Legal Forms and Characteristics of Business Organizations

Major Characteristics of the Legal Forms of Business Organizations in the Philippines

Take a look at the various characteristics of business organizations to help you determine what
will be best for your own business enterprise. Given below is a table that may help you characterize
each type of business organization:

CHARACTERISTICS OF BUSINESS ORGANIZATION

Types of Business Number of People Main Government Variety of Business
Organization Required to be Agency Involved that may be Engaged
Registered In

Sole Proprietorship One DTI Broad, any legal

business.

Partnerships More than One SEC Broad, any legal

business as long as
partners allow.

Corporations At least 5 SEC Limited to what

Articles of
Incorporation state.

Cooperatives At least 15 CDA Primary limited to

what Articles of
Incorporation state.

DISTINCT CHARACTERISTICS OF BUSINESS ORGANIZATION

TYPE Ownership Control of Distinction Profit and Lifespan of Implication
the of Owners’ Loss (P/L) the s Or
Business and Distributio Business Remarks
Business’ n
Asset

SOLE One person Full control No All Profits Business Easiest to

PROPRIE of the distinction and Losses ‘dies’ with organize;
TOR owner goes to the the owner Broad
owner ot if not business
renewed transaction
s;
Most
numerous;
Smallest
insize;
High
mortality
rate;
 Tendency
for
unprofessio
nal
manageme
nt

TYPE Ownership Control of Distinction Profit and Lifespan of Implication

the of Owners’ Loss (P/L) the s Or
Business and Distributio Business Remarks
Business’ n
Asset

PARTNE Two or Limited No Profit and Business Relatively

RSHIP more control of distinction Loss dependent easy to
persons partners distribution on the organize;
is willingness Generates
dependent and / or life more
on the of the investment
formal partners s (cash,
agreement property,
in Articles etc.);
of Easily
Partnership dissolved;
Usually
better
manageme
nt than sole
proprietors
hip

TYPE Ownership Control of Distinction Profit and Lifespan of Implication

the of Owners’ Loss (P/L) the s Or
Business and Distributio Business Remarks
Business’ n
Asset

CORPOR At least Control and Generally, Profits 50 years by Harder to

ATIONS five voting assets of a distributed law subject recognize;
incorporato power corporation in to renewal; Requires
rs; dependent is separate proportion Ownership legal
Indefinite on shares of and distinct to is procedures;
number of stocks from those ownership transferable Trends to
owners or of the of shares of via trading have
stock - owners stocks, of shares of biggest
holders subject to stocks investment
several s;
 considerati Relatively
ons more
stable;
Limited
profit
sharing;
Easiest to
generate
more
investment
s;
Professiona
l
manageme
nt

TYPE Ownership Control of Distinction Profit and Lifespan of Implication

the of Owners’ Loss (P/L) the s Or
Business and Distributio Business Remarks
Business’ n
Asset

COOPER At least Democratic Generally, Dividends 50 years by Easier to

ATIVES fifteen; Control; assets of are given law subject organize
indefinite One the dependent to renewal; than
number of member cooperative on various Life is corporation
members one vote is separate considerati distinct and s;
policy and distinct ons (e.g. separate Greater
from those usage of from benefits to
of the share members members -
owners capital) owners but
limited
profit
sharing;
Easily
grows in
assets and
membershi
ps;
Trends
towards
professiona
l
manageme
nt
GENERAL REQUIREMENTS IN PUTTING UP A BUSINESS

A. REGISTERING A BUSINESS NAME

(The following has been adapted from the DTI Website:)

Acceptable Business Names

In determining whether a business name submitted for registration is acceptable, the following
factors shall be considered:
● The root word or words of the name shall be considered (e.g. "Island" instead of
"Islander").
● The business name should describe the nature of the business. It should be comprised solely
of any or all of the following: letters, numerals, and punctuation that are part of the English
and Filipino language.

