Credit Line Certificate

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Credit Line Certificate

Post by MIGZ98 on Thu Aug 04, 2011 6:10 pm

Sir, we just had a bidding wherein a Foreign Bidder has participated and won. The bidder used a Credit Line Certificate issued by a Universal Bank in lieu of its NFCC.

However, we noted that the CLC was not confirmed by a local commercial bank. Considering that the document is present, the BAC declared it as compliant. Is it a requirement during the bidding that the CLC has been confirmed by a local commercial bank or it may be confirmed afterwards, say, during the post qual period?

This is an issue because we cited in the bidding documents “In case of foreign bidders, the CLC issued by a foreign Universal or Commercial Bank must be confirmed or authenticated by a local commercial bank in the Philippines.”

Thanks,

MIGZ98
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Re: Credit Line Certificate

Post by engrjhez® on Fri Aug 05, 2011 5:06 pm

Credit Line Certificate is actually required before contract signing. The requirement for bid submission (in lieu of NFCC) is only a credit line commitment. So basically, you cannot require that on post qual but you can have initial check and verification of that document if you have doubts.

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Re: Credit Line Certificate

Post by MIGZ98 on Mon Aug 08, 2011 12:24 pm

Sir, considering that the credit line has not yet been confirmed by a local bank, does it mean that it shall only be confirmed before contract signing?
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Re: Credit Line Certificate

Post by RDV @ GP3i on Thu Aug 11, 2011 4:01 pm

MIGZ98 wrote:Sir, we just had a bidding wherein a Foreign Bidder has participated and won. The bidder used a Credit Line Certificate issued by a Universal Bank in lieu of its NFCC.

However, we noted that the CLC was not confirmed by a local commercial bank. Considering that the document is present, the BAC declared it as compliant. Is it a requirement during the bidding that the CLC has been confirmed by a local commercial bank or it may be confirmed afterwards, say, during the post qual period?

This is an issue because we cited in the bidding documents “In case of foreign bidders, the CLC issued by a foreign Universal or Commercial Bank must be confirmed or authenticated by a local commercial bank in the Philippines.”

Thanks,

MIGZ98

The acronym CLC, as used in the IRR, refers to a commitment from a Universal or Commercial Bank to extend a credit line in favor of the prospective bidder if awarded the contract (Sec. 23.1.a.vi). Therefore, CLC would refer to credit line commitment and not actually a credit line certificate.

Although just a commitment and not an actual credit line yet, Sec. 23.5.1.4 of the IRR is quite explicit that if the CLC is issued by a foreign Universal or Commercial Bank it has to be confirmed or authenticated by a (local) Universal or Commercial Bank.
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Re: Credit Line Certificate

Post by edprintshoppe on Fri Aug 19, 2011 7:21 am

Greetings. . . . Sir, may we ask if it is legitimate for the BAC to institute requirements contradictory to IRR of RA 9184? Such ask the submission of Certificate of Cash deposit in lieu of NFCC or CLC in stated in ITB/BDS. . . such requirements was raise for clarification in the pre-bid which was un-resolved by BAC and we were advice that an ADDENDUM will be posted in Philgeps for such concerns. Unfortunately, Certificate of Cash deposit still stands in lieu of NFCC or CLC in the issued Addendum. Thus, consequently a bidder submit a bid in compliance with the issued ITB/BDS and collaborated with the issued addendum.
Is this Legal? Does such bidder still be eligible in the opening of Bids even it is not in compliance with IRR of RA 9184 already? On what provision we could cite that BAC self made policy could not supersede RA9184 if this is not allowed?

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Re: Credit Line Certificate

Post by RDV @ GP3i on Fri Aug 19, 2011 9:02 am

edprintshoppe wrote:Greetings. . . . Sir, may we ask if it is legitimate for the BAC to institute requirements contradictory to IRR of RA 9184? Such ask the submission of Certificate of Cash deposit in lieu of NFCC or CLC in stated in ITB/BDS. . . such requirements was raise for clarification in the pre-bid which was un-resolved by BAC and we were advice that an ADDENDUM will be posted in Philgeps for such concerns. Unfortunately, Certificate of Cash deposit still stands in lieu of NFCC or CLC in the issued Addendum. Thus, consequently a bidder submit a bid in compliance with the issued ITB/BDS and collaborated with the issued addendum.
Is this Legal? Does such bidder still be eligible in the opening of Bids even it is not in compliance with IRR of RA 9184 already? On what provision we could cite that BAC self made policy could not supersede RA9184 if this is not allowed?

