Asset Purchase Agreement (Philippines)
ASSET PURCHASE AGREEMENT
Civil Code of the Philippines (RA 386) — NIRC (RA 8424) Compliant
This Asset Purchase Agreement ("Agreement") is entered into as of [Agreement Date] by and between:
SELLER: [Seller Name], with principal office at [Seller Address], TIN: [Seller TIN] ("Seller"); AND
BUYER: [Buyer Name], with principal office at [Buyer Address], TIN: [Buyer TIN] ("Buyer").
The Seller and Buyer are hereinafter collectively referred to as the "Parties."
1. SALE AND PURCHASE OF ASSETS
1.1 Subject to the terms and conditions of this Agreement, the Seller agrees to sell, transfer, assign, and convey to the Buyer, and the Buyer agrees to purchase and acquire from the Seller, all of the Seller's right, title, and interest in and to the following assets ("Purchased Assets"):
[Assets Description]
1.2 The following assets are expressly excluded from this sale ("Excluded Assets"): [Excluded Assets].
1.3 The Buyer shall assume the following liabilities of the Seller in connection with the Purchased Assets ("Assumed Liabilities"): [Assumed Liabilities]. Except for the Assumed Liabilities, the Buyer shall not assume and shall not be responsible for any debt, liability, or obligation of the Seller.
2. PURCHASE PRICE AND PAYMENT
2.1 The aggregate purchase price for the Purchased Assets shall be [Purchase Price] ("Purchase Price"), exclusive of applicable taxes.
2.2 Purchase Price Allocation: For BIR tax purposes, the Purchase Price is allocated among the Purchased Assets as follows: [Price Allocation].
2.3 Payment Schedule: [Payment Terms].
2.4 Target Closing Date: [Closing Date].
3. TAXES
3.1 Value-Added Tax (VAT) at 12% under Section 106 of the NIRC (RA 8424) on the sale of personal property shall be borne by the [VAT Responsibility].
3.2 Capital Gains Tax (CGT) at 6% under Section 24(D) of the NIRC on real property classified as capital asset shall be borne by the [CGT Responsibility].
3.3 Documentary Stamp Tax (DST) under Section 196 of the NIRC at ₱15.00 per ₱1,000 of consideration on the deed of sale of real property shall be borne by the [DST Responsibility].
3.4 Local Government Transfer Tax under Section 135 of the Local Government Code (RA 7160) shall be paid by the Buyer.
3.5 The Seller shall obtain the BIR Certificate Authorizing Registration (CAR) for all real property included in the Purchased Assets prior to the Closing Date.
4. REPRESENTATIONS AND WARRANTIES OF SELLER
4.1 The Seller represents and warrants to the Buyer as of the date of this Agreement and as of the Closing Date that: (a) the Seller has full legal authority to enter into this Agreement and to sell the Purchased Assets; (b) the Seller has good and marketable title to all Purchased Assets, free and clear of all liens, mortgages, pledges, and encumbrances except as disclosed herein; (c) all BIR tax returns related to the Purchased Assets are current and no deficiency assessments are pending; (d) the Purchased Assets are not subject to any pending Philippine Competition Commission (PCC) order or investigation under RA 10667.
4.2 Known Encumbrances and Disclosures: [Additional Disclosures].
4.3 The Seller's warranties under this Section 4 shall survive Closing for a period of [Warranty Period] months.
5. CLOSING CONDITIONS
5.1 The Closing shall be conditioned upon: (a) delivery by the Seller of executed deeds of sale (notarized as required by Article 1358 of the Civil Code) for all real property included in the Purchased Assets; (b) BIR CAR for all real property; (c) LGU Transfer Tax receipts; (d) release of all liens and encumbrances on the Purchased Assets; (e) assignment agreements for all contracts included in the Purchased Assets with counterparty consents as required by Article 1649 of the Civil Code; and (f) Secretary's Certificates or Board Resolutions authorizing the sale for corporate Sellers.
6. GOVERNING LAW AND DISPUTE RESOLUTION
6.1 This Agreement shall be governed by and construed in accordance with the Civil Code of the Philippines (RA 386), the National Internal Revenue Code (RA 8424), and all applicable Philippine laws and regulations.
6.2 Any dispute arising from this Agreement shall be resolved by the proper courts of the Philippines with jurisdiction over the subject matter.
IN WITNESS WHEREOF, the Parties have executed this Asset Purchase Agreement on the date first written above.
[Seller Name]
Seller (Authorized Signatory)
[Buyer Name]
Buyer (Authorized Signatory)
Seller (Authorized Signatory)
________________
Signature
Buyer (Authorized Signatory)
________________
Signature
What Is a Asset Purchase Agreement (Philippines)?
