Requesting Entity: Philippine Amusement and Gaming Corporation
Issues Concern: Request for Clarification of Section 42.5 of the Implementing Rules and Regulations Part A (IRR-A) of Republic Act No. 9184 (R.A. 9184)
Request for Clarification on the Issuance of Letters of Credit
While it is true that IRR-A prohibits the issuance of a letter of credit in favor of a Philippine entity and its foreign manufacturer or supplier, the same is not true when a procuring entity directly contracts with a foreign manufacturer or supplier as in the case of importation.
Being a product of international commerce, it is only imperative that the issuance of a letter of credit in favor of foreign manufacturers or suppliers be considered as an acceptable mode of payment, especially in cases of foreign procurement by the Government. A letter of credit is recognized as a financial device developed by merchants as a convenient and relatively safe mode of dealing with sales of goods to satisfy the seemingly irreconcilable interests of a seller, who refuses to part with his goods before he is paid, and a buyer, who wants to have control of the goods before paying