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

What is a service agreement in the Philippines, and when do you need one? A service agreement in the Philippines is a contract where one party (the service provider) agrees to perform defined services for another (the client) in return for payment. You need one whenever services are the main thing being bought: IT support, marketing, logistics, facilities, professional work, or an ongoing arrangement run through a master service agreement with separate statements of work. It is close to a consultancy agreement but is usually written for a company provider and for recurring or larger-scale work. In the Philippines the agreement rests on the Civil Code (Republic Act No. 386), which gives parties freedom to set their own terms so long as they are not contrary to law, morals, good customs, public order or public policy. The Civil Code also implies duties of good faith and lays down the rules on obligations and damages when a party fails to perform. A service agreement should still say the things the Code leaves open: scope, service levels, price, payment, liability, term and how either side can exit. This article is general guidance, not legal advice. Tax rules and thresholds change, so have a Philippine lawyer or tax adviser review an agreement before you rely on it. Last verified October 2026. ## Philippines service agreement template Copy the block below and fill the bracketed fields. For recurring work, keep clauses 1 to 12 as a master agreement and attach each piece of work as a separate statement of work. ```

SERVICE AGREEMENT This Service Agreement (the "Agreement") is made on [DATE] BETWEEN: [CLIENT NAME], with office at [address] (the "Client") AND [PROVIDER NAME], with office at [address], TIN [number] (the "Provider") 1. SERVICES The Provider will perform the services described in Schedule 1 or in each statement of work agreed under this Agreement (the "Services"). 2. SERVICE LEVELS The Provider will meet the standards and timelines in Schedule 2 [response times, availability, quality measures]. 3. FEES AND TAXES The Client will pay the fees in Schedule 3, invoiced [schedule] and due within [N] days. Fees are [exclusive] of VAT, which the Provider adds where registered. The Client will withhold and remit expanded withholding tax on the Services as required and issue BIR Form 2307. 4. CLIENT RESPONSIBILITIES The Client will give the Provider the access, information and approvals the Services reasonably need, on time. 5. INTELLECTUAL PROPERTY Deliverables created for the Client belong to the Client on full payment; the Provider assigns those rights and keeps its pre-existing and generic tools, which it licenses for use in the deliverables. 6. CONFIDENTIALITY AND DATA PRIVACY Each party keeps the other's confidential information secret and uses it only for this Agreement. Where personal data is processed, the parties comply with the Data Privacy Act of 2012 and agree their roles. 7. WARRANTIES The Provider warrants that it will perform with reasonable skill and care and that the Services will conform to Schedules 1 and 2. 8. LIABILITY To the extent the law allows, each party's total liability is capped at [the fees paid in the prior 12 months], and neither party is liable for indirect or consequential loss. Nothing limits liability that cannot be limited by law. 9. TERM AND TERMINATION This Agreement runs from [START] for [term] and renews [terms]. Either party may end it on [N] days notice, or at once for material breach not cured within [N] days. Fees earned to the end date remain payable. 10. INDEMNITY The Provider indemnifies the Client against third-party claims arising from the Provider's breach or infringement, subject to clause 8. 11. FORCE MAJEURE Neither party is liable for delay caused by events beyond its reasonable control (a fortuitous event), and the affected party will mitigate. 12. GOVERNING LAW AND DISPUTES This Agreement is governed by Philippine law. Disputes go to the courts of [city], or to arbitration under [rules] if agreed. Signed: Client: __________________ Provider: __________________ Name / title / date Name / title / date

- **Fees and taxes (clause 3).** State whether fees include or exclude VAT. A provider charges VAT once annual gross receipts pass the registration threshold, otherwise percentage tax. A client that is a withholding agent deducts expanded withholding tax on services and remits it to the Bureau of Internal Revenue, then gives the provider BIR Form 2307 so the provider can credit it.
- **Intellectual property (clause 5).** Commissioned deliverables are not automatically the client's, so assign them on payment and let the provider keep its generic tools and know-how.
- **Warranties and liability (clauses 7 and 8).** Under the Civil Code a party in breach is liable for damages, including for fraud, bad faith, negligence or delay. A clear warranty plus a reasonable liability cap gives both sides certainty. Note that some liability, for example for fraud, cannot be waived in advance.
- **Force majeure (clause 11).** The Civil Code already excuses performance made impossible by a fortuitous event, but a clause lets you define the events and the process. ## Key local-law points - **Freedom of contract with limits.** The Civil Code lets parties set their terms, but a stipulation contrary to law, morals or public policy is void, and the courts can reduce penalties that are unconscionable.
- **Taxes.** VAT applies once the provider passes the registration threshold; below it, percentage tax applies. Expanded withholding tax applies to many service payments, and certain contracts attract documentary stamp tax. Confirm the current rates and thresholds with the BIR.
- **Consumer and sector rules.** Where the client is a consumer, or the service is regulated (finance, telecoms, data), extra statutory duties apply on top of the contract. ## Red flags to avoid - A scope that describes the goal but not the boundaries, so every change becomes an argument about whether it was included.
- Fees silent on VAT and withholding tax, leaving the provider to absorb tax it must still account for.
- No IP assignment on deliverables the client assumes it owns.
- An uncapped liability clause, or one that tries to waive liability for fraud, which the law will not allow.
- Auto-renewal with no diary note, so the agreement rolls over before anyone decides whether to continue. Get scope, tax treatment, IP and liability right and the template above will carry most Philippine service engagements. ## Where a contract workspace helps A template produces one sound service agreement. The real workload is everything around it: lining up each statement of work with the master terms, keeping the VAT and withholding wording consistent across providers, checking the liability cap and IP clause before signing, and catching renewal and notice dates before they pass. Drafting from a template shaped to how your company buys services, having the risky clauses flagged as you review, and tracking every term and renewal can live in one AI contract workspace rather than scattered across files and inboxes. [Adira](https://adiralaw.com) is one such workspace. Its established depth today is in Indian corporate law, so Philippine coverage is a roadmap item rather than a settled capability, and local output should be checked by a Philippine adviser. The underlying idea stands on its own: when drafting, review and tracking share one place, scattered contracts stop being a source of surprises.