An Asset Purchase Agreement in the Philippines completes the transfer of the asset to the buyer, fixing the consideration paid and confirming the seller's right to sell.
Philippine asset purchase transactions are distinct from share purchases because the buyer acquires only the enumerated assets and does not assume undisclosed liabilities of the selling entity unless expressly agreed. Assets commonly transferred include tangible assets such as equipment, inventory, and real property; intangible assets such as intellectual property rights (trademarks registered with the Intellectual Property Office of the Philippines under RA 8293), trade names, customer lists, and goodwill; and contractual rights with the consent of counterparties under Article 1311 of the Civil Code.
The Bureau of Internal Revenue (BIR) imposes tax obligations on asset transfers that both parties must address in the agreement. Value-Added Tax (VAT) at 12% under Section 106 of the National Internal Revenue Code (NIRC, RA 8424 as amended) applies to the sale of goods and personal property in the ordinary course of business. Documentary Stamp Tax (DST) under Section 196 of the NIRC applies to deeds of sale of real property at ₱15.00 per ₱1,000 of consideration. Capital Gains Tax (CGT) at 6% under Section 24(D) of the NIRC applies to the sale of real property classified as capital asset.
For the transfer of real property included in the asset purchase, the BIR Certificate Authorizing Registration (CAR) must be obtained before the Register of Deeds will annotate or transfer title. Transfer Tax payable to the Local Government Unit (LGU) under Section 135 of the Local Government Code (RA 7160) at a maximum of 0.75% of the consideration also applies to real property transfers. The Securities and Exchange Commission (SEC) and BIR may require prior notification for asset acquisitions meeting thresholds under the Philippine Competition Act (RA 10667) administered by the Philippine Competition Commission (PCC).
The legal framework governing the Asset Purchase Agreement (Philippines) in Philippines draws on several key statutes and regulatory bodies. Under Philippine law, the Civil Code of the Philippines (Republic Act No. 386) governs contractual obligations. The Revised Corporation Code (Republic Act No. 11232) regulates corporate entities through the Securities and Exchange Commission (SEC). The Labor Code of the Philippines (Presidential Decree No. 442) and Department of Labor and Employment (DOLE) govern employment matters. The Data Privacy Act of 2012 (Republic Act No. 10173) and the National Privacy Commission (NPC) protect personal data. The Bureau of Internal Revenue (BIR) administers tax obligations under the National Internal Revenue Code. Parties executing a Asset Purchase Agreement (Philippines) in Philippines should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Revised Corporation Code (RA 11232, 2019) sets the foundational requirements.
When Do You Need a Asset Purchase Agreement (Philippines)?
A Philippines Asset Purchase Agreement is needed whenever a buyer intends to acquire specific assets of a business rather than the entire corporate entity or its shares.
An Asset Purchase Agreement is required when an investor or entrepreneur acquires the operating assets of an existing business — such as equipment, inventory, leasehold rights, and customer contracts — to continue operations under a new legal entity, avoiding the assumption of the seller's undisclosed liabilities and pending BIR tax deficiency assessments.
An Asset Purchase Agreement is needed when a company acquires a competitor's product line, brand, or customer portfolio as a strategic acquisition, where the buyer wishes to purchase the intellectual property registered with the Intellectual Property Office of the Philippines and customer contracts without assuming the seller's existing workforce obligations under the Labor Code (PD 442) beyond what is expressly agreed.
An Asset Purchase Agreement is required when a financially distressed company sells its productive assets to repay creditors, and the buyer needs a clean acquisition document that evidences BIR tax compliance and transfer of specific assets without inheriting the seller's tax liabilities beyond those assessed on the transfer itself.
An Asset Purchase Agreement is needed when a franchise network or group of companies reorganizes by consolidating assets under a single entity, requiring documentary evidence for BIR CAR applications, LGU transfer tax payments, and Land Registration Authority (LRA) title transfers.
An Asset Purchase Agreement is required when a foreign investor acquires business assets in the Philippines, where the Foreign Investments Act (RA 7042 as amended by RA 11647) and Anti-Dummy Law (CA 108) impose nationality requirements that affect which specific asset categories (such as land under the 1987 Constitution, Article XII, Section 7) a foreign buyer may legally acquire.
What to Include in Your Asset Purchase Agreement (Philippines)
A valid Philippines Asset Purchase Agreement must include the following essential provisions to be enforceable under the Civil Code and compliant with BIR, SEC, and LGU requirements.
