NPM Date Form of Applicable Provision Issue Answer

Security (If cited)

142-2004 November 5, Performance Whether or not a performance The purpose for requiring the
2004 Security security posted for an ongoing posting of a performance security
contract may be used by the prior to the signing of the contract
service provider for compliance is to guarantee that the winning
with a new and similar contract. bidder will not renege on its
contractual obligations and to
protect the procuring entity’s
interests in the completion of the
project. It is therefore imperative
that performance security be
posted prior to the signing of a
contract and released only after
the contract is completed as
certified by the procuring entity.

In this regard, if the contract for

which the performance security is
posted is still ongoing, the service
provider for that contract cannot
make use of the said performance
security for purposes of compliance
in a new contract regardless of the
fact that the incremental difference
will be paid to cover any shortfall in
amount. A performance security,
being contract specific, may be
retained by the procuring entity
and used for purposes of
compliance with a subsequent
contract only after the contract for
which it was posted has been
completed as certified by the

019-2004 February 26, Performance Section 39.1(c) (IRR- Whether or not a procuring entity
2004 Security A) may require that performance
securities come exclusively from
the Government Service Insurance
System (GSIS).
Whether or not a procuring entity
may impose standards or
requirements in order to ascertain
if the insurance/surety company
issuing the performance security is
reputable.
procuring entity.
It should be noted that procuring
entities have the discretion to
require a particular form of
performance security but such
discretion does not extend to the
authority to require where a
performance security may be
secured because to allow
otherwise would defeat the
principle of competitiveness
espoused under R.A. 9184 and its
IRR-A. The preference of a bidder
on the insurance/surety company
which shall provide it with its
performance security should not
serve as a hindrance in its eligibility
as a bidder.
Considering that the reputable
character of an insurance/surety
company is a requirement that is
subjective in nature, and
considering further that the IRR-A
did not provide guidelines for its
proper determination, it may be
inferred that it was the intention of
the Legislature to vest procuring
entities with the discretion to
impose standards or additional
requirements, e.g., certificate of
accreditation from IC, in ensuring
the reputable character of the
insurance/surety company issuing
 the performance security.

Accordingly, it is our opinion that

your agency may prescribe
standards or additional
requirements to properly ensure
the reputable character of an
insurance/surety company issuing a
performance security provided that
it shall be so stated in the bidding
documents.
077-2007 December 3, Performance Request to relax the application of The purpose of these securities is
2007 Security the following provisions of R.A. to guarantee the faithful
9184 and its IRR-A in favor of performance by the winning bidder
cooperatives of its obligations under the
contract, to assure the procuring
entity that manufacturing defects
shall be corrected by the supplier,
and to warrant that the goods
supplied are free from patent and
latent defects. Any violation of the
contract by the contractor/supplier
would result in the forfeiture
thereof in favor of the
Government.

The undertaking of the security is

to indemnify the Government for
any damage or loss due to non-
completion or non-performance of
projects. In addition, the warranty
provides insurance that should
there be defective works by the
contractor/supplier, the
 Government has the means to
compel the contractor/supplier to
remedy these defective works or
use the money retained to pay
other parties to correct the defects
in a manner satisfactory to the
Government.
053-2007 December 3, Bid Security, Whether bond forms issued by The sample forms prescribed by
2007 Performance insurance companies, such as the the GPPB merely serve as guides.
Security, and bid security, performance security, Eligible bidders need not copy
Warranty Bonds and warranty bonds are still verbatim the language used in the
acceptable in light of the sample sample forms. They may change its
forms issued by the GPPB. wordings as long as the language
employed is consistent with the
purpose and intent of R.A. 9184
and its IRR-A.

