Letter of Credit Application (Philippines)
IRREVOCABLE LETTER OF CREDIT
Subject to UCP 600 (ICC Publication No. 600)
LC Number: [LC Number]
Date of Issue: [LC Date]
ISSUING BANK: [Issuing Bank Name], [Issuing Bank Address]
APPLICANT: [Applicant Name], [Applicant Address]
BENEFICIARY: [Beneficiary Name], [Beneficiary Address]
1. CREDIT DETAILS
1.1 Type of Credit: [LC Type], subject to the Uniform Customs and Practice for Documentary Credits, 2007 Revision, ICC Publication No. 600 (UCP 600).
1.2 Amount: [LC Amount].
1.3 Goods: [Goods Description].
1.4 Shipment from [Shipment From] to [Shipment To]. Latest date of shipment: [Latest Shipment Date]. Partial shipments: permitted unless otherwise specified. Transhipment: permitted unless otherwise specified.
1.5 Documents must be presented within [Presentation Period] after the date of shipment. The LC expires on [Expiry Date].
2. REQUIRED DOCUMENTS
The Beneficiary must present the following documents to obtain payment under this LC: (a) Signed commercial invoice in triplicate showing LC number, applicant name, and full description of goods; (b) Full set of clean on-board Bills of Lading made out to the order of [Issuing Bank Name], marked 'Freight Prepaid' and 'Notify Applicant'; (c) Packing list in duplicate; (d) Insurance certificate or policy covering 110% of the LC value for all risks; (e) Certificate of origin issued by the relevant Chamber of Commerce or government authority; (f) Phytosanitary or sanitary certificate (if applicable to the goods).
All documents must be presented in English. Any discrepancy in documents must be notified within 5 banking days of presentation per UCP 600 Article 16.
3. PAYMENT AND GOVERNING LAW
3.1 Upon receipt of complying documents, [Issuing Bank Name] undertakes to honour (pay) this Credit in accordance with UCP 600 and BSP Circular No. 1049 (2020) on trade finance and letters of credit. This Credit is available at the counters of [Issuing Bank Name].
3.2 This Letter of Credit is governed by the laws of the Philippines, BSP regulations, and UCP 600. Disputes shall be resolved by the proper courts of the Philippines or by ICC arbitration, as agreed by the parties.
Issued by authority of [Applicant Name] in accordance with applicable BSP foreign exchange regulations.
[Issuing Bank Name]
Authorized Signatory
Authorized Signatory (Issuing Bank)
________________
Signature
Countersignatory (Issuing Bank)
________________
Signature
What Is a Letter of Credit Application (Philippines)?
A Letter of Credit Application in the Philippines documents a credit arrangement, recording how much is owed, when it falls due and the consequences of late payment.
The Bangko Sentral ng Pilipinas (BSP) regulates the issuance of LCs by Philippine banks under the Manual of Regulations on Foreign Exchange Transactions (FX Manual) and BSP Circular No. 645. All LCs for importation of goods must comply with BSP import regulations, and for LC amounts above USD 500,000 (or equivalent), advance registration with the BSP through the Philippine Dealing System (PDS) may be required under the FX Manual.
The Bureau of Customs (BOC) requires the LC or its equivalent as documentary evidence of importation for assessment of customs duties and tariffs under the Customs Modernization and Tariff Act (CMTA, RA 10863). The Bureau of Internal Revenue (BIR) imposes documentary stamp tax (DST) on letters of credit under Section 182 of the NIRC (RA 8424) at PHP 0.30 per PHP 200 of the face value of the LC.
A Letter of Credit differs from a bank guarantee in that an LC is a primary payment obligation — the issuing bank pays the beneficiary upon presentation of complying documents (typically commercial invoice, bill of lading or airway bill, packing list, and certificate of origin), regardless of disputes between the applicant and beneficiary. The autonomy principle under UCP 600 Article 4 means the bank's obligation is independent of the underlying sale contract.
