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Surety Bond

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Surety Bond

Post by TalnaPj on Mon Jan 11, 2010 11:46 am

Recently, our agency rescinded an infrastructure contract with our contractor due to the latter's inaction in performing its obligations. The mobilization fee equivalent to 15% of the total ABC for the project was released in favor of the contractor after it had posted a surety bond to that effect (also equivalent to the same amount being released to it by our agency).

With this scenario and after all the steps in the termination of contracts have been made, our agency now wants to recover the amount released to the contractor through the surety bond issued in our favor.

My question now is, does anyone know the procedure/s on how to recover the amount from the Insurance Company?

This is our first time to encounter this type of situation and your help will be very much appreciated.

Many thanks!
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Re: Surety Bond

Post by Guest on Mon Jan 11, 2010 1:50 pm

go to the insurance company who issued the surety bond in favor of the bidder and claim it there. you can also ask them the procedure in claiming.

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Re: Surety Bond

Post by TalnaPj on Mon Jan 11, 2010 3:07 pm

thank you very much!
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Re: Surety Bond

Post by sunriser431 on Mon Jan 11, 2010 3:36 pm

TalnaPj wrote:Recently, our agency rescinded an infrastructure contract with our contractor due to the latter's inaction in performing its obligations. The mobilization fee equivalent to 15% of the total ABC for the project was released in favor of the contractor after it had posted a surety bond to that effect (also equivalent to the same amount being released to it by our agency).

With this scenario and after all the steps in the termination of contracts have been made, our agency now wants to recover the amount released to the contractor through the surety bond issued in our favor.

My question now is, does anyone know the procedure/s on how to recover the amount from the Insurance Company?

This is our first time to encounter this type of situation and your help will be very much appreciated.

Many thanks!
You can also institute Blacklisting to the contractor. for the guidelines click this link http://www.gppb.gov.ph/issuances/Guidelines/2004/Blacklisting.pdf
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Re: Surety Bond

Post by amang'65 on Mon Jan 11, 2010 5:12 pm

as a learning experience, i suggest make all bonds payable in cash, it is more soluble, unlike surety bond through an insurance company, mahirap maclaim ang daming requirements.
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Re: Surety Bond

Post by msm326 on Mon Jan 11, 2010 5:26 pm

Good day.....
WE had an experience on claiming such a long time ago on our Public Market Project and took us a couple of months before we were able to claim just inquire on the insurance company and of course proper documentations....Sunrise has a point on the procedures for blacklisting that is one way to make this constructor learn a lesson too.
msm326 Very Happy
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Re: Surety Bond

Post by Niwram on Tue Jan 12, 2010 9:19 am

liquidated damages are also proper to collect before blacklisting..
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Re: Surety Bond

Post by kim_wd on Fri Jan 29, 2010 9:17 am

amang1965 wrote:as a learning experience, i suggest make all bonds payable in cash, it is more soluble, unlike surety bond through an insurance company, mahirap maclaim ang daming requirements.

Before, when we make our bid documents, we specify the forms of bid/performance security from which the bidders can choose. We really do not include surety bond, knowing the hassles in claiming from insurance companies, not to mention the question on its integrity. However, with the advent of the revised IRR, the procuring entity cannot anymore specify their preferable forms, lahat talaga ipe-present mo as choices incl. surety bond. Now, surety bonds are ok provided the bidder should secure a certification from the Insurance Commission on capability of a particular insurance company.
Is the certification sufficient assurance to the procuring entity that it can claim from that insurance company in the event na mag-fail yung bidder to perform his obligations? Tanong ko lang po.
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Re: Surety Bond

Post by Guest on Fri Jan 29, 2010 9:35 am

No, the certification is not an assurance kasi evaluate pa ng insurance company ung liability ng bidder e. Ung certification is only an evidence to prove na they have the authority to issue surety bonds.