Cash Deposit Certificate (CDC), as an acceptable form, to show the financial liquidity of a prospective bidder, was already discarded in the revised IRR. It is, therefore, not correct for the BAC to still make it acceptable for biddings conducted after the effectivity of the said IRR (September 2, 2009). The BAC should have corrected itself by issuing a Supplemental/Bid Bulletin (NB. Maybe that is the ADDENDUM to be posted in the PhilGEPS the BAC was referring to.) If the Supplemental/Bid Bulletin says that only NFCC or CLC would be acceptable, which is correct, then the bidder submitting the CDC should be disqualified. If the 'Addendum' says that a CDC would be acceptable, then the bidding may be declared a failure by the HOPE, exercising his Reservation Clause under Section 41, since the BAC failed to follow the required bidding procedure.

The bidder submitting the CDC should be disqualified by the BAC during the opening of the technical envelope using the pass-fail criteria. Maybe the BAC is still using an old (IRR-A) checklist of requirements where CDC was still acceptable.

What you can do is submit a Request for Reconsideration against the decision of the BAC allowing the bidder to be eligible despite submitting a CDC which is no longer an acceptable form.
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Re: Credit Line Certificate

Post by edprintshoppe on Fri Aug 19, 2011 10:25 am

thanks for the legit opinion Sir. . . again this really of great help. . . KUDOS to all the team of this GPPB forum

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Re: Credit Line Certificate

Post by silverthon on Thu Feb 02, 2012 12:07 pm

I would like to know if CLC issued by a savings bank is a ground for disqualification?

We were declared LCB by the BAC and during post qualification, they discovered that our CLC was issued by a savings bank and not a universal or commercial bank. The CLC was confirmed by the bank during post qualification.

Credit Line Certificates can't be obtained like an over the counter transaction in a bank. The bank issues the said CLC if you are an existing account holder with good standing and it takes the bank loans committee to approve such CLC application.

What if the bank that extended a credit facilities to my company is a savings bank (PSBank)? Will this limit my participation to public Bidding?

Can I request a motion for reconsideration? since the CLC was confirmed by PSBank.

What is the difference between a CLC issued by a Universal/Commercial and a savings bank like PSBank?

Thank you for the help....

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Re: Credit Line Certificate

Post by engrjhez® on Thu Feb 02, 2012 12:32 pm

silverthon wrote:I would like to know if CLC issued by a savings bank is a ground for disqualification?

We were declared LCB by the BAC and during post qualification, they discovered that our CLC was issued by a savings bank and not a universal or commercial bank. The CLC was confirmed by the bank during post qualification.

Credit Line Certificates can't be obtained like an over the counter transaction in a bank. The bank issues the said CLC if you are an existing account holder with good standing and it takes the bank loans committee to approve such CLC application.

What if the bank that extended a credit facilities to my company is a savings bank (PSBank)? Will this limit my participation to public Bidding?

Can I request a motion for reconsideration? since the CLC was confirmed by PSBank.

What is the difference between a CLC issued by a Universal/Commercial and a savings bank like PSBank?

Thank you for the help....

Welcome silverthon,

The rule is very specific on your concern and that the CLC must be from a universal/commercial bank. If the bank where you obtained such is not under any of the universal/commercial bank, then your motion may simply be denied. However, CLC is only an alternative if you Net Financial Contracting Capacity or NFCC is below ABC. Have you tried computing it? If your NFCC is qualified, the submission of its computation is already enough, thus will need no more a CLC.
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Re: Credit Line Certificate

Post by RDV @ GP3i on Thu Feb 02, 2012 12:45 pm

silverthon wrote:I would like to know if CLC issued by a savings bank is a ground for disqualification?

We were declared LCB by the BAC and during post qualification, they discovered that our CLC was issued by a savings bank and not a universal or commercial bank. The CLC was confirmed by the bank during post qualification.

Credit Line Certificates can't be obtained like an over the counter transaction in a bank. The bank issues the said CLC if you are an existing account holder with good standing and it takes the bank loans committee to approve such CLC application.

What if the bank that extended a credit facilities to my company is a savings bank (PSBank)? Will this limit my participation to public Bidding?

Can I request a motion for reconsideration? since the CLC was confirmed by PSBank.

What is the difference between a CLC issued by a Universal/Commercial and a savings bank like PSBank?

Thank you for the help....

If you joined in a bidding conducted by an LGU, the CLC issued by banks other than universal bank or commercial bank may be acceptable provided you could get a certification from the BSP that such bank (like savings bank) is duly authorized to issue such financial instrument. If the bidding is conducted by an NGA, GOCC, SUC, or GFI, the requirement is no less than that issued be either a universal bank or commercial bank.
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