Letter of Intent (Philippines)
A formal letter expressing intent to enter into a transaction or agreement
Letter of Intent
[Loi Date]
[Recipient Name]
[Recipient Address]
LETTER OF INTENT
Re: Proposed [Transaction Type]
Dear Sir/Madam:
Introduction
[Sender Name] (hereinafter referred to as the "Proponent"), with principal address at [Sender Address], hereby submits this Letter of Intent ("LOI") to [Recipient Name] (hereinafter referred to as the "Recipient"), with address at [Recipient Address], in connection with the proposed transaction described herein.
This Letter of Intent is submitted to express the Proponent's serious and genuine interest in pursuing the proposed transaction described below, and to establish a framework for good-faith negotiations toward the execution of a definitive agreement.
Proposed Transaction
1. PROPOSED TRANSACTION
The Proponent proposes to enter into the following transaction with the Recipient:
[Transaction Description]
2. INDICATIVE CONSIDERATION
The Proponent proposes a consideration of [Proposed Consideration], subject to adjustment upon completion of due diligence and satisfactory resolution of all conditions precedent.
3. KEY PROPOSED TERMS
[Key Terms]
Due Diligence and Conditions
4. DUE DILIGENCE
The Proponent shall conduct a comprehensive due diligence investigation on the Recipient and the subject matter of the proposed transaction within [Due Diligence Period]. The Recipient agrees to provide full access to all relevant documents, records, facilities, and personnel reasonably required for the due diligence exercise.
5. CONDITIONS PRECEDENT
The obligation of the Proponent to proceed with the proposed transaction is subject to the satisfaction of the following conditions:
[Conditions]
Exclusivity and Confidentiality
6. EXCLUSIVITY
During the exclusivity period of [Exclusivity Period], the Recipient agrees not to solicit, initiate, encourage, or enter into any negotiations or discussions with any other party regarding a transaction involving the subject matter of this LOI, without the prior written consent of the Proponent.
7. CONFIDENTIALITY
Both parties agree to keep strictly confidential the existence and contents of this Letter of Intent, all information exchanged in connection with the proposed transaction, and all due diligence materials. Neither party shall disclose such information to any third party without the prior written consent of the other party, except as required by applicable Philippine law or regulatory authority, including the Securities and Exchange Commission (SEC), Philippine Stock Exchange (PSE), or Bureau of Internal Revenue (BIR).
Binding and Non-Binding Provisions
8. BINDING AND NON-BINDING PROVISIONS
Binding Clauses: The following provisions of this LOI are legally binding on both parties: [Binding Clauses]
Non-Binding Statement: [Non Binding Statement] This LOI does not constitute a contract of sale, a definitive agreement, or any legally binding commitment to consummate the proposed transaction. Neither party shall have any liability to the other arising from or in connection with this LOI except under the binding provisions identified above.
9. TARGET CLOSING DATE
The parties shall use their best efforts to execute a definitive agreement on or before [Target Closing Date].
10. GOVERNING LAW
This Letter of Intent shall be governed by and construed in accordance with [Governing Law]. Any dispute arising from or in connection with this LOI shall be resolved through good-faith negotiations between the parties, and failing such resolution, through arbitration in accordance with the Alternative Dispute Resolution Act of 2004 (Republic Act No. 9285) or through the appropriate courts of the Philippines.
Closing
This Letter of Intent is submitted in good faith and with genuine interest in consummating the proposed transaction. The Proponent looks forward to your favorable response and to commencing the due diligence and negotiation process at the earliest opportunity.
Kindly indicate your agreement to the terms of this Letter of Intent by signing in the space provided below and returning a signed copy to the Proponent.
Very truly yours,
[Sender Name]
Proponent
________________
Signature
Recipient (Agreed and Accepted)
________________
Signature
What Is a Letter of Intent (Philippines)?
A Letter of Intent in the Philippines records a formal request or statement in writing, giving the recipient the details needed to act on it.
The legal status of a Philippine Letter of Intent depends on its specific language and structure. Under Article 1305 of the Civil Code, a contract arises from the meeting of minds on the object and consideration. A Letter of Intent that expressly states it is 'non-binding' and 'subject to execution of a definitive agreement' does not create binding obligations on the proposed transaction terms, but may create binding obligations on specific provisions that are expressly stated to be binding — such as exclusivity, confidentiality, and expense allocation during negotiations.
The Supreme Court of the Philippines has examined the enforceability of Letters of Intent in several cases. In Limketkai Sons Milling, Inc. v. Court of Appeals and National Bookstore, Inc. (G.R. No. 118509, December 1, 1995), the Court distinguished between a mere offer, a binding preliminary agreement, and a fully executed contract, holding that a document binding parties to negotiate toward a formal contract may itself be enforceable as a pre-contractual obligation under Article 1159 of the Civil Code.