The procuring entity must

determine if the contents of the
surety bonds comply with the
following elements such as but not
limited to:

1. The bonds shall be posted in

favor of the procuring entity and
shall be forfeited in favor of the
procuring entity in case of default;

2. It is expressly made specific to

the contract to be bid;

3. It must be in the amount at least

equal to or not lower than the
amount set by the procuring entity

011-2010 April 22, Bid Security, Clarification on what a "bank
2010 Performance draft/guarantee confirmed by a
Security Universal Bank or Commercial
Bank" is and whether the local
Universal Bank or Commercial Bank
can both be the issuing and
confirming bank.
Clarification on the computation of
the amount of bid/performance
security if a combination of the
various forms of bid/performance
security is used.
Whether the posting of
or the IRR-A;
4. The validity or effectivity of the
bonds must be in accordance with
the periods set by the procuring
entity or the IRR-A;
5. It must comply with the other
conditions and requirements under
R.A. 9184. (Sections 27, 39, 62, and
paragraphs 4.2 and 6.2 of Annex
"E" of the IRR-A)
If the procuring entity determines
that the language of the surety
bond meets the requirements
under R.A. 9184, then the bond
submitted is presumed to have
complied with R.A. 9184.
Please note that bank-issued
instruments, as acceptable forms of
bid or performance securities, are
required to be confirmed only if
these are issued by a foreign bank.
The intent is to have a local
Universal or Commercial Bank
guarantee the obligations of a
foreign issuing bank. (Feati Bank &
Trust Co. v. C.A. 196 SCRA 576 with
regard to the commitments made
by a bank once it confirms a bank
instrument.) Consequently, a local
Universal or Commercial Bank
cannot be both the issuing and
performance and warranty
securities required in all alternative
modes of procurement and
whether the procuring entity may
still require the posting of
performance and warranty
securities in instances these are not
required under the IRR.
confirming bank.
If a bidder opts to use at least one
or a combination of the acceptable
forms of bid security, then the
amount of each form should be
proportionate to the share of said
form with respect to total amount
of security. For instance, if the
Approved Budget for the Contract
(ABC) is P1 million, and bidder
intends to secure its bid 60% by
cash and the remaining 40% by
surety bond, then the amount of
each form of bid security should be
as follows:
Amount of Cash
= (ABC x 2%) x 60%
= (1,000,000 x .02) x .6
= 20,000 x .6
= P12,000
Amount of Surety Bond
= (ABC x 5%) x 40%
= (1,000,000 x .05) x .4
= 50,000 x .4
= P 20,000
Section 54.5 of the IRR prescribe
that, as a general rule,
performance and warranty
securities are still required except
for Section 52 (Shopping), 53.2
 (Emergency Cases), 53.9 (Small-
value Procurement), 53.10 (Lease
of Real Property) and 53.13 (UN
Agencies).

In the aforesaid instances when the

posting of securities is not
mandatory, the procuring entity
may still require the posting of said
securities. It bears stressing that
the IRR prescribes the minimum
requirements. Procuring entities
may require additional terms and
conditions than those prescribed
by the IRR as long as these
reasonable and redounds to the
benefit of the government.
024-2010 July 7, 2010 Performance Inquiry on the correct form of The certification which must be
Security certification that should submitted by the bidder together
accompany the surety bond which with the surety bond must (i)
is submitted as a bid or unequivocally state that the surety
performance security. or insurance company is specifically
authorized to issue surety bonds
callable upon demand, and (ii)
must be issued by the Insurance
Commission. Consequently, a copy
of the firm's license or certificate of
authority to transact in insurance
business will not suffice. It must be
a separate certificate which cannot
be issued by any other entity
except the Insurance Commission.
013-2006 July 17, 2006 Performance What would be the proper course Project Implementation
Security and of action that may be taken by a PE
Warranty against the erring awardee who During project implementation, the
Security submitted a fraudulent warranty PE has the following legal
security? remedies under R.A. 9184 and its
IRR:

a. Terminate the contract for

drawing up or using forged
documents. (GPPB Resolution No
18-2004 approving the Guidelines
on Termination of Contracts); and

b. Initiate blacklisting proceeding

against the contractor under any of
the following grounds: (i) failure to
fully and faithfully comply with its
contractual obligation without valid
cause; or (ii) failure to comply with
the written lawful instruction of the
procuring entity or its
representative(s) pursuant to the
implementation of the contract.
(GPPB Resolution No 9-2004
approving the Uniform Guidelines
for Blacklisting).

Project Completion

After a project has been completed

and the contractor was found to
have submitted a fraudulent
warranty security, the procuring
entity shall have the same legal
options described above if it has
not fully paid the contractor.
However, if the procuring entity
has fully paid up or complied with
its contractual commitments, then
it may only initiate blacklisting
proceeding against the contractor
since there is no more contract to
terminate.

