Contract Drafting and Review Services in the Philippines
Contracts define the terms of every commercial relationship your business enters, from hiring your first employee to engaging a supplier, signing a lease, or formalizing a partnership. When those terms are clear, enforceable, and properly documented, they protect your interests. When they are not, they create disputes that cost more to resolve than the original contract cost to get right.
STLAF Global provides contract drafting and review services for businesses operating across the Philippines. As part of our broader corporate legal services, we handle both the creation of new contracts and the independent review of contracts you have received, across all major business contract types under Philippine law.
What sets STLAF apart from a standard law firm: we have both lawyers and Certified Public Accountants on staff. For contracts that require both legal enforceability and compliance with professional accountancy standards, including audit engagement letters, bookkeeping service agreements, and advisory retainer agreements, that dual capacity is not a marketing point. It is a practical advantage that no law-only or accountancy-only firm can replicate.
Contract Drafting Services
Under Articles 1305 to 1422 of the Civil Code of the Philippines, a valid contract requires three essential elements: consent of the contracting parties, a definite object, and a cause or consideration. These requirements apply regardless of whether the contract is drafted by a lawyer or downloaded from the internet. The difference is whether the specific terms are enforceable, internally consistent, compliant with Philippine mandatory provisions, and built to protect your particular interests.
STLAF drafts contracts that meet those standards. The primary contract types we handle for Philippine businesses:
| Contract Type | Typical Use Case | Notarization | Key Clauses |
|---|---|---|---|
| Employment Contract | Hiring regular or probationary employees | No (advisable) | Probationary period; termination grounds; DOLE-compliant benefits |
| Contract of Lease | Commercial space, equipment, residential tenancy | No (except registered leases) | Rental amount; term and renewal; permitted use; return conditions |
| Service Agreement / Retainer | Freelancers, consultants, outsourced service providers | No | Scope of work; payment terms; IP ownership; limitation of liability |
| Non-Disclosure Agreement (NDA) | Business development, investor discussions, employee confidentiality | No | Definition of confidential information; term; remedies for breach |
| Memorandum of Agreement (MOA) | Binding partnership or collaboration arrangements | No (common practice) | Obligations per party; deliverables; governing law; dispute resolution |
| Memorandum of Understanding (MOU) | Preliminary arrangements, intent statements | No | Specify binding or non-binding; definite terms if binding |
| Deed of Sale (personal property) | Vehicles, equipment, goods | No (advisable) | Description and condition; purchase price; warranties |
| Deed of Sale (real property) | Land or buildings | Yes | Property description with TCT/OCT; purchase price; representations |
| Shareholders / JV Agreement | Equity arrangements, joint ventures | No | Equity structure; voting rights; exit mechanisms; dispute resolution |
| Audit Engagement Letter | Scope of audit, CPA and client obligations | No | Scope; management responsibilities; fees; BOA-compliant representations |
| Bookkeeping Service Agreement | Ongoing bookkeeping or accounting retainer | No | Service scope; monthly deliverables; data access; confidentiality |
| Tax Advisory Retainer Agreement | BIR compliance, ongoing tax planning | No | Scope of advice; exclusions; fees; engagement period |
Employment Contracts
Employment contracts establish the terms of the employment relationship and define the rights and obligations of both employer and employee. Under Philippine labor law, all employees, whether regular, probationary, project-based, or seasonal, should have a written employment agreement that accurately reflects the nature and terms of their engagement.
Key clauses STLAF addresses in every employment contract: probationary period (up to six months, with specific performance standards if dismissal on probation is intended); grounds for termination by either party; job description and reporting structure; compensation, statutory benefits, and any additional entitlements; post-employment restrictions where applicable; and Data Privacy Act compliance for the handling of employee personal data.
Businesses that engage independent contractors rather than employees should also review their obligations for proper classification. Misclassification as a recurring issue under Philippine labor law is covered in our labor relations and HR compliance services.
Lease Agreements
A Contract of Lease in the Philippines is governed by the Civil Code and, for specific lease types, by the Rent Control Act. Whether you are taking a commercial space, leasing equipment, or entering a residential tenancy arrangement, the terms of the lease directly affect your operational flexibility, your financial exposure, and your ability to exit the arrangement.
Key clauses STLAF addresses in every lease agreement: the lease period and renewal terms; the rental rate and escalation formula; permitted use and restrictions on alterations; the party responsible for maintenance and repairs; return conditions for the premises or equipment; and early termination procedures.
