Contract Bonds
Retention Bond
A surety alternative to cash retention withheld from progress billings.
Overview
A retention bond allows the owner to release retention money to the contractor while keeping equivalent security through a surety undertaking.
It improves contractor cash flow without reducing the owner's protection during the retention or defects period.
Purpose
- Frees retention money for working capital.
- Maintains owner protection during the retention period.
- Reduces disputes over release of retained amounts.
Typical uses
- Release of 10 percent retention on progress billings
- Substitution of retention at project completion
- Long-duration contracts with staged retention
Who normally requires it
- Contractors seeking release of retained amounts
- Subcontractors under back-to-back retention
- Suppliers with retention terms
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
- Contract clause on retention money
- Progress billings and statement of retained amounts
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
- Defects discovered during the retention period
- Non-completion of punch-list items
- Cost of rectification funded by released retention
Frequently asked questions
Will the owner accept a retention bond?
Only if the contract allows substitution of retention with a surety bond. Confirm before applying.
How long does it run?
Usually until the end of the defects liability or warranty period.
More answers on premiums, collateral, and timelines are in the general FAQs.
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SuretyPH is a digital platform for surety bond information, inquiries, requirements and request tracking. It does not underwrite, approve, bind, issue, or guarantee any insurance policy or surety bond. Evaluation, underwriting, approval, pricing and issuance are undertaken by the applicable licensed insurance company.