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Re: Surety Bond

Post by Guest on Thu Jul 21, 2011 1:06 pm

A disqualified bidder submitted a motion for reconsideration on the contention that it is not being directly stated in the ITB that the certification from the Insurance Commission be attached to the surety bond, and submitted the required certification along with his motion. The BAC denied his motion, stating that the said clause must be understood in ts full context, that stating directly its attachement there is unnecessary, and reminded the bidder that this was even stressed during the pre-bid conference and is in the minutes. Is the BAC right in its decision?

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Re: Surety Bond

Post by engrjhez® on Thu Jul 21, 2011 4:41 pm

eagerlearner wrote:A disqualified bidder submitted a motion for reconsideration on the contention that it is not being directly stated in the ITB that the certification from the Insurance Commission be attached to the surety bond, and submitted the required certification along with his motion. The BAC denied his motion, stating that the said clause must be understood in ts full context, that stating directly its attachement there is unnecessary, and reminded the bidder that this was even stressed during the pre-bid conference and is in the minutes. Is the BAC right in its decision?

A reading of ITB Clause 12.1.b (i.2) reveals that the inclusion of a certification from Insurance Commission is required:
"a surety bond, it shall be accompanied by a certification by the Insurance Commission that the surety or insurance company is authorized to issue such instruments;"
This is clearly stated in the Philippine Bidding Documents as issued by the GPPB. Hence, the BAC's decision is IN ORDER following the non-discretionary "pass/fail" criteria. Smile


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Re: Surety Bond

Post by vince on Sun Jan 01, 2012 11:53 pm

Is it necessary for the certification from the IC to be project specific or for the project title to be specified in the certification? or is it enough that the certification states that the surety/bonding company is authorized to issue bonds callable on demand?

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Re: Surety Bond

Post by RDV @ GP3i on Thu Jan 05, 2012 7:02 am

vince wrote:Is it necessary for the certification from the IC to be project specific or for the project title to be specified in the certification? or is it enough that the certification states that the surety/bonding company is authorized to issue bonds callable on demand?

The certification should not be project-specific because the Insurance Commission certification is pertaining to the surety/insurance company, that it is duly authorized to issue a surety bond callable on demand. The Certification would be good for a year; hence, it could be used in all bidding it participates in during the period that the certification is still valid.
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Re: Surety Bond

Post by vince on Fri Jan 06, 2012 9:04 pm

Thanks for the reply Sir RDV, I totally agree. In fact, the term "project specific" is not found in the PBD for Infrastructure Projects. It is unfortunate that there seems to be different interpretations of this requirement, even among procurement trainers, resulting in the confusion among bidders. I hope the GPPB can come up with an opinion on this matter for the guidance of everyone.

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Re: Surety Bond

Post by Jovinal on Sat Jan 07, 2012 12:22 pm

I wish there will be an Annotated Version of Books for RA. No. 9184.
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a surety bond

Post by sonia2010 on Thu Jan 12, 2012 5:32 pm

Hi,
You should claim to them necessarily and perhaps its your basic right...

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Re: Surety Bond

Post by mari on Fri Jan 13, 2012 11:46 am

hello,

just would like to know if people's organizations (POs) are required to post performance bond? am referring to people's organizations which our agency has organized. the composition of these POs are
marginal communities in the uplands.... are they also required to enrol with PhilGeps just so they could enter into a letter of agreement (LOA) or MOA with us to undertake projects which are programmed for them? Are there specific/concrete guidelines as to negotiated procurement involving community participation? We have 8 POs which have not been paid yet (almost 4 months now) because our BAC and Accountant do not agree on a lot of things. Obligation Requests (ObRs) have been cancelled because the accountant argued that the BAC did not abide by the timeline for the awarding process.

Thank you po.

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Re: Surety Bond

Post by Jovinal on Fri Jan 13, 2012 11:26 pm

Ask lang ko for clarification, ano ang transaction between the PO and you agency, may procurement ba?
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Re: Surety Bond

Post by clenio14@yahoo.com on Tue Jan 31, 2012 4:04 pm

Is the Certificate of Authority to conduct business issued to insurance companies by IC, the one required for bidding as an accompanying document of the surety bond? Or is it another certification from IC stating specificaly that such insurance is authorized to issue surety bonds

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Re: Surety Bond

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