1. SURITYSHIP
Sec 175-178, Insurance Code
of the Philippines
By: Paul I. Pili,

2. PAYMENT OF PREMIUMS
RULES ARE AS FOLLOWS:
• 1. The premiums becomes a debt
as soon as the contract of
suretyship or bonds is perfected
and delivered to the obligor (sec. 77)

3. PAYMENT OF PREMIUMS
• SECOND RULE
• 2. The contract of suretyship
or bonding shall not be valid
and binding unless and until
the premium therefore has
been paid.

4. PAYMENT OF PREMIUMS
THIRD RULE
• 3. Where the obligee has accepted
the bond, it shall be valid and
enforceable notwithstanding that
the premium has not been paid.
(Philippine Pryce Assurance Corp vs. Court of Appeals,
230 SCRA 164 [1994].);

5. PAYMENT OF PREMIUMS
• 4TH RULE
• If the contract of suretyship
or bond is not accepted by or
filed with the obligee , the
surety shall collect only a
reasonable amount;

6. PAYMENT OF PREMIUMS
• 5TH RULE
• If the non-acceptance of the
bond be due to the fault or
negligence of the surety, no
service fee, stamps, or taxes
imposed shall be collected by
the surety; and

7. PAYMENT OF PREMIUMS
• 6TH RULE
• In the case of continuing bond
(for a term longer than one year
or with no fixed expiration date),
the obligor shall pay the
subsequent annual premium as it
falls due until the contract is
cancelled. (sec 177)

8. TYPES OF BONDS

9. KINDS OF BONDS
• 1. Fidelity Bonds
• 2. Surety Bonds

10. Fidelity Bond
• Bond that answers for the
loss of an employer who is
the obligee for the
dishonesty of the
employee.

11. Surety Bond
• surety bond
A bond given to protect the recipient against
loss in case the terms of a contract are not
filled; a surety company assumes liability for
non-performance
• [syn: performance bond]

12. TYPES OF SURETY BONDS
•
• 1. Contract Bonds
• 2. Fidelity Bonds
• 3. Judicial Bonds

13. KINDS OF BONDS
TYPES OF SURETY BONDS
1. CONTRACT BONDS

14. Contract bond
• Guarantees contractual obligations.
Connected with construction and supply
contracts. They are for the protection of
the owner against a possible default by
the contractor to comply with his contract
or his possible failure to pay material men,
laborers and sub contractors.

15. 1. Performance bond
• Secures, that the contractor will faithfully
comply with the requirements of the contract
awarded to the contractor and make good
damages sustained by the project owner
incase of contractor’s failure to do so.

16. 2. Payment bond
• Secures that the payments of bills for the labor
and materials used in building a project.

17. TYPES OF SURETY BONDS
TYPES OF SURETY BONDS
2. FIDELITY BONDS

18. FIDELITY BONDS
• Bond that answers for the loss of an employer
who is the obligee for the dishonesty of the
employee.

19. CLASSIFICATION OF FIDELITY BOND
• A. Industrial Bond
• B. Public Official Bond

20. Industrial Bond
• One required by private
employers to cover loss
through dishonesty of
employees.

21. Public Official Bond
• One required of public
officers for the faithful
performances of their
duties.

22. KINDS OF BONDS
TYPES OF SURETY BONDS
3. JUDICIAL BONDS

23. JUDICIAL BONDS
• They are those which are
required in connection with
the judicial proceedings.

24. Most common kinds of
JUDICIAL BONDS
• a. Replevin bonds
• b. Injunction bonds
• c. Attachment bonds bond
• d. Bail bond
• e. Appeal Bonds

25. PERTINENT CIVIL CODE PROVISIONS
APPLICABLE IN A SUPPLETORY CHARACTER

26. Sec. 178, Insurance Code
• Pertinent provisions of the Civil Code of
the Philippines shall be applied in a
suppletory character whenever necessary
in interpreting the provisions of a contract
of suretyship.

27. PERTINENT CIVIL CODE PROVISIONS
APPLICABLE IN A SUPPLETORY CHARACTER

28. CONTINUING SURETY
• By executing such agreement, the principal
places itself in a position to enter into the
projected series of transaction with its creditor
with such suretyship agreement, there would
be no need to execute a separate surety
contract or bond for each financing or credit
accommodation extended to the principal
debtor

29. • .“In the case of a continuing bond, the obligor
shall pay the subsequent annual premium as it
falls due until the contract of suretyship is
cancelled by the obligee or by the
Commissioner or by a court of competent
jurisdiction, as the case may be.” Sec. 177.

30. REIMBURSEMENT.
• A surety to who paid the obligee can recover
what he paid from the principal. Usually
covered by a separate INDEMNITY AGREEMENT
signed by the principal in favor of the surety
whereby the principal expressly agrees to
reimburse the surety whatever amount that it
will be required to pay the obligee.

31. Extinguishment.
• Obligation of surety is extinguished at the
same time as that of the principal and for some
causes as all other obligations.
• Suretyship is extinguished if there is material
alteration of the principal obligation. For example an
extension granted to the debtor by the credit or without the consent of
the surety extinguishes the surety.

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