Contract Bonds
Performance Bond
Performance security guaranteeing faithful performance of an awarded contract.
Overview
A performance bond answers to the obligee for losses if the contractor fails to perform the contract according to its terms.
Performance security is commonly a percentage of the total contract price, with surety bonds typically accepted at a higher percentage than cash or bank guarantees.
Purpose
- Secures completion of the works, goods, or services.
- Gives the obligee recourse for costs caused by default.
- Frees bank credit lines for project execution.
Typical uses
- Government infrastructure contracts
- Private construction and fit-out contracts
- Long-term supply and service agreements
Who normally requires it
- Contractors awarded government or private contracts
- Suppliers under framework agreements
- Subcontractors posting security to a main contractor
Parties involved
- Principal — the contractor or supplier applying for the bond
- Obligee — the project owner or procuring entity protected by the bond
- Surety — the authorized Philippine insurance company that issues the bond
Typical documentary requirements
- Accomplished bond application form with obligee and transaction details
- SEC or DTI registration, Articles of Incorporation, or business permit
- BIR Certificate of Registration and latest filed tax return
- Audited financial statements for the last two to three years
- Valid government IDs of signatories and board or partnership authority
- Notice of Award or signed contract
- Project schedule or scope of work
Final requirements depend on the obligee and the issuing insurance company. See the full requirements guide.
Typical application process
Step 1
Submit the application
Open an application in your SuretyPH portal and enter the obligee, transaction, and bond details.
Step 2
Upload requirements
Follow the guided checklist and upload each document securely to your application file.
Step 3
Pre-assessment
We review the file for completeness and endorse it to an authorized issuing insurance company.
Step 4
Quotation
The insurer evaluates the submission and issues a quotation covering premium, fees, and any collateral requirement.
Step 5
Payment and issuance
Once the quotation is accepted and the premium is settled, the insurer issues the bond for release or delivery.
Risks typically covered
- Abandonment or non-completion of the contract
- Defective or non-conforming performance
- Additional cost of completion by another contractor
Frequently asked questions
When must it be posted?
Usually within the period stated in the Notice of Award, before contract signing or issuance of the notice to proceed.
Will collateral be required?
Some submissions are approved on financial strength alone; others require collateral or an indemnity arrangement, as determined by the issuing insurance company.
Can it be extended?
Yes. Extensions for time-extended contracts are processed as endorsements, subject to insurer approval and additional premium.
More answers on premiums, collateral, and timelines are in the general FAQs.
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SuretyPH is a digital information and lead-generation platform owned and operated by McMatthise Global Group Corporation. It does not independently underwrite, approve, bind, issue, or guarantee any insurance policy or surety bond. Evaluation, underwriting, premiums, approval, and issuance remain the responsibility of the relevant duly licensed insurance company.