CHAPTER IV

MANAGEMENT AND LEGAL STUDY

The management aspect of a feasibility study is to determine the option

effectiveness of the organizational setup and the qualifications of the individuals

who will make up the organization. It is the performance of conceiving and

achieving desired results by means of group effort consisting of utilizing human

talents and resources. Therefore, management is considered as the force that

runs an enterprise and is responsible for its success or failure.

Legal study involves the management’s rules and regulations that must be

adherent to the government laws, practices and not contrary to moral and values

exercised in the Philippines.

MANAGEMENT ASPECT

Form of Ownership

The type of business is a partnership. It is to be registered with the

Securities and Exchange Commission (SEC) for the contract called Articles of

Co-partnership. By the contract of partnership, two or more persons bind

themselves to contribute money, property and industry with the intension of

dividing the profits among themselves.

In the formation of partnership as well as to operate legally, King Fish

Cake will be registered with different government agencies. The business will be

registered with Securities and Exchange Commission (SEC) upon filing of

Articles of Co-Partnership and SEC registration form for the issuance of SEC
certificate. It will also register with Department of Trade and Industry (DTI) for the

registration of business name, City or Municipal Mayor’s Office for the issuance

of permit and license to operate, Bureau of Internal Revenue (BIR) for tax

matters, and other government agencies such as Social Security System (SSS),

Philippine Health Insurance Corporation, and PAG-IBIG Fund and DOLE.

Upon completion of legal requirements and other matters, the project will

start its operation and engage in the business. The pre-operating capital for

starting up the business is ₱160,000 for each capitalist partners and ₱100,000

for the capitalist-industrial partner, for a total of ₱900,000.

Vision, Mission, and Core Values

A. Vision

To be the leading food shop provider in the Philippines that offers

Fish Cake, a foreign fish dish with a Filipino twist, and a variety of drinks

and snacks while maintaining a continuous improvement for our

customer’s sake and convenience.

B. Mission

We shall:

 Always seek first for the benefits of our customer before

anything else.

 Observe the proper implementation of the policies and

procedures in the conduct of business.

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  Promote customer-involvement relationship for business

improvement.

C. Core Values

C – OMMITTED: Dedicated to serve customers.

O – PEN-MINDED: Willing to consider ideas for continuous

improvement.

M – OTIVATED: Well-driven to serve customers.

R – ELIABLE: Dependable by customers.

A – DAPTABLE: Not afraid in coping up with the change brought

the environment.

D – ECISIVE: Choosing right decisions to promote success.

E– NRICHING: giving knowledge of what our country can offer

Capitalization

Table 52
Capitalization

Partners Types of Partners Capital Sources of Capital

John Paolo Apelo Capitalist ₱160,000 Personal Savings
Jo-an Dela Bajan Capitalist-Industrialist ₱100,000 Personal Savings
Roxanne Gadiano Capitalist ₱160,000 Personal Savings
Christine Peje Capitalist ₱160,000 Personal Savings
Alexis Rabina Capitalist ₱160,000 Personal Savings
Carlo Soliman Capitalist ₱160,000 Personal Savings

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Organizational Chart

Jo-an Dela
Bajan (Store
Manager) Capitalist-Industrialist

Cashie Cre Cashi Cre

r w er
Day Shift Day Shift Night Shift w
Night Shift Fi
gure 44
Organizational Chart

Manpower Requirements

It is very essential in all the business organization to provide their

manpower requirements to make the operations run smoothly all the time.

Presenting the requirements enables the vacant positions in the business to be

filled by the applicants that fit in the nature of the work regarding their skills and

abilities. It also helps the employee to be aware on their duties and

responsibilities. Establishing the standards to be followed in hiring and selecting

employees makes the business operations effective and efficient.