Philippine banks offer several LC types: Irrevocable LC (cannot be amended without beneficiary consent, per UCP 600 Article 10), Confirmed LC (a second bank adds its confirmation — a separate undertaking to pay), and Standby LC (functionally similar to a demand guarantee, used as a payment default mechanism). Export LCs benefit Philippine exporters under the BSP's Export Development Program through pre-export financing facilities.
The legal framework governing the Letter of Credit Application (Philippines) in Philippines draws on several key statutes and regulatory bodies. Under Philippine law, the Civil Code of the Philippines (Republic Act No. 386) governs contractual obligations. The Revised Corporation Code (Republic Act No. 11232) regulates corporate entities through the Securities and Exchange Commission (SEC). The Labor Code of the Philippines (Presidential Decree No. 442) and Department of Labor and Employment (DOLE) govern employment matters. The Data Privacy Act of 2012 (Republic Act No. 10173) and the National Privacy Commission (NPC) protect personal data. The Bureau of Internal Revenue (BIR) administers tax obligations under the National Internal Revenue Code. Parties executing a Letter of Credit Application (Philippines) in Philippines should confirm the document reflects current law, including any amendments enacted since the original drafting date. The National Internal Revenue Code (RA 8424) sets the foundational requirements.
When Do You Need a Letter of Credit Application (Philippines)?
A Letter of Credit Application in the Philippines is needed in the following circumstances.
A Letter of Credit Application is required when a Philippine importer purchases goods from a foreign supplier who demands payment security from a Philippine bank before shipping the goods. The LC provides the supplier with certainty of payment upon presentation of shipping documents, while the importer retains control over payment through the document requirement.
A Letter of Credit Application is needed for importation of machinery, equipment, and raw materials under the Tariff and Customs Code of the Philippines (CMTA, RA 10863) and BOC importation regulations, where the LC serves as the financing mechanism for the importer's bank to release payment to the foreign exporter's bank upon document presentation.
A Letter of Credit Application is required for government procurement transactions under RA 9184 (Government Procurement Reform Act) where the government agency's implementing rules require an LC as an advance payment guarantee from private sector suppliers or contractors.
A Letter of Credit Application is needed by Philippine exporters applying for a Back-to-Back LC or Transferable LC — where the export LC received from the foreign buyer is used as security to obtain a domestic LC in favor of the exporter's local suppliers, enabling the exporter to finance production without equity outlay.
A Letter of Credit Application is required for trade transactions involving Bankers Acceptance financing — where the importer's bank accepts a time draft drawn under the LC, creating a negotiable instrument that the exporter can discount in the secondary market for immediate liquidity under BSP-regulated acceptance financing facilities.
Parties in Philippines should prepare a Letter of Credit Application (Philippines) proactively rather than waiting for a dispute to arise. Courts interpret agreements based on the written terms rather than oral representations. Under Philippine law, the Civil Code of the Philippines (Republic Act No. 386) governs contractual obligations. The Revised Corporation Code (Republic Act No. 11232) regulates corporate entities through the Securities and Exchange Commission (SEC). The Labor Code of the Philippines (Presidential Decree No. 442) and Department of Labor and Employment (DOLE) govern employment matters. The Data Privacy Act of 2012 (Republic Act No. 10173) and the National Privacy Commission (NPC) protect personal data. The Bureau of Internal Revenue (BIR) administers tax obligations under the National Internal Revenue Code. Where the transaction involves regulated activities, prior approval from the relevant authority may be required before execution.
What to Include in Your Letter of Credit Application (Philippines)
A valid Philippines Letter of Credit Application must contain the following essential elements.
Applicant Details: Full legal name, address, TIN, and BSP-registered LC credit line number of the applicant (importer). Corporate applicants must include SEC Registration Number and Board resolution authorizing the LC application under RA 11232.
Beneficiary Details: Full legal name, address, and bank details (SWIFT code, account number) of the beneficiary (exporter or seller). For domestic LCs, Philippine banking details.
LC Amount and Currency: Total LC amount in the applicable currency (USD, EUR, or PHP ₱). State whether the amount is fixed or carries a tolerance (UCP 600 Article 18 allows 5% more or 5% less tolerance unless excluded).
