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The Retention Bank Guarantee is a crucial financial instrument in Philippine construction and infrastructure projects, commonly used when a contractor wishes to receive their full payment without waiting for the typical retention period. This document type is specifically designed to comply with Philippine banking laws and BSP regulations, providing security to project owners while improving contractors' cash flow. The guarantee typically covers 5-10% of the contract value, which would otherwise be retained until the defects liability period expires. It includes detailed provisions for claims, validity periods, and release conditions, structured to protect all parties' interests while ensuring compliance with local banking and contract law requirements.

1. Parties: Identification of the Bank (Guarantor), the Principal (Contractor), and the Beneficiary (Employer)

2. Background: Context of the underlying contract and purpose of the retention guarantee

3. Definitions: Key terms used throughout the guarantee document

4. Guarantee Amount: Specification of the maximum guaranteed sum and currency

5. Validity Period: Duration of the guarantee, including start date and expiry date

6. Bank's Undertaking: Core guarantee commitment and terms of payment upon valid demand

7. Conditions for Claims: Requirements and process for making a valid claim under the guarantee

8. Form of Demand: Specified format and content requirements for making a demand

9. Payment Terms: Timeframe and method for payment upon receipt of valid demand

10. Reduction and Release: Conditions and process for reducing or releasing the guarantee amount

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

12. Notices: Communication requirements and contact details for all parties