If you registered your business with DTI as a sole proprietor and you now want to operate as a One Person Corporation, the most important thing to understand is this: your existing “DTI contracts” do not automatically become contracts of the OPC. In Philippine law, a DTI-registered business name is usually just the individual owner doing business under a trade name. An OPC, on the other hand, is a separate corporation registered with the Securities and Exchange Commission. This article explains what happens to your customer contracts, supplier contracts, leases, loans, permits, invoices, employees, and government registrations when you move from a DTI sole proprietorship to an OPC.

The Short Answer: DTI Contracts Stay With the Sole Proprietor Unless Properly Transferred

When people say “DTI contracts,” they usually mean contracts signed while the business was still a DTI-registered sole proprietorship, such as:

customer service agreements;
supplier agreements;
purchase orders;
lease contracts;
loan or credit line documents;
franchise or dealership agreements;
online marketplace, payment gateway, or platform contracts;
employee contracts;
permits or licenses connected to the DTI-registered business name.

These contracts generally remain with the individual owner, not with the new OPC, unless there is a legally effective transfer.

A sole proprietorship has no separate legal personality from its owner. For example, if “Maria Santos doing business as MS Trading” signed a supplier contract, the contracting party is still Maria Santos personally, even if the trade name appears on the document.

An OPC is different. Under the Revised Corporation Code of the Philippines, Republic Act No. 11232, a corporation is an artificial being created by operation of law, and an OPC is a corporation with a single stockholder. Once registered, the OPC becomes a separate juridical person from the owner.

That separation is useful for continuity, branding, investment readiness, and limited liability, but it also means you cannot simply assume that old contracts “move over” by themselves.

DTI Sole Proprietorship vs. One Person Corporation

The confusion often starts because business owners use the same brand, store, logo, address, staff, and customers after registering the OPC. In practical terms, it may feel like the same business. Legally, however, the parties are different.

Issue	DTI Sole Proprietorship	One Person Corporation
Registering agency	Department of Trade and Industry	Securities and Exchange Commission
Legal personality	No separate personality from the owner	Separate juridical personality from the single stockholder
Owner’s liability	Owner is personally liable for business debts	Generally limited to the OPC, subject to exceptions
Business name	DTI business name	SEC corporate name with “OPC”
Contracts	Usually contracts of the individual owner	Contracts of the corporation
Tax registration	Individual business registration with BIR	Corporate taxpayer registration with BIR
Continuity after owner’s death/incapacity	More difficult; tied to individual owner	OPC has nominee/alternate nominee rules under RA 11232

The DTI Business Name Registration System FAQ also makes clear that a DTI business name registration is not the same as a full authority to operate. DTI states that a business name registration gives the business a legal identity, but the business still needs a Business/Mayor’s Permit to actually operate.

There Is No Direct “DTI to OPC Conversion” in the Strict Legal Sense

In everyday business language, people say they are “converting” a sole proprietorship into an OPC. In strict Philippine corporate law, that is not really a direct conversion.

RA 11232 provides rules for:

conversion from an ordinary stock corporation to an OPC; and
conversion from an OPC to an ordinary stock corporation.

But a DTI sole proprietorship is not a corporation. It is not an SEC entity. Because of that, there is normally no SEC “conversion” from DTI sole proprietorship to OPC.

What happens in practice is a business transition:

The owner registers a new OPC with the SEC.
The sole proprietor transfers business assets, contracts, operations, and permits where legally allowed.
The parties amend, assign, or novate existing contracts.
The old DTI, LGU, and BIR registrations are cancelled, retired, or closed as appropriate.
Future transactions are made under the OPC’s name, TIN, receipts/invoices, bank account, and permits.

This distinction matters because many business owners think that once they have an SEC Certificate of Incorporation, all old obligations, receivables, and contracts automatically belong to the OPC. That assumption can create tax, collection, contract, and liability problems.