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 Table 53
Manpower Requirements

Position Job Description Job Specification

 Maintains staff by recruiting,
selecting, orienting, and
training employees.
 Maintaining a safe, secure,
legal work environment and
developing personal growth
opportunities.
 Responsible for day-to-day
operations such as planning,
monitoring, disciplining
employees; developing,
coordinating, policies,
procedures, and productivity
standards.
 Establishes strategic goals by
gathering pertinent business,
financial, service, and
operations information;
identifying and evaluating
trends and options; choosing
Store Manager  Capitalist-Industrialist
a course of action; defining
objectives; evaluating
outcomes.
 Maintains quality service by
enforcing quality and
customer service standards;
analyzing and resolving
quality and customer service
problems; identifying trends;
recommending system
improvements.
 Authorize to sign essential
business documents that will
affect the operation of the
business.
 Responsible for the
safekeeping, monitoring and
purchase of inventory.
 Responsible for the deposit of
weekly collections.

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 Position Job Description
 Responsible for safekeeping
the cash payments of the
customer given by the
cleaning service head.
 In charge of giving the cash
Cashier payments to general manager
for deposits.
 Responsible for recording
cash disbursements.
 Authorize to disburse cash for
business transactions.
 Responsible for making the
empanada order of the
customer.
 Responsible for cleaning
store area.
 Deliver excellent customer
service.
Crew  Maintain high standards of
cleanliness.
 Must complete all the tasks
delegated to him/her.
 Carry out instructions given
by the store manager.
 Always adhere to all company
policies and procedures.
Job Specification
 Male or Female
 Must be a college graduate
of any business or
accounting related course
 Must be computer literate
 Trustworthy and honest
 With pleasing personality
 Good written and
communication skills
 Male or Female
 Outstanding customer
service skills
 Ability to work effectively
individually and with a team
 Ability to prioritize and
perform multiple tasks
simultaneously
 Dedicated and careful; high
level of accuracy and
attention to detail.

Table 54
Manpower Requirements

Position Daily Weekly Monthly Annually

Store  Supervises  Arranges  Gives  Provides
Manager the daily weekly monthly training and
operation of schedule of evaluation assistance
the store the staffs for the other to newly
staffs hired
 Manages employees
stocks for
the store  Held team-
building
activities

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 Position Daily Weekly Monthly Annually
Crew  Ensures  Receives  Decorates  Organizes
cleanliness supplies for the store company’s
of the store the week according to special
the month’s events, like
 Serves theme Christmas
customers’ parties and
orders likes
Cashier  Receives  Make  Arranges  Prepares all
order by the weekly cash the cash the needed
customers sales report files, like documents
for the store receipts and by the
 Keeps the deposit slips external
cash register  Maintains an for the accountant
intact organized month of the
workstation business

Organizational Policies and Procedures

1. Employment Process

 Applicants must submit their resume with a 2 x 2 picture (in white

background) to the store manager.

 The store manager will evaluate and assess the contents of the resume

and will notify the applicant regarding the interview through call, e-mail or

SMS.

 The applicant will take an examination that involves general and abstract

questions.

 If the applicant passed the examination, he/she will immediately proceed

to the screening process.

 If the applicant passed the screening, he/she will be given the list of

requirements to be complied for a specific period of time.

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  After the applicant complied with all the necessary requirements, he/she

will then be given his/her schedule for the job orientation.

 Once applicants are oriented, they will attend a job training provided by

the company familiarizing them with the basic principles of the company.

2. Classification of Employees

a. According to Rank

 Managerial Employee – An employee who is engaged predominantly in

executive and management functions. He/ She is also charged with the

responsibility of directing the execution of management policies and

practices.

 Rank and File Employee – All other employees not falling within the

above definition.

b. According to Status

 Regular – An employee is hired on a regular status upon satisfactory

completion of the probationary period and upon satisfaction of the criteria

necessary for appointment as regular status.

 Probationary – An employee who is hired on a probationary basis for a

period not to exceed six (6) months. The company reserves the right to

amend the above classification or create sub-classifications as the

circumstances of the company may require.

 Casual – An employee who is not covered by the preceding definitions.

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3. Orientation

Applicants who passed the interviews and complied with all the

requirements needed must undergo an orientation to introduce the newly-hired

employee to other staffs. In addition, the orientation is done to be able to gain

the employee’s commitment, help understand the company expectation, and

lastly, the employee can convey what he/she should expect from the job and

the company.

