DEPARTMENT OF MANAGEMENT
BSHM80 - LEGAL ASPECTS
NAME: _______________________ DATE: ___________________
YEAR/SECTION: _________________
I. Answer briefly.
1. Mr. Francois Renault, a French resident and citizen, is interested in putting up
a travel agency in the Philippines, specializing in European outbound tour package. If
you were the lawyer appointed by Mr. Renault to assist him in putting up this kind of
business, what advice would you give him?
- To help Mr. Francois Renault to establish a travel agency in the Philippines
specializing in European outbound tour packages, several considerations
need to be addressed. This includes the legal structure and ownership where
foreign ownership restrictions are; this simply means, Mr. Renault can own up
to 40% of the travel agency; the remaining 60% must be owned by Filipinos
due to the Philippine Foreign Investments Act of 1991. Next is Business
registration such as securities and exchange commission (SEC) where Mr.
Renault must Register the corporation by reserving a company name, filing
Articles of Incorporation and By-Laws, and submitting required documents. It
is followed by licensing and accreditation in the Department of Tourism (DOT)
where the business obtains accreditation by submitting an application,
business plan, and complying with DOT standards. By following these steps,
Mr. Renault will be well-prepared to establish and operate his travel agency in
the Philippines.
2. Martha Soriano, Baguio City-based retailer and caterer, noted the severe
shortage of hotel accommodations in the city especially during the annual
Panagbenga Flower Festival. She invited some foreign friends, Arthur Hewitt, an
American retiree, and Rose Ann Grundt, a German hotelier, to join and invest in their
new business venture - the Mayflower Hotel. Based on the business plan prepared,
the total capitalization needed for the 50-room standard hotel is PhP20million. Martha
is only capable of raising half of the total investment needed. What advice would you
give Ms. Soriano as she forms a partnership with two foreign partners?
- ms. Martha Soriano must choose the right legal structure and decide whether
the partnership will be a corporation, limited liability partnership (LLP), or
another form of business entity. A corporation might offer better protection
and flexibility for foreign investment. ms. Soriano also must consider
investment and ownership distribution which clearly outline how much each
partner is contributing. Martha can invest PhP10 million (50% of the total
investment), and the remaining PhP10 million should be covered by Arthur
and Rose Ann. It can also determine the equity shares based on
contributions. If Martha invests PhP10 million and Arthur and Rose Ann invest
PhP5 million each, the ownership distribution could be 50% for Martha and
25% each for Arthur and Rose Ann. As she forms partnerships with two
foreign partners, ms. Soriano also has to consider partnership agreements
which create a detailed partnership agreement that covers roles,
responsibilities, profit sharing, decision-making processes, dispute resolution,
and exit strategies. This document is crucial to avoid misunderstandings and
conflicts. By carefully considering these aspects, Ms. Soriano can form a
strong, legally sound, and financially viable partnership with her foreign
partners, ensuring the success of the Mayflower Hotel in Baguio City.
3. Mr. Ccheck O. Teng, a Chinese resident and citizen, wants to put a fine dining
restaurant in West Avenue, Quezon City specializing in Macanese cuisine. If you
were the lawyer appointed by Mr. Teng to put up his business, what advice would you
give?
- Mr. Teng must understand that setting up a business in the Philippines
as a foreign national involves several legal steps and considerations. If
he’s done choosing an appropriate business structure then he must
consider the legal requirements for foreign investment or the Foreign
Investment Act (FIA). He also must have registrations and permits
starting from SEC, BIR, Local Government, and other permits. Mr. Teng
must also ensure a lease agreement for the restaurant space is in
place, complying with local real estate laws. He also can engage with
local consultants, accountants, and legal advisors to ensure
compliance with all local laws and regulations. This approach will help
mitigate risks and streamline the process of setting up the restaurant.
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