318 STANDBY LETTERS OF CREDIT
The following shall govern the issuance of standby letters of credit.
a. The bank’s obligation to pay shall be either unconditional (as against presentation of a clean draft) or conditional only upon the presentation of documents and not upon actual existence or non-existence of facts, i.e., the bank must not be called upon to determine disputed questions of facts or law;
b. The bank’s obligation shall be limited to a fixed maximum amount;
c. The bank’s obligation shall have an expressed expiration date;
d. The standby letters of credit accommodation shall not violate any law or existing Bangko Sentral directives, rules and regulations, such as the SBL and DOSRI ceilings;
e. The party who opened the standby letters of credit or the ultimate borrower shall not have any past due obligation with the issuing bank for the ninety (90)-day period preceding the date of issuance of the letter of credit; and
f. The party who opened the letter of credit (borrower or principal obligor) must have an unqualified obligation to reimburse the bank on the same condition as the bank has paid.