Names That Are Not Acceptable :

● Those which are or whose nature of business is illegal, offensive, scandalous, or contrary
to propriety;
● Those which are identical or nearly resemble business names already registered with the
DTI and the SEC; and
● CDA, DOLE or any other government office authorized by law to register names, because
these are likely to cause confusion or mistake in the minds of the public and prejudice the
interest of the owner of the registered business name or firm name taking into consideration
the following:

* Nature of the business;

* Product/service handled;
* Location/place of the business;
* Capitalization;
* General appearance, spelling, sound and meaning;
Use of dominant/descriptive words and such other factors as maybe determined by the BTRCP
• Director;
• Names composed purely of generic words;
* Name which, by law or regulation, cannot be appropriated;
* Names, words, terms, or expressions used to designate or distinguish, or suggestive of quality of
any class of goods, articles, merchandise, or service;
* Names or styles used by the government in its governmental functions;
* The names or abbreviation of names, of any nation,
inter-governmental or international organization unless authorized by the competent authority. of
that nation, inter-governmental or international organizations;
* Names which are deceptive, misleading or which misrepresent the nature of the business;
* Such other names which, in the opinion of the Director, are undesirable or analogous to the
above.
Applying For A Business Name

A. Choose a Business Name

We suggest you think of at least three business names in case your first preference is not available.
If the name you have chosen is already registered or is similar to a name that is already registered,
you may have to consider your next preference.

B. Search for a Business Name

You may use the online search facility to find out if your proposed business name is still available
and can still be registered. It is your responsibility to ensure that your proposed business name
does not infringe on any existing trademarks. A DTI Examiner will make the final determination
on the availability and suitability of the name you wish to register once we have received your
application.

C. Register your Business Name

Register your Business Name by completing the business

applicant profile registration.

D. Completing The Application

When completing your application for registration on-line, there are certain items of information
that are mandatory. If these items are left blank, you will receive an error message prompting you
to complete them.

Among these items are:

Tax Identification Number (TIN)
Email address
Zip code

In addition, if the business you are registering is a branch, a franchise or was acquired from a
previous business, additional items such as the exact business name of the franchise, main office
and/or certificate number and date of registration of the acquired business are also required.

There also some items of information that may be of particular concern when completing the
application. For example:

What is/are your business activity(ies)?

What is /are your products) and/or services?
What is your Philippine Industrial Classification System
(PSIC) code?
1. Submit Documentary Requirements

After you submit this application, A DTI Business Name examiner will review it for completeness.
Registration is not complete until a signed copy of the Transaction Reference Number
acknowledgment form is returned to DTI.

2. Pay your Application

The completed application and correct fee can be paid at the DTI office indicated in your
Transaction Reference Number (TRN) acknowledgment form. Our business hours are Monday to
Friday 8.00am ta 5pm. For documents to be processed by 5pm, they must be lodged with the
cashier by 4.45pm.

The Officer attending will assess your application and determine the suitability of the business
name. If everything complies, you will be issued a Certificate.

What Do I Need To Register My Business Name?

A. For Single Proprietorship

> must be a Filipino citizen, at least 18 years old

Two 2X2 color ID pictures of applicant taken within one (1) one year immediately preceding the
filing of such application. The pictures must be identical, clear and signed at the back by the
applicant.

> Filipinos whose names are suggestive of alien nationality must submit proof of citizenship, such
as birth certificate, PRC ID, voter's ID, passport

If the applicant has a foreign sounding name, acquired Filipino citizenship by naturalization,
election or by other means provided by law, he must submit proof of his Filipino citizenship such
as naturalization certificate and Oath of Allegiance, affidavit of election or ID card issued by the
Bureau of Immigration and Deportation (BID), or Valid ID card issued by the Integrated Bar of
the Philippines (IBP) or Professional Regulatory Commission (PRC)

Processing fee of P300.00 + P15.00 Documentary Stamp.

