Confidentiality Agreement (M&A) (Philippines)
NON-DISCLOSURE AGREEMENT
Mergers and Acquisitions — Civil Code (RA 386) and Data Privacy Act (RA 10173)
This Non-Disclosure Agreement ("Agreement") is entered into as of [Agreement Date] by and between:
DISCLOSING PARTY: [Disclosing Party], with address at [Disclosing Address] ("Disclosing Party"); AND
RECEIVING PARTY: [Receiving Party], with address at [Receiving Address] ("Receiving Party").
NDA Type: [NDA Type].
1. PURPOSE
1.1 The Parties are considering the following transaction: [Transaction Description] (the "Transaction").
1.2 In connection with the Parties' evaluation of the Transaction, the Disclosing Party may share certain confidential information with the Receiving Party. This Agreement governs the use and protection of such information.
1.3 Permitted Purpose: The Receiving Party may use Confidential Information solely for [Permitted Purpose] and for no other purpose.
2. CONFIDENTIAL INFORMATION
2.1 "Confidential Information" means all non-public business, financial, legal, technical, and operational information of the Disclosing Party disclosed in connection with the Transaction, whether in written, oral, electronic, or any other form, including: financial statements and projections; customer and supplier lists; employee information; BIR tax records; intellectual property and trade secrets; Transaction terms; and all information obtained through due diligence.
2.2 Confidential Information does not include information that: (a) is or becomes publicly available through no act or omission of the Receiving Party; (b) was known to the Receiving Party prior to disclosure, as evidenced by written records predating this Agreement; (c) was independently developed by the Receiving Party without use of Confidential Information; or (d) is required to be disclosed by Philippine law, SEC regulation under RA 8799, or court order, provided the Receiving Party gives prior written notice to the Disclosing Party.
3. CONFIDENTIALITY OBLIGATIONS
3.1 The Receiving Party shall: (a) hold all Confidential Information in strict confidence using at least the same standard of care as it uses to protect its own confidential information and not less than reasonable care; (b) use Confidential Information solely for the Permitted Purpose; (c) disclose Confidential Information only to its employees, legal counsel, financial advisors, and representatives who need to know for the Permitted Purpose and who are bound by equivalent confidentiality obligations; and (d) promptly notify the Disclosing Party of any actual or suspected unauthorized disclosure of Confidential Information.
3.2 Data Privacy Compliance: The Receiving Party acknowledges that Confidential Information may include personal data protected under the Data Privacy Act of 2012 (RA 10173). The Receiving Party shall: process personal data only to the extent necessary for the Permitted Purpose; implement appropriate security measures under Section 20 of RA 10173; and return or securely delete all personal data within [Return Deadline] days if the Transaction does not proceed.
3.3 Insider Trading: The Receiving Party acknowledges that Confidential Information relating to any publicly listed company may constitute material non-public information under Section 27 of the Securities Regulation Code (RA 8799) and agrees not to trade in the securities of any such company while in possession of such information.
4. TERM AND RETURN OF INFORMATION
4.1 The obligations under this Agreement shall remain in force for [Confidentiality Period] years from the date of disclosure or termination of Transaction discussions, whichever is later.
4.2 Upon written request by the Disclosing Party or upon the Parties' decision not to proceed with the Transaction, the Receiving Party shall within [Return Deadline] days return all tangible Confidential Information and certifiably destroy all copies, extracts, and notes thereof.
4.3 Non-Solicitation: During the term of this Agreement and for [Non-Solicit Period] months thereafter, the Receiving Party shall not directly or indirectly solicit or hire any key employee of the Disclosing Party identified through due diligence, without the Disclosing Party's prior written consent.
5. REMEDIES AND GOVERNING LAW
5.1 The Receiving Party acknowledges that breach of this Agreement will cause irreparable harm to the Disclosing Party for which monetary damages would be inadequate. The Disclosing Party is entitled to seek injunctive relief under Rule 58 of the Rules of Court in addition to damages under Articles 2201-2202 of the Civil Code of the Philippines (RA 386).
5.2 This Agreement shall be governed by the laws of the Republic of the Philippines. Any dispute shall be resolved by the proper courts of the Philippines.
IN WITNESS WHEREOF, the Parties have executed this Non-Disclosure Agreement on [Agreement Date].
[Disclosing Party]
Disclosing Party
[Receiving Party]
Receiving Party
Disclosing Party
________________
Signature
Receiving Party
________________
Signature
What Is a Confidentiality Agreement (M&A) (Philippines)?
A Confidentiality Agreement (M&A) in the Philippines binds the parties to confidentiality, defining what counts as protected information and the consequences of misuse.
1159. It restricts disclosure and use of designated confidential information between the disclosing and receiving parties.
