LEGAL ASPECTS IN

TOURISM AND HOSPITALITY

Review
RELEVANT LAWS
TOURISM LAWS IN THE PHILIPPINES

REPUBLIC ACT No. 9593 otherwise known as

Tourism Act of 2009
REPUBLIC ACT No. 9593 otherwise known as Tourism Act of 2009

SALIENT FEATURES
Section 7. Structure of the Department. - The Department shall consist of the
Department Proper, Department offices, services and unit, and the regional and
foreign offices.

Section 8. Department Proper. - The Department Proper shall consist of the

Offices of the Secretary, Undersecretaries and Assistant Secretaries. necessary
for the implementation of this Act.

Section 9. Office of the Secretary. - The Office of the Secretary shall consist of the
Secretary and his or her immediate staff.
 REPUBLIC ACT No. 9593 otherwise known as Tourism Act of 2009

SALIENT FEATURES
Section 10. Undersecretaries and Assistant Secretaries. - The Secretary shall be assisted by at least three (3)
Undersecretaries, namely:

(a) Undersecretary for Tourism Development, who shall be responsible for the Office of Product Development,
the Office of Tourism Development Planning, Research and Information Management and the Office of Industry
Manpower Development;

(b) Undersecretary for Tourism Regulation, Coordination and Resource Generation, who shall be responsible
for the Office of Tourism Standards and Regulations, the Office of Tourism Coordination, the Office of Tourism
Resource Generation and all regional and foreign offices; and

(c) Undersecretary for Special Concerns and Administration, who shall be responsible for the Office of Special
Concerns, the Financial and Management Service, Administrative Affairs Service, Legal Affairs Service, Internal
Audit Service and Legislative Liaison Unit.

Each Undersecretary shall be assisted by an Assistant Secretary.

SECTION 39. Accreditation. – In order to encourage global competitiveness,
strengthen data gathering and, research on tourism, and facilitate the promotion of
individual enterprises and the industry as a whole, the Department shall prescribe
and regulate standards for the operation of the tourism industry. Primary tourism
enterprises shall be periodically required to obtain accreditation from the
Department as to the quality of their facilities and standard of services.
Accreditation shall be voluntary for secondary tourism enterprises. The
Department shall evolve a system of standards for the accreditation of these
enterprises in accordance with the relevant tourism development plan. These
standards shall adhere, insofar as practicable, to those recognized internationally.
The Department and LGUs shall ensure strict compliance of tourism enterprises
with these standards.
"Primary tourism enterprises" refers to travel and tour services; land,
sea and air transport services exclusively for tourist use;
accommodation establishments; convention and exhibition organizers;
tourism estate management services; and such other enterprises as
may be identified by the Secretary, after due consultation with
concerned sectors.
"Secondary tourism enterprises" refers to all other tourism enterprises
not covered by the preceding subsection.
The Department, through the Office of Tourism Standards and Regulations, shall
act on complaints regarding accredited tourism enterprises and after notice and
hearing, may impose fines, or downgrade, suspend or revoke accreditation, for
violation of the terms thereof. The Department shall likewise have the power and
the duty to issue tourism advisories pertaining to tourism enterprises found to have
violated the terms of their accreditation. A tourism advisory shall contain the
following: (a) Complete identification of the pertinent tourism enterprise; (b)
Location of this entity; (c) Its registered owner or proprietor and the business
address thereof; (d) The specific term or terms of accreditation violated; and (e)
The statement that the advisory shall only be lifted upon continued compliance of
the enterprise with the terms of accreditation.
 RELEVANT LAWS
TOURISM LAWS IN THE PHILIPPINES
Foreign investors investing in the Philippines can now lease private lands up
to 75 years. Based on R.A. No. 7652, entitled “Investor’s Lease Act”, lease
agreements may be entered into with Filipino landowners. Lease period is 50
years, renewable once for another 25 years.
Who may invest?
Anyone, regardless of nationality, is welcome to invest in the Philippines. With the
liberalization of the foreign investment law, 100% foreign equity may be allowed in all
areas of investment except those reserved for Filipinos by mandate of the Philippine
Constitution and existing laws.

What requirements must be complied with before a foreign corporation can do business in
the Philippines? A foreign corporation must first secure the necessary licenses or
registrations from the appropriate government bodies. In the case of corporations or
partnerships, the necessary incorporation papers from the Securities and Exchange
Commission must first be obtained. In the case of single proprietorship, registration from
the Bureau of Trade Regulation & Consumer Protection of the Department of Trade and
Industry must be secured.

http://tourism.gov.ph/business_philippines.aspx
Are foreigners allowed to lease land?