Contract Termination

In the event that the procuring

entity exercised the first option and
terminated the contract, it
continues to be legally bound to
pay the cost of completed works
pursuant to the principle of
quantum meruit. Following Section
3, number 45 of the General
Conditions of the Contract under
the Philippine Bidding Documents
(PBD's), the procuring entity should
determine and pay the value of the
work done and the materials
ordered less advance payments
made up to the date of the
contract termination and less the
percentage to apply to the value of
the work not completed, as
indicated in the Special Conditions
of the Contract. However, should
total amount due the procuring
entity exceed any payment due the
contract awardee, the difference
shall be considered as debt payable

018-2012 February 2, Bid Security, Whether the winning bidder's
2012 Performance submission of performance security
Security prior to the lapse of the bid
security and within the three-
month reglementary period
provided in Section 38.1 of the
Implementing Rules and
Regulations (IRR) of Republic Act
(RA) 9184, under the situation
where the Notice of Award (NOA)
was timely issued, but the
execution of the corresponding
contract and the issuance of the
Notice to Proceed were deferred
beyond said period, may be
considered compliant with the
procurement rules.
017-2012 February 2, Bid Security, Section 27, Section Clarification as regards the
2012 Performance 39 (2009 IRR) prescribed format and the required
Security information of the certification that
should accompany a surety bond
submitted as a bid or performance
security provided in Sections 27
and 39.
to the procuring entity.
If the NOA was issued and the
winning bidder has submitted a
performance security within the
three-month period, the
requirement that the bid security
should remain valid no longer finds
application considering that the
act, i.e. the offer, which it
guarantees has already been
accepted. In other words, since the
offer/bid was accepted through the
issuance of the NOA, during the
validity of the bid and the
corresponding bid security, it is no
longer relevant whether the bid
security was extended or not.
Accordingly, under the attending
circumstances, the non-extension
of the validity of the bid security
should not prevent the execution
of the contract.
With respect to the format of the
certification, please be informed
that since the authority to issue
such certification belongs with the
Insurance Commission, it has the
prerogative to determine the
format therefor.
As regards the content of the
certification, please note that as
discussed in a previous opinion and
in compliance with Sections 27.2 (c)
 and 39.2 (c), the certification which
must be submitted by the bidder
together with the surety bond must
(i) unequivocally state that the
surety or insurance company is
specifically authorized to issue
surety bonds callable on demand,
and (ii) must be issued by the
Insurance Commission. Further, we
wish to note that since the surety
bond required under Sections 27.2
(c) and 39.2 (c) is required to be
project specific, the certification
from the Insurance Commission
must also be project specific.
019-2012 July 16, 2012 Performance Section 39.1, Section Whether the procurement of Section 39.1 of the Implementing
Security, 54.5 (2009 IRR) Liquefied Petroleum Gas (LPG) Rules and Regulations (IRR) of
Warranty through Direct Contracting may be Republic Act (RA) No. 9184
Security exempt from the submission of provides that a winning bidder shall
performance and warranty post a performance security prior
securities. to the signing of the contract to
guarantee the faithful performance
of its obligations under the
contract in accordance with the
Bidding Documents.

Moreover, Section 54.5 of the IRR

of RA 9184 provides that, as a
general rule, performance and
warranty securities are required
except for procurement under
Section 52 (Shopping), 53.2
(Emergency Cases), 53.9 (Small-
value Procurement), 53.10 (Lease
 of Real Property) and 53.13 (UN
Agencies).

Direct Contracting is not one of the

exceptions to the requirements of
posting of performance and
warranty securities.
092-2012 July 23, 2012 Performance Section 39.2 (2009 Which between the Approved Section 39.2 of the IRR of RA 9184
Security IRR) Budget for the Contract and is clear that the Performance
Contract Price should be the basis Security, whether it is in the form
for the amount of performance of cash, cashier's/manager's check,
security? bank draft/guarantee or
irrevocable letter of credit, surety
bond callable upon demand, or any
combination thereof, should be
equal to the percentage of the total
contract price. A similar provision
on Performance Security appears
under Clause 32.2 of the
Instruction to Bidders (ITB) of the
Philippine Bidding Documents
(PBDs) for the Procurement of
Infrastructure Projects.