Legal Basis: Why Contracts Do Not Automatically Transfer

Contracts bind only the parties, their assigns, and heirs

Article 1311 of the Civil Code of the Philippines, Republic Act No. 386 provides that contracts take effect only between the parties, their assigns, and heirs, except when the rights and obligations are not transmissible by nature, stipulation, or law.

In plain English: a contract generally binds only the people or entities who signed it, unless there is a valid assignment or legal succession.

If the contract was signed by the sole proprietor, the OPC is not automatically a party. The other contracting party may insist that the original owner remains liable unless they agree to the transfer.

Novation is needed when the contracting party changes

Under Articles 1291 to 1293 of the Civil Code, obligations may be modified by substituting the person of the debtor, but substitution of a new debtor requires the consent of the creditor.

This is called novation. In this context, novation means replacing the sole proprietor with the OPC as the contracting party.

For example:

Old party: Juan Dela Cruz doing business as JDC Supplies
New party: JDC Supplies OPC
Required document: a novation agreement, contract amendment, or written consent from the customer, supplier, landlord, lender, or creditor

Without the other party’s consent, the sole proprietor may still be liable even if the OPC starts performing the contract.

Assignment may transfer rights, but not always obligations

An assignment transfers rights, such as receivables or benefits under a contract. For example, the sole proprietor may assign to the OPC the right to collect unpaid invoices from a customer.

But assignment is not always enough to transfer burdens or obligations. If the contract requires services, delivery, warranties, confidentiality, credit terms, personal trust, or landlord approval, the other party’s consent is usually needed.

Article 1625 of the Civil Code also provides that an assignment of a credit, right, or action has no effect against third persons unless it appears in a public instrument, or is recorded in the Registry of Property when real property is involved. In practice, this is why important assignments are usually put in a notarized deed.

What Happens to Different Types of DTI Contracts?

Customer contracts

Customer contracts do not automatically move to the OPC. The safest approach is to issue a written notice and have the customer sign either:

a contract amendment;
a novation agreement;
a new service agreement with the OPC; or
a purchase order naming the OPC as the supplier or service provider.

This is especially important for long-term service contracts, construction contracts, maintenance agreements, subscription arrangements, retainers, and contracts with warranty obligations.

For simple cash sales or retail transactions, the practical transition is usually easier: from the effective date of the OPC’s operations, the customer buys from the OPC and receives the OPC’s BIR-registered invoice or official receipt, as applicable.

Supplier contracts

Supplier contracts often contain clauses on assignment, credit terms, personal guarantees, and change of ownership. A supplier may agree to continue dealing with the OPC, but may require:

updated business registration documents;
SEC Certificate of Incorporation;
Articles of Incorporation;
BIR Certificate of Registration;
Mayor’s Permit;
corporate bank details;
updated credit application;
personal guarantee from the single stockholder;
settlement of old sole proprietor balances.

Do not assume that old credit terms carry over. If the supplier extended credit based on the owner’s personal creditworthiness, it may treat the OPC as a new account.

Lease contracts

A lease contract is one of the most commonly mishandled documents during a DTI-to-OPC transition.

If the lease is under the sole proprietor’s name, the OPC cannot automatically step in as tenant unless the lease allows assignment or the landlord consents. Many commercial leases prohibit assignment or sublease without written landlord approval.

The usual options are:

sign a lease amendment adding the OPC as the new tenant;
sign a deed of assignment of lease with landlord consent;
terminate the old lease and sign a new lease with the OPC; or
keep the old lease temporarily but make the sole proprietor personally responsible until the new arrangement is signed.

If the business needs a Mayor’s Permit under the OPC, the LGU may require a lease contract or authorization showing the OPC’s right to use the premises.

Loans, credit lines, and financing contracts

Banks and lenders usually do not allow automatic transfer of loans from a sole proprietor to an OPC. Existing loans remain obligations of the person who borrowed unless the lender approves a restructuring or novation.

