The first time I had an OFS ask me for a Certificate of Employment (COE) I was hesitant.  

I wasn’t sure if I should give it.
What liabilities would it pose for me?
They’re technically independent contractors, not employees.
Would this put me on the hook for something?

This is weird.

Or…that’s what I thought.

The weird reason behind this is because the Philippine government and most Philippine businesses can’t wrap their head around the idea that a Filipino worker can have a stable job working online.

That’s just me ranting. The short answer is having a COE allows them to take out loans.

Here’s what my OFS says about it:

Remember a few emails ago I talked about SSS and how taking an SSS loan helps Filipinos establish credit (

Let’s say I now have enough credit to take out an even bigger loan, say a car loan. I can only take out a car loan through a bank. And in order to take out a bank loan, I need to offer proof of income. That means I have to show the bank I’m:

1. employed or 
2. a business owner.

Showing employment is easier. All we need to do is show payslips and a COE. 

But most OFS don’t have that. Even if we show the banks that we have a salary that comes in regularly, it’s not considered proof of income.

BUT the banks will recognize it as proof of income IF we can also present a COE. Their rationale for this is they want to make sure that the money that’s going into our account is coming from an employer and not from illegal activities.

But what if we just register as a sole proprietor/independent contractor business? Won’t that make it easier to take a loan?

Ironically, in order for us to register as an independent contractor, we would still need a COE. 

The first step of the business registration process requires us to go to our barangay (town) hall and declare ourselves as independent contractors. We have to make this declaration so we can be exempted from most business requirements like renting out an office and getting the paperwork to use that office (fire clearance, health clearance, utilities permit, garbage permit, etc).

If we can show that we’re working from home, they’ll issue a certificate that we can take to the BIR (Bureau of Internal Revenue), DTI (Department of Trade and Industry) and our local government. This would waive most of these requirements.

And to prove that we work from home, most barangays require that we show a COE.

Why do we need a COE? The explanation they gave us is that a COE is proof that our online work is our primary source of income.

However, in recent years, some banks and government offices have started changing their policies. Instead of asking for a COE, they’ve started accepting certificates of engagement instead.

A certificate of engagement is essentially a COE, the only difference is that you’re simply acknowledging that your OFS is an independent contractor and that you’re currently using their services. This offers proof of income for the OFS without tying down the business with a legally binding document.

What does a COE look like?  

Super simple, download my template.