Chapter 3: Starting a

Business in the Philippines

Business Finance

Burgus,Sherwen

Forca,Corren
Impreso,Alexa Mae

Bernardo, Elmer
Introduction
Starting a business in the Philippines involves
understanding local regulations market
opportunities,and cultural factors. The country
offers growth potential due to its young
workforce for and expanding consumer
market.There are steps like obtaining permits,
following tax laws and adapting local practices.
What do you think are
the regulatory
agencies that
concerned with the
business operations
and the areas of
responsibility?
 Regulatory Agencies

Securities and Department

Bangko of Trade
Sentral ng Exchange and
Pilipinas Commission Industry
 Regulatory Agencies

Department of Department of
Labor and Finance
Employment
Bangko
Sentral ng
Pilipinas
An administrative unit through
the Monetary Board MB –the
monetary banking credit
systems of the country. Primary
purpose is to oversee payment
systems in the Philippines and
exercise supervisory and
regulatory powers
Securities and
Exchange
Commission
Handles the registration,
licensing,regulation supervision of
all the corporations and
partnerships in the Philippines
includes foreign corporations
licensed to engage in business or to
establish branch offices in the
country, regional or area
headquarters,and representative
officers. The SEC also regulates the
operation of the stock exchange.
Department of
Trade and
Industry
Responsible for industrial
development promotions,
development promotion of
investment s, development of
small and medium enterprises,
expansion of exports and
integrated delivery of DTI
services to the regions and
provinces
Department of
Labor and
Employment
A charge with the promotion of
workers, employment
promotion,and manpower
development .
Department of
Finance

Handles the collection of all

taxes , issuance , implementation
or enforcement of the tax laws,
and negotiation of loans with
foreign government and banks.
Registration
of Business
Name
Requirements of the
dti

1.The applicant must pay a registration/processing of

P300, then proceed to accomplishing the
corresponding application form (in quadruplicate).the
term of registration is five(5) years.
Requirements of the
dti

2.The applicant must file the duly accomplished

application 4.1-4.2 form with the Department of
Trade and Industry provincial office where the
business is located .
Requirements of the
dti
3.The applicant must submit two(2) passport
-size pictures of himself taken not more than a
year preceding the filing
application

4.In case applicant is a natural born Filipino ,he

must be 21 years old or over
Requirements of the
dti

5.If applicant states in the application that he is a

Filipino citizen but whose surname sounds
foreign or alien surname,he must submit two (2)
photocopies of either of the following:

1.If natural born, Voter's ID or Birth Certificate ;

2.If by election
-Affidavit of Election and Oath of allegiance or ID
issued by CID.

3.If by naturalization
-Certificate of Naturalization and Oath of allegiance
or ID issued by CID.
4.If by reacquisition of Philippine Citizen-ship
-Affidavit of repatriation or reacquisition
-Oath of allegiance and ID issued by CID

5.If by marriage to a Filipino

-Marriage Contract and Cancellation Certificate of
Alien Certification of registration by CID.
 Who can apply for a
business name?

Any individual who is at least eighteen (18)years

old ,or any juridical person who is doing
WWW.YOGAPEACE.COM

business or proposing to do business in the

Philippines under a business name as defined
in this order,and is not disqualified by any
existing law or regulations to engage in
business are required to register under the
business name law.
 Who can apply for a
business name?

The signatories of application for registration

are as follows:
WWW.YOGAPEACE.COM

•For individual applicants,the applicant

himself;or by the person holding power of
attorney for him if the application is under a
special power of attorney

•For corporations,the Board Director,CEO or

Board Secretary;
 Who can apply for a
business name?

• For partnership;one of the partners;

WWW.YOGAPEACE.COM

•For cooperatives,the President or Secretary

thereof;

•For legitimate labor organizations,the

President or Secretary thereof.
 Who can apply for a
business name?

If the applicant is signed by a person holding

WWW.YOGAPEACE.COM

power of attorney for the applicant,the

application shall be accepted provided that the
original power of attorney is presented and
copy thereof submitted as part of the
supporting documents.
 What happens after submitting
the application?

An applicant can reserve a business name

online up to three(3) working days ,free or
charge.The registrant however, shall comply
with all the necessary requirements for
registration within the same period in that the
application can prosper.
 Where to file ?

A business name can be registered through

DTI regional or provincial offices where the
business is located .
 Validity of business registration

The business name registrationis renewable every five

years.Such renewal should be made within the 90 days grace
period following yhe expiration of the 5 year period from the
date of the original registration. The business name is
automatically deleted from the computer file six months after
the date pf expiration and after publication of such leading
newspaper. If applicant register after 6 months after the date of
expiration his /her applicationis considered as a new
application. Early renewal or renewal before yhe expiration
date is not allowed.
 Organizing a Sole Proprietorship

A sole proprietorship is the easiest to organize

among the major forms of the business.
Registration is done at the Department of Trade
and Industry where required documents is
submitted.

The requirements are as follows:

A. The applicants must be a majority age (18 years or over)
B. He must submit two passports size picture of himself
taken not more than one year proceeding the filling of such
application.

C.If an Alien, he must submit the following:

1.Alien Certificate of Registration, if any
2.Accomplished DTI form no. 17 under Republic act No. 7042
3. A written appointment of Filipino resident agent
4. Authority to verify bank accounts/ bank certificate of
deposit
5. Proff of inward remittance of foreign currency for
nonresident alien and Bank Certificate of Deposit for
retail.
 Organizing a Corporation

The process of organizing a Corporation generally

consist of three stages which normally require the
aid of legal competent advisers.

1.Promotion- In this stage,the incorporators make

preliminary arrangements to set up an tentative
working condition to solicit subscription to raise
sufficient capital for business.

