Consultancy agreement in the Philippines: Template, Key Clauses and Local Law (2026)

What is a consultancy agreement in the Philippines, and when do you need one? A consultancy agreement in the Philippines is a contract between a company (the client) and an independent consultant who gives expert advice or services for a fee. It sits close to a service agreement, but it is written for an individual professional or a small firm engaged on their own account, not as staff. The agreement sets the scope, the fee, who owns the work, and the rules on confidentiality. In the Philippines its most important job is to support a genuine engagement of an independent contractor rather than an employment relationship, because the two are taxed and protected very differently. The relationship is built on the freedom to contract under the Civil Code of the Philippines (Republic Act No. 386), where parties may agree on any terms that are not contrary to law, morals or public policy. But the label on the paper does not decide status. Philippine labour authorities and the courts apply the four-fold test: who selected and engaged the worker, who pays the wage, who holds the power of dismissal, and, most important of all, who controls the means and methods of the work, not just the result. Where the control is over how the work is done, a court can find employment no matter what the contract says. Cases such as Sonza v. ABS-CBN and Fuji Television Network v. Espiritu show how closely this is read. This article is general guidance, not legal advice. Tax rates and labour rules change, so have a Philippine lawyer or tax adviser review an agreement before you rely on it. Last verified October 2026. ## Philippines consultancy agreement template Copy the block below and fill the bracketed fields. ```

CONSULTANCY AGREEMENT This Consultancy Agreement (the "Agreement") is made on [DATE] BETWEEN: [CLIENT NAME], with office at [address] (the "Client") AND [CONSULTANT NAME], of [address], TIN [number] (the "Consultant") 1. ENGAGEMENT AND SERVICES The Consultant will provide the consulting services described in Schedule 1 (the "Services"). The Consultant decides the manner, means and hours of performing the Services and uses its own skill and tools. 2. INDEPENDENT CONTRACTOR The Consultant is an independent contractor, not an employee of the Client. The Consultant is not entitled to SSS, PhilHealth, Pag-IBIG, 13th month pay, leave or other employee benefits, and carries its own registrations and statutory contributions. 3. FEES AND TAXES The Client will pay a professional fee of PHP [AMOUNT], invoiced [schedule] and due within [N] days. The Client will withhold and remit expanded withholding tax on the professional fee as the National Internal Revenue Code requires. The Consultant handles its own income tax and business tax (VAT or percentage tax). 4. EXPENSES The Client reimburses pre-approved expenses against receipts. 5. INTELLECTUAL PROPERTY All deliverables created for the Client under this Agreement belong to the Client on full payment, and the Consultant assigns those rights. The Consultant keeps its pre-existing material and licenses it for use in the deliverables. 6. CONFIDENTIALITY AND DATA PRIVACY The Consultant keeps the Client's confidential information secret during and after the engagement, uses it only for the Services, and complies with the Data Privacy Act of 2012 for any personal data it processes. 7. NON-SOLICITATION For [N] months after the engagement the Consultant will not solicit the Client's employees or the clients it worked with, so far as the restraint is reasonable. 8. TERM AND TERMINATION This Agreement runs from [START] and either party may end it on [N] days written notice, or at once for material breach. Fees earned to the end date remain payable. 9. LIABILITY To the extent the law allows, the Consultant's total liability is capped at [the fees paid in the prior [N] months], and neither party is liable for indirect loss. 10. GOVERNING LAW AND DISPUTES This Agreement is governed by Philippine law. Disputes go to the courts of [city], or to arbitration under [rules] if the parties so agree. Signed: Client: __________________ Consultant: __________________ Name / title / date Name / date

- **Fees and taxes (clause 3).** A client that is a withholding agent must deduct expanded withholding tax on professional fees and remit it to the Bureau of Internal Revenue, then give the consultant the BIR Form 2307 certificate. The consultant registers with the BIR, issues official receipts, and pays either VAT at the standard rate once annual gross receipts pass the VAT threshold, or percentage tax below it. Make the fee clear on whether it includes or excludes these business taxes.
- **Intellectual property (clause 5).** Without an assignment, ownership of commissioned work can be contested, so assign deliverables on payment and let the consultant keep and license its background material.
- **Confidentiality and data privacy (clause 6).** If the consultant will handle personal data, the Data Privacy Act of 2012 (Republic Act No. 10173) and the National Privacy Commission rules apply, so bind the consultant to them.
- **Non-solicitation (clause 7).** Philippine courts uphold restraints only so far as they are reasonable in time, area and scope and protect a legitimate interest. A narrow non-solicit is safer than a broad non-compete. ## Key local-law points - **Classification is the core risk.** The four-fold test, with control as the deciding factor, governs whether you have a contractor or an employee. A finding of employment brings back pay of 13th month pay, SSS, PhilHealth and Pag-IBIG contributions, and security of tenure. DOLE Department Order No. 174 (2017) regulates contracting and bans labour-only contracting; individual professionals doing genuinely independent work generally sit outside it, but the facts control.
- **Taxes.** Expanded withholding tax applies to professional fees, with the rate depending on whether the payee is an individual or a company and on the annual gross income. The consultant charges VAT once gross receipts pass the registration threshold, otherwise percentage tax. Confirm current rates and the VAT threshold with the BIR.
- **Documentary stamp tax.** Certain contracts attract documentary stamp tax, so check whether your engagement does. ## Red flags to avoid - Setting fixed office hours, giving day to day supervision and providing all equipment, then calling the person a consultant. That invites a finding of employment.
- Forgetting to withhold and remit expanded withholding tax, which leaves the client exposed to the deficiency and penalties.
- No written assignment of intellectual property, so the client may not own what it paid for.
- Treating a long engagement of a single full-time consultant as safe. Continuous, exclusive, controlled work is the pattern most likely to be reclassified.
- An over-broad non-compete that a court will not enforce. A sound consultancy agreement is mostly about keeping the engagement genuinely independent and the tax treatment clean. Get those right and the template above will serve most Philippine engagements. ## Where a contract workspace helps The template gives you a solid Philippine consultancy agreement. The ongoing work is the part that repeats: keeping each engagement's classification language consistent, getting the withholding tax and VAT wording right, checking the IP assignment before signing, and remembering when each consultant's term ends. Drafting from a template tuned to how your company engages consultants, flagging the classification and tax risks as you go, and tracking every end date can sit in one AI contract workspace instead of being spread across documents, email and spreadsheets. [Adira](https://adiralaw.com) is one such workspace; its depth today is in Indian corporate law, and Philippine coverage is on its roadmap rather than established, so treat its local output here as a draft a Philippine adviser should check. The point is simpler than any tool: when drafting, review and renewal tracking live in one place, the three jobs stop being three.