B. For Corporation, Partnership and Cooperative

> Filled up application form

> Certified photocopy of SEC and CDA registration and Articles of Incorporation, Partnership or
Cooperative (by the board of secretary)
› Board Resolution for the authorized signatory, if signatory is not one of the incorporators
> Board Resolution for the registration of an adopted name/branch with specific address (if
applicable)
> Processing fee of P500.00

C. For Foreign Investors

Certified true copy of the certificate of authority to engage in business in the Philippines per R.A.
7042 issued by the DTI-NCR;

Certified true copy of latest business permit from the concern Local Government Unit (LGU);

Alien certificate of registration (ACR) updated the current year and present original copy of
comparison;

Accomplished DTI Form No.17 under R.A. 7042;

Current written appointment of Filipino Resident Agent;

Clearance from other involved agencies such as Department of Science and Technology (DOST),
PNP etc.;

In case of alien retailer, current year's permit to engage in retail business per R.A. 1180; and

If corporation/partnership - If the foreign capital investment exceeds thirty percent (30%) of the
total capital stock, secure certificate of authority to engage in business in the Philippines from
Securities and Exchange Commission (SEC).

B. For Corporation, Partnership and Cooperative

> Filled up application form

> Certified photocopy of SEC and CDA registration and Articles of Incorporation, Partnership or
Cooperative (by the board of secretary)
> Board Resolution for the authorized signatory, if signatory is not one of the incorporators
> Board Resolution for the registration of an adopted name/branch with specific address (if
applicable)
> Processing fee of P500.00

C. For Foreign Investors

Certified true copy of the certificate of authority to engage in business in the Philippines per R.A.
7042 issued by the DTI-NCR;

Certified true copy of latest business permit from the concern Local Government Unit (LGU);
Alien certificate of registration (ACR) updated the current year and present original copy of
comparison;

Accomplished DTI Form No.17 under R.A. 7042;

Current written appointment of Filipino Resident Agent;

Clearance from other involved agencies such as Department of Science and Technology (DOST),
PNP etc.;

In case of alien retailer, current year's permit to engage in retail business per R.A. 1180; and

If corporation/partnership - If the foreign capital investment exceeds thirty percent (30%) of the
total capital stock, secure certificate of authority to engage in business in the Philippines from
Securities and Exchange Commission (SEC).

There are additional requirements on a case-to-case basis depending on actual examination and
processing of the application.

Example: If the business requires practice of profession the applicant must submit a photocopy of
PRC license and present original copy for comparison and contract of employment (If applicable)

D. For Special Documentary Requirements

> Copy of the Business Name of the main office/establishment, for branch application. Bulk Sales
Certificate, if the business name was obtained pursuant to Act No.3952 (The Bulk Sales Law), as
amended, and Affidavit executed by the transferee-applicant
> DTI Accreditation Certificate for applicants engaged in repair service covered by and pursuant
to Presidential Decree No. 1572;
> DTI Accreditation Certificate for applicants engaged in importation; manufacture, sale or
servicing of the fire extinguisher, supplies and equipment pursuant to
Presidential Decree 721;
> DTI Bonded Warehouse License for applicants engaged in the business of "warehouse" as
defined under Act 3893, as amended (Bonded Warehouse Act);
> DTI issued Certificate of Authority for applicants engaging as merchandise or ship broker as
defined under Act 2728 (Law on Brokerage Business);
> Proof of registration with or license from the proper government agency authorized to regulate
the profession to which the applicant belongs if the latter seeks to register a business related to, or
practice his/her profession; otherwise, a duly notarized contract of employment of a licensed
professional and proof of such license, if the owner is not a licensed professional;
> Franchise Agréement or equivalent contract and a copy of Certificate of Business Name
Registration of the franchiser.
> Affidavit executed by all compulsory heirs authorizing a representative to renew a business name
under the name of the deceased registrant solely for the purpose of winding up the business
operation
> Deed of Sale, Assignment or Transfer, as the case may be, and a notarized written waiver from
further use of the same business name, in cases contemplated
> Affidavit executed by the applicant declaring his/her relationship with the deceased registrant
within the second degree by consanguinity or affinity and a notarized consent and waiver executed
by all the compulsory heirs or other legal heirs, in the absence of compulsory heirs
> Affidavit executed by the registrant declaring that the purpose of registration is to perpetuate the
memory of the deceased in his/her expertise or interest and a notarized consent and waiver
executed by all the compulsory heirs or other legal heirs, in the absence of compulsory heirs
> Such other documents required in this Order, those as may be required in subsequent laws and
regulations and those which in the opinion of the Director are necessary to protect the interest of
the government and the public.