It is the amount of Bid Security that

must be equal to the corresponding
percentage of the ABC under
Section 27.2 of the IRR while
Performance Security is based on
the total contract price as
aforementioned.
106-2012 August 29, Performance Section 39.2 (2009 Which between the Approved Section 39.2 of the IRR of RA 9184
2012 Security IRR) Budget for the Contract and is clear that the Performance
Contract Price should be the basis Security, whether in the form of
 for the amount of performance cash, cashier's/manager's check,
security? bank draft/guarantee or
irrevocable letter of credit, surety
bond callable upon demand, or any
combination thereof, should be
equal to the percentage of the total
contract price. A similar provision
appears under Clause 32.2 of the
Instruction to Bidders (ITB) of the
Philippine bidding Documents
(PBDs) for the Procurement of
Infrastructure Projects.
035-2013 March 27, Performance Uniform Guidelines Whether the payment of Section 4.1.5 of the Guidelines
2012 Security for Blacklisting of Performance Security through a provides that the refusal or failure
Manufacturers, personal check is one of the of a contractor to post the required
Suppliers, grounds to blacklist a winning Performance Security within the
Distributors, bidder based on Section 4.1.5 of prescribed period is one of the
Contractors and the Uniform Guidelines for grounds for blacklisting. The
Consultants Blacklisting of Manufacturers, aforesaid provision thus considers
Suppliers, Distributors, Contractors two situations - (1) Refusal to post
and Consultants (Guidelines). the required Performance Security,
or (2) Failure to post the required
Performance Security. Failure to
post denotes the inability to post
the Performance Security in the
required form and in accordance
with the corresponding
percentages indicated in Section
39.2 of the IRR of RA 9184. Hence,
the submission of a Performance
Security in the form of a personal
check after the signing of the
contract could be considered as a
failure to post the required

037-2012 April 10, Performance Implementing Whether PEs are exempt from
2012 Security Guidelines on posting a Performance Security
Agency-to-Agency provided for under Section 39 of
Agreements Republic Act No. 9184 when they
enters into any procurement
contract with other government
agencies and instrumentalities.
098-2013 December Performance Whether the performance security
20, 2013 Security posted by the winning bidder, on
the basis of a Notice of Award
(NOA) issued in its favor, should be
forfeited in the event that it is
found that another procuring entity
has previously issued a Blacklisting
Order against the same bidder.
Performance Security.
The Implementing Guidelines on
Agency-to-Agency Agreements
(Guidelines), which describes the
conditions when a government
agency may procure from another
agency without need of public
bidding pursuant to Section 53.5 of
the IRR of RA 9184, provides under
Section 5(c) thereof that the
Procuring Agency may require the
Servicing Agency to post a
Performance Security under
Section 39 of RA 9184. This
suggests that the posting of a
Performance Security is an option
which the procuring agency may
impose upon the servicing agency
subject to the former's discretion.
Accordingly, PEs may be required
to post Performance Security for
contracts where the PE has elected
to require the same from another
government agency.
The performance security posted
by winning bidder on the basis of
the NOA issued in a PEs favor
cannot be forfeited, but should
instead be returned in accordance
with the principle of solutio indebiti
under Article 2154 of the Civil Code
of the Philippines.
Under Section 39.1 of the IRR of RA

120-2013 December Performance NGO Participation in Whether NGOs selected to perform
26, 2013 Security Public Procurement contracts acquired through
Negotiated Procurement (NGO
Participation) under Section 53.11
of the revised Implementing Rules
and Regulations (IRR) of Republic
Act No. (RA) 9184 are required to
post performance security even if
such contract does not involve an
infrastructure project.
079-2014 October 22, Performance Whether it is mandatory for a
2014 Security winning bidder under the
Negotiated Procurement (Two-
Failed Biddings) to post a
performance security
9184, the posting of a performance
security and its forfeiture depend
on a validly awarded contract.
Considering that the NOA issued by
a PE has no force and effect, the
winning bidder has no obligation to
post a performance security in
favor of the procuring entity
because there is no contract
performance to guarantee in the
first place.
Regardless of the category of
procurement for a contract where
the NGO is engaged using
Negotiated Procurement (NGO
Participation) under Section 53.11
of the IRR of RA 9184 and Section 6
of the NGO Participation in Public
Procurement (Guidelines), the
selected NGO is required to post a
performance security upon signing
of the MOA. The Guidelines require
the posting of performance
security in accordance with Section
39 of the IRR of RA 9184 regardless
of the modality adopted in
selecting the NGO.
As a rule, performance and
warranty securities are required
except for procurement under
Sections 52 (Shopping), 53.2
(Emergency Cases), 53.5 (Agency-
to-Agency). 53.9 (Small Value
Procurement), 53.10 (Lease of Real

