- Petitioner
- Marlou L. Velasquez
- Respondent
- Solidbank Corporation
- Citation
- G.R. No. 157309
- Court
- Supreme Court
- Division
- Third Division
- Ponente
- R.T., J.
- Decided
- March 28, 2008
Summary
This commercial law case involved export businessman Marlou Velasquez who executed a letter of undertaking with Solidbank Corporation to secure advance payment for a US$59,640 sight draft drawn on a Korean letter of credit for dried sea cucumber exports. When the sight draft was dishonored by the Bank of Seoul due to document discrepancies and the buyer issued a stop payment order for defective goods containing soil, Solidbank demanded restitution of the P1,495,115.16 advance. The Supreme Court held that while Velasquez was discharged from liability under the sight draft due to the bank's failure to protest its dishonor, he remained liable under the letter of undertaking as an independent contract. The Court emphasized that the letter of undertaking created a direct, primary obligation separate from the negotiable instrument, and parties must fulfill their express contractual stipulations. The decision reinforced the principle that commercial undertakings are binding regardless of the fate of related instruments, preventing unjust enrichment in banking transactions.