The applicant shall undertake to execute the following:

> Declare that all information supplied in the application filed are true and correct to the best of
her /his belief and knowledge;
› Declare that any false or misleading information supplied, or production of materially false or
misleading document to support the application shall be a ground for the appropriate criminal, civil
and/or administrative action against the registrant; and
> Change and/or cancel the registered business name in the event that there is already another
person, firm or entity;
> Lawfully using an identical or confusingly similar business name;
> Juridical person applying for registration of an adopted business name;

Any name that is different from its primary registered name and used or signed in connection with
his/its business on any written or printed receipts, including receipts for business taxes, duties and
fees and withdrawal or delivery receipts; any written or printed evidence of any agreement or
business transaction and any sign or billboard conspicuously exhibited in plain view in or at the
place of his business or elsewhere, announcing his business.

> Certified true copies of Certificate of registration with

SEC, CDA, DOLE, etc., whichever is applicable,
> Certified true copies of the Articles of Incorporation, Partnership, Cooperation or Constitution,
whichever is applicable.
> Items (a) and (b) may be certified either by the issuing government agency or its corporate
secretary, or his. equivalent.
> An original copy of the Board Resolution authorizing the registration of an adopted name, for
original application.
> A duly certified document
establishing the
position/ authority of the signatory issued by Corporate Secretary or his/her equivalent.
SEC Certificate of Authority to engage in business in the Philipppines, if foreign capital investment
exceeds thirty percent (30%) of the total capital stock

Who Can Apply for a Business Name?

Any individual who is at least eighteen (18) years old, or any juridical person who is doing 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.

A person who has been convicted of any crime involving moral turpitude shall not be qualified to
apply for the registration of a business name except when such person had been granted absolute
pardon by the President of the Philippines, had served his sentence, or had been discharged from
probation, as provided by law.

Signatories

The signatories of application for registration are as follows:

For individual applicants, the applicant himself; or by the person holding power of attorney for the
him if the application is under a special power of attorney?
For corporations, the Board Director, CEO or Board Secretary;
For partnerships, one of the partners;
For cooperatives, the President or Secretary thereof;
For legitimate labor organizations, the President or Secretary thereof.

If the application is signed by a person holding power of attorney for the applicant, the application
shall be accepted provided that the original power of attorney is presented and a copy thereof
submitted as part of the supporting documents.

What Happens After Submitting My Application?

An applicant can reserve a business name online up to three (3) working days, free of charge. The
registrant, however, shall comply with all the necessary requirements for registration within the
same period in order that the application can prosper.

In cases where any of the proposed names can no longer be registered or when a document is
rejected, the applicant shall be required to resubmit proposed names or the required documents, as
the case may be, within the fifteen (15) working days from notification, verbally or otherwise.

Failure to resubmit the same within the prescribed period shall be deemed abandonment of the
application filed and the corresponding fee or fees paid shall not be refunded.
B. SCHEDULE OF FEES TABLE

A. Business Name Registration

A.1. Registration Original Renewal

A.1a. Single Proprietorship Php 300.00 Php 300.00

A.1b. Partnership, Corporation or Php 500.00 Php 500.00

Cooperative

A2. Other Fees

A. 2a. Surcharge for Renewal

A. 2a1. If filed within three (3) Free of

months from the expiration of the charge
five (5) - year period

A. 2a2. If filed after the said period Php 100.00

of three (3) months

A. 2b. Certification (Change in Php 50.00

Business Profile, Negative
Certification, etc.)