In real estate transactions, a Letter of Intent to purchase or lease property is often the first step before a Deed of Absolute Sale or Contract of Lease is executed. Under the Maceda Law (Republic Act No. 6552) for residential real estate and the Real Estate Service Act (Republic Act No. 9646), real estate brokers facilitating transactions must confirm that Letters of Intent accurately reflect the proposed terms and do not inadvertently create binding sale obligations.
For mergers and acquisitions (M&A) transactions involving SEC-registered corporations, a Letter of Intent typically precedes due diligence and the execution of a Share Purchase Agreement or Asset Purchase Agreement. The Securities and Exchange Commission (SEC) and the Philippine Competition Commission (PCC) may require notification of acquisition transactions exceeding the thresholds under the Philippine Competition Act (Republic Act No. 10667) — the Letter of Intent date may be relevant for determining notification timelines.
The legal framework governing the Letter of Intent (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 Letter of Intent (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 Letter of Intent (Philippines)?
A Letter of Intent in the Philippines is needed whenever parties wish to document their preliminary agreement on the key terms of a proposed transaction before investing in the time and expense of negotiating and drafting a full formal contract.
A Letter of Intent is required when an investor or acquirer proposes to purchase a Philippine business or its assets. Corporate acquisitions in the Philippines involve due diligence of financial statements, BIR tax clearances, SEC records, and regulatory licenses — an LOI establishes the proposed purchase price, payment structure, and exclusivity period during which the seller agrees not to negotiate with other potential buyers.
A Letter of Intent is needed when a prospective commercial tenant wants to reserve a commercial space in a Philippine mall, office building, or industrial complex before the formal Commercial Lease Agreement is negotiated. Mall LOIs from SM, Robinsons, Ayala Malls, and other large property developers typically commit the tenant to a proposed rental rate, area, lease term, and fit-out allowance.
A Letter of Intent is required when a Philippine company proposes a joint venture or strategic partnership with a local or foreign partner. A joint venture LOI outlines the proposed ownership structure, capital contributions, management roles, and profit-sharing before the Joint Venture Agreement is drafted and filed with the SEC.
A Letter of Intent is needed when a government-owned and controlled corporation (GOCC) or LGU enters into a public-private partnership (PPP) proposal under the BOT Law (Republic Act No. 6957 as amended by RA 7718), where the LOI from a private proponent triggers the NEDA ICC review process.
A Letter of Intent is required in franchise transactions when a franchisee applicant formally expresses interest in acquiring a Philippine franchise. The LOI initiates the franchisor's disclosure and evaluation process under the Philippine Franchise Association guidelines.
What to Include in Your Letter of Intent (Philippines)
A well-drafted Letter of Intent for Philippine transactions must contain the following essential elements to clearly communicate the proposed terms and avoid unintended binding obligations.
Parties: Full legal names of all parties — with SEC Registration Numbers for corporations — and authorized signatory names and designations. The LOI must be signed by persons with authority to bind the party to at minimum the binding provisions (exclusivity, confidentiality).
Transaction Description: A clear description of the proposed transaction — acquisition of shares, purchase of assets, lease of premises, joint venture, partnership — and the object of the transaction with sufficient specificity to avoid ambiguity. For real property transactions, the property description (TCT number, lot area, location) must be stated.
Proposed Key Terms: The proposed purchase price or consideration in Philippine peso (PHP ₱) or foreign currency, the proposed payment structure (lump sum, installment, earnest money), and the proposed timeline for completing the transaction. For business acquisitions, the LOI should note conditions precedent — satisfactory due diligence, regulatory approvals, board approval.
Binding vs. Non-Binding Provisions: A clear statement that the LOI is non-binding except for specified provisions. Provisions that are typically expressed as binding: (a) exclusivity/no-shop clause — prohibiting the other party from negotiating with third parties for a specified period (typically 30-90 days); (b) confidentiality of the LOI terms and transaction negotiations; (c) cost allocation for due diligence and legal fees; and (d) governing law.
Due Diligence Access: For acquisition transactions, the seller's agreement to provide the buyer reasonable access to books, records, financial statements, licenses, and key personnel during the due diligence period, subject to confidentiality obligations.
Expiry and Termination: The LOI's expiry date (typically 30-60 days from signing) and the conditions under which either party may terminate the LOI without liability — mutual agreement, failure to reach definitive agreement by the expiry date, or adverse due diligence findings.
