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19 December 2017

IDN Holdings Inc.


15th Floor, MDI Corp. Center
BGC, Taguig

Attention: Ms. Kharen E. Castillo


Finance Department

Re: Requirements to establish a Travel & Tour and Networking


Business

Dear Ms. Castillo,

This is in response to your query on the requirements to operate a Travel & Tour
and Networking Business.

In answering your query, we assume the following:

1) That the business vehicle to be used is a Corporation; and

2) That the Networking Business you are referring to is a Multi-Level


Direct Selling Business.

Thus, we reply:

Requirements in setting up a Travel and Tour Agency

A Travel and Tour Agency must be registered in order to do business. Aside from
securing the necessary certificate of registration with the Securities and Exchange
Commission (SEC), Bureau of Internal Revenue (BIR) and permit to operate
from the Local Government Unit, travel and tour agencies must be duly
accredited by the Department of Tourism (DOT).

The DOT came up with a Progressive Accreditation System wherein there is a Commented [ML1]: Citation
three-level recognition scheme, to wit: Commented [ML2]: No citation since DOT only released a
powerpoint presentation. Please see attachment in the
1) Basic Registration - applications may be filed anytime and is valid for one email.
(1) year from the date of issuance.

2) Regular Accreditation - granted to establishments found to be compliant


with the minimum standards expected of DOT-Accredited
establishments. It is valid for two (2) years and shall be renewable unless
sooner cancelled or revoked for a cause.

3) Premium Accreditation - granted to establishments found to be


compliant with the minimum standards expected of DOT-Accredited

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establishments and garnered at least 50% of the total points allotted. It is
valid for three (3) years and shall be renewable unless sooner cancelled or
revoked for a cause.

The following are the specific documentary requirements for each criteria:

1) Basic Registration- Presentation of a valid Mayor’s/Business Permit only.

2) Regular Registration -

a. Valid Mayor’s/Business Permit;


b. For Corporations, Php 500,000.00 Paid-up Capital;
c. For General Manager, documents to prove a minimum of three (3)
years managerial experience in travel and tour agency operations or
proof of passing the Travel and Tour Agency Management Course or
its equivalent; and
d. Notarized Summary of Inbound Transaction reflecting a total of 100
foreign guests per year, duly certified by an Independent Auditor.

3) Premium Registration -

a. Audited Financial Statements to prove that the establishment has


minimum of Php 1,500,000.00 working capital;
b. For General Manager, documents to prove a minimum of three (3)
year managerial experience in travel and tour agency operations or
proof of passing the Travel and Tour Agency Management Course or
its equivalent;
c. Recognition from reputable institutions or external bodies;
d. Proof of Membership in good standing to any duly recognized Travel
and Tour National and/or International Associations; and
e. Notarized Summary of Inbound Transaction reflecting a total of 500
foreign guests per year, duly certified by an Independent Auditor.

If the Company plans to operate a Tourist Land Transport, it must submit the
following:

a. Valid Land Transportation Franchising and Regulatory Board


(LTFRB) Tourist Transport Service Franchise of the Vehicle;
b. Land Transportation Office (LTO) Certificate of Registration of
Vehicles; and
c. Proof of attendance to a Tourist Driver’s Training conducted by
DOT or DOT-recognized training institute.

Requirements in setting up a Multi-Level Direct Selling Company

Before we enumerate the requirements, there is a need to distinguish networking


from pyramiding.

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In the Philippines, Networking is legal and is recognized as an effective marketing
strategy. The SEC requires every Multi-Level Marketing (MLM) Company to
abide by the Anti-Pyramiding Law (RA 5601) that requires at least 73% of the Commented [ML3]: The law is still effective and SEC still
amount invested must be given to the investor in the form of product and service. requires its implementation.
To further protect the consumers from pyramiding scam, the Department of Commented [ML4]: Is