069-2015 December Performance Which between the five percent
29, 2015 Security (5%) performance security for
delivery of goods and the ten
percent (10%) performance
security for infrastructure projects
shall be used, in case it is necessary
for the winning bidder to
undertake an infrastructure
component before it can the
delivery of the goods
Property), 53.12 (Community
Participation), and 53.13 (UN
Agencies).
Negotiated Procurement under the
two-failed bidding modality is not
one of the exceptions to the
requirements of posting of
performance and warranty
securities. Thus, it is a mandatory
requirement for the winning bidder
to post the required Performance
Security for procurement
employing the negotiated mode
under two-failed biddings.
In case of projects involving mixed
procurements, we wish to clarify,
however, that the nature of the
procurement, i.e., goods,
infrastructure projects, or
consulting services, shall be
determined based on the primary
purpose of the contract.
The amount of performance
security, if the form used is either
cash, cashier's/manager's check,
bank draft/guarantee or
irrevocable letter of credit issued
by a Universal or Commercial Bank,
depends on the nature of
procurement project as
determined by the PE, that is, five
percent (5%) of the total contract

006-2016 March 18, Performance Whether it is allowed to post a
2016 Security performance security in the form of
a Security Bond issued by an
accredited insurance company by
the Insurance Commission of the
Philippines.
103-2016 November Performance Whether a winning bidder who is
15, 2016 Security found to have submitted
fraudulent eligibility documents
may be allowed to withdraw its
Performance Security after the
issuance of the Notice to Proceed
(NTP) but prior to delivery of the
subject matter of the contract.
price if the nature of the project is
either goods or consulting services,
or ten percent (10%) of the total
contract price if infrastructure
projects.
PEs now have the right to indicate
in the Bidding Documents at least
two (2) acceptable forms of
performance security from which
the bidder may opt to use. Thus, if
the PE indicated in the bidding
documents that only cash or
cashier's/manager's check, bank
draft/guarantee or irrevocable
letter of credit are the acceptable
forms of performance security that
its winning bidder may choose
from, then the latter may not post
any other form of performance
security, i.e. the Surety Bond, albeit
it is one of the forms provided
under the rules.
A Performance Security is a
guarantee that the winning bidder
will faithfully perform its
obligations under the contract in
accordance with the Bidding
Documents, it shall post a
Performance Security prior to the
signing of the contract.
Upon submission of the
Performance Security, and the
subsequent execution of the
 contract and issuance of the NTP,
the Performance Security may not
be withdrawn by the winning
bidder as it already operates to
guarantee the existing contract
between the contracting parties.

Accordingly, the winning bidder

may not be allowed to withdraw its
Performance Security after the
issuance of the Notice to Proceed
because it stands to guarantee the
contract entered into by the
procuring entity and the winning
bidder.
055-2017 December Performance Section 39, Section Determination of the amount of The imposition of performance or
21, 2017 Security, 62 (2016 Revised Performance Security and warranty security and
Warranty IRR) Warranty Security to require from determination of the amount or
Security suppliers in any of the alternative rate of performance and warranty
modes security shall depend on which
alternative method of procurement
is adopted by the Procuring Entity.
The amount of performance and
warranty securities shall depend on
the form chosen by the winning
bidder and shall be based on the
total contract price and not on the
Approved Budget of the Contract
(ABC) pursuant to Sections 39 and
62 of the 2016 IRR of RA 9184.
019-2017 November Performance Section 54.5 (2016 Whether posting of Performance Section 54.5 of the 2016 revised
21, 2017 Security Revised IRR) Security is required as a condition Implementing Rules and
precedent for the award of Regulations (IRR) of Republic Act
contract in Negotiated (RA) No. 9184 prescribes the rules
 Procurement under Highly
Technical Consultants modality.
on the posting of Performance
Security applicable to alternative
methods of procurement. Posting
of Performance Security is required
only in Limited Source Bidding and
Negotiated Procurement under
Two Failed Biddings, Take-over of
Contracts and Adjacent or
Contiguous modalities. On the
other hand, for Negotiated
Procurement under Emergency
Cases and Small Value
Procurement modalities, procuring
entity may require posting of
Performance Security depending
on the nature of the procurement
project, provided that it shall be
required in infrastructure projects.

