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LEGAL ASPECT

Espasyo being a newly established service provider of space for different businesses has

to comply with the rules and regulations set by government. Such compliance is necessary not

only because the business has to be known by its legal name, but also to acquire a legal

personality to conduct its business operations, instill confidence for the customers, and

protects its name against those who wish to use it as well.

I. LICENSING

In the Philippines, the following are some of the essential legal requirements that

Espasyo has comply with to be able to legally establish its business in Tarlac.

1. SEC Registration – for the registration of their trade name.

2. Barangay Clearance – for the registration of the business in the barangay where it is

located.

3. Mayor’s Office Registration – for getting the license to operate in the city or municipality

and payment of local taxes

4. BIR Registration – for getting TIN, official receipts and invoices, registering your books of

accounts, and paying national internal revenue taxes such as Income Tax, VAT or

Percentage Tax, Withholding taxes, and others.

5. SSS Registration - All businesses that have employees must be registered with the SSS.

The registered employer will be assigned an employer number, which will be used as

reference for the remittance of monthly contributions, composed of the employee’s

contribution and the employer’s share.

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 6. PhilHealth Registration - All employers are required to register themselves and their

employees with PhilHealth, the government health-care system. Upon registration, an

employer shall be issued an employer number

7. Register with the Home Development Mutual Fund – employees who are or ought to be

covered by the SSS are also covered by mandatory membership in the Pag-IBIG Fund.

The Pag-IBIG Fund provides various types of housing loans to employees.

II.REQUIREMENTS

In the Espasyo case, securing these essential legal requirements is indispensable. The

consequences of operating a business without the said legal requirements range from the

closure of business, to the imposition of monetary fines, and finally, to imprisonment. However,

considering that they are to put up a type of business that already exists in the market and not

an entirely new product then as long as the above requirements and other special

requirements that are required with a typical warehouse establishment are fulfilled, then

Espasyo’s legal feasibility is assured.

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REGISTRATION WITH SEC

Reserve and register the business name in Securities and

Exchange Commission (SEC), as follows:

 Check if the desired business name is available via SEC online website or at SEC Office in

Mandaluyong

 If available, register/reserve the business name via SEC online website or at SEC Name

Verification Unit – SEC Office in Mandaluyong

 Prepare, sign and notarize the following:

 Articles of Incorporation

 By Laws

 Treasurer’s Affidavit; and

 Joint affidavit of two incorporators undertaking to change corporate name

immediately upon receipt of notice or directive from the Securities and Exchange

Commission that another corporation, partnership, or person has acquired a

prior right to the use of that name or that name has been declared misleading,

deceptive, confusingly similar to a registered name, or contrary to public morals,

good customs or public policy. (Not required if the Articles of Incorporation have

a provision on this commitment).

 Submit notarized documents to SEC Office in Mandaluyong City

 Claim SEC Certificate of Registration

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REGISTRATION WITH BARANGAY

Once the corporation is registered with SEC the next step is to get a

barangay clearance in the barangay where your business is located, as

follows:

 Go to the barangay where your business is located to secure and fill-up application

form

 Submit your completed application form together with the following:

 Certificate of Business Registration from SEC

 Two (2) valid IDs

 Proof of Address such as Contract of Lease (if rented) or Certificate of Land

Title (if owned)

REGISTRATION WITH MAYOR’S OFFICE

Once you have a Barangay Clearance Certificate, the next step is

to acquire a Business Permit in the municipality where your business is

located, as follows:

 Go to the municipal office where your business is located to secure and fill-up

application form

 Submit your completed application form together with the following:

 Certificate of Business Registration from SEC

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  Barangay Clearance Certificate

 Two (2) valid IDs

 Proof of Address such as Contract of Lease (if rented) or Certificate of Land

Title (if owned)

REGISTRATION WITH BUREAU OF INTERNAL REVENUE (BIR)

Once you have the Mayor’s Business Permit, you can now register

with the BIR, as follows:

 Go to the Regional District Office (RDO) where your business is located

 Fill-up registration form as follows:

 BIR Form 1903 – Application for Registration (For Partnership/Corporation)

 Submit completed registration form together with the following:

 Certificate of Registration form SEC

 Barangay Clearance

 Business Permit From the Mayor’s Office

 Proof of Address such as Contract of Lease (if rented) or Certificate of Land

Title (if owned)

 Valid IDs, if applicable

 Pay the Registration Form (BIR Form 0605) and Documentary Stamp Tax (BIR Form

2000), if applicable.

