOL. 443, NOVEMBER 22, 2004 319

proceedings already pending before the CIAC and ICC in

connection with its alleged default in the performance of its
obligations. Asserting that LHC had no right to call on the
Securities until the resolution of disputes before the
arbitral tribunals, petitioner warned respondent banks
that any transfer, release, or disposition of the Securities in
favor of LHC or any person claiming under LHC would
constrain it to hold respondent banks liable for liquidated
damages.
As petitioner had anticipated, on 27 June 2000, 14
LHC
sent notice to petitioner that pursuant to Clause 8.2 of the
Turnkey Contract, it failed to comply with its obligation

Transfield vs. Luzon Hydro

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Transfield vs. Luzon Hydro

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2/14/2017 SUPREMECOURTREPORTSANNOTATEDVOLUME443

VOL. 443, NOVEMBER 22, 2004 307

TRANSFIELD PHILIPPINES, INC., petitioner, vs. LUZON

Commercial Law Banks and Banking Letters of Credit

However, credits are also used in nonsale settings where they

308 SUPREME COURT REPORTS ANNOTATED

Transfield Philippines, Inc. vs. Luzon Hydro Corporation

mance. Generally, credits in the nonsale settings have come to be

acceptability in international trade transactions, the International

VOL. 443, NOVEMBER 22, 2004 309

Transfield Philippines, Inc. vs. Luzon Hydro Corporation

has published from time to time updates on the Uniform Customs

nature, are separate transactions from the sales or other

310 SUPREME COURT REPORTS ANNOTATED

Transfield Philippines, Inc. vs. Luzon Hydro Corporation

beneficiary of prompt payment independent of any breach of the

commercial letter of credit or repayment standby, which is

VOL. 443, NOVEMBER 22, 2004 311

Transfield Philippines, Inc. vs. Luzon Hydro Corporation

the parties in the main contract. As the principles nomenclature

under a letter of credit. In other words, the argument is

312 SUPREME COURT REPORTS ANNOTATED

Transfield Philippines, Inc. vs. Luzon Hydro Corporation

respondent banks were left with little or no alternative but to

Same Same Same Same Injunction Requisites Most

VOL. 443, NOVEMBER 22, 2004 313

Transfield Philippines, Inc. vs. Luzon Hydro Corporation

it is not a cause of action in itself but merely a provisional

pressing necessity to avoid injurious consequences which cannot

314 SUPREME COURT REPORTS ANNOTATED

Transfield Philippines, Inc. vs. Luzon Hydro Corporation

pending disputes between them. Petitioner should not be allowed

Same Same Same Same Obligations and Contracts

VOL. 443, NOVEMBER 22, 2004 315

Transfield Philippines, Inc. vs. Luzon Hydro Corporation

prohibited from engaging in or working for an enterprise that

right to recover the amounts wrongfully drawn on the Securities,

316 SUPREME COURT REPORTS ANNOTATED

PETITION for review on certiorari of a decision of the

The facts are stated in the opinion of the Court.

Quasha, Ancheta, Pea & Nolasco for respondent

Subject of this case is the letter of credit which has evolved

1 Penned by Justice Candido V. Rivera, concurred in by Justices

VOL. 443, NOVEMBER 22, 2004 317

inces of Benguet and Ilocos Sur (hereinafter, the Project).

their differences through mediation, conciliation and such

4 Id., at pp. 7576.

318 SUPREME COURT REPORTS ANNOTATED

the local branch of respondent Australia

The first of the actions was a Request for Arbitration

7 Annex C, Rollo, pp. 254256.

VOL. 443, NOVEMBER 22, 2004 319

proceedings already pending before the CIAC and ICC in

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