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The Reverse Letter of Credit is a crucial trade finance instrument used in situations where the buyer needs to provide security upfront to facilitate a transaction. This document, governed by Philippine law and banking regulations, is particularly relevant when sellers require additional payment security or when buyers wish to demonstrate their financial capability and commitment. The Reverse Letter of Credit arrangement involves the buyer providing collateral or security to the issuing bank, which then issues a letter of credit in favor of the seller. This document outlines all security arrangements, payment terms, documentation requirements, and obligations of all parties involved, ensuring compliance with both Philippine banking regulations and international banking practices. It's commonly used in large-scale international trade transactions, particularly in industries where significant payment security is required.

1. Parties: Identification of all parties: Applicant (buyer), Beneficiary (seller), Issuing Bank, and any Advising/Confirming Banks

2. Background: Context of the transaction, including the underlying commercial transaction and purpose of the RLC

3. Definitions: Key terms used in the document, including banking, trade, and technical terms specific to RLC

4. Security Arrangement: Details of the security/collateral provided by the applicant, including type, value, and maintenance requirements

5. Credit Terms: Specific terms including amount, currency, expiry date, and available payment methods

6. Documentation Requirements: List of required documents for drawing under the RLC and presentation requirements

7. Payment Terms: Conditions for payment, timeline, and mechanism for funds transfer

8. Bank's Rights and Obligations: Detailed responsibilities and rights of the issuing bank and other participating banks

9. Applicant's Undertakings: Commitments and obligations of the applicant, including maintaining security and meeting payment obligations

10. Force Majeure: Provisions for unforeseen circumstances affecting the RLC execution

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