4. Personnel Records

Each employee must have an updated personnel record which should

be maintained by the store manager. At a minimum, it should contain the

following documents:

 Resume with 2 x 2 picture (in white background)

 Test results
 Interview impressions
 NBI clearance
 Mayor’s permit and health certificate (renewable every calendar year)
 Transcript of records
 TIN, SSS, PHIC, HDMF numbers
 Employment contract
 Performance evaluation forms
 Certificate of trainings attended
 Leave and violation records
 Other relevant personnel records

5. Employment Contract

An employment contract is an agreement between the employer and the

employee, and the basis of their relationship. This should be signed, executed,

and delivered to all employees. Thereafter, all employees are required to wear

their identification card issued by the company during working hours.

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a. Work Schedule

It is the company’s policy to provide appropriate work hours without

violating the mandated rest days. As such, the company requires all

employees to follow the eight (8) hours working shift, excluding one-hour

break assigned to them.

b. Overtime Work

Work may be performed beyond eight (8) hours a day, provided that

the employee is paid for the overtime work an additional compensation

equivalent to his/her regular wage plus at least 25% of such regular wage

thereof.

c. Under-Time Work

Under-time work is allowed on a case-to-case basis, and only if

approved by the store manager. Under-time hours shall be automatically

deducted from the salary of the concerned employees.

d. Weekly Rest Day

It shall be the duty of every employer, whether operating at a profit or

not, to provide each of his/her employees a rest period of not less than

twenty-four (24) consecutive hours after every six (6) consecutive normal

work days.

e. Attendance and Punctuality

Attendance and punctuality are important qualities that the company

expects from its employees. They are the factors that determine an

employee’s commitment, attentiveness, and determination. Their presence

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is necessary for the smooth flow of work at the start of the business hours.

 Attendance

A written permission should be given by the store manager by the

employee before taking any leave of absence.

 Unscheduled Absences

An employee is deemed absent when he/she did not file a written

permission of the store manager prior to his/her absence.

 Sickness

In the event of an employee becoming ill and unable to carry out

his/her duties, he/she should notify the store manager for at least two (2)

hours before his/her shift. Failure to notify the store manager will make

such absence an absence without official leave (AWOL). Upon return to

work, he/she must file a leave of absence together with his/her medical

certificate subject to the approval of the store manager.

 Emergency Leave

Employees are entitled to up to ten (10) full days of emergency

leave every year provided that he must inform the store manager and file

an absence slip indicating the reason for his absence with documents

evidencing the validity of his absence. Failure to notify and submit the

absence slip within five (5) consecutive days will subject to an outright

dismissal from the company.

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  Punctuality

A policy on punctuality sets forth the company’s expectations for

the arrival of its employees. Punctuality means that employees are

already at their respective work area and ready to work no later than the

shift starting time. Failure to come to work before the required starting

time will render the employee as late. Employees are allowed to have

four (4) tardiness per month. In excess of this, the employee will be

subjected to disciplinary action. Each tardiness is chargeable against the

employee’s salary.

6. Personnel Movement and Performance Evaluation

Employees are to be provided a formal performance evaluation by the

store manager on their before the end of their fifth month of service. On the

other hand, regular employees shall be evaluated twice a year every May and

November of a calendar year. The completed employee evaluations should be

confirmed by the employee and the store manager. Such completed employee

evaluations shall be the basis for salary increase.

a. Separation from Service

 Voluntary Resignation

If the employee intends to resign, notification to the management

must be done at least one (1) month prior to the intended resignation.

There shall be no provision granting separation pay to voluntarily

resigning employees. He/She must comply with all the clearance

requirements; otherwise, remaining compensation shall be forfeited.

