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Surety Backed Letter Of Credit for Philippines

Surety Backed Letter Of Credit Template for Philippines

This document establishes a specialized financial arrangement under Philippine law where a Letter of Credit is reinforced by a surety guarantee. It combines the security of a traditional Letter of Credit with additional protection through a surety provider, creating a robust financial instrument for complex commercial transactions. The document adheres to Philippine banking regulations, particularly Republic Act No. 8791 (The General Banking Law) and relevant Bangko Sentral ng Pilipinas circulars, while incorporating international banking practices. It details the rights, obligations, and relationships between the issuing bank, applicant, beneficiary, and surety provider, including specific drawing conditions and payment mechanisms.

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Surety Backed Letter Of Credit

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What is a Surety Backed Letter Of Credit?

The Surety Backed Letter of Credit is a sophisticated financial instrument used in the Philippine market for high-value commercial transactions where additional security is required beyond a standard Letter of Credit. This document is particularly crucial when dealing with significant international trade transactions, major infrastructure projects, or substantial commercial undertakings where the beneficiary requires enhanced payment security. The document incorporates both local Philippine banking regulations and international banking practices, making it suitable for cross-border transactions. It includes detailed provisions for the surety's obligations, drawing conditions, and payment mechanisms, while ensuring compliance with Philippine banking laws and Bangko Sentral ng Pilipinas regulations. The structure is designed to protect all parties' interests while facilitating smooth commercial operations.

What sections should be included in a Surety Backed Letter Of Credit?

1. Parties: Identification of all parties: the issuing bank, the applicant, the beneficiary, and the surety provider

2. Background: Context of the transaction and relationship between parties

3. Definitions: Key terms used throughout the document including banking and surety-specific terminology

4. Letter of Credit Terms: Core terms of the letter of credit including amount, validity period, and purpose

5. Surety Guarantee: Terms of the surety backing, including scope and extent of the guarantee

6. Drawing Conditions: Specific conditions and documentation required for drawing on the letter of credit

7. Payment Obligations: Details of payment mechanisms, timelines, and currencies

8. Surety's Rights and Obligations: Specific terms regarding the surety's role, including conditions for surety payment

9. Bank's Rights and Obligations: Terms governing the bank's responsibilities and rights

10. Applicant's Undertakings: Commitments and obligations of the applicant

11. Events of Default: Circumstances constituting default and consequences

12. Representations and Warranties: Standard declarations by all parties

13. Governing Law and Jurisdiction: Specification of Philippine law as governing law and jurisdiction details

What sections are optional to include in a Surety Backed Letter Of Credit?

1. Security Arrangements: Required when additional collateral or security is provided beyond the surety guarantee

2. Foreign Currency Provisions: Needed when the letter of credit involves foreign currency transactions

3. Counter-Indemnity: Optional section for when the applicant provides additional indemnity to the surety

4. Insurance Requirements: Required when specific insurance coverage is mandatory for the underlying transaction

5. Assignment Provisions: Needed when rights under the letter of credit may be assignable

6. Anti-Money Laundering Compliance: Required for high-value or international transactions

7. Force Majeure: Optional section detailing circumstances beyond parties' control

What schedules should be included in a Surety Backed Letter Of Credit?

1. Schedule 1 - Form of Letter of Credit: Template of the actual letter of credit to be issued

2. Schedule 2 - Form of Surety Bond: Template of the surety bond document

3. Schedule 3 - Drawing Documents: List and samples of required documents for drawing on the LC

4. Schedule 4 - Fee Schedule: Detailed breakdown of all fees, charges, and commission rates

5. Schedule 5 - Authorized Signatories: List of authorized signatories for each party

6. Appendix A - Compliance Documents: Required regulatory and compliance documentation

7. Appendix B - Communication Procedures: Procedures for notices and communications between parties

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Philippines

Publisher

Ƶ

Document Type

Letter of Credit

Cost

Free to use
Relevant legal definitions



























































Clauses









































Relevant Industries

Banking and Financial Services

International Trade

Manufacturing

Construction

Infrastructure Development

Energy

Mining

Agriculture

Telecommunications

Maritime and Shipping

Real Estate Development

Heavy Industry

Relevant Teams

Legal

Finance

Treasury

Risk Management

International Trade

Compliance

Corporate Banking

Credit Analysis

Trade Operations

Documentary Credits

Relevant Roles

Chief Financial Officer

Treasury Manager

Trade Finance Manager

Risk Management Officer

Commercial Banking Officer

Credit Risk Manager

International Trade Specialist

Compliance Officer

Legal Counsel

Finance Director

Corporate Banking Manager

Senior Credit Analyst

Banking Operations Manager

Documentary Credits Specialist

Corporate Finance Manager

Industries








Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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