I. Purpose and Scope
“Legitimacy” in a legal and due-diligence sense is not a single fact. In the Philippine context, a company is typically considered “legitimate” for transaction purposes when you can reasonably establish:
- Existence — it is a real person or juridical entity that has been properly created/registered.
- Identity — the entity you are dealing with is the same entity reflected in government records (no name-swapping or impersonation).
- Status — it remains registered and is not dissolved, revoked, or otherwise barred from doing business.
- Capacity and authority — it can lawfully enter the specific transaction and the signatory is duly authorized.
- Licensing and regulatory compliance — it has the permits/licenses required for its industry and location.
- Tax and local compliance — it is registered with the Bureau of Internal Revenue (BIR) and has local business permits where it operates.
This article provides a practical legal framework for verifying each element using Philippine registries and customary due diligence steps.
II. Identify the “Kind” of Business You Are Dealing With
Verification starts by identifying what the counterparty actually is, because different business forms are registered with different agencies and carry different legal consequences.
A. Corporations, Partnerships, OPCs, Branch/Representative Offices
Primary registry: Securities and Exchange Commission (SEC)
These are juridical entities (separate legal persons) once properly registered (or licensed, in the case of foreign entities doing business).
Common forms you may encounter:
- Stock corporation (e.g., “ABC Corporation,” “ABC Inc.”)
- Non-stock corporation (e.g., foundations, associations)
- One Person Corporation (OPC)
- Partnership (general/professional/limited) — though partnerships are created under the Civil Code, many are registered with SEC for record and regulatory purposes
- Foreign corporation with Philippine license (branch office, representative office, regional HQ, etc.)
Key point: If the name uses “Inc.,” “Corp.,” “Corporation,” “OPC,” or similar, you should expect an SEC registration/licensing trail.
B. Sole Proprietorship (Trade Name)
Primary registry: Department of Trade and Industry (DTI) for the business name
A sole proprietorship is not a separate juridical entity from the owner. The legal party is the individual (or, in some cases, a single proprietor that is itself a juridical person using a trade name, but the usual case is an individual).
Key point: A DTI business name registration is not the same as incorporation. Contracting, liability, and enforcement ultimately attach to the owner.
C. Cooperatives
Primary registry: Cooperative Development Authority (CDA)
Cooperatives are governed by cooperative law and have their own compliance regime.
D. Entities Created by Special Law / Government Instrumentalities
Some entities exist by statute or charter rather than ordinary registration. Verification often involves checking their enabling law and current operational authority.
III. The Core Verification Questions (A Legal Checklist)
When you “verify registration,” you are really answering these questions:
- Is there a valid government record of existence for this entity (SEC/DTI/CDA)?
- Is the entity’s registration still active/in good standing?
- Is the entity you are dealing with the same as the registered entity (name, registration number, address, officers/owner)?
- Is the person signing authorized to bind the entity for this type of transaction?
- Does the entity hold the industry-specific licenses it must have?
- Is the entity registered for tax and local permitting where it operates?
Each question has distinct documentary proof and verification steps.
IV. What to Request Upfront (Baseline Documents)
A practical first layer is to request documents directly from the business, then verify them against official records.
A. If SEC-registered (corporation/partnership/foreign branch/OPC)
Request:
- SEC Certificate of Registration (or License to Do Business for foreign entities)
- Articles of Incorporation / Partnership (and amendments)
- By-laws (for corporations, if applicable)
- Latest General Information Sheet (GIS) (shows officers/directors/trustees, address)
- Latest Audited Financial Statements (AFS) (where required; also useful for operational credibility)
- Proof of signatory authority (see Section VIII)
B. If DTI (sole proprietorship)
Request:
- DTI Business Name Certificate
- Government ID of owner (for identity matching)
- Proof the signatory is the owner or is duly authorized by the owner (SPA)
C. If CDA (cooperative)
Request:
- CDA Certificate of Registration
- Latest compliance filings as applicable (annual reports, updated officers)
- Board/authorized signatory documents
D. For all business forms (common operational compliance)
Request:
- BIR Certificate of Registration (COR) (commonly BIR Form 2303)
- Authority to Print / invoices or official receipts sample (or current invoicing authority as applicable)
- Mayor’s/Business Permit (current year)
- Barangay clearance (often part of local permitting)
- Fire Safety Inspection Certificate (FSIC) (commonly required for permits)
- Any industry license/accreditation relevant to what they do
Practical rule: Treat client-provided PDFs or photos as leads, not proof. Final comfort comes from matching them to official records and/or obtaining certified copies.
V. Verifying SEC Registration and Status (Corporations, Partnerships, OPCs, Foreign Entities)
A. What the SEC record should confirm
At minimum, an SEC record should allow you to confirm:
- Exact registered name (including punctuation and suffix)
- SEC registration/licensing number
- Date of registration or licensing
- Principal office address
- Corporate term (if relevant under filings)
- Current status indicators (e.g., active, delinquent, revoked, dissolved) depending on available certification
- Names of incorporators, directors/trustees, and key officers (through GIS and filed documents)
B. How to verify (evidence hierarchy)
Certified true copies / SEC certifications
The strongest verification is obtaining certified documents or a certification of status (commonly requested in due diligence, lending, and procurement). This reduces reliance on easily forged scans.