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  Termination

In all cases involving termination of an employee’s service from the

company, appropriate notice of termination shall be furnished to the

employee subject to clearances of all accountabilities. The employer

may terminate an employment for any of the following causes:

1) Serious misconduct or willful disobedience by the employee of the

lawful orders of his/her employer or representative in connection

with his work;

2) Gross and habitual neglect of duty;

3) Fraud or breach of trust;

4) Commission of a crime or offense against the employer, his/her

family or representative; or

5) Other similar causes.

b. Compensation and Benefits

 Salaries and Wages

All employees shall receive their respective salaries or wages as

provided in their employment contracts every 15th and last day of the

month. Cut-off for payroll computation shall be every 10th and 25th of

the month.

 Cancelled Day-off/Holiday Pay

Every employee shall be provided with a rest period of twenty-four

(24) consecutive hours after every six (6) consecutive normal working

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 days. Work performed on a regular holiday shall be compensated with

an additional compensation equivalent to 100% of his/her regular salary.

Work performed on an employee’s rest day or on a special holiday shall

be paid an additional compensation of 30% of his/her regular salary.

According to the provisions of Republic Act No. 9492 otherwise

known as the act rationalizing the celebration of national holidays, the

following shall be considered regular holidays:

 New Year’s Day – January 1

 Maundy Thursday – Movable date
 Good Friday – Movable Date
 Eidul Fitr – Movable date
 Araw ng Kagitingan (Bataan and Corregidor Day) – April 9
 Labor Day – May 1
 Independence Day – June 12
 National Heroes Day – Last Monday of August
 Bonifacio Day – November 30
 Christmas Day – December 25
 Rizal Day – December 30
The following shall be considered nationwide special holidays:
 Chinese New Year – Movable date
 Black Saturday – Movable date
 Second Monday of May (subject to the issuance of a Presidential
Proclamation) – National and local elections [once every six (6)
years]
 Quezon City Day – August 19
 Ninoy Aquino Day – August 21
 Eidul Adha – Movable date
 All Saints Day – November 1
 Last Day of the Year – December 31

c. 13th Month Pay

The 13th month pay of an employee, which shall be equivalent to 1/12

of his/her basic salary earned within a calendar year, shall be given not later
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 than December 24 of each year.

d. Paternity and Maternity Leaves

Paternity and maternity leave benefits, as provided by law, shall be

given to every employee entitled thereto, upon compliance with and

submission of all the requirements of the law, and upon proper verification

by the company’s duly authorized representatives.

e. SSS/PHIC/HDMF Benefits

Benefits under the SSS/PHIC/HDMF law shall be granted in

accordance with applicable laws. Implementation of procedures relative to

entitlement of said benefits should be done in accordance with the

regulations to be promulgated by law.

f. Bereavement Assistance

If an immediate family member of a regular employee passed away,

such employee shall be given a financial assistance of ₱5,000 upon

compliance to and submission of all the requirements of the company.

g. Other Incentives and Awards

Awards and recognitions such as “Crew of the Month”, “Perfect

Attendance”, “Most Punctual Employee”, “Model Employee of the Year”,

and the like shall be given corresponding monetary incentives subject to the

discretion of management and availability of funds.

9. Finance

The company must settle some of its revenue for future use, such as for

investments, business improvements, establishment of branches, and

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 expansion of business operations. The amount and timing of future

expenditures shall be subject to the discretion of management.

Code of Ethics

1. Hygiene and Sanitation

Employees must meet the following hygiene requirements during

regular business hours for the duration of their employment:

 Maintenance of personal cleanliness by bathing daily

 Oral hygiene (brushing of teeth).

 Use of deodorant/anti-perspiration to minimize body odor

 Prohibition of heavily-scented perfumes, colognes, and lotions. These

can cause allergic reactions, migraines, and difficulty in breathing to

some customers.

 Clean and trimmed fingernails

 Hand washing and sanitation

 Wearing of clean and proper attire

2. Arrival and Departure

Employees entering the company premises, regardless of their

status and rank, must submit all their belongings for inspection. Inspection

includes listing of all possession down to the smallest detail. Belongings

must be placed at the locker area where they are restricted within the time

of their duty. It is prohibited to bring any belonging not required based on

the existing company rules.

