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

What a distribution agreement is in the Philippines A distribution agreement lets a supplier appoint a local distributor to buy its goods and resell them in the Philippines. The distributor buys and resells on its own account, takes title to the stock, and earns the margin between the supply price and the resale price. This is different from an agency, where an agent sells in the supplier's name and earns a commission without owning the goods. The line between the two matters, because Philippine courts look at the real substance of the deal, not the label on the cover page. The Philippines does not have a single statute that governs distributorships. The arrangement is built on freedom of contract under the Civil Code of the Philippines (Republic Act No. 386), so the written agreement itself is the main source of the parties' rights. Where the deal looks more like agency, the Civil Code rules on agency (Title X) can apply. On top of the contract sit general rules on competition, consumer protection, taxation, and, for regulated goods such as food, drugs, and cosmetics, product registration with the relevant agency. This page is general information, not legal advice. Confirm the current position with a Philippine lawyer before you sign, especially on exclusivity, termination, and any registration your product needs. ## What local law expects you to get right Exclusivity is a real, protectable right. Philippine jurisprudence treats the right to run an exclusive distributorship and to earn its profits as a proprietary right the distributor can defend. A supplier who grants exclusivity cannot quietly defeat it by routing the same goods into the territory through a third party. So if you promise exclusivity, define it precisely, and if you do not want it, say the appointment is non-exclusive in plain words. Term and revocation must be spelled out. Disputes in this area often turn on whether the supplier could end the deal and appoint someone new. Where an agreement describes the rights as irrevocable or fixed for a term, the supplier cannot simply walk away. State the term, renewal, and the exact grounds and notice for termination, so neither side has to argue later about what was meant. Put the scope in writing. Courts have had to untangle claims that an appointment covered only one shipment, or that a draft exclusive agreement was never finalised. Record the products, the territory, the term, and whether the appointment is exclusive, sole, or non-exclusive. A signed document beats a half-finished draft every time. Mind regulated products. Food, drugs, cosmetics, and medical devices need registration with the Food and Drug Administration before they can be distributed. Decide who holds that registration, because whoever holds it holds real leverage over the product in the market. ## A distribution agreement template you can adapt ```

DISTRIBUTION AGREEMENT Date: [date] Supplier: [full legal name, registration details, address] Distributor: [full legal name, SEC/DTI registration, address] 1. APPOINTMENT The Supplier appoints the Distributor to purchase and resell the Products in the Territory. The appointment is [exclusive / sole / non-exclusive]. 2. PRODUCTS AND TERRITORY Products: [list or schedule]. Territory: [the Philippines / named regions]. Customers: [all / defined channels]. 3. TERM AND RENEWAL This Agreement runs for [number] years from the date above and renews for [period] unless either party gives [number] days written notice. 4. PURCHASE, TITLE AND PRICE The Distributor buys the Products on its own account. Title and risk pass on [delivery term]. Prices are per the Supplier's price list, which may be changed on [number] days notice. Payment terms: [terms]. 5. OBLIGATIONS OF THE DISTRIBUTOR Minimum purchases: [target]. Marketing, storage, after-sales support: [detail]. The Distributor will comply with all Philippine law, including product registration and labelling. 6. OBLIGATIONS OF THE SUPPLIER Supply, lead times, warranties, product information and training: [detail]. 7. INTELLECTUAL PROPERTY The Distributor may use the Supplier's marks only to resell the Products and gains no ownership of them. 8. REGULATORY REGISTRATIONS Product registrations will be held by [party]. On termination they will be [transferred to / retained by] [party] on the following terms: [detail]. 9. TERMINATION Either party may terminate for uncured material breach after [number] days written notice, or on [insolvency / other grounds]. [Termination for convenience: allowed on [number] days notice / not allowed.] 10. EFFECT OF TERMINATION Treatment of unsold stock, outstanding orders, and the registrations in clause 8: [detail]. 11. GOVERNING LAW AND DISPUTES This Agreement is governed by the laws of the Republic of the Philippines. Disputes will be resolved by [courts of [city] / arbitration under [rules]]. SIGNED for the Supplier ____________ SIGNED for the Distributor ____________

- A term with no clean exit. No notice period and no breach-and-cure clause leaves you locked in or fighting.
- Confusing agency with distribution. If the document mixes commission language with buy-and-resell language, a court may recharacterise the deal with tax and liability consequences.
- Ignoring product registration. For food, drugs, and cosmetics, not naming who holds the registration is a trap, especially at exit.
- No minimum targets behind an exclusive grant. Exclusivity with no performance obligation gives the supplier no remedy for a passive distributor. ## How this differs from other countries Many jurisdictions have special distributor protection rules, such as mandatory termination indemnities or notice periods set by statute. The Philippines does not have a dedicated distributorship statute, so the contract carries more weight, backed by Civil Code principles and the case law on exclusivity. That freedom is an advantage if you draft carefully and a risk if you leave gaps. Confirm the current rules on competition and consumer protection before relying on any single clause. ## Keeping the agreement working after signing A distribution agreement is not finished when it is signed. Price lists change, targets get renegotiated, a product registration moves, and the exclusivity promise has to be honoured in practice. The real work is keeping the signed terms, the side letters, and the renewal notices consistent, and knowing on any given day what the current obligations are. That is the same problem every company has with its contracts, only concentrated in one relationship. Drafting from a clear template, spotting the clause that leaves one side exposed, editing a term in plain language, and holding every version with its date can live in one AI workspace tuned to how your company contracts. [Adira](https://adiralaw.com) is built around that single-workspace idea, India-first today with other jurisdictions on the roadmap, so deep Philippine coverage is something to verify rather than assume. For a single distribution deal, the template above is enough on its own; the point worth borrowing is that a contract is easier to trust when the document and the paperwork around it stay in one place and in step.