SEC document retrieval / official registry checks
Use SEC channels to confirm that the registration number and entity name correspond, and that the documents presented match the SEC file.
Cross-check filings
Compare the latest GIS and relevant amendments with what the counterparty claims today (address, officers, capitalization, etc.).
C. Special SEC cases to watch
Foreign corporations “doing business” in the Philippines
A foreign entity that is “doing business” locally generally needs an SEC license (commonly through a branch office or similar structure). Verify:
- The SEC license and scope
- Local resident agent details
- The Philippine office address and authorized representatives
Regulated SEC industries
Some businesses need secondary SEC authority beyond basic registration (e.g., certain financing/lending, securities-related activities). Do not assume that “SEC registered” equals “licensed to solicit investments” or “licensed to lend.”
Delinquency/revocation risk
SEC status can be affected by failure to submit required reports. A company may exist historically but have impaired capacity to transact in practice (and you may face enforceability/collection risk).
VI. Verifying DTI Business Name Registration (Sole Proprietorship)
A. What DTI registration actually means
DTI business name registration generally confirms that:
- A business name has been registered for use by an owner
- The certificate identifies the owner and the scope (geographic)
- The registration has a validity period and renewal cycle
Critical legal point: The owner is the contracting party, not the business name. If the counterparty insists on signing “ABC Trading” without naming the owner, your enforceability and collection path may be compromised.
B. What to verify
- Exact business name on the certificate (match spelling exactly)
- Owner’s name (match with ID and signatory)
- Validity period (not expired)
- Business address and scope
C. Misuse indicators
- Use of “Inc.”/“Corp.” by a DTI-registered sole proprietorship
- Presenting a DTI certificate as “proof of incorporation”
- Refusing to disclose owner identity for contracting/KYC
VII. Verifying CDA Registration (Cooperatives)
CDA-registered cooperatives should be verified for:
- Registration number and certificate authenticity
- Current officers/board structure (and whether the signatory is authorized)
- Compliance standing (where certifications are obtainable)
- Nature/type of cooperative (relevant to powers and permissible activities)
Because cooperative governance differs from corporations, pay close attention to board resolutions and authority documents for transactions.
VIII. Verifying Authority to Sign and Bind the Entity (Often the Most Overlooked Step)
Even if registration is legitimate, a transaction can still be attacked if the signatory lacked authority.
A. For corporations/OPCs
Common acceptable proof:
- Board Resolution authorizing the transaction and designating the signatory
- Secretary’s Certificate attesting to the resolution and quorum
- For major transactions (e.g., asset sale, guarantees, long-term leases), more formal approvals may be prudent.
What to check:
- Names and titles match the latest GIS
- Resolution covers the specific deal (party, amount, duration, key terms)
- Signatory’s specimen signature and ID match
B. For partnerships
Authority depends on partnership type and partnership agreement. Common proof:
- Partnership agreement provisions granting authority
- Partner resolution / written authorization
- SEC-registered partnership documents if applicable
C. For sole proprietorships
- Owner signs personally or
- An SPA (Special Power of Attorney) authorizes an agent to sign (and you verify the owner’s identity)
D. For cooperatives
- Board resolution and secretary’s certificate (or equivalent CDA-recognized authorization documents)
Practical rule: A “Sales Manager” or “Account Executive” signature without formal authority documentation is a common failure point for enforceability.
IX. Verifying Tax Registration and Invoicing Capacity (BIR)
A. What BIR registration usually demonstrates
A BIR Certificate of Registration (COR) typically indicates:
- The entity/owner is registered with the BIR
- Registered business name and TIN
- Registered business address and RDO
- Tax types the taxpayer is registered for (e.g., VAT, withholding)
B. What you can realistically verify
BIR information is not always publicly searchable in a way that gives third parties full confirmation. In practice, verification relies on:
- Obtaining and reviewing the COR
- Matching the COR details to contracts/invoices (name, address, TIN)
- Checking invoice/OR formats and required details
- Requesting additional certifications when needed (e.g., for procurement or higher-stakes transactions)
C. Red flags
- TIN/name mismatch between COR and invoices
- Address mismatch across COR, permit, SEC/DTI/CDA records
- “We can’t issue official receipts/invoices yet” (common in fraudulent setups)
- Refusal to provide COR while demanding payment
X. Verifying Local Government Permits and Actual Place of Business (LGU)
A. Why local permits matter
A current Mayor’s/Business Permit strongly supports that the business is:
- Known to the LGU
- Operating at a declared location
- Renewing annually (at least on paper)
B. What to check
- Permit validity year (local permits are commonly annual)
- Exact business name used on the permit (match to SEC/DTI/CDA)
- Business address (match to registered address and actual operations)
- Nature of business (match to what they claim to do)
C. Limitations
A local permit does not guarantee solvency, integrity, or full regulatory compliance, but it helps confirm operational footprint and traceability.