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3. Procedures for Notices/Bulletin Boards

Workplace bulletin boards serve as a visual way to communicate

with employees. Management shall post compliance posters,

announcements, events, notices, and memoranda on the bulletin board. It

is incumbent for every employee to regularly check the bulletin board for

announcements and notices. No employee is allowed to attach or remove

anything on the board without the management’s authorization.

4. Notice of Disciplinary Action

In accordance with the due process requirements of the Labor Code

of the Philippines, as amended, all employees found or reported to have

committed a violation of the company rules and regulations shall be given a

written notice to explain, and shall be given the opportunity to explain why

no disciplinary action should be imposed against him/her. Thereafter, any

disciplinary action to be imposed by the management shall again be

indicated in writing and duly furnished to the concerned employee.

5. Code of Conduct

Ignorance of company rules and regulations is not an acceptable

excuse for violation. It is each employee's responsibility to know the rules

and abide by them. In accordance with the Labor Code of the Philippines,

as amended, all employees proven to have committed a violation of the

company rules and regulations is subject to a written notice. Such written

notice will give the employee an opportunity to defend himself/herself

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stating facts why he/she should not be imposed with such disciplinary

action.

Employees are subject to penalties according to their violations

made during their employment:

a. Written Report of Warning (WR)

Written warning is the first normal stage of corrective discipline. The

purpose of this warning is to once bring to employee’s attention the

ongoing deficiencies in his/her conduct and performance.

b. Suspension (3D/6D/9D)

If a worker has committed offense for the second, third or fourth time,

he/she is subject to suspension. He/She will be detached from the

company within a designated period of time without renumeration.

c. Termination (TR)

Termination will be given to employees who have committed a major

offense. The employee will be dishonorably separated from the

organization.

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 Table 55
Employee Offense List

Offenses WR 3D 6D 9D TR
1. Tardiness 1st 2nd 3rd 4th 5th
2. Absence without leave 1st 2nd 3rd 4th 5th
3. Loitering or unauthorized leaving of post 1st 2nd 3rd 4th 5th
4. Extending break period 1st 2nd 3rd 4th 5th
5. Unauthorized use of company time for 1st 2nd 3rd 4th 5th
personal pursuit
6. Negligence or carelessness 1st 2nd 3rd 4th
7. Unauthorized use or misuse of company 1st 2nd 3rd 4th
property
8. Discourtesy towards consumers, suppliers, 1st 2nd 3rd 4th
supervisors, and co-workers
9. Failure to comply with health, security, and 1st 2nd 3rd 4th
safety requirements of the company
10. Willful destruction of company property 1st 2nd 3rd
11. Disobedience to superior/Insubordination 1st 2nd 3rd
12. Using profane language or obscene 1st 2nd
language superiors
13. Stealing or attempting to steal properties of 1st
the company or of the co-workers
14. Immortality or scandalous acts 1st

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Project Schedule Gantt Chart

September October November December

1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4
Processing of
Legal
Requirements
Processing
the Lease of
Contract
Purchasing
and Installation
of Equipment
Hiring and
Training of
Personnel
Preparing all
the Operation
Materials
Business
Operation
Proper
Figure 45
Project Schedule Gantt Chart

Internal Controls

1. Administrative Controls

 Recruitment

A company’s ability to recruit and retain competent personnel

indicates the management’s intent to properly record accounting

transactions. In addition, the retention of employees increases the

comparability of financial records from year to year. This in turn reduces

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 the risk of a material misstatement in the company’s financial statements.

The recruitment process is very strict, wherein it complies all the

standard qualities for the job position, in a timely and cost-effective

manner.

The company also provides the employees with appropriate

training and guidance to ensure that they have the knowledge necessary

to carry out their job duties, are provided with an appropriate level of

direction and supervision, and are aware of the proper channels for

reporting suspected improprieties. Furthermore, all applicants are

required to submit and comply with all legal requirements which include,

but shall not be limited to, certificate of live birth from the Philippine

Statistics Authority, clearance from the National Bureau of Investigation,

SSS/BIR/HDMF identification, and health certificate.