A bank may require:

new loan documents under the OPC;
board or single stockholder resolutions;
updated collateral documents;
updated post-dated checks or auto-debit arrangements;
personal suretyship of the single stockholder;
tax returns and financial statements;
proof that the old sole proprietor account is current.

If the loan financed inventory or equipment now being transferred to the OPC, document that transfer carefully. Otherwise, the BIR, creditors, or future buyers may question who owns the asset.

Franchise, dealership, distribution, and platform agreements

Franchisors, principals, online marketplaces, payment processors, logistics platforms, and government-accredited portals often treat a change from sole proprietorship to OPC as a change in contracting party.

Check the contract for clauses such as:

“no assignment without prior written consent”;
“change in ownership or control”;
“authorized dealer only”;
“non-transferability”;
“termination upon change of entity”;
“new accreditation required.”

For regulated businesses, the issue may not only be contractual. You may need fresh accreditation, permits, or endorsements under the OPC.

Employment contracts

Employees of the sole proprietorship do not automatically become employees of the OPC just because the owner formed a corporation.

In practice, there are two cleaner approaches:

Approach	What happens	Main concern
Absorption by the OPC	Employees sign documents acknowledging transfer or new employment under the OPC, often with continuity of tenure recognized	Avoid loss of accrued rights and unclear employer identity
Closure of sole proprietorship and hiring by OPC	Sole proprietor closes or retires business, settles final pay if required, and OPC hires employees	Must comply with labor rules on termination, final pay, and benefits

For ordinary small businesses, the most worker-friendly and least disruptive approach is often absorption with continuity of service recognized in writing. This helps avoid disputes over tenure, 13th month pay, service incentive leave, SSS/PhilHealth/Pag-IBIG reporting, and separation benefits.

The key is not to treat employees as if they are movable assets. Employment is a personal legal relationship. The employees should be properly informed, and the employer on payroll, government remittances, payslips, contracts, and BIR withholding records should be consistent.

What Happens to the DTI Business Name?

A DTI business name registration cannot simply be transferred to the OPC as if it were a corporate registration. The DTI FAQ states that transfer of ownership of a business name registration is not allowed; the old registration must be cancelled and a new one applied for under the new ownership where applicable.

For an OPC, the main business name is the SEC corporate name, not a DTI sole proprietorship name. The OPC’s name must include “OPC” either below or at the end of the corporate name, as required by RA 11232.

DTI also states that only SEC-registered partnerships or corporations can use words such as “company,” “corporation,” or “incorporated” as part of the business name. This is one reason the name transition should be planned before printing signage, packaging, invoices, contracts, and online store materials.

Step-by-Step Guide to Moving DTI Contracts to an OPC

1. List all contracts and obligations of the DTI business

Before registering documents or cancelling anything, prepare a contract inventory.

Include:

customers with active contracts;
unpaid receivables;
unfulfilled purchase orders;
supplier payables;
lease contracts;
loan agreements;
equipment leases;
vehicle financing;
platform accounts;
government permits and accreditations;
employee contracts;
warranties and after-sales obligations;
pending disputes or demand letters.

Mark each item as:

already completed;
still ongoing;
needs consent to transfer;
non-transferable;
should remain with the sole proprietor;
should be replaced with a new OPC contract.

2. Register the OPC with the SEC

OPCs are registered with the SEC, commonly through SEC eSPARC. The SEC describes eSPARC as an electronic system for registration of companies, including One Person Corporations.

For qualified simple applications, the SEC’s OneSEC process may issue a digital certificate through automated processing. More complex applications may go through regular processing, especially if the corporation needs endorsements, special licenses, foreign ownership review, or uploaded documents.

Basic OPC features under RA 11232 include:

single stockholder must be a natural person, trust, or estate;
the single stockholder is the sole director and president;
the OPC is not required to submit bylaws;
a nominee and alternate nominee must be designated;
a treasurer and corporate secretary must be appointed within the required period;
the single stockholder cannot be the corporate secretary;
reportorial requirements must be filed with the SEC.