Foreign investors investing in the Philippines can now lease private lands up to 75
years. Based on R.A. No. 7652, entitled “Investor’s Lease Act”, lease agreements
may be entered into with Filipino landowners. Lease period is 50 years, renewable
once for another 25 years.
For tourism projects, the lease shall be limited to projects with an investment of not
less than US$5M, 70% of which shall be infused in said project within 3 years from
signing of the lease contract.
For more information download our Primer on Tourism Investment in the
Philippines.
Please have an Adobe Reader installed to be able to open this file.
http://tourism.gov.ph/business_philippines.aspx
SOURCES OF LEGAL INFORMATION
1. Philippine Constitution
2. Official Gazette (copy of laws)
3. Websites of Different Government Agencies such as
DOLE, DOT, DENR, SEC, DTI, etc.
4. Industry Associations such as TIBFI, HRAP, etc.
5. Law firms and Consultancy companies
CONTACTING AUTHORITIES
1. Telephone
2. Email
3. Videoconferencing
4. Visit offices
COMMON BUSINESS STRUCTURE

1. Single Proprietorship
2. Partnership
3. Corporation
What Is a Sole Proprietorship?
A sole proprietorship also referred to as a sole trader or a proprietorship, is an
unincorporated business that has just one owner who pays personal income tax
on profits earned from the business.

A sole proprietorship is the easiest type of business to establish or take apart,

due to a lack of government regulation. As such, these types of businesses are
very popular among sole owners of businesses, individual self-contractors, and
consultants. Many sole proprietors do business under their own names because
creating a separate business or trade name isn't necessary.
Understanding Sole Proprietorship
A sole proprietorship is very different from corporations and limited partnerships, in
that no separate legal entity is created. As a result, the business owner of a sole
proprietorship is not exempt from liabilities incurred by the entity.

For example, the debts of the sole proprietorship are also the debts of the owner.
However, the profits of the sole proprietorship are also the profits of the owner, as
all profits flow directly to the business's owner.
PARTNERSHIP
The Philippine Civil Code provides for a definition of a partnership as follows:

Art. 1767. By the contract of partnership two or more persons bind themselves to contribute money, property, or industry to a common
fund, with the intention of dividing the profits among themselves.

Two or more persons may also form a partnership for the exercise of a profession.

A partnership is different from a corporation in many ways. First, there is no time limit for the existence of the partnership as this
depends on the agreement of the parties. On the other hand, a corporation can exist for a period not exceeding fifty (50) years. Second,
as to the beginning of juridical personality, a partnership becomes a juridical person from the time the contract begins while in a
corporation, it only becomes a juridical person upon registration with the Securities & Exchange Commission (SEC). Third, although a
partner may transfer his interest in a partnership to another, the transferee does not automatically become a partner unless all the other
partners give their consent. However, in corporations, when the shares of stock are transferred to another, the transferee becomes a
stockholder of the corporation. Fourth, as to liability to third persons, partners may be held liable with their private and personal property
while in corporations, the stockholders are generally liable only to the extent of their subscribed capital stock. Lastly, a partnership may
be dissolved due to the insolvency, civil interdiction, death, insanity or retirement of any of the partners while such grounds do not
dissolve a corporation.
PARTNERSHIP
Like a corporation, a partnership has a separate juridical personality. Even if the partnership failed to register with the SEC, it still has a
separate juridical personality. Thus, the partnership, as a separate person can acquire its own property, bring actions in court in its own
name and incur its own liabilities and obligations. A partnership action is embodied in a Partners’ Resolution which is similar to a
corporation’s Board Resolution.

Partnerships are recorded with the Securities & Exchange Commission (SEC). The following requirements must be submitted with the
SEC:

1. Name Verification Slip with the reservation of the partnership name

2. Articles of Partnership

3. Registration Data Sheet

4. Affidavit of a partner undertaking to change partnership name

5. Certificate of Bank Deposit

PARTNERSHIP
If a partnership has foreign partners, the following additional
requirements must be filed:
1. SEC Form No. F-105
2. Bank certificate on the capital contribution of the partners
3. For foreign partners who want to register their investments with
the Bangko Sentral ng Pilipinas, proof of the remittance
PARTNERSHIP
The following information should also be provided:
1. Name of the partnership
2. Principal office address
3. Telephone number of the partnership
4. Name, citizenship, address, birthday and TIN of the partners
5. Capital contribution of the partners
6. Purpose of the partnership
PARTNERSHIP
A partner has certain rights in the partnership. Thus, he has a share in the profits of the partnership and has the right to
a specific partnership property. As a partner, he has a right to participate in the management, inspect partnership
books and can in fact, demand for a formal accounting. However, rights have corresponding obligations. Hence, a
partner is obligated to give his contribution and share in the losses.