 Separation of Duties

An effective system of internal control separates authoritative,

accounting, and custodial functions. Implementing segregation of duties

is a must so that duties are divided among different people to reduce risk

of error or inappropriate actions. Accounting policies and distribution of

responsibilities should be strictly implemented in order to maintain the

utmost control within the company. No one person has control over all

aspects of any financial transaction.

 Physical Protection of Assets

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 Safeguards prevent unauthorized personnel from accessing

valuable company assets. Since the business handles some high-valued

equipment and materials, the company maintains several well secured

storage areas for these with appropriate locks and only those who are

authorized may enter these premises. It should be certain that

equipment, inventories, cash, and other property are secured physically,

counted periodically, and compared with item descriptions shown on

control records. The company shall also have high security passwords in

the computer software that would help prevent unauthorized access from

entering into the company’s valuable and confidential information.

 Hygiene and Sanitation

All employees must observe the highest standard of hygiene and

sanitation. Employees must be well-groomed and continue with their

work wearing clean and proper attire. For this purpose, the term “well

groomed” shall mean proper haircut, trimmed fingernails, use of

deodorant, and clean and regularly washed hands. The term “clean

and proper attire” shall include newly-washed and properly-ironed

attire, tidy shoes, and complete company uniform worn properly.

Employees shall also maintain cleanliness or orderliness within the area

of the workplace to avoid any accident.

2. Accounting Controls

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 Allow only authorized employee to make cash deposits, and require

these employees to make deposits as soon and as frequently as

possible.

 Keep records of all deposits and compare them to the bank statement

each month.

 Hold cash in a secure location when it is on hand.

 Keep prepared deposits in a locked safe until the deposits are made, and

secure cash registers with individual authentication so that the company

will know who accesses which register at which times.

 Ensure that cash reporting responsibilities are spread out enough to

prevent theft by collusion.

 Store copies of all cash register tapes, receipts, invoices, cancelled

checks, and any other documentation that records cash transactions.

Use these documents as paper trail to investigate cash losses and

discrepancies between internal records and bank statements.

 Implement physical and electronic security measures to ensure the

safety of financial information. Store sensitive documents in secure

areas, such as locked filing cabinets that are accessible only to select

employees.

 Protect financial data stored in the company network by contracting a

third-party network security company. Anyone with physical or electronic

access to financial data can alter, replace, steal or destroy evidence of

theft or other financial mismanagement.

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 Obtain third-party accounting audits, from time to time, to get an

outsider's look into the company’s financial control systems. Only work

with auditors who have no material connection to the company or

employees.

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Legal and Taxation Aspects

1. Applicable Labor Laws

The company shall conform to the provisions of the law as specified

in the Labor Code of the Philippines as prescribed by Department of Labor

and Employment.

2. Social Security Act and other related employee benefits

Under the Labor Code of the Philippines, there are six (6) basic

employee benefits for an individual who is legally working in the Philippines.

Such employee is automatically covered for these government-mandated

employee benefits:

 Social Security Systems (SSS) Contributions

Republic Act No. 8282, otherwise known as the Social Security

Act of 1997, refers to the social security system in the Philippines that is

initiated, developed, and promoted by the government. The social

security system is aimed at providing protection for the SSS member

against socially recognized hazard conditions, such as sickness,

disability, maternity, old age and death, or other such contingencies not

stated but resulted in loss of income or results to a financial burden.

The employee and the company shall contribute for the social

security benefits of the said employee in accordance to a given

schedule by the Philippine Social Security System. Monthly employee

contribution depends on the employee's actual monthly salary.

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 Contribution to National Health Insurance Program (NHIP)

The employee and the company shall contribute for the medical

insurance of the said employee in accordance to the Republic Act No.

7835 on Medicare Program which is administered by the Philippine

Health Insurance Corporation (PhilHealth). Monthly employee

contribution depends on the employee's actual monthly salary. The

contribution schedule is provided by PhilHealth.