Identification of Parties: Full legal names, addresses, and TIN numbers of the buyer and seller. For corporate parties, include the SEC Registration Number and the name of the authorized representative with proof of corporate authority (Board Resolution or Secretary's Certificate). Under Article 1318 of the Civil Code, the identities and legal capacity of the parties are essential elements of a valid contract.
Schedule of Assets: A detailed, itemized list of all assets being transferred, divided into categories: real property (with Transfer Certificate of Title numbers and lot areas), personal property (equipment, vehicles with OR/CR details, furniture), inventory (description, quantity, valuation method), intellectual property (trademark registration numbers from the IPO Philippines), software licenses, customer contracts, and goodwill. Excluding specific assets must be stated explicitly, as Philippine courts apply the rule that the object of a contract must be certain under Article 1349 of the Civil Code.
Purchase Price and Payment Terms: The aggregate purchase price in Philippine peso (PHP ₱), allocation among asset categories (required for BIR purposes to compute VAT, DST, and CGT on each category), payment schedule, escrow arrangements if any, and adjustment mechanisms for post-closing inventory counts or receivable collections.
Tax Representations and Allocation: Each party's responsibility for BIR taxes arising from the transfer — VAT at 12% (Section 106 NIRC) on personal property sales, DST at ₱15/₱1,000 (Section 196) on real property deed, Capital Gains Tax at 6% (Section 24(D)) on real property capital assets, and LGU Transfer Tax under Section 135 of RA 7160. The agreement should specify which party bears each tax and by when payment must be made to avoid penalties under Sections 248-249 of the NIRC.
Representations and Warranties: Seller's representations that the seller has good and marketable title to all assets; assets are free from liens, mortgages, and encumbrances except as disclosed; all BIR tax filings are current; no pending PCC review under RA 10667; and all regulatory licenses and permits are transferable. Buyer's representations on legal capacity and financial ability to perform.
Closing Conditions and Post-Closing Obligations: Conditions precedent to closing including BIR CAR for real property, SEC notification if required, PCC merger notification if thresholds are met under RA 10667, LGU business permit transfers, and consent of landlords to assignment of leases under Article 1649 of the Civil Code.
Additional compliance elements for a Asset Purchase Agreement (Philippines) used in Philippines include: Under Philippine law, the Civil Code of the Philippines (Republic Act No. 386) governs contractual obligations. The Revised Corporation Code (Republic Act No. 11232) regulates corporate entities through the Securities and Exchange Commission (SEC). The Labor Code of the Philippines (Presidential Decree No. 442) and Department of Labor and Employment (DOLE) govern employment matters. The Data Privacy Act of 2012 (Republic Act No. 10173) and the National Privacy Commission (NPC) protect personal data. The Bureau of Internal Revenue (BIR) administers tax obligations under the National Internal Revenue Code. Forms-legal.com provides this template as a starting point for Philippines-compliant documentation.
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Forms Legal. (2026). Asset Purchase Agreement (Philippines) (Philippines) [Legal document template]. Forms Legal. https://forms-legal.com/philippines/business/contracts/asset-purchase-agreement-philippines
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author = {{Forms Legal}},
title = {Asset Purchase Agreement (Philippines) (Philippines)},
year = {2026},
howpublished = {\url{https://forms-legal.com/philippines/business/contracts/asset-purchase-agreement-philippines}},
note = {Free legal document template. Based on Revised Corporation Code (RA 11232, 2019)}
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Frequently Asked Questions
A Philippines asset purchase triggers multiple taxes that the Asset Purchase Agreement must address. Value-Added Tax (VAT) at 12% under Section 106 of the NIRC (RA 8424) applies to the sale of personal property (equipment, inventory, goodwill) in the ordinary course of trade or business by a VAT-registered seller. Documentary Stamp Tax (DST) under Section 196 of the NIRC applies to the deed of sale of real property at ₱15.00 per ₱1,000 of the consideration or zonal value, whichever is higher. Capital Gains Tax (CGT) at 6% under Section 24(D) applies to the sale of real property classified as a capital asset (not held for sale in the ordinary course of business), computed on the gross selling price or BIR zonal value, whichever is higher. Local Government Transfer Tax under Section 135 of the Local Government Code (RA 7160) is payable to the city or municipality at a maximum of 0.75% of the consideration. The BIR Certificate Authorizing Registration (CAR) must be obtained before the Register of Deeds transfers title to real property. Withholding taxes may also apply to certain asset transfers under BIR Revenue Regulations.
