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1. Buyer - who procures the letter of credit and obliges himself to reimburse the issuing bank
upon receipt of the document’s title;
2. Issuing bank - which undertakes to pay the seller upon receipt of the draft and proper
documents of titles and to surrender the documents to the buyer upon reimbursement; and
3. Seller - who in compliance with the contract of sale ships the goods to the buyer and
delivers the documents of title and draft to the issuing bank to recover payment.
The number of the parties may be increased and may include:
1. Advising (notifying) bank - may be utilized to convey to the seller the existence of the
credit.
2. Confirming bank - which will lend credence to the letter of credit issued by a lesser
known issuing bank; the confirming bank is directly liable to pay the seller-beneficiary;
3. Paying bank - which undertakes to encash the drafts drawn by the exporter/seller
4. Instead of going to the place of the issuing bank to claim payment, the buyer may
approach another bank, termed the negotiating bank to have the draft discounted
(Charles Lee v. CA, GR No. 117913 February 1, 2002)
upon receipt of the document’s title;
2. Issuing bank - which undertakes to pay the seller upon receipt of the draft and proper
documents of titles and to surrender the documents to the buyer upon reimbursement; and
3. Seller - who in compliance with the contract of sale ships the goods to the buyer and
delivers the documents of title and draft to the issuing bank to recover payment.
The number of the parties may be increased and may include:
1. Advising (notifying) bank - may be utilized to convey to the seller the existence of the
credit.
2. Confirming bank - which will lend credence to the letter of credit issued by a lesser
known issuing bank; the confirming bank is directly liable to pay the seller-beneficiary;
3. Paying bank - which undertakes to encash the drafts drawn by the exporter/seller
4. Instead of going to the place of the issuing bank to claim payment, the buyer may
approach another bank, termed the negotiating bank to have the draft discounted
(Charles Lee v. CA, GR No. 117913 February 1, 2002)