3. Register the OPC with BIR and local government

After SEC registration, the OPC must have its own tax and business registrations.

This usually involves:

corporate TIN and BIR Certificate of Registration;
registration of books of accounts;
authority or system compliance for invoices and receipts;
LGU Business/Mayor’s Permit;
barangay clearance;
SSS, PhilHealth, and Pag-IBIG employer registration if hiring employees;
industry-specific permits, if applicable.

SEC eSPARC is integrated with the Philippine Business Hub, which allows businesses to access forms and requirements and, for eligible registrations, proceed with related government registration steps.

4. Decide how each contract will be handled

Each contract should fall into one of these categories:

Contract situation	Best document
The OPC will replace the sole proprietor as contracting party	Novation agreement
Only receivables or rights are transferred	Deed of assignment
Equipment, inventory, goodwill, domain names, and other assets are transferred	Deed of sale or asset transfer agreement
The other party wants fresh terms	New contract with the OPC
The contract is almost finished	Finish under the sole proprietor, then transact under the OPC going forward
The contract is non-transferable	Secure written consent or leave it with the sole proprietor

For important contracts, attach a schedule listing contract title, date, parties, remaining obligations, receivables, payables, deposits, warranties, and required consents.

5. Prepare written corporate approvals

An OPC does not have a traditional board meeting with several directors, but RA 11232 recognizes written resolutions of the single stockholder. For clean records, prepare written OPC resolutions approving:

acceptance of transferred assets;
assumption of specific obligations, if any;
opening bank accounts;
entering into novation agreements;
appointment of authorized signatories;
approval of leases, loans, or major contracts;
acceptance of employees.

This is especially useful when banks, landlords, suppliers, and LGUs ask for proof that the person signing for the OPC is authorized.

6. Notify customers, suppliers, landlords, and platforms

A practical transition notice should state:

the old DTI-registered name;
the new OPC corporate name;
SEC registration number;
BIR TIN, if already available;
effective date of new invoicing;
updated bank account details;
whether existing contracts will be amended or replaced;
where future notices and payments should be sent.

For customers, avoid creating confusion about payment. If old receivables still belong to the sole proprietor but new sales belong to the OPC, say so clearly.

7. Transfer assets properly

Assets may include:

inventory;
furniture and equipment;
vehicles;
computers;
domain names;
social media pages;
trademarks or brand assets;
receivables;
deposits;
licenses that are transferable;
goodwill.

Use a deed of sale, deed of assignment, or asset transfer agreement. For high-value assets, notarization is recommended. For vehicles, land, intellectual property, and regulated licenses, additional government filings may be needed.

8. Retire or close the old sole proprietorship registrations

Do not leave the old DTI and BIR registrations unattended.

The usual closure steps are:

Office	Usual action
DTI	Cancel the business name if the sole proprietorship will stop operating
Barangay/LGU	Retire or close the business permit
BIR	File closure or cessation of business registration
SSS/PhilHealth/Pag-IBIG	Update employer records if employees are transferred
Industry regulator	Cancel, amend, or reapply for permits depending on the rules

For BIR closure, current BIR issuances include the use of BIR Form No. 1905 and supporting documents such as inventory of goods and supplies, unused invoices or supplementary documents, BIR permits, and Certificate of Registration, depending on the taxpayer’s situation. The BIR New Business Registration portal and BIR forms should be checked for current filing channels and documentary requirements.

In real life, BIR closure can be delayed by open cases, unfiled returns, unused invoices, old registration issues, or mismatches in registered address and tax types.