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  your book of accounts and receipts/invoices.

 Claim your Certificate of Registration (BIR Form 2303)

APPLICATION FOR SSS, PAG-IBIG AND PHILHEALTH EMPLOYER-MEMBER REGISTRATION

Under the Philippine Labor Code, there are six benefits employees are entitled to: Social

Security Systems (SSS) contribution, contribution to National Health Insurance Program (NHIP)

or Philhealth, contribution to Home Development and Mutual Fund (HDMF) or Pag-ibig, 13th

month pay, service incentive leave and meal and rest periods.

Requirements for SSS Number:

 Employers (Single Proprietorship, Partnership, Corporation)

 SSS Form R-1 (Employer’s Data Record)

 SSS Form R-1A (Initial or Subsequent List of Employees)

 Photocopy of the Articles of Partnership/Incorporation

Requirement for Pag-Ibig Employer-Member Registration

 Two (2) copies of the Membership Registration/Remittance Form (M1-1)

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  Two (2) photocopies of the following documents:

 SEC registration or the company's DTI and SSS registration

 R3 and R1A forms (SSS registration and remittance forms)

 Secure referral slip from Marketing staff after presenting documents.

Requirement for PhilHealth Employer-Member Registration

 Accomplish ER1 (Employer Data Record)

 Accomplish ER2 (Report of Employee-members) – attach to ER1 as Initial

List of Employee-member.

III. RECLASSIFICATION OF AGRICULTURAL LAND

The Agricultural land will be converted to Commercial land before the actual

construction of the warehouse. The reclassification and conversion procedures as follows:

1. Applicant gets Application Form.

2. Applicant installs billboard, takes photos of billboard, land & structures on land.

3. Applicant submits two (2) Land Use Conversion Folders (LUCFs) to Municipal Agrarian

Reform Program Officer (MARPO) containing application, titles, sketch map & billboard

photo.

4. MARPO transmits one folder to the Provincial Agrarian Reform Program Officer(PARPO).

Within twenty (20) days, MARPO checks status of CARP coverage, inspects billboard,

checks presence of farmers, posts notices in conspicuous places, prepares MARPO

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 certification, & gives original copy of certification to applicant. If MARPO refuses to act,

PARPO shall take over.

5. Applicant files four (4) complete LUCFs, plus MARPO certification at Regional Land Use

Cases Committee (RLUCC) or LUCD.

6. RLUCC/LUCD evaluates completeness of LUCFs using LUC Form A; if complete, issues

assessment of fee, inspection cost and cash/surety bond.

7. Applicant pays filing fee, inspection cost, & posts cash/surety bond.

8. Within ten (10) days from filing, RLUCC/LUCD shall issue notice indicating the date of

On-Site Inspection and Investigation (OSII), which must be held not earlier than ten (10)

days nor later than twenty (20) days from notice.

9. Applicant writes OSII schedule in billboard & transmits notice of conduct of OSII to the

MARPO, within five (5) days before OSII.

10. Investigating Team (IT) conducts OSII & dialogue, if applicable, with applicant/s &

farmer/ farmer beneficiary.

11. IT accomplished investigation report within five (5) days from OSII.

12. RLUCC/LUCD deliberates on the merits of the Application.

- The Presidential Agrarian Reform Council (PARC) Land Use Technical Committee

(PLUTC) shall participate in the deliberation when the land is highly restricted for

conversion & more than five (5) hectares, or when deliberation requires interagency

inputs except lands for housing projects.

13. RLUCC/LUCD forwards recommendation and the entire records to Approving Authority,

within eighty (80) days from filing.

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 - Approving Authority shall issue the Conversion Order or its denial, within thirty (30)

days from submission of the recommendation.

The space will undergo construction to build the warehouse and other structures intended

for the business. The land, having an approximate measure of 10,280 square meters will be

enough for accommodating the needs of the business. The said lot will be purchased at an

amount of ₱800 per square meter based on market value for the 10,000 square meter

original land, and ₱1,200 per square meter based on average price for areas with frontage

quoted by real estate broker for the 280 square meters right of way, totaling ₱8,541,600.00

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