Surety agreement

A surety agreement is an agreement executed by the proper parties as defined by R.A. No. 10744 and its implementing rules and regulations, in favor of the lending bank, whereby the surety obligates itself to be jointly and severally liable with a qualified borrower in the event that the latter defaults: Provided, That a surety agreement shall not be deemed to be an insurance contract and the issuance thereof pursuant to R.A. No. 10744, and those previously issued and to be issued by the Oversight Committees of existing Credit Surety Funds (CSFs), shall not be considered as doing an insurance business under Republic Act No. 10607, otherwise known as “The Insurance Code”, or any applicable law. (Sec. 4(s), R.A. No. 10744)