Expiry Date and Place: LC expiry date and whether the LC expires at the issuing bank's counters or at the beneficiary's bank counters (advising/confirming bank). Philippine import LCs typically expire at the foreign bank's counters to support beneficiary document presentation.
Required Documents: Specify all required documents per UCP 600 Article 18: (1) signed commercial invoice in the number of originals and copies; (2) full set of clean on-board ocean bills of lading or airway bill consigned to the issuing bank's order; (3) packing list; (4) certificate of origin (for preferential tariff treatment under ASEAN-AFTA or bilateral trade agreements); (5) marine insurance policy or certificate for CIF terms; (6) any special certifications (phytosanitary, fumigation, quality inspection).
Shipment Terms and Port Details: Incoterms 2020 trade terms (FOB, CIF, CFR), port of loading, port of discharge, and latest shipment date.
Payment Terms: Whether the LC is payable at sight (immediate payment upon complying document presentation) or at a usance/deferred period (e.g., 90 days after bill of lading date) under UCP 600 Articles 6–8.
Special Conditions and Reimbursement: Any special LC conditions (partial shipments allowed or prohibited under UCP 600 Article 31; transhipment allowed or prohibited under Article 20). Reimbursement instruction to the issuing bank's correspondent bank under UCP 600 Article 13.
Additional compliance elements for a Letter of Credit Application (Philippines) used in Philippines include: Under Philippine law, the Civil Code of the Philippines (Republic Act No. 386) governs contractual obligations. The Revised Corporation Code (Republic Act No. 11232) regulates corporate entities through the Securities and Exchange Commission (SEC). The Labor Code of the Philippines (Presidential Decree No. 442) and Department of Labor and Employment (DOLE) govern employment matters. The Data Privacy Act of 2012 (Republic Act No. 10173) and the National Privacy Commission (NPC) protect personal data. The Bureau of Internal Revenue (BIR) administers tax obligations under the National Internal Revenue Code. Forms-legal.com provides this template as a starting point for Philippines-compliant documentation.
Cite this page
Reference this free template in an article, syllabus, or research note:
Forms Legal. (2026). Letter of Credit Application (Philippines) (Philippines) [Legal document template]. Forms Legal. https://forms-legal.com/philippines/financial/agreements/letter-of-credit-philippines
"Letter of Credit Application (Philippines) (Philippines)." Forms Legal, 2026, https://forms-legal.com/philippines/financial/agreements/letter-of-credit-philippines.
@misc{formslegal-letter-of-credit-philippines,
author = {{Forms Legal}},
title = {Letter of Credit Application (Philippines) (Philippines)},
year = {2026},
howpublished = {\url{https://forms-legal.com/philippines/financial/agreements/letter-of-credit-philippines}},
note = {Free legal document template. Based on National Internal Revenue Code (RA 8424)}
}
Frequently Asked Questions
A Letter of Credit (LC) and a bank guarantee are both bank-issued payment instruments, but they differ in their payment trigger and primary purpose. An LC under UCP 600 is a primary payment instrument — the issuing bank pays the beneficiary upon presentation of documents complying with the LC terms (commercial invoice, bill of lading, etc.), regardless of any dispute between the buyer and seller. The bank's obligation is autonomous and documentary under UCP 600 Article 4. A bank guarantee under the Civil Code (RA 386, Articles 2047–2084) and General Banking Law (RA 8791) is a secondary payment instrument — the guarantor bank pays only if the principal defaults on the underlying obligation, and the demand guarantee variant (payable on first demand) is the closest to an LC. In practice, Philippine banks issue LCs for trade finance (import/export payment) and guarantees for performance assurance (construction, government contracts, lease deposits).