Notarization of a Contract of Lease is not required for validity under Philippine law. However, leases of one year or longer that are entered into the civil registry or registered with BIR for tax purposes must be in writing and in many cases are notarized as a matter of standard commercial practice.
Service Agreements and Retainer Contracts
Service agreements define what services will be provided, by whom, over what timeline, and at what cost. For any ongoing commercial relationship, from a freelance arrangement to a corporate outsourcing engagement, a well-drafted service agreement prevents scope disputes, protects intellectual property, and establishes clear remedies if either party fails to perform.
Key clauses STLAF addresses: scope of work with specific deliverables; payment schedule and invoicing terms; ownership of work product and intellectual property; confidentiality obligations; limitation of liability; and termination rights.
For professional service retainer agreements, including legal retainers, accountancy retainers, and consultancy arrangements, STLAF also addresses the professional standards requirements applicable to the service provider.
Non-Disclosure Agreements (NDA)
Non-Disclosure Agreements protect confidential business information shared in commercial negotiations, due diligence processes, investor discussions, and employee relationships. In the Philippines, NDAs are enforceable under the Civil Code and, where personal data is involved, must also comply with the Data Privacy Act (RA 10173).
Key clauses STLAF addresses: a precise definition of what constitutes confidential information (and what is excluded); permitted disclosures; the term of the confidentiality obligation; return or destruction of materials; and specific remedies for breach, including injunctive relief.
NDAs do not require notarization to be valid or enforceable in the Philippines.
Memorandum of Agreement (MOA) and Memorandum of Understanding (MOU)
The MOA and MOU are among the most widely used instruments in Philippine business and government contracting, and among the most frequently misunderstood.
An MOA is intended to create binding obligations. An MOU is typically used for preliminary arrangements or to record intent without creating enforceable duties. The distinction matters in practice, but courts in the Philippines assess substance, not the document title. If an instrument called an MOU contains all three elements of a valid contract, consent, object, and cause, it is legally binding regardless of what it is named.
Key clauses STLAF addresses in MOAs and MOUs: the scope and specific obligations of each party; whether the instrument is intended to be binding or non-binding (stated explicitly); deliverables and timelines; governing law and dispute resolution; and corporate authority requirements, including board resolutions and secretary’s certificates for corporate signatories.
Both instruments are common enough that template versions circulate widely online. Most of those templates are inadequate for transactions involving real financial or operational stakes.
Accounting and Audit Engagement Contracts
This is where STLAF’s dual legal and accountancy capability creates a structural advantage that no law-only firm can match.
Accounting and audit engagement letters are the formal contracts between a CPA firm and its clients. They define the scope of the engagement, the responsibilities of management and the accountant, the fee arrangement, and the limitations of the service. Under guidelines from the Board of Accountancy (BOA) and standards maintained by the Philippine Institute of Certified Public Accountants (PICPA), BOA-accredited CPAs in public practice are expected to issue written engagement letters for audit, review, compilation, and related services.
These instruments carry two simultaneous requirements: they must be legally enforceable as contracts under Philippine law, and they must satisfy the professional and regulatory standards applicable to CPAs under the Professional Regulation Commission (PRC) and BOA. A lawyer who does not understand accountancy professional standards cannot draft these instruments to their full standard. An accountant who does not have legal training may produce an engagement letter that is professionally appropriate but lacks the enforceability architecture of a properly structured contract.
STLAF has both. Our lawyers and CPAs co-draft accounting engagement contracts to meet both requirements simultaneously.
The accounting engagement contracts STLAF handles include: audit engagement letters; review and compilation engagement letters; bookkeeping and accounting service agreements; tax advisory retainer agreements; financial advisory engagement contracts; and management accounting service agreements.
Contract Review Services
Contract review is the process of independently evaluating a contract you have received, whether from an employer, a supplier, a landlord, a business partner, or an investor, before you sign it.
The purpose of contract review is not to find reasons to refuse to sign. It is to identify terms that do not reflect your understanding of the deal, clauses that are unenforceable or unconscionable under Philippine law, missing provisions that expose you to liability, and provisions that require negotiation before execution.
What STLAF looks for in a contract review:
The review covers essential contract elements under Articles 1305 to 1422 of the Civil Code: whether consent was freely given or whether any vitiating factors exist (mistake, violence, intimidation, undue influence, or fraud); whether the object is lawful and possible; and whether the consideration is adequate.
Beyond the legal elements, STLAF’s contract review examines:
- Red flag clauses: Vague or ambiguous scope language; unilateral modification rights; excessive penalty clauses (Philippine courts can reduce penalties found to be iniquitous or unconscionable, but the clause still creates a dispute); limitation of liability provisions that may be unenforceable against consumers; non-compete clauses that are overbroad in duration, geography, or scope.