XI. Industry-Specific Licenses and Accreditations (Regulatory Legitimacy)
Depending on what the company does, mere SEC/DTI/CDA registration is not enough. Examples of activities that often require additional authority:
- Construction contracting — typically requires contractor licensing (e.g., PCAB licensing for many contracting activities)
- Recruitment / overseas employment services — typically requires government licensing (commonly through the labor migration regulator)
- Real estate development / selling projects — may require project registrations, licenses to sell, and broker licensing for individuals involved
- Food, drugs, cosmetics, medical devices — commonly require FDA licensing to operate (LTO) and product authorizations where applicable
- Financial services (lending/financing, investment solicitation, remittance, pawnshop-like services, etc.) — may require SEC authority and/or central bank oversight depending on structure and activity
- Security agencies / security services — often require police regulatory licensing
- Telecommunications / radio equipment — typically requires NTC authority
- Transportation franchises and regulated utilities — require sector-specific franchises/authorizations
Due diligence principle: Verify the license that matches the activity, not just the company’s general existence.
XII. Common Fraud Patterns and How Verification Defeats Them
A. “We’re registered” — but under a different entity
Scammers may show a real certificate for a different company with a similar name. Countermeasure:
- Match registration number, exact name, and address across documents
- Verify officers/owner identity and signatory authority
B. Using a DTI business name to pretend corporate status
Countermeasure:
- Treat DTI as sole proprietorship unless proven otherwise
- Require owner identity and owner signature/SPA
- Reject “Inc./Corp.” branding unsupported by SEC records
C. “Licensed” to solicit investments or accept deposits without authority
Countermeasure:
- Demand the specific license that authorizes the activity
- Confirm the scope of authority (not all registrations permit all financial activities)
D. Fake permits and fabricated PDFs
Countermeasure:
- Obtain certified copies or confirmations through official channels when stakes are high
- Cross-check details against independent records and payment instruments (e.g., invoice compliance, bank account name matching)
E. Impersonation of employees or officers
Countermeasure:
- Require corporate email domain where feasible
- Verify signatory identity and authority documents
- Use callbacks to independently obtained contact numbers (not only what’s in the email thread)
XIII. Privacy, Data Handling, and Documentation Discipline
Verification involves collecting IDs, certificates, and corporate records. Keep in mind:
- Collect only what is necessary for due diligence/KYC and contracting
- Store documents securely with limited access
- Use confidentiality provisions and data processing clauses where appropriate
- Avoid circulating government IDs beyond what is necessary for verification
Good due diligence is not only about gathering documents—it is also about handling them responsibly.
XIV. Practical Verification Workflows (Tiered)
Tier 1: Quick Screen (low-value transactions)
- Identify entity type (SEC/DTI/CDA)
- Obtain registration certificate + BIR COR + Mayor’s permit
- Check name/address consistency
- Confirm payee bank account name matches entity/owner name
Tier 2: Standard Contracting (typical B2B)
Everything in Tier 1, plus:
- SEC: obtain GIS and basic filed documents; confirm status indicators
- Authority: board resolution/secretary’s certificate or SPA
- Validate invoicing compliance (sample invoice/OR)
- Confirm operational address and contact channels
Tier 3: Enhanced Due Diligence (high-value, long-term, regulated)
Everything in Tier 2, plus:
- Certified true copies and/or certificates of good standing/status where available
- Industry license confirmations
- Litigation/credit/compliance checks as feasible
- Beneficial ownership/KYC documentation consistent with risk profile
XV. Contract Protections That Complement Verification
Even after verification, well-drafted representations and warranties reduce risk. Common clauses include:
- Organization and good standing: counterparty is duly organized/registered and in good standing; has power to enter the contract
- Authority: signatory is duly authorized; all necessary approvals obtained
- Compliance with laws: compliance with permits, tax laws, and sector regulations
- No misleading statements: documents and disclosures are true and complete
- Indemnity: for losses arising from misrepresentation or lack of authority
- Termination/right to withhold payment: if registration/licensing is found defective or revoked
These clauses do not replace verification; they allocate risk when verification fails or when facts change.
XVI. Summary: What “Verification” Looks Like When Done Properly
A robust Philippine company legitimacy check ties together:
- Correct registry (SEC/DTI/CDA) and matching identity details
- Current status (not merely historical existence)
- Authority to bind (board/partner/owner authorization)
- Tax and local compliance (BIR + LGU permits)
- Industry licensing (activity-specific authority)
- Cross-document consistency (name, address, registration numbers, officers/owner, payee identity)
Done systematically, these steps convert “trust me” claims into verifiable facts and create a defensible record of due diligence.