A Philippine bank typically takes 1–5 business days to issue a Letter of Credit after receiving a complete LC Application from a pre-approved applicant with an existing LC credit line. For new applicants without an existing credit line, the bank first conducts credit assessment — reviewing financial statements, tax returns, business permits, BSP credit bureau records, and collateral documentation — which may take 2–4 weeks. Once the LC is approved and issued, the issuing bank transmits the LC to the beneficiary's bank via SWIFT MT700 (Documentary Credit) message, which the advising bank typically forwards to the beneficiary within 1–2 business days. For time-sensitive importation where the supplier requires an LC before a specific shipment date, Philippine importers should apply for the LC at least 10–15 business days before the required shipment date to allow for bank processing and SWIFT transmission.
A Philippine import Letter of Credit under UCP 600 typically requires the following documents from the foreign exporter: (1) signed commercial invoice in the number of originals and copies specified in the LC, describing the goods exactly as in the LC; (2) full set (3/3) of clean on-board ocean bills of lading consigned to the issuing bank's order or endorsed in blank, with freight prepaid notation for CIF/CFR terms; (3) packing list detailing carton counts, weights, and dimensions; (4) certificate of origin — Form E for ASEAN-AFTA preferential tariff, Form AK for ASEAN-Korea FTA, or other preferential scheme as applicable; (5) marine insurance policy or certificate for CIF Incoterms; (6) any special certifications required by the LC (Bureau of Plant Industry phytosanitary certificate for agricultural products, Bureau of Animal Industry certificate for animal products, DOST-ITDI inspection certificate for regulated items). Documents must be presented within 21 calendar days after shipment date per UCP 600 Article 14(c), and no later than the LC expiry date.
A Letter of Credit in the Philippines is subject to documentary stamp tax (DST) under Section 182 of the NIRC (RA 8424) at PHP 0.30 for every PHP 200 (or fraction thereof) of the face value of the LC. The DST is payable by the issuing bank within 5 days after the close of the month of issuance using BIR Form 2000. The LC opening fee and related bank charges — acceptance commission, negotiation fee, amendment fees — charged by the issuing bank to the applicant are subject to 12% VAT under NIRC Section 108. For importation, goods arriving under an LC are subject to customs duties under the CMTA (RA 10863) based on the transaction value (LC amount plus freight and insurance for CIF imports), computed using the applicable ASEAN Harmonized Tariff Nomenclature (AHTN) tariff rate. VAT on importation at 12% under NIRC Section 107 is also assessed by the BOC on the dutiable value plus customs duties.
Under UCP 600 Article 16, if an issuing bank determines that documents presented by the beneficiary under a Philippine Letter of Credit do not comply with the LC terms (discrepant documents), the bank may refuse to pay and must give a single notice of refusal to the presenter within 5 banking days after presentation, specifying all discrepancies and stating whether the bank is holding the documents or returning them. Common discrepancies in Philippine LC practice include: invoice amount exceeds LC amount; bill of lading not marked 'on board'; late presentation beyond 21 days; description of goods differs from LC; and missing required documents. Upon refusal, the beneficiary has several options: (1) request the applicant (importer) to authorize the issuing bank to honor despite discrepancies; (2) re-present corrected documents if time permits; (3) request the advising bank to seek the applicant's consent. If the applicant waives the discrepancies, the bank pays; if the applicant refuses, the documents are returned and the seller must seek payment directly from the buyer under the underlying contract.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
Found an error? Let us knowRelated Documents
You may also find these documents useful:
Bank Guarantee Letter (Philippines)
A Bank Guarantee Letter for the Philippines under which a BSP-supervised bank undertakes to pay a beneficiary upon demand if the principal defaults. Governed by the Civil Code (RA 386), General Banking Law (RA 8791), and BSP regulations.
Foreign Exchange Declaration (Philippines)
A Foreign Exchange Declaration for the Philippines declaring foreign currency holdings for BSP reporting compliance. Governed by BSP Circular No. 645, the Manual of Regulations on Foreign Exchange Transactions, and BSP Circular No. 1039.
Remittance Authorization (Philippines)
A Remittance Authorization for the Philippines authorizing a bank or remittance company to transfer funds on behalf of the sender. Compliant with BSP Circular No. 649, Anti-Money Laundering Act (RA 9160), and BSP FX Manual.