M&A Confidentiality Agreements in the Philippines must also comply with the Data Privacy Act of 2012 (RA 10173) and its Implementing Rules and Regulations administered by the National Privacy Commission (NPC). When due diligence involves access to personal data — employee records, customer data, medical records — the parties must confirm proper legal bases for processing under Section 12 of RA 10173, and the NDA must include provisions addressing the use, storage, and return or destruction of personal data consistent with the NPC's registration requirements under Section 46 of RA 10173.
The Trade Secrets Act principles in the Philippines are recognized under the Intellectual Property Code (RA 8293) and the Civil Code's provisions on unjust enrichment and obligations. Philippine courts have upheld confidentiality obligations under general contract law and awarded damages for breach of confidentiality, including actual damages under Article 2201 of the Civil Code and moral damages under Article 2220 for willful breach causing business harm.
For transactions involving publicly listed companies, confidentiality agreements must be consistent with the Securities Regulation Code (RA 8799) prohibitions on insider trading under Section 27 of RA 8799 — persons in possession of material non-public information about a listed company obtained through the M&A process are prohibited from trading in the company's shares until the information is publicly disclosed to the Philippine Stock Exchange (PSE) and Securities and Exchange Commission (SEC).
The legal framework governing the Confidentiality Agreement (M&A) (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 Confidentiality Agreement (M&A) (Philippines) in Philippines should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Civil Code of the Philippines (RA 386), Art. 1159 sets the foundational requirements.
When Do You Need a Confidentiality Agreement (M&A) (Philippines)?
A Philippines M&A Confidentiality Agreement is needed at the very outset of any business acquisition, investment, or strategic partnership discussion before confidential information is shared.
An M&A Confidentiality Agreement is required before a buyer is granted access to the seller's financial statements, BIR tax returns, customer lists, employee records, proprietary technology, and other non-public business information during due diligence for a business acquisition or asset purchase, protecting the seller from the buyer using such information to compete or to harm the seller if the transaction does not proceed.
An M&A Confidentiality Agreement is needed before a private equity fund or venture capital investor receives a business plan, capitalization table, financial model, or pitch deck from a startup or SME seeking funding in the Philippines, confirming that the investor's use of proprietary business information is limited to evaluating the investment.
An M&A Confidentiality Agreement is required when two Philippine corporations explore a joint venture, strategic alliance, or licensing arrangement, where each party discloses proprietary operational information, technology, and trade secrets to the other to evaluate whether the collaboration is commercially viable.
An M&A Confidentiality Agreement is needed when a company discloses information to a potential partner for evaluation of a merger under the Philippine Competition Act (RA 10667) framework, confirming that competitively sensitive pricing, cost, and customer data shared in the context of merger discussions is not used for anti-competitive purposes.
An M&A Confidentiality Agreement is required before a financial institution conducts credit due diligence on a Philippine corporate borrower, where the borrower discloses non-public financial information and the bank must confirm the information is used only for credit assessment and kept confidential from the bank's other clients who may be competitors of the borrower.
What to Include in Your Confidentiality Agreement (M&A) (Philippines)
A Philippines M&A Confidentiality Agreement must include the following provisions to be enforceable under the Civil Code and effective in protecting transaction information.
Definition of Confidential Information: A broad definition covering all non-public business, financial, legal, and technical information disclosed by the disclosing party (Seller or Target) to the receiving party (Buyer or Investor), whether in written, oral, electronic, or any other form. The definition should specifically include: financial statements and projections; customer and supplier lists; employee information; BIR tax records; intellectual property and trade secrets; transaction terms; and all information obtained through due diligence. Standard exclusions apply to information that: is or becomes public knowledge without breach; was known to the recipient prior to disclosure with evidence; was independently developed; or is required to be disclosed by Philippine law or court order.
Permitted Use Restriction: The receiving party's use of confidential information is restricted solely to evaluating the transaction described in the agreement (the Permitted Purpose). No use for competing with the disclosing party, soliciting customers or employees, or any other purpose is permitted. This restriction is a core obligation under the Civil Code principles of obligatory force of contracts (Article 1159).
Non-Disclosure Obligations: The receiving party's obligation to protect confidential information using at least the same standard of care used to protect its own confidential information and to limit disclosure to its employees, advisors, and representatives who need to know for the Permitted Purpose and who are bound by equivalent confidentiality obligations.
Data Privacy Compliance: Specific provisions addressing compliance with the Data Privacy Act (RA 10173) — restricting processing of personal data of employees and customers to the specific purpose of evaluating the transaction, requiring return or deletion of personal data if the transaction does not proceed, and acknowledging the NPC registration obligations of both parties under Section 46 of RA 10173.
Insider Trading Restrictions: For transactions involving publicly listed Philippine companies, acknowledgment that material non-public information received is subject to the Securities Regulation Code (RA 8799) insider trading prohibition under Section 27, and the receiving party agrees not to trade in the listed company's shares while in possession of such information.
Term, Return of Information, and Remedies: Duration of confidentiality obligations (typically 2-5 years); obligation to return or certifiably destroy confidential information if the transaction does not proceed; and acknowledgment that breach will cause irreparable harm entitling the disclosing party to injunctive relief under Rule 58 of the Rules of Court in addition to damages under Articles 2201-2202 of the Civil Code.
