What are the Different Business Organizations in the Philippines

PEZA RegistrationThe most common forms of business organizations in the Philippines are sole proprietorship, partnership and corporation. It would be a good idea to have a glance of its structure and how they are established as one is way different from the other.

Sole Proprietorship

Sole Proprietorship is the simplest form of business organization because it is not governed by very strict regulatory laws and rules as that of a partnership or corporation. Only the provisions on civil obligations, contracts and commercial transactions govern this organization.

Sole Proprietorship is a business structure owned by an individual who has full control/authority of its own and owns all the assets, personally owes and answers all liabilities or suffers all losses but enjoys all the profits to the exclusion of others. Take note that even foreigners may put up a sole proprietorship provided that his business or industry does not fall under those which the Constitution and other laws impose restrictions and limitations in terms of ownership equity.

Even registration is very plain. A Sole Proprietorship must apply for a Business Name and such must be registered with the Department of Trade and Industry. In Metro Manila, applications should be filed in DTI-NCR. In provinces, application may be filed with the DTI extension offices.

If one plans to register his business, the following must be put in order:

  1. Name of your business to be registered through DTI Business Name Registration System (BNRS)
  2. Original & photocopy of proof of citizenship (e.g. PRC ID, birth certificate, voters ID, passport)
  3. Signed copy of undertaking from DTI BNRS (see #2 below)
  4. Payment of P300 for application (+P15 for documentary stamps)
  5. 2 recent identical passport sized picture (with signature of owner at the back)


Partnership is treated as juridical person, an artificial being created by operation of law with a legal personality separate and distinct from its members. Partnerships may either be general partnerships or limited partnerships. In general partnerships, partners have unlimited liability for the debts and obligation of the partnership. In limited partnerships, one or more general partners have unlimited liability and the limited partners have liability but only up to the amount of their capital contributions. The law only requires at least two (2) partners for a partnership to be formed. A partnership with more than three thousand pesos (P3,000.00) capital must be registered with Securities and Exchange Commission (SEC).

Partnership operates under the Civil Code of the Philippines. Even from the time of its creation, up to the time of its dissolution and liquidation, the mentioned law will always come into play to rule the partnership.

Therefore, all partnerships are required to be registered with Securities and Exchange Commission. Registration may be done by filing the Articles of Partnership which will set forth the terms and conditions mutually agreed upon by the partners. Other documents required are the following:

  1. Proposed Articles of Partnership
  2. Name Verification Slip
  3. Bank Certificate of Deposit)
  4. Alien Certificate of registration, SIRV or proof of other types of visa (in case of foreigner)
  5. Proof of Inward Remittance (in case of Non-Resident Aliens)

Stock Corporation

Corporations, as defined under Corporation Code of the Philippines, are artificial beings created by operation of law, having the right and succession and the powers, attributes and properties expressly authorized by law or incident to its existence. Although it is established under the Corporation Code, it is regulated by the Securities and Exchange Commission as a separate and distinct personality from that of its stockholders. The liability of the shareholders of a corporation is limited to the amount of their share capital. Corporation may consist of at least five (5) to fifteen (15) incorporators each of whom must hold at least one share and must be registered with the Securities and Exchange Commission (SEC). Minimum paid up capital must be five thousand pesos (P5,000.00).

A corporation can either be stock or non-stock. Such company, if 60% Filipino-40% foreign-owned, is considered a Filipino corporation; If more than 40% foreign-owned, it is considered a domestic foreign owned corporation.

Specifically, Stock Corporation is a corporation with capital stock divided into shares and authorized to distribute to the holders of such shares dividends or allotments of the surplus profits on the basis of the shares held.

The SEC may only register the corporation if it meets the following:

  1. Name Verification Slip
  2. Articles of Incorporation
  3. Treasurer’s Affidavit
  4. Statement of assets & Liabilities executed under oath by the Treasurer of the corporation (if paid up capital consists of cash and properties
  5. Bank certificate of deposit which must be notarized before a notary public in the place where bank signatory is assigned.
  6. Authority to verify Bank Account
  7. Written Undertaking to change corporate name signed by incorporator/director
  8. Registration Data sheet
  9. Undertaking to comply with SEC requirements
  10. Audited financial statements of the subscribing domestic corporation for the last Fiscal/calendar year but only if subscriptions of such domestic corporations are partially paid. This will only apply if subscriber/stockholder is a corporation.
  11. Customs Brokerage – at least two directors must be customs brokers, who must submit their respective licenses to act as a custom broker and PTR20
  12. Management Consultancy – Personal Information Sheet of the Directors

Corporations with 60-40% Filipino Foreign Equity, 40% Foreign Equity, and Foreign Corporation will have to submit additional documents and forms as may be required by SEC.

To know more about this topic, please email info@dapatlaw.com:8888/dlaw or call Atty. Joyce Domingo at +632-8231090 or +639175220680.

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Comparison Between the Benefits Provided Under the BOI and PEZA