Based on the foregoing, we would

like to clarify that posting of
Performance Security is not
required as a condition precedent
for the award of contract in
Negotiated Procurement under
Highly Technical Consultants
modality.
083-2017 December Performance Section 39 (2016 Whether the posting of We wish to clarify that the posting
29, 2017 Security Revised IRR) Performance Security is of the performance security is a
mandatory. mandatory requirement. Section 39
of RA No. 9184 mandates that prior
to the signing of contract, the
winning bidder shall, as a measure
to guarantee the faithful

124-2017 December Bid Security, Whether PEs may limit the
29, 2017 Performance prospective bidders to the
Security submission of the following:
(a) a Bid Securing Declaration
(BSD) or bank draft/guarantee or
irrevocable letter of credit issued
by a Universal or Commercial Bank
as its preferred form of Bid
Security; and
(b) a bank draft guarantee or
irrevocable letter of credit issued
by a Universal or Commercial Bank
or a surety bond callable upon
demand issued by a surety or
insurance company duly certified
by the Insurance Commission as its
preferred form of Performance
Security.
performance of and compliance
with his obligations under the
contract prepared in accordance
with the Bidding Document, be
required to post a performance
security in such form and amount
as specified in the Bidding
Documents.
Under the 2016 revised IRR, the
option to choose which one (1)
form of bid security and
performance security to submit
solely belongs to the bidders, such
that the PE can no longer limit the
acceptable forms of bid security, as
well as that of performance
security, in its Bidding Documents
as provided under GPPB Resolution
No. 25-2013 and clarified in GPPB
Circular No. 01-2014.
We wish to note that the intention
of the rule is to encourage greater
participation in competitive bidding
by granting the bidders the right to
choose any of the prescribed forms
of bid security and performance
security. In any case, the
acceptable forms provided under
the 2016 IRR of RA 9184 were
deliberated and considered as
adequate to ensure that the
procuring entities would not be left
without remedy in the event that

017-2018 May 8, 2018 Bid Security, Section 27.2, Section Whether or not forms of Bid
Performance 39.2 (2016 Revised Security as provided under Section
Security IRR) 27.2 and the forms of Performance
Security under Section 39.2 of the
2016 revised Implementing Rules
and Regulations (IRR) of Republic
Act (RA) No. 9184 are fixed and
exclusive, such that the procuring
entity cannot remove from or add
to, any of the forms provided in the
2016 revised IRR?
026-2018 September Performance Whether or not the government
20, 2018 Security agency may forfeit the entire
amount of the posted performance
bond in case of non-completion of
the project and blacklisting with
the bidder withdraws its bid or
refuses to enter into contract with
the procuring entity upon award;
or when the winning bidder
defaults in the performance of its
obligations under the contract.
Accordingly, under the present
state of the rules, PEs cannot limit
the forms of bid security and
performance security to only two
(2) preferred forms. Ultimately, it is
the bidder that has the discretion
and choice as to what form of bid
or performance security it shall
post, and a departure therefrom
would be a violation of the existing
procurement rules and regulations.
Under the 2016 IRR of RA 9184, the
prospective bidder has the
discretion to select the form of Bid
Security to accompany its bid, and
the Performance Security to
guarantee the faithful performance
of its obligations under the
contract
A government agency shall forfeit
the entire performance security in
case of non-completion of the
project, and blacklist the bidder
except in instances where partial
the GPPB despite the projects are delivery or performance is allowed.
already 95% and 69% completed