A Philippines Asset Purchase Agreement for personal property (equipment, inventory, intellectual property) does not strictly require notarization to be legally binding under the Civil Code of the Philippines (RA 386), as Article 1356 provides that contracts are obligatory in whatever form they are entered into as long as the essential requisites of Article 1318 are present. However, notarization by a notary public under the 2004 Rules on Notarial Practice converts the document into a public instrument under Article 1358, giving it evidentiary weight in court proceedings. For real property included in the asset purchase, Article 1358 of the Civil Code requires a public instrument (notarized deed), and the Register of Deeds will not process title transfer without a notarized Deed of Sale. BIR will also not issue a Certificate Authorizing Registration (CAR) for real property without a notarized deed. For asset purchases exceeding ₱500,000 involving real property, notarization is therefore effectively mandatory to achieve the intended transfer.
In the Philippines, an Asset Purchase Agreement transfers specific identified assets from a seller to a buyer, while a Share Purchase Agreement (also called a Stock Purchase Agreement) transfers equity shares in a corporation. The key legal distinction is that in an asset purchase, the buyer does not assume the seller's liabilities — including pending BIR tax deficiency assessments, labor claims before the National Labor Relations Commission (NLRC), and undisclosed SEC-registered obligations — unless expressly assumed in the agreement. In a share purchase, the buyer acquires the entire legal entity with all its assets and liabilities. From a BIR tax perspective, share sales are subject to a stock transaction tax of 0.6% under Section 127 of the NIRC (for listed shares) or 15% capital gains tax (for unlisted shares under Section 24(D)(2)), whereas asset purchases are subject to VAT, DST, and CGT on each asset category. Foreign investors must also consider that certain assets (land, public utilities, mass media) cannot be owned by foreign nationals under the 1987 Constitution, making share purchases of Philippine corporations subject to the Foreign Investments Act (RA 7042) nationality restrictions.
The Philippine Competition Commission (PCC) reviews asset purchases that meet the compulsory notification thresholds under the Philippine Competition Act (RA 10667) and PCC merger notification rules. Under PCC Memorandum Circular No. 18-001, a transaction is subject to compulsory notification if the aggregate value of the transaction exceeds ₱2.2 billion AND the combined annual gross revenues or value of assets in the Philippines of all parties exceed ₱6.1 billion (thresholds adjusted periodically by PCC). An asset purchase meeting these thresholds must be notified to the PCC before closing, and the parties must observe a 30-day standstill period during Phase 1 review. Failure to notify the PCC of a notifiable transaction is subject to a fine of up to 1% of the transaction value per day of non-compliance under Section 17 of RA 10667. For most small and medium enterprise asset acquisitions in the Philippines, the PCC thresholds are not met and no PCC filing is required.
When a buyer acquires business assets in the Philippines, the buyer does not automatically assume the employment obligations of the seller's workforce under the Labor Code of the Philippines (PD 442). Unlike a share acquisition, an asset purchase does not transfer the employment contracts by operation of law. The seller remains responsible for paying separation pay to affected employees under Articles 298-299 of the Labor Code if the sale results in redundancy, retrenchment, or business closure. If the buyer wishes to hire the seller's employees, new employment contracts should be executed between the buyer and each employee. The Supreme Court, in Manlimos v. National Labor Relations Commission (G.R. No. 113337, March 2, 1995), has held that the new employer in an asset acquisition is not liable for the prior employer's labor obligations unless there is an express assumption agreement or the transaction is a mere continuation of the same business — the so-called 'successor employer' doctrine. The Asset Purchase Agreement should expressly state which employees, if any, the buyer agrees to absorb and on what terms.
Goodwill in a Philippines asset purchase represents the excess of the purchase price over the fair market value of the identifiable net assets acquired. The Civil Code of the Philippines (RA 386) and BIR regulations do not prescribe a specific goodwill valuation methodology, but BIR Revenue Regulations require that the purchase price be allocated among all acquired assets for tax purposes. Common valuation approaches used in Philippine transactions include the excess earnings method (capitalizing earnings above the normal return on tangible assets), the multiple of earnings method, and the income approach using discounted cash flows per Philippine Valuation Standards aligned with International Valuation Standards (IVS). The BIR may challenge a goodwill allocation that appears to undervalue tangible assets to minimize DST and VAT. Goodwill transferred in an asset purchase is subject to VAT at 12% under Section 108 of the NIRC as a service/intangible. The parties should obtain an independent valuation from a Philippine-registered appraiser (under RA 9646, the Real Estate Service Act) for real property and engage a Certified Public Accountant (CPA) accredited by the Board of Accountancy under RA 9298 for business valuation.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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