GROUP 3

CONSTRUCTION MANAGEMENT 2
PHILIPPINE CONTEXT: BONDS,
INSURANCE, AND ALL RISK IN
CONSTRUCTION
 BOND
“A contract or agreement
that secures [locally]
professional liability
insurance, malpractice
insurance, or acceptable
equivalent which is
commensurate with the
nature and magnitude of
their project involvement
and their compensation.”

*IRR RA 9266 ARCHITECTURE ACT OF 2004

 RA 9266 ARCHITECTURE ACT OF 2004
“SEC. 39. Liability Insurance of a Person or Entity Allowed to
Practice under a Temporary/Special Permit. - Foreign
nationals, including former Filipinos wanting to engage in the
general practice of architecture as defined in Section 3 (c) of
this Act must secure locally their professional
liability insurance or malpractice insurance or
their acceptable equivalent in bond form
commensurate with the nature and magnitude of their
project involvement and their compensation.”

*IRR RA 9266 ARCHITECTURE ACT OF 2004

 RA 9184 GOVERNMENT PROCUREMENT
REFORM ACT

“An act providing for the modernization,

standardization, and regulation of the
procurement activities of the government and
for other purposes.”

*IRR Republic Act No. 9184

 INSURANCE OR SURETYSHIP
“An agreement whereby a party called the surety
company guarantees the performance by another
party called the principal or obligor, i.e., bidder, of
an obligation or undertaking in favor of a third
party called the obligee, i.e., procuring entity. It
includes official recognizances, stipulations,
bonds, or undertakings issued by any company by
virtue of and under the provisions of Act No. 536,
as amended by Act No. 2206.”

*IRR Republic Act No. 9184

 INSURANCE OR SURETYSHIP

OBLIGEE SURETY COMPANY OBLIGOR/PRINCIPAL

PROCUREMENT PUBLIC OR PRIVATE WITH
Certificate of Authority issued
BIDDER
by the Insurance Commission
ENTITY

*IRR Republic Act No. 9184

 SURETY BOND
“It refers to a bond issued by a surety
company to guarantee the performance
by the bidder of an obligation or
undertaking in favor of the procuring
entity, i.e., bid security, performance
security, or warranty security.”
*IRR Republic Act No. 9184
 BID BOND WARRANTY
BOND
PERFORMANCE BOND
ADVANCE PAYMENT/
RETENTION MONEY DOWNPAYMENT
BOND BOND

OBLIGEE OBLIGOR
PROCUREMENT BIDDER
ENTITY

*IRR Republic Act No. 9184

 BID BOND
“It refers to the guaranty, in the form and
amount prescribed, that the successful bidder
shall, within ten (10) calendar days or less, as
indicated in the Instructions to Bidders, from
receipt of the notice of award, enter into
contract with the procuring entity and furnish
the performance security required in Section
39 of the IRR, except when Section 37.1 of the
IRR allows a longer period.”
*IRR Republic Act No. 9184
 PERFORMANCE BOND
“It refers to the guaranty posted prior to the
signing of the contract for the faithful
performance by the winning bidder of its
obligations under the contract in accordance
with the Bidding Documents in an amount
equal to the percentage of the total contract
price in accordance with the schedule
provided in Section 39.2 of the IRR.”

*IRR Republic Act No. 9184

 PERFORMANCE
BOND

OBLIGOR/PRICIPAL
BIDDER

*IRR Republic Act No. 9184

 WARRANTY BOND
“It refers to the guaranty that the
contractor shall perform his
responsibilities as prescribed in
Section 62.2.3.1(a) of the IRR against
“Structural Defects” or “Structural
Failures” for infrastructure projects.”

*IRR Republic Act No. 9184

 ADVANCE PAYMENT AND
DOWNPAMENT BOND
“The procuring entity shall, upon a written request of
the contractor which shall be submitted as a contract
document, make an advance payment to the
contractor in an amount not exceeding fifteen
percent (15%) of the total contract price, to be made
in lump sum or, at the most, two installments
according to a schedule specified in the Instructions
to Bidders and other relevant Tender Documents.”

*IRR Republic Act No. 9184

 RETENTION MONEY BOND
“Progress payments are subject to retention of ten
percent (10%) referred to as the "retention money."
Such retention shall be based on the total amount due
to the contractor prior to any deduction and shall be
retained from every progress payment until fifty
percent (50%) of the value of works, as determined by
the procuring entity, are completed. If, after fifty
percent (50%) completion, the work is satisfactorily
done and on schedule, no additional retention shall be
made; otherwise, the ten percent (10%) retention shall
be imposed.”
*IRR Republic Act No. 9184
 RETENTION MONEY ADVANCE PAYMENT/
BOND DOWNPAYMENT
BOND

OBLIGEE
PROCUREMENT
ENTITY

*IRR Republic Act No. 9184

 CONTRACTOR ALL RISK INSURANCE
The IRR of R.A No. 9184 requires that the
1 surety bond to be filed is callable upon
demand and is issued by a surety or insurance
company duly certified by the lnsurance
Commission as authorized to issue such
security.
lf required by the government department or
2 agency, a certification on contractor's all risk
insurance ("CARI') policy may be issued by the
Commission.
*IRR Republic Act No. 9184
 CONTRACTOR ALL RISK INSURANCE

ln a CARI policy, the principal becomes the

3 insured of the policy.

The specific type of bond shall appear in the

certification such as bidder's bond, performance
4 bond, warranty bond, advance payment/down
payment bond, retention money bond, etc.

*IRR Republic Act No. 9184

 Certificate
for
Surety Bond

*IRR Republic Act No. 9184

 Certificate
for
CARI Policy

*IRR Republic Act No. 9184

 REFERENCES

RA 9266 ARCHITECTURE ACT OF 2004

RA 9184 GOVERNMENT PROCUREMENT REFORM ACT