Licensing Agreement (Philippines)

A Licensing Agreement in the Philippines sets out the mutual obligations the parties accept and the terms that govern their dealings.

The Intellectual Property Code (RA 8293) governs licensing of patents (Sections 95 to 103), trademarks (Section 150), and copyright (Section 180) — each with specific requirements. For patents, Section 95 of RA 8293 permits voluntary licensing of patent rights with or without exclusivity. For trademarks, Section 150 requires quality control provisions. For copyright, Section 180.2 requires assignments and certain licenses to be in writing. The Philippine Competition Act (Republic Act 10667, 2015) and the Philippine Competition Commission (PCC) at phcc.gov.ph regulate licensing arrangements that may have anti-competitive effects — such as exclusive licenses that foreclose competition in a relevant market.

A general Licensing Agreement in the Philippines may cover a broad range of subject matter beyond IP alone — including licenses to manufacture products under a proprietary process, licenses to operate a business under a branded concept (franchise-adjacent arrangements), licenses to distribute proprietary goods in a defined territory, and licenses to use confidential know-how or trade secrets protected under Section 291 of RA 8293 and the Civil Code. The distinction between a license and a sale is legally significant in the Philippines for tax purposes: royalties earned by a Philippine licensor from domestic licensees are subject to 20% final tax for individuals or regular corporate income tax for companies, while outbound royalties paid to foreign licensors are subject to final withholding tax under Section 28(B) of the National Internal Revenue Code (NIRC) as amended by the TRAIN Law (RA 10963).

For franchise-type licensing in the Philippines, the Department of Trade and Industry (DTI) through the Philippine Franchise Association (PFA) and the Bureau of Domestic Trade (BDT) has issued guidelines on franchise disclosure obligations that apply to licensors granting rights to operate a substantially complete business system.

The legal framework governing the Licensing 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 Licensing 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.

A Licensing Agreement is needed whenever a Philippine or foreign rights holder grants another party the right to exploit their intellectual property or proprietary assets commercially in or from the Philippines.

A Philippine business that has developed a proprietary product formulation, manufacturing process, or service concept and wishes to allow another company to manufacture or offer that product or service under a defined arrangement needs a Licensing Agreement to define the scope, quality standards, and royalty terms.

A foreign company entering the Philippine market through a local distributor or manufacturer that will use the foreign company's brand, process, or technology needs a Licensing Agreement compliant with the Technology Transfer provisions of Sections 85 to 103 of RA 8293, which governs cross-border technology and IP licensing.

A Philippine celebrity, entertainer, sports personality, or content creator who has developed a recognizable brand or character and wishes to license merchandise rights to a manufacturer or retailer needs a Licensing Agreement that specifies the licensed images, quality approval rights, royalty rates, and term.

A Philippine agricultural producer or food manufacturer that licenses the use of geographical indications — such as 'Benguet Coffee' or 'Bukidnon Pineapple' — to qualified producers under IPOPHL's Geographical Indications (GI) registration system needs a Licensing Agreement compliant with Section 168 of RA 8293.

Any Philippine business entering into a joint venture that includes licensing of IP or proprietary information from one partner to the other needs a Licensing Agreement that survives the joint venture — addressing what happens to the license if the joint venture is dissolved — to protect each party's long-term interests.

Parties in Philippines should prepare a Licensing Agreement (Philippines) proactively rather than waiting for a dispute to arise. Courts interpret agreements based on the written terms rather than oral representations. 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. Where the transaction involves regulated activities, prior approval from the relevant authority may be required before execution.

A thorough Philippine Licensing Agreement must include the following essential elements.

Identification of Parties and Licensed Assets: Full legal names and addresses of licensor and licensee, and precise identification of the licensed IP, technology, or assets — including registration numbers where applicable (IPOPHL trademark or patent registration).

License Grant: Whether the license is exclusive (licensee is the only authorized user in the defined territory and field of use), sole (licensor and licensee may use but no further licensees), or non-exclusive (licensor may grant additional licenses). Geographic scope — whether limited to the Philippines (specifying NCR, Luzon, Visayas, Mindanao, or specific regions) or broader. Field of use restrictions — the specific industry, application, or product categories in which the licensee may use the licensed assets.

Term: Duration of the license, conditions for renewal, and any post-term restrictions, noting that perpetual post-termination use restrictions on technology are prohibited under Section 87(j) of RA 8293.

Royalties and Payments: Royalty rate or fee schedule, payment currency (PHP), payment timing, audit rights, minimum royalty guarantees, and tax gross-up provisions for withholding taxes under the NIRC.

Quality Control: For trademark and brand licenses, the licensor's right to approve products, marketing materials, and quality standards — mandatory under Section 150 of RA 8293 for trademark licenses.

Sublicensing: Whether the licensee may sublicense the rights and, if so, with what conditions and licensor approval.

Confidentiality: Protection of trade secrets and proprietary information disclosed in connection with the license, under the framework of Section 291 of RA 8293.

Termination: Grounds for termination (material breach, insolvency, change of control), notice periods, cure rights, and post-termination obligations.

Compliance with Philippine Competition Act: Confirmation that the license does not unreasonably restrain competition under the Philippine Competition Act (RA 10667, 2015) — vertical restraints such as resale price maintenance and exclusive territorial restrictions may attract PCC scrutiny.

Additional compliance elements for a Licensing 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.