Additional compliance elements for a Letter of Intent (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:
Forms Legal. (2026). Letter of Intent (Philippines) (Philippines) [Legal document template]. Forms Legal. https://forms-legal.com/philippines/business/letters/letter-of-intent-philippines
"Letter of Intent (Philippines) (Philippines)." Forms Legal, 2026, https://forms-legal.com/philippines/business/letters/letter-of-intent-philippines.
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title = {Letter of Intent (Philippines) (Philippines)},
year = {2026},
howpublished = {\url{https://forms-legal.com/philippines/business/letters/letter-of-intent-philippines}},
note = {Free legal document template. Based on Revised Corporation Code (RA 11232, 2019)}
}
Frequently Asked Questions
A Letter of Intent in the Philippines may be binding or non-binding depending on its specific language under the Civil Code (Republic Act No. 386). A Letter of Intent that expressly states it is 'non-binding' and 'subject to execution of a formal definitive agreement' is generally not enforceable as a contract for the proposed transaction terms, because Article 1318 of the Civil Code requires a meeting of minds on all material terms for a binding contract to arise. However, specific provisions within an LOI that are expressly stated to be binding — exclusivity clauses, confidentiality obligations, cost-sharing arrangements — are enforceable as independent contracts once both parties sign. The Supreme Court in Limketkai Sons Milling v. Court of Appeals (G.R. No. 118509, December 1, 1995) examined when a preliminary document creates binding obligations. Parties who sign an LOI with binding exclusivity and confidentiality provisions and then violate those provisions face liability for breach of contract under Articles 1159 and 1170 of the Civil Code.
In Philippine practice, a Letter of Intent (LOI) and a Memorandum of Understanding (MOU) serve similar purposes — documenting the parties' preliminary agreement on proposed transaction terms — but differ in form and typical use. An LOI is typically a shorter, more specific document issued by one party to another expressing intent to enter a specific transaction (e.g., 'we intend to purchase your property for PHP 10,000,000'). An MOU is typically a more comprehensive document signed by both parties that outlines areas of cooperation, shared goals, and preliminary terms in a more formal bilateral format. Both documents may be binding or non-binding depending on their language under Civil Code Article 1305. Government agencies and GOCCs in the Philippines commonly use MOUs for interagency cooperation arrangements. Private commercial parties more commonly use LOIs for M&A transactions, leases, and joint ventures. For binding effect, both require clear language identifying which provisions create enforceable obligations.
A Letter of Intent does not require notarization to be legally effective under the Civil Code of the Philippines. An LOI's binding provisions — exclusivity, confidentiality — are enforceable as contracts from the moment both parties sign, without notarization, under the general rule that contracts are perfected by mere consent under Article 1315 of the Civil Code. However, notarization of an LOI is advisable in real property transactions, as notarized documents have stronger evidentiary value as public documents under Rule 132, Section 19 of the Revised Rules of Court. For LOIs relating to real property purchases, notarization also helps establish the date of the agreement, which may be relevant if the property is later the subject of a competing offer or claim. SEC-registered corporate transactions typically do not require notarized LOIs, but board resolutions authorizing the LOI signing should be appended to demonstrate authority.
An exclusivity clause (also called a 'no-shop' or 'lock-up' clause) in a Philippine Letter of Intent is a binding provision that prohibits one or both parties from negotiating with, soliciting offers from, or entering into agreements with third parties regarding the same transaction for a specified period. For M&A transactions, the seller typically grants the buyer exclusivity for 30 to 90 days to complete due diligence without the risk of a competing buyer. For commercial lease LOIs, the landlord may grant the prospective tenant an exclusivity period to negotiate the final lease terms. In the Philippines, exclusivity clauses in LOIs are enforceable as independent binding contracts under Article 1159 of the Civil Code even if the overall LOI is stated to be non-binding. A seller who violates an exclusivity clause by negotiating with another buyer during the exclusivity period is liable for actual damages under Article 2201 of the Civil Code, including the buyer's due diligence expenses and legal fees wasted in reliance on the exclusivity.
Withdrawal from a non-binding Letter of Intent in the Philippines — before a formal definitive contract is signed — generally does not create liability for the withdrawing party, as a non-binding LOI does not create an obligation to complete the transaction under Civil Code Article 1315. However, the withdrawing party may still be liable for: (1) breach of binding provisions — if the LOI included binding exclusivity or confidentiality provisions that were violated before withdrawal, the other party may claim actual damages for due diligence costs and legal fees wasted in reliance on those provisions; (2) bad faith negotiations — under the doctrine of culpa in contrahendo (liability in the pre-contractual stage), Philippine courts have recognized liability for damages where a party enters negotiations without genuine intent to conclude an agreement, as established in Woodhouse v. Halili (G.R. No. L-4811, July 31, 1953). Withdrawal based on genuine due diligence concerns — adverse findings about the target business or property — is generally protected from liability.
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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