Documents Commonly Needed

Purpose	Common documents
SEC registration	Articles of Incorporation, nominee and alternate nominee consent, SEC forms, valid IDs, proof of address where required
OPC operations	SEC Certificate of Incorporation, Articles of Incorporation, written resolutions, treasurer/corporate secretary appointments
Contract transfer	Novation agreement, deed of assignment, deed of sale, contract amendment, written consent of counterparty
Tax transition	BIR Form 1905 for closure of old registration, BIR registration documents for OPC, books of accounts, invoice/receipt authority or system registration
LGU permits	Barangay clearance, lease contract under OPC or owner’s authorization, occupancy or zoning requirements, fire safety inspection certificate where required
Employment transfer	Employee notices, acceptance letters, new employment contracts or absorption agreements, payroll transition records
Bank and payment channels	SEC documents, BIR COR, Mayor’s Permit, corporate resolutions, authorized signatory documents, beneficial owner information
Foreign owner documents	Passport, proof of address, apostilled or authenticated documents when executed abroad, visa or authority documents where relevant

Common Pitfalls When Moving From DTI to OPC

Continuing to issue invoices under the old sole proprietorship

Once the OPC starts operating, invoices, receipts, contracts, and payment instructions should match the OPC’s BIR registration. Mixing the old DTI name and the new OPC name can create tax and collection issues.

Cancelling DTI before transferring important contracts

If the old sole proprietorship still has active contracts, receivables, warranties, or unresolved disputes, closing registrations too early can make documentation messy. Plan the effective dates carefully.

Assuming limited liability covers old sole proprietor debts

The OPC’s limited liability generally applies to the corporation’s obligations. It does not automatically erase the owner’s personal liabilities from the DTI period.

Also, RA 11232 states that a sole shareholder claiming limited liability has the burden of showing that the OPC was adequately financed. If the single stockholder cannot prove that OPC property is independent from personal property, the stockholder may be jointly and severally liable for OPC debts. This is why separate bank accounts, proper records, and clean documentation matter.

Forgetting anti-assignment clauses

Many contracts say they cannot be assigned without written consent. This is common in leases, distributorships, service contracts, loans, and platform agreements. Ignoring this clause may trigger default or termination.

Treating permits as transferable

Business permits, BIR registrations, FDA licenses, PCAB licenses, LTFRB franchises, DOLE licenses, and other regulatory approvals may be entity-specific. A permit issued to the sole proprietor is not automatically a permit of the OPC.

Not checking foreign ownership restrictions

Foreigners may form or own an OPC in many lines of business, but not all. The Foreign Investments Act, RA 7042, as amended by RA 11647, the Foreign Investment Negative List, the Constitution, and special laws may restrict foreign ownership in certain activities.

Foreigners should be especially careful with:

land ownership;
mass media;
certain retail activities;
professions reserved to Filipinos;
public utilities or regulated public services;
security agencies;
recruitment and placement businesses;
other partly nationalized industries.

For private land, Article XII, Section 7 of the 1987 Philippine Constitution limits transfers to persons or entities qualified to acquire or hold land of the public domain. A foreign-owned OPC generally cannot be used to own private land in the Philippines.

Practical Timeline

Timelines vary widely depending on location, industry, and whether old tax filings are clean.

Step	Practical timing
Contract inventory and review	A few days to 2 weeks, depending on number of contracts
SEC OPC registration	Can be fast for simple eligible applications; longer if regular processing, name issues, foreign ownership, or special endorsements apply
BIR registration of OPC	Often several days to a few weeks, depending on RDO and completeness
LGU Mayor’s Permit	Often 1 to 4 weeks, depending on city/municipality and required inspections
Contract novations and supplier approvals	A few days to several weeks, depending on counterparties
BIR closure of sole proprietorship	Can be quick if records are clean; can take months if there are open cases or missing filings
Full operational transition	Commonly 1 to 3 months for a small business; longer for regulated businesses

The biggest bottlenecks are usually BIR open cases, landlord consent, supplier credit re-approval, LGU permit requirements, and counterparties who are slow to sign novation documents.

