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The Performance Letter of Guarantee is a crucial financial instrument in Philippine commercial transactions, particularly in sectors requiring substantial performance assurance. This document is commonly used in construction projects, government contracts, and large commercial undertakings where one party needs security for the other's performance obligations. The guarantee, issued by Philippine banks under the supervision of the Bangko Sentral ng Pilipinas, provides an independent and usually unconditional commitment to pay upon valid demand. It must comply with Philippine banking regulations and commercial law, including the New Central Bank Act and relevant BSP circulars. The document typically includes detailed information about the underlying contract, guarantee amount, validity period, and claim conditions. The Performance Letter of Guarantee has become increasingly important in both domestic and international transactions involving Philippine entities, serving as a risk mitigation tool and facilitating commercial relationships.

1. Letter Header and Date: Bank's letterhead, reference number, and date of issuance

2. Beneficiary Details: Full name and address of the party in whose favor the guarantee is being issued

3. Reference to Underlying Contract: Details of the main contract or agreement for which the performance guarantee is being issued

4. Guarantee Amount: The specific amount being guaranteed, expressed in both figures and words

5. Scope of Guarantee: Clear description of what performance obligations are being guaranteed

6. Duration and Validity: Explicit start and end dates of the guarantee, including any conditions for extension

7. Terms of Demand: Conditions and process for making a claim under the guarantee

8. Bank's Undertaking: The bank's commitment to pay upon valid demand

9. Governing Law Statement: Explicit reference to Philippine law as the governing law

10. Authorization Statement: Confirmation of the bank's authority to issue the guarantee