Dealership Agreement (Philippines)

A Dealership Agreement in the Philippines records the bargain between the parties, fixing their respective rights, duties and remedies.

Dealership agreements in the Philippines are primarily governed by the Civil Code provisions on contracts (Articles 1305 to 1422) and sale (Articles 1458 to 1637), the Consumer Act of the Philippines (RA 7394, 1992) for consumer goods, and the Philippine Competition Act (RA 10667, 2015) administered by the Philippine Competition Commission (PCC) for provisions that may affect market competition, such as exclusive dealing, territorial restrictions, and resale price maintenance.

The Department of Trade and Industry (DTI) and the Philippine Competition Commission (PCC) monitor dealership arrangements that may constitute anti-competitive vertical restraints. Resale price maintenance clauses — requiring dealers to sell at a fixed minimum price — are scrutinized under Philippine Competition Act Section 14 on prohibited agreements. Exclusive dealing provisions may be reviewed under PCC Guidelines on Vertical Agreements.

For motor vehicle dealerships, the Department of Trade and Industry (DTI) administers the Motor Vehicle Industry Development Plan (MVIDP), and dealers must comply with DTI Department Administrative Order No. 8, Series of 1987, which governs the terms of motor vehicle sales. For petroleum product dealerships, the Department of Energy (DOE) Oil Industry Management Bureau regulates dealer appointments under the Downstream Oil Industry Deregulation Act (RA 8479, 1998).

The legal framework governing the Dealership 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 Dealership 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 Dealership Agreement in the Philippines is required whenever a supplier appoints another business to distribute and sell its products within a specific territory or channel.

A Dealership Agreement is needed when a manufacturer or importer appoints a Philippine dealer to sell consumer electronics, automotive parts, or industrial equipment, because without a written agreement the dealer's purchase obligations, sales quotas, and after-sales service responsibilities are undefined and unenforceable.

A Dealership Agreement is required when granting exclusive territorial rights to a dealer, because without a written exclusivity provision, the supplier retains the right to appoint competing dealers in the same area, and the dealer cannot compel the supplier to honor any territorial protection under Civil Code Article 1306.

A Dealership Agreement is needed when the supplier wants to impose minimum purchase quotas, required product ranges, or branding standards on the dealer, because such obligations must be expressly agreed in writing to be binding under Civil Code Article 1159.

A Dealership Agreement is required for motor vehicle dealerships, as DTI Department Administrative Order No. 8 and the vehicle brand's own dealer standards agreements require formal written appointment before a dealer may use the brand's trademark and participate in factory warranty programs.

A Dealership Agreement is needed when the parties want to establish clear terms for stock returns, warranty claims, and product liability, especially given the Consumer Act (RA 7394) provisions on warranties and product liability that impose obligations on both manufacturers and retailers.

Parties in Philippines should prepare a Dealership 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 valid Dealership Agreement in the Philippines must contain the following key components.

Parties and Appointment: Full legal names, SEC or DTI registration numbers, and addresses. The appointment clause must state whether the dealership is exclusive or non-exclusive within the defined territory, and for what product lines or categories.

Territory: A precise description of the geographic territory within which the dealer is authorized to sell, and whether the dealer may solicit customers outside the territory. Philippine Competition Act (RA 10667) compliance must be considered for exclusivity provisions that may foreclose competition.

Purchase Obligations and Quotas: Minimum purchase quantities or values per period, consequences for failing to meet quotas (such as loss of exclusivity), and the ordering and delivery process including lead times and minimum order quantities.

Pricing and Payment Terms: The transfer price from supplier to dealer, payment terms (credit period and conditions), and any restrictions on resale pricing consistent with Philippine Competition Act Section 14 prohibiting resale price maintenance that substantially prevents, restricts, or lessens competition.

Warranty and After-Sales Service: The supplier's warranty terms, the dealer's obligations to process warranty claims, and the allocation of warranty costs between the parties. These provisions must comply with the Consumer Act (RA 7394), particularly Articles 67 to 76 on warranties.

Intellectual Property License: Permission to use the supplier's trademarks, trade name, and product materials solely for the purpose of selling the products, with all IP rights remaining with the supplier as registered with IPOPHL.

Term and Termination: The dealership term, renewal conditions, and termination provisions. Termination without cause should require reasonable notice — Philippine courts apply Civil Code Article 19 on abuse of rights to dealership terminations found to be sudden or in bad faith.

Governing Law and Dispute Resolution: Philippine law, with venue at the Regional Trial Court of the parties' agreed city or arbitration under the Alternative Dispute Resolution Act (RA 9285, 2004).

Additional compliance elements for a Dealership 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.