 Contribution to Home Development and Mutual Fund (HDMF)

The company is required to contribute per month not less than

₱100 to the employee's Home Development and Mutual Fund. In

accordance to the periodic remittance schedule provided by HDMF, the

company shall remit this contribution, in addition to that of the

employee's, which is to be deducted from his/her payroll.

 13th Month Pay

As mandated by the Presidential Decree No. 851, the employee

shall receive a bonus salary equivalent to one (1) month, regardless of

the nature of his/her employment, not later than December 24 of every

year.

 Service Incentive Leave

Book III Chapter III of the Labor Code of the Philippines covers

the employee's benefit for service incentive leaves. According to Article

95, an employee who has rendered at least one (1) year of service is

entitled to a yearly five (5) days service incentive leave with pay.

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  Meal and Rest Periods

Under Article 83 of the Labor Code of the Philippines, the

employee is provided a one-hour employee benefit for regular meals,

when working on an eight (8) hour stretch. Employees are also

provided adequate rest periods in the morning and afternoon which

shall be counted as hours worked.

3. Local tax codes

The company must pay the local taxes in accordance to the tax

policies where the company resides or situated.

4. Business and income tax laws

Businesses are required to file taxes as a result of their profitable

operation. Such taxes shall be imposed depending on the classification of

business operation as prescribed by the Bureau of Internal Revenue.

Labor Laws for Employees

The company may implement policies and impose terms and conditions of

employment as it deem fit given their operating and profitability requirements.

These policies and employment terms and conditions however must be

consistent with mandated labor policies set forth in the Labor Code of the

Philippines.

Under the Labor Code of the Philippines, employees are entitled to

compensation or wages, overtime pay, holiday and premium pay, service

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charges and tips in service businesses, SSS, EC and NHI remittances, service

incentive leaves, and retirement pay.

Income Taxes

Under the National Internal Revenue Code (NIRC), the company is

considered a partnership. According to Section 27 of the NIRC, an income tax of

30% is hereby imposed upon the taxable income derived during each taxable

year from all sources within and outside the Philippines. The company will use a

calendar year for tax purposes.

Annual income tax return for corporations and partnerships provisions are

as follows:

Tax Form: BIR Form 1702 – Annual Income Tax Return (For

Corporations and Partnerships)

Documentary Requirements:

1. Certificate of Income Payments not Subjected to Withholding Tax (BIR

Form 2304), if applicable

2. Certificate of Creditable Tax Withheld at Source (BIR Form 2307), if

applicable

3. Duly approved Tax Debit Memo, if applicable

4. Proof of Foreign Tax Credits, if applicable

5. Income tax return previously filed and proof of payment, if amended

return is filed for the same taxable year

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6. Account Information Form (1702 - AIF) and/or the Certificate of the

independent CPA with Audited Financial Statements, if the gross

quarterly sales, earnings, receipts or output exceed ₱150,000.

7. Proof of prior year’s excess tax credits, if applicable

Procedures:

1. Fill-up BIR Form 1702 in triplicate.

2. If there is payment:

 Proceed to the nearest Authorized Agent Bank (AAB) of the

Revenue District Office where the company is registered and

present the duly accomplished BIR Form 1702, together with the

required attachments and your payment.

 In places where there are no AABs, proceed to the Revenue

Collection Officer or duly Authorized City or Municipal Treasurer

located within the Revenue District Office where the company is

registered and present the duly accomplished BIR Form 1702 with

the required attachments and your payments.

 Receive the copy of the duly stamped and validated form from the

teller of the AABs/Revenue Collection Officer/duly Authorized City

or Municipal Treasurer.

3. For "No Payment" Returns including refundable/creditable returns and

returns with excess tax credit carry over:

 Proceed to the Revenue District Office where the company is

registered or to any Tax Filing Center established by BIR and

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 present the duly accomplished BIR Form 1702, together with the

required attachments.

 Receive the copy of the duly stamped and validated form from the

RDO/Tax Filing Center representative.

Deadline: Final Adjustment Return or Annual Income Tax Return – On or

before the 15th day of the fourth month following the close of the

taxpayer’s taxable year.

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