- Missing protections: Absent force majeure clause; no dispute resolution mechanism; no governing law clause for contracts with cross-border parties; missing Data Privacy Act compliance clause where personal data is processed; no IP assignment clause for work-product agreements.
- Authority and execution issues: Whether the other party’s signatory has authority to bind the corporation (board resolution required for Philippine corporations in certain transactions); whether the contract requires notarization for its intended purpose; whether electronic signature is permissible under RA 8792 for this type of instrument.
- Common problems found in downloaded or template contracts: Internal clause conflicts; clauses from foreign jurisdictions that are void under Philippine mandatory law; penalty clauses set at levels courts have historically reduced; non-compete restrictions that exceed what Philippine courts will enforce.
Why DIY contracts fail under Philippine law:
The Civil Code contains mandatory provisions that cannot be contracted out of, regardless of what the parties agree. A clause that violates a mandatory provision is void. In some cases, the entire contract may be void or voidable. Generic templates drafted for a foreign jurisdiction do not account for these provisions.
The result is not always obvious at signing. The problem surfaces when the contract is invoked, when parties disagree, or when the document is presented to a court or government agency. At that stage, the cost of a poorly drafted contract is significantly higher than the cost of a professional review would have been.
Common Contract Mistakes in the Philippines
Missing essential elements. Under the Civil Code, a contract without consent, object, or cause is void from the beginning. Businesses drafting their own contracts sometimes omit a precise description of the consideration (the ‘cause’), particularly in service arrangements where payment terms are assumed rather than stated.
Relying on a notarized contract as sufficient protection. Notarization converts a private document to a public document and creates a presumption of regularity. It does not validate a contract with missing elements. It does not make unconscionable clauses enforceable. A poorly drafted contract that has been notarized is still a poorly drafted contract.
Assuming an MOU is non-binding. Philippine courts assess substance, not document title. If an MOU contains definite obligations, identified parties, and consideration, it may be enforceable as a contract whether the parties intended that or not.
Using foreign template contracts. Penalty clauses, limitation of liability caps, non-compete restrictions, and IP assignment language from US, UK, or Australian contract templates often conflict with Philippine mandatory provisions under the Civil Code and relevant special laws. Void clauses do not automatically invalidate the rest of the contract, but they create uncertainty and often become the center of disputes.
Verbal agreements for significant transactions. Verbal agreements are valid under Philippine law. The Statute of Frauds (Article 1403 of the Civil Code) does require certain agreements to be in writing: those that cannot be performed within a year, sales of real property, and agreements for goods over PHP 500. But even for transactions not covered by the Statute of Frauds, verbal agreements are extremely difficult to enforce. Philippine courts heavily favor documentary evidence. Testimony alone is frequently insufficient to prove the terms of a disputed verbal agreement.
Signing without authority documentation. For contracts signed on behalf of a corporation, the signatory must have actual authority. For transactions that require board approval under the Revised Corporation Code (RA 11232) or the corporation’s own by-laws, a board resolution and secretary’s certificate are required. Contracts signed without proper corporate authority may be challenged and avoided.
Notarization Requirements in the Philippines
Notarization in the Philippines is governed by A.M. No. 02-8-13-SC (Rules on Notarial Practice), amended post-pandemic by A.M. No. 20-07-04-SC to permit remote notarization under specific conditions.
When notarization is legally required:
- Deeds of Sale of real property, required for registration with the Bureau of Internal Revenue and the Register of Deeds
- Special Powers of Attorney authorizing transactions involving real property
- Documents required to be registered with the Register of Deeds or other government registries
When notarization is not required for validity:
Most common business contracts, including NDAs, MOAs, MOUs, service agreements, employment contracts, and lease agreements for non-registered tenancies, do not require notarization to be legally valid and enforceable.
What notarization actually does:
Notarization converts a private document into a public document. This creates a presumption of regularity, that the parties appeared, that signatures are genuine, and that the document was executed as stated. A notarized document has a higher evidentiary standing in court than an unnotarized private document.
Notarization requires personal appearance of the signatory before the notary public, production of a government-issued photo ID, and entry in the notarial register. Signing a document and sending it to a notary without appearing personally defeats the validity of the notarization.
Notarial fees:
Notarial fees in the Philippines typically range from PHP 200 to PHP 1,000 or more per document, depending on the document type and the notary. For property transactions, some notaries charge approximately 1% of the contract value.