2.Incorporations- It is the process of formalizing the

organization of the corporation.
Procedure include:

a. Drafting of the articles of incorporation which must be duly

executed and acknowledge before the notary public.

b.Filing of the articles of incorporation with the Securities and

Exchange Commission (SEC) together with the statement of
the asset and by -laws.

c.After the required fees have been paid and upon the
approval of the articles of incorporation,the date of which
being considered as the date of registration or incorporation.

3.Commencement of the business -The business should start

at it's operations within two years from the date of
incorporation.
 Classification of Corporations
The Corporation Code of the Philippines classifies
private corporations into stock and nonstock
corporations,according to whether their membership
is presented by shares of stock or not.

A stock corporation is the ordinary business

corporation creat and operated for the purpose of
making a profit wich may be distributed in the form of
dividends to stockholders on the basis of their
investment Capital.Unlike stock corporations,
nonstock corporations do not issue stock and
distribute to their members;they are created not for
the profit but for the public good and welfare
 Classification of Corporations

There are other classifications of corporations

such as those enumerated below:

1. Corporation sole a special form of corporation

usually associated with the clergy. Under the
code, it is a s a religious corporation which
consists of one member only and his successors,
such as a bishop.

2)Ecclesiastical corporation is one organized for

religious purpose
 Classification of Corporations
3. Lay corporation is one organized for a purpose
other than for religion. Lay corporations, in may
be either eleemosynary or civil.

4. Eleemosynary corporation is one established

and devoted to charitable purposes or those sup.
ported by charity;

5. Civil corporation is one established for

business or profit.
. Classification of Corporations
6. Domestic corporation is one incorporated under
the laws of the Philippines.

7. Foreign corporation is formed, organized or

existing under any laws other than those of the
Philippines.

8. De jure corporation is a corporation existing in

fact and in law.

9. De facto corporation is a corporation existing in

fact but not in law.
 Classification of Corporations

10. Close corporation is one which is limited to

selected persons or members of a family.

11. Open corporation is one which is open to any

person who may wish to become a stockholder or
member thereto.

12. Parent or holding corporation is one who is so

related to another corporation that it has the
power either directly or indirectly to elect the
majority of the directors of such other
corporations.
 Classification of Corporations

13. Subsidiary corporation is one which is so related to

another corporation that the majority of its directors can be
elected either directly or indirectly by such other
corporation. It is one which another corporation owns at
least a majority of the shares and thus has control.

14. Affiliated corporation is one related to another by owning

or being owned by common management or by a long-term
lease of its property or other control device.

15. Public corporations are those formed or organized for the

government or for the State..
 Classification of Corporations

16. Government owned or controlled corporations are

those which the government is the majority
stockholder.

17. Corporation by prescription is one which has

exercised corporate powers for an indefinite period
without interference on the part of the sovereign
power and which by function of law is given the status
of a corporation.
 Formation Procedure

The SEC administers the New Corporation Code.

The following are the documentary and other
requirements for registering a corporation.

1.Articles of incorporation
2. Treasurer's affidavit
3. Statement of asset and liabilities
4.Bank Certificate of deposit and paid subscription
 Formation Procedure

5.Authorization of the SEC to verify bank account

6.Written undertaking to change corporate name
if such similar to or resembles the name of an
existing corporation.
7.Personal information sheet of directors,officers
and shareholders.
8.Written undertaking by a resident shareholder
to assume unpaid subscription of nonresident
alien subscribers under oath.
 Express Lane

The SEC has devised an "express lane" for

processing incorporation papers for common lines
of business subject to certain limitations. In the
"express lane," processing of an incorporation
papers takes only one working day. The certificate
of registration is issued on the same day, provided
all the requirements mentioned above are
submitted in the morning of that day.
The process for non-qualified individuals takes a
month, with the filing fee for articles of
incorporation being one-tenth of one percent of
authorized capital stock. The corporation gains
legal personality upon issuance, and by-laws must
be submitted within 30 days.
 Steps in the Registration of a Corporation

Express Lane

Under the express lane scheme, applications for

registration of articles of incorporations for
registration of articles of incorporation and
by-laws are processed within a maximum period
of only one day. The applicant must:
1. Verify proposed corporate name with Records
Division.

2. Procure an express lane form specially prepared

for business from the Cashier.

3. Present accomplished express lane forms or

documents to the Express Lane Unit at the
Corporate and Legal Department (CLD) for
checking the financial and legal aspects.
4. Proceed to Cashier for payment of filing and
other fees.

5. Resubmit all documents to the receiving clerk at

the Express Lane Unit for processing.

Note: Verified name is deemed unofficial unless and

until approved by the Commission after issuance of
the Certificate of Registration.
The Regular Procedures

1. Secure verification slip and present it for

checking with the Records Division.

2. Prepare documents required to be per brochure.

submitted as

3.Get "Approved for Payment" stamped on the

articles of incorporation from Corporate and Legal
Department (CLD) or from other departments as
may be designed by authorities.
4. Proceed to Cashier for payment.

5. Submit three (3) copies of documents to the

Receiving Unit.

6. The documents will be processed by the Exa

miners and Appraisers Department (EAD) for the
financial aspects and by the Corporate and Legal
Department (CLD) for legal aspects of incor
poration.

7. The certificate of registration is then ready for

release. Claim it at the Releasing Unit, Records
 Summary
An entrepreneur who wishes to start a business
in the Philippines has to be very familiar with
the different government entities or principal
regulatory agencies that are concerned with
business operations.The principal entities are
the Department of Trade and Industry (DTI)
,the Securities and Exchange Commission
(SEC),the Department of Labor and
Employment (DOLE) ,and the Department of
Finance
To GOD BE ALL
THE GLORY!