Sample Transition Language for Contracts

A simple contract transition clause may say:

The parties acknowledge that the business previously operated by [Name of Sole Proprietor] under the registered business name [DTI Business Name] shall, effective [date], be operated by [Corporate Name] OPC. With the consent of the parties, [Corporate Name] OPC shall assume the rights and obligations of [Name of Sole Proprietor] under the Agreement from the effective date, without prejudice to obligations, liabilities, and claims that accrued prior to such date unless otherwise expressly agreed in writing.

For receivables, the wording should be more specific:

[Name of Sole Proprietor] hereby assigns, transfers, and conveys to [Corporate Name] OPC all rights to collect the receivables listed in Annex “A,” subject to the terms of the underlying contracts and applicable law.

For leases and loans, use a more formal document because the landlord or lender’s written consent is usually essential.

Frequently Asked Questions

Do my DTI contracts automatically transfer to my OPC?

No. Contracts signed by the DTI sole proprietor generally remain contracts of the individual owner unless transferred by assignment, novation, contract amendment, or a new agreement accepted by the other party.

Is forming an OPC the same as converting my DTI business?

Not exactly. A DTI sole proprietorship is not an SEC corporation, so there is usually no direct legal conversion. In practice, you register a new OPC and then transfer assets, contracts, employees, permits, and operations properly.

Can I use the same business name for my OPC?

Possibly, but the OPC name must comply with SEC name rules and must include “OPC.” A DTI business name registration cannot simply be transferred as ownership to the OPC. DTI rules state that transfer of ownership of a business name registration is not allowed.

What happens to unpaid invoices from before the OPC registration?

Receivables from the DTI period usually belong to the sole proprietor unless assigned to the OPC. If customers are told to pay the OPC, it is better to have a deed of assignment or written notice so the payment instruction is clear.

What happens to debts from the old DTI business?

Old debts generally remain with the sole proprietor unless the creditor agrees to substitute the OPC as debtor. Under the Civil Code, substitution of debtor requires creditor consent. The OPC may voluntarily assume obligations, but that does not automatically release the original owner unless the creditor agrees.

Do I need to cancel my DTI registration after registering an OPC?

If the sole proprietorship will stop operating, cancellation is usually appropriate. However, coordinate the timing with BIR closure, LGU retirement, contract transfer, and pending collections. Do not leave the old registration active if it is no longer being used, because tax and permit obligations may continue.

Can the OPC take over my lease contract?

Only if the lease allows it or the landlord consents. Many leases prohibit assignment without written approval. The cleanest approach is a lease amendment, deed of assignment with landlord consent, or a new lease under the OPC.

Do employees need new contracts when the business becomes an OPC?

Usually, yes, or at least written absorption or transfer documents. The records should clearly show who the employer is, whether service is continuous, how benefits are treated, and when payroll shifts to the OPC.

Can a foreigner convert a DTI sole proprietorship into an OPC?

A foreigner may be able to form an OPC depending on the business activity and foreign ownership rules. The Foreign Investments Act and the Foreign Investment Negative List must be checked. Some industries are restricted, and foreign-owned entities generally cannot own Philippine private land.

Will an OPC protect me from liabilities of my old DTI business?

Not from liabilities that already arose while you operated as a sole proprietor. The OPC can help separate future corporate obligations from personal obligations, but old DTI-period debts, taxes, warranties, and claims may still follow the individual owner unless properly settled or novated.

Key Takeaways

A DTI sole proprietorship and an OPC are legally different business forms.
Existing DTI-era contracts do not automatically become OPC contracts.
Use novation when the OPC will replace the sole proprietor as contracting party.
Use assignment when transferring receivables or contract rights.
Get written consent when the contract prohibits assignment or involves personal trust, credit, lease rights, loans, or regulated approvals.
Register the OPC with SEC, BIR, LGU, and other agencies before operating under the corporate name.
Cancel or retire the old DTI, BIR, and LGU registrations only after planning the contract, tax, and operational transition.
Keep personal and OPC assets, bank accounts, invoices, books, and contracts separate to preserve the liability protection of the OPC.