Additional compliance elements for a Confidentiality Agreement (M&A) (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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Reference this free template in an article, syllabus, or research note:
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Frequently Asked Questions
An M&A Confidentiality Agreement is legally enforceable in the Philippines under the Civil Code (RA 386) as a valid contract satisfying the elements of Article 1318: consent (both parties signing), object (the confidential information), and cause (the consideration of proceeding with the transaction discussions). Philippine courts have consistently enforced confidentiality obligations and awarded damages for breach under Articles 2201-2202 of the Civil Code. The injured party may seek actual damages (proven losses caused by the disclosure), and in cases of willful or fraudulent breach, moral damages under Article 2220 and exemplary damages under Article 2232. Courts may also grant preliminary injunctions under Rule 58 of the Rules of Court to prevent ongoing or threatened disclosure of confidential information before trial. For trade secrets, additional protection is available under the Intellectual Property Code (RA 8293). The agreement is binding even without notarization under Article 1356 of the Civil Code, though notarization is advisable for evidentiary purposes in court proceedings.
The standard confidentiality period in a Philippines M&A Non-Disclosure Agreement (NDA) is typically 2 to 5 years from the date of disclosure or from the termination of the transaction discussions. For straightforward business acquisitions of SMEs, a 2-year confidentiality period covering the period from the NDA signing through the expected closing date (or deal failure) is common. For larger, more complex transactions — such as acquisitions of regulated entities requiring BSP or Insurance Commission approval or transactions subject to PCC merger review under RA 10667 — confidentiality periods of 3 to 5 years are standard to account for the extended deal timeline and post-closing integration period. Perpetual confidentiality obligations (no end date) are sometimes used for highly sensitive categories of information, such as proprietary formulas, technology trade secrets protected under RA 8293, or customer personal data covered by the Data Privacy Act (RA 10173). Philippine courts have enforced reasonable confidentiality periods in M&A NDAs without treating them as unreasonable restraints of trade, distinguishing them from post-employment non-compete clauses which are subject to stricter reasonableness analysis.
Standard exclusions from an M&A Confidentiality Agreement in the Philippines include categories of information that are not truly confidential or where the receiving party should not be restricted. Information that is or becomes publicly available through no breach by the receiving party — such as SEC-filed Annual Reports, PSE-disclosed material transactions, or publicly registered patents at the IPO Philippines — is excluded from confidentiality obligations. Information independently developed by the receiving party without reference to the disclosing party's information is excluded, subject to the receiving party's burden of demonstrating independent development. Information already known to the receiving party before disclosure, evidenced by contemporaneous written records predating the NDA, is excluded. Information required to be disclosed by Philippine law or by order of a Philippine court or government agency — such as disclosure required by the Securities Regulation Code (RA 8799), a BIR subpoena under Section 5 of the NIRC, or a court order — is excluded from the non-disclosure obligation, provided the receiving party gives prior written notice to the disclosing party to allow the disclosing party to seek a protective order.
A Philippines M&A Non-Disclosure Agreement should expressly address the Data Privacy Act of 2012 (RA 10173) when due diligence involves access to personal data of the target's employees, customers, or other data subjects. Under Section 12 of RA 10173, personal data processing requires a legal basis — including the legitimate interest of the parties in evaluating the transaction, subject to a balancing test with the data subjects' privacy rights. The NDA should: limit the use of personal data strictly to evaluating the transaction; require the receiving party to implement appropriate organizational, physical, and technical security measures under Section 20 of RA 10173; obligate the receiving party to return or securely delete all personal data if the transaction does not proceed; prohibit re-use of employee or customer personal data for any other business purpose; and acknowledge that both parties remain responsible for compliance with National Privacy Commission (NPC) regulations under their respective roles as personal information controllers or processors under RA 10173. Breach of data privacy obligations may expose the receiving party to criminal liability under Section 25-34 of RA 10173 and NPC enforcement action.
A Philippines M&A Confidentiality Agreement may include a non-solicitation clause prohibiting the buyer from soliciting or hiring employees of the seller or target for a defined period after the NDA is signed, whether or not the transaction closes. Non-solicitation provisions in the M&A NDA context are distinct from post-employment non-compete agreements and are generally enforceable under Philippine law as reasonable restrictions protecting the disclosing party's confidential business information — specifically, employee-related information (compensation, performance records, key personnel details) disclosed during due diligence. The non-solicitation restriction is subject to a reasonableness standard under Article 1306 of the Civil Code: courts assess whether the restriction is reasonable in scope (limited to identified key employees rather than all employees), geographic reach, and duration (typically 1-2 years). A blanket prohibition on hiring any employee of a large company for an extended period may be challenged as an unreasonable restraint of trade. The non-solicitation clause should distinguish between targeted recruitment of specific individuals identified through due diligence and hiring in response to general employment advertisements open to the public.
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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