Frequently Asked Questions
Does a contract need to be notarized to be valid in the Philippines?
No. Under the Civil Code of the Philippines, a valid contract requires only three elements: consent of the parties, a definite object, and a cause or consideration. Notarization is not one of those elements. Most business contracts, including NDAs, MOAs, service agreements, and employment contracts, do not require notarization to be enforceable. Notarization is mandatory only for specific instruments, primarily deeds of sale of real property and documents submitted to government registries.
What is the difference between an MOA and an MOU?
A Memorandum of Agreement (MOA) is intended to establish binding obligations between parties. A Memorandum of Understanding (MOU) is typically used for preliminary arrangements or statements of intent. In practice, Philippine courts examine substance, not the document title. If an instrument labeled ‘MOU’ contains all elements of a valid contract, including consent, object, and consideration, courts may treat it as binding regardless of the label. Whether your MOA or MOU creates legal obligations depends on what it says, not what it is called.
Are verbal agreements legally binding in the Philippines?
Yes, with important limitations. Verbal agreements are generally valid under Philippine law. However, certain agreements must be in writing under the Statute of Frauds (Article 1403 of the Civil Code), including agreements that cannot be performed within one year and sales of real property. Even for agreements not covered by the Statute of Frauds, verbal contracts are extremely difficult to enforce because Philippine courts heavily favor documentary evidence. If the other party denies the terms, testimony alone is frequently insufficient to prove the agreement.
What does a contract review cover?
A contract review examines whether the contract contains all essential legal elements, identifies clauses that are potentially void or unenforceable under Philippine law, flags unfair or one-sided terms (including excessive penalty clauses that courts may reduce), identifies missing protections, and checks execution requirements such as notarization and corporate authority documentation. For contracts with cross-border parties, a review also examines governing law provisions and enforceability considerations.
What happens if a contract I downloaded online conflicts with Philippine law?
A clause that violates a mandatory provision of Philippine law is void. In some cases, this may affect only the specific clause; in others, it may render the entire contract void or voidable. Contracts drafted for foreign jurisdictions often contain penalty clauses, non-compete restrictions, and liability limitations that conflict with the Civil Code. The conflict may not be apparent at signing, it typically surfaces when the contract is invoked or disputed. A contract review before signing costs significantly less than litigation over an unenforceable clause.
Can I sign a contract on behalf of my company without board authorization?
It depends on the nature of the transaction and the corporation’s by-laws. Under the Revised Corporation Code (RA 11232), certain corporate acts require board approval. For contracts that fall within those thresholds or that the by-laws reserve for board action, the signatory must present a board resolution and secretary’s certificate. A contract signed without proper corporate authority may be challenged by the other party or by the corporation’s own shareholders.
What are the essential elements of a valid contract in the Philippines?
Under Articles 1305 to 1422 of the Civil Code of the Philippines, a valid contract requires: (1) consent of the contracting parties, freely given and without vitiating defects such as mistake, fraud, or undue influence; (2) a definite object, which must be lawful, possible, determinate or determinable, and within the commerce of men; and (3) cause or consideration, which must be lawful. A contract missing any of these elements is void or voidable depending on the defect.
How much does it cost to have a contract drafted by a lawyer in the Philippines?
Attorney fees for contract drafting vary by complexity and the firm engaged. Market references suggest simple contracts are typically in the PHP 2,000 to PHP 5,000 range, while complex commercial contracts run PHP 5,000 to PHP 10,000 or more. STLAF provides fee estimates at the start of each engagement. Contact us for a quote specific to your contract type and transaction.
Why Choose STLAF for Contract Services
Most law firms can draft a service agreement or review an employment contract. What they cannot do is draft an audit engagement letter that simultaneously meets the legal enforceability requirements of the Civil Code and the professional standards requirements of the BOA, PRC, and PICPA.
STLAF is both a law firm and an accountancy firm. When your business needs contracts that operate at the intersection of legal and professional accountancy obligations, that dual capacity is directly relevant to the quality of the instrument you receive.
Beyond accountancy-specific contracts, STLAF handles the full range of commercial contracts for Philippine businesses: employment contracts, lease agreements, service agreements, NDAs, MOAs, MOUs, shareholders agreements, and contracts of sale. Every engagement includes review for compliance with the Civil Code, relevant special laws, and applicable professional standards.
A poorly drafted contract costs more to fix than it costs to get right.
STLAF Global serves businesses across the Philippines. Whether you need a single contract drafted, a suite of standard agreements, or independent review of a contract you have received, we handle it from one engagement.