A. 2c. Credit Investigation - per Php 50.00

Business Name

A. 2d. Listing of Accredited

Enterprises

A. 2d1. Hard copy - per page of the Php 20.00

first five (5) pages

- per page of the succeeding Php 3.00

page(s)

A. 2d2. Soft copy (in diskette) - per Php 5.00

Business Name

B. Certificate of Authority to
Engage in Business under R.A.
7042 (Foreign Investment Act)

B. 1. Filing Fee Php 500.00

B. 2. Registration Php 5,000.00

C. Accreditation of Service and

Repair Enterprises

C. 1. Registration Filing Fee Accreditation

 Fee

C. 1a. One - Star Php 50.00 Php 350.00 Php 350.00

C. 1b. Two - Star Php 50.00 Php 400.00 Php 400.00

C. 1c. Three - Star Php 50.00 Php 425.00 Php 425.00

C. 1d. Four - Star Php 50.00 Php 450.00 Php 450.00

C. 1e. Five - Star Php 50.00 Php 500.00 Php 500.00

C. 1f. Medical/ Dental Php 50.00 Php 350.00 Php 350.00

C. 2. Other Fess/ Charges

C. 2a. Certification; Replacement Php 50.00

of a lost/ destroyed Certificates

C. 2b. Listing of Accredited

Enterprises

C. 2b1. Hard - copy per page of Php 20.00

the first five (5) pages

- per page of the succeeding Php 3.00

page(s)

C. 2b2. Soft - copy (in diskette) - Php 5.00

per Accredited Enterprise

As previously mentioned, rates may vary from province to province due to existing economic
conditions. Other charges may also vary.

C. REQUIREMENTS IN REGISTERING SOLE PROPRIETORSHIPS

Generally, most DTI offices in the country require the following:

* Applicant must be 18 years of age or older;

Two recent passport sized photos of applicant;
Proofs of Filipino citizenship (e.g. birth certificate and/or voter's ID);
* DI registration certificate of business name;
* Business Permit and/ or Mayor's Permit;
* Location map of business establishment;
*Barangay clearance
*Community Tax Certificate of proprietor;
*Tax Identification Number (TIN);
* SSS registration (if you have employees);
* DOLE registration (if employees number five or more);
% Building occupancy permit;
* Mechanical permit (in some cases);
* Electrical inspection;
* Pollution clearance;
% Sanitary / health certificate; and
* Police clearance.

D. REQUIREMENTS IN REGISTERING PARTNERSHIPS AND CORPORATIONS

Generally, most SEC offices in the country require the following besides most (if not all) of those
mentioned above:
* Certified true copy of articles of partnership or incorporation, by-laws and registration certificate
duly approved by the SEC;
* For corporations having foreign incorporators, the registration certificate should specify with the
Foreign Investments Act (and other applicable laws, if need be); and
*A certificate from the SEC specifying increases in
capital in applicable cases.

In the succeeding pages, you will find the updated fees collected by the SEC with respect to
registration of Partnerships and Corporations, as provided in the SEC website.

In addition to the Registration Fee, there shall be a Legal Research Fee equivalent to one percent
(1%) of the Filing Fee but not less than Ten Pesos (P10.00).

F. REQUIREMENTS IN REGISTERING COOPERATIVES

Generally, most CDA offices in the country require the following:

* Registration with the nearest CDA office;

* Business name registration with the nearest DTI office;
* Permit to operate a Cooperative from the LGU;
Tax Identification Number;
* Registration with DOLE if necessary;
* Location map of business establishment;
* Barangay clearance;
* Certified true copy of articles of cooperation, bylaws and CDA registration; and
* A certificate from the CDA specifying increases in capital in applicable cases.
The following links may also be able to address some of your inquiries:

www.dti.gov.ph
www.boi.gov.ph
www.bir.gov.ph
www.cda.gov.ph
www.sec.gov.ph