There are many types of partners, the common types of which are:

1. General partner

2. Industrial partner (one who furnishes labor or industry)

3. Capitalist partner (one who give capital)

4. Limited partner (one who is liable only to the extent of his contribution)

Anent the liability, all partners are liable to third persons. However, as between the partners, the industrial partner is not
liable for losses while a limited partner is liable only to the extent of his contribution.

https://ndvlaw.com/how-to-form-a-partnership/
 CORPORATION
What is a Corporation?
A corporation is a legal entity that is separate and distinct from its owner or incorporators.
It has legal rights and obligations similar to an individual. It can enter into contracts, loan,
hire employees, pay taxes, etc. It is formed by at least five (5) individual called
incorporators.

The ownership of a corporation is divided into shares of stock. A corporation issues the
stock to individuals or other businesses, who then become owners or stockholders, of the
corporation.
Advantages of a Corporation
● The risk and liability is limited only to the corporation. Owners are not personally liable.
● It is easy to increase capital through issuance of stocks to investors
● It can be pass on to different owners
● It can exist indefinitely
● It has the capacity to act independently similar to individual
● The management or decision making is shared by the board of directors, not sole individual.

Disadvantages of a Corporation
● More costly to set-up than a sole proprietor
● It is mandated by more government reportorial requirements and laws
● Higher capital requirement and operating cost
● Higher tax rates
BUSINESS REQUIREMENTS

How to Register a Sole Proprietorship in the Philippines

Since the law treats the owner and the business as the same, the sole proprietor only needs to register his or
her name with the Department of Trade and Industry (DTI) and secure local licenses and permits to
commence business operations.

Here’s a step-by-step process for registering a sole proprietorship in the Philippines:

1. Register a business name with DTI to acquire a DTI Certificate of Registration;

2. Register with the Barangay Office where the business is going to be located to acquire a Barangay
Certificate of Business Registration;
3. Register with the Mayor’s Office to acquire a Mayor’s Permit; and
4. Register with the Bureau of Internal Revenue (BIR) to acquire a Certificate of Registration.
BUSINESS REQUIREMENTS
Partnerships are recorded with the Securities & Exchange Commission (SEC). The
following requirements must be submitted with the SEC:

1. Name Verification Slip with the reservation of the partnership name

2. Articles of Partnership

3. Registration Data Sheet

4. Affidavit of a partner undertaking to change partnership name

5. Certificate of Bank Deposit

BUSINESS REQUIREMENTS
If a partnership has foreign partners, the following additional requirements must be filed:
1. SEC Form No. F-105

2. Bank certificate on the capital contribution of the partners

3. For foreign partners who want to register their investments with the Bangko Sentral ng Pilipinas, proof of the remittance

The following information should also be provided:

1. Name of the partnership

2. Principal office address

3. Telephone number of the partnership

4. Name, citizenship, address, birthday and TIN of the partners

5. Capital contribution of the partners

6. Purpose of the partnership

Where to Register a Corporation?
Here are the government agencies where you are required to register a Corporation in the
Philippines:

● Securities and Exchange Commission

● Local Government Units where your business is located:
○ Barangay
○ Mayor’s Office
● Bureau of Internal Revenue
● If you have employees, you need to register to the following:
○ Social Security System
○ Philippine Health Insurance Corporation
○ Home Development Mutual Fund
Basic Requirements and Procedure in Registering a Corporation
Here are the basic requirement and procedure in registering a corporation:

1. Reserve and Register Your Business Name in Securities and Exchange Commission (SEC), as
follows:
● Check if your desired business name is available via SEC online website or at SEC Office in Mandaluyong
● If available, register/reserve your 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 your SEC Certificate of Registration
● Processing Time: At least one (1) week upon submission of complete documents
Basic Requirements and Procedure in Registering a Corporation

2. Acquire Barangay Clearance

Once the corporation is registered with SEC the next step is to get a barangay clearance in the
barangay where your business is located.

Here are the basic steps

● 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)
○ Processing Time: 1 day upon submission of complete documents.
Basic Requirements and Procedure in Registering a Corporation

3. Acquire Business Permit from the 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.

Here are the basic steps and requirements:

● 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
○ Barangay Clearance Certificate
○ Two (2) valid IDs
○ Proof of Address such as Contract of Lease (if rented) or Certificate of Land Title (if
owned) (Processing Time: At least one week upon submission of complete
documents. But It can take longer depending on the permit requirements based on
the industry.)
Basic Requirements and Procedure in Registering a Corporation
4. Register with the Bureau of Internal Revenue (BIR)
Once you have the Mayor’s Business Permit, you can now register with the BIR.

Here are the basic steps and requirements:

● 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.
● Register your book of accounts and receipts/invoices.
● Claim your Certificate of Registration (BIR Form 2303) retrieved from:
https://mpm.ph/how-to-register-a-corporation/
ONE PERSON CORPORATION
Republic Act No. 11232, otherwise known as the Revised
Corporation Code of the Philippines (RCC), introduced several
innovations committed to improve the ease of doing business in the
country. One of the most prominent inclusions in the RCC is the
concept of a One-Person Corporation (OPC), or a corporation with
a single stockholder. This Primer outlines the basic information in
establishing an OPC.
ONE PERSON CORPORATION
● What is a One-Person Corporation?
A One-Person Corporation (OPC) is a corporation with a single stockholder, who can only
be a natural person (who must be of legal age), trust or estate. As an incorporator, the
“trust” does not refer to a trust entity but rather pertains to the subject being managed by
a trustee.

● In case of trust or estate as incorporator, is there a need to submit proof of

authority?
Yes. Proof of authority to act on behalf of the trust or estate must be submitted at the
time of incorporation.
ONE PERSON CORPORATION
● Who are not allowed to form OPC?
The following are not allowed to incorporate or organize as OPCs:

1. Banks, non-bank financial institutions, quasi-banks;

2. Pre-need, trust, insurance companies;
3. Public and publicly-listed companies;
4. Non-chartered government-owned-and-controlled corporations (GOCCs); and
5. A natural person who is licensed to exercise a profession, except as otherwise
provided under special laws.
ONE PERSON CORPORATION
● May a foreign national form an OPC?
Yes. A foreign natural person may establish an OPC, subject to the applicable
capital requirement and constitutional and statutory restrictions on foreign
equity in certain investment areas or activities.

● What is the term of existence of the OPC?

The term of existence of the OPC shall be perpetual. However, in case of the
trust or estate, its term of existence shall be co-terminous with the existence of
the trust or estate.
ONE PERSON CORPORATION
● What should the corporate name of an OPC include?

Yes. The suffix “OPC” should be indicated by the one-person corporation either below or at the end of
its corporate name.

● Is the OPC required to have a minimum authorized capital stock?

No. The OPC is not required to have a minimum authorized capital stock, except as otherwise
provided by special law. Further, unless otherwise required by applicable laws or regulations, no
portion of the authorized capital is required to be paid-up at the time of incorporation.

● Who serves as the director and officers of the OPC?

The single stockholder shall be the sole director and president of the OPC. He can be the Corporate
Treasurer but not as the Corporate Secretary.
ONE PERSON CORPORATION
● Who replaces the single stockholder in case of his death and/or
incapacity?
In the event of his death or incapacity, the single stockholder may be replaced
by the designated nominee or by an alternate nominee. The single stockholder
is required to designate a nominee and an alternate nominee named in the
Articles of Incorporation who shall replace the single stockholder in the event of
the latter's death and/or incapacity. The written consent of both the nominee
and alternate nominee shall be attached to the application for incorporation.
ONE PERSON CORPORATION
● Is the OPC required to submit and file the By-Laws together with the Articles of
Incorporation?
No. Only the Articles of Incorporation (AOI) is needed, which includes the following
information:

○ Primary purpose;
○ Principal office address;
○ Term of existence;
○ Names and details of the single stockholder;
○ Nominee and alternate nominee;
○ The authorized, subscribed and paid-up capital; and
○ Such other matters consistent with law and which may be deemed necessary and
convenient.
ONE PERSON CORPORATION
● What is the procedure concerning the appointment of officers of the OPC?
1. Within fifteen (15) days from the issuance of its Certificate of Incorporation, the OPC shall
appoint a Treasurer, Corporate Secretary, and other officers;
1. Within five (5) days from appointment, the OPC shall notify the Securities and Exchange
Commission (SEC) using the Appointment Form as may be prescribed by the SEC.
● If the single stockholder assumes the position of the Treasurer, is he required to post a
surety bond?

Yes. The single stockholder who assumes the position of the Treasurer shall post a surety bond
to be computed based on the authorized capital stock (ACS) of the OPC. If another person
other than the single stockholder is appointed as treasurer, there is no bond requirement.

https://www.zglaw.com/primer-on-one-person-corporations-in-the-philippines
BUSINESS NAME
Your Business Name will not be accepted under the following instances:

1. Those that connote activities or norms that are unlawful, immoral, scandalous or contrary to propriety;

2. Those names, words, terms or expressions used to designate or distinguish, or suggestive of quality,
of any class of goods, articles, merchandise, products or services;

3. Those that are registered as trade names, trademarks, or business names by any government
agency authorized to register names or trademarks;

4. Those that are inimical to the security of the State;

5. Those that are composed purely of generic word or words;

6. Those that by law or regulation are restricted or cannot be appropriated;

BUSINESS NAME
Your Business Name will not be accepted under the following instances:

7. Those that are officially used by the government in its non-proprietary functions;

8. Those names or abbreviations of any nation, intergovernmental or international organization

unless authorized by competent authority of that nation, inter-government or international
organization;

9. Those ordered or declared by administrative agencies/bodies or regular court not to be

registered;

10. Those names of other persons;

11. Those names which are deceptive, misleading or which misrepresent the nature of business.

https://bnrs.dti.gov.ph/faq
WHAT TYPE OF BUSINESS STRUCTURE DO
YOU PREFER FOR YOUR BUSINESS? WHY?
CONSUMER PROTECTION
1. Air Passenger Bill of Rights
Time limits on baggage claims
Time limits are imposed on making a claim for delayed, damaged or lost baggage. Any potential claims should be
made to a carrier in writing within these specified limits.

Article 26 of Warsaw provides that any complaint as to delay of baggage must be made at the latest within 21
days from the date the baggage was placed at the passenger’s disposal.

Similarly, under Article 31 of Montreal, a complaint must be made within 21 days of a passenger receiving their
baggage.

With respect to damaged baggage, under Warsaw, any claim must be made “forthwith” after the discovery of the
damage and at most seven days from the date of receipt of the baggage. Montreal also gives passengers seven
days from receipt of checked bags to report a damage claim.

Neither convention imposes a time limit for reporting lost baggage claims. But it is advisable that you make your
complaint as soon as possible.

Warsaw does not state when baggage is considered “lost”, leaving it up to carriers to make that
ruling. Under Montreal, baggage is only considered lost after 21 days or if the carrier admits that
they have lost it.

If a passenger fails to make a complaint within the specified times, the carrier will not be liable unless there has
been fraud on the carrier’s part.
Calculating baggage compensation
Under the Warsaw Convention (as amended by the Hague Protocol and Montreal Protocol No. 4) and the
Montreal Convention, liability limits are expressed in special drawing rights (SDRs).

An SDR is a type of foreign exchange reserve asset created by the International Monetary Fund. Its value is
based on an artificial basket of currencies consisting of the US dollar, the euro, the pound and the Japanese
yen. The liability limits are reviewed every five years.

As of October 16, 2014, the value of an SDR is about US$1.49, £0.93 or A$1.70. Current SDR values for other
currencies are also listed here.
So what is your baggage worth?
In terms of baggage liability limits, the Warsaw Convention is of relatively little assistance to passengers.

If your international travel is subject to Warsaw (for example, if you flew out of the United States on a one way
ticket to Guatemala), liability for delayed, damaged or lost baggage is limited to 17 SDRs (about US$25.33,
£15.81 or A$28.90) per kilogram per passenger for checked baggage and 332 SDRs (about US$494.68,
£308.76 or A$564.40) per passenger for unchecked baggage.

In contrast, a carrier is liable to pay far greater damages if the Montreal Convention applies.

For any travel covered by Montreal, the carrier’s liability for baggage is limited to 1131 SDRs per passenger
(US$1685.19, £1051.83 or A$1922.70), unless otherwise declared.

The carrier is not liable for damages caused by delay if the carrier took all reasonable measures, or if it was
impossible for it to take such measures.
PRELIM COVERAGE
POINTERS

20% questions will be coming from Intro to Law discussion (including other
reference materials)

80% from the relevant laws stated in each activity assigned during Prelim
(10 activities)

Types of Question:

Multiple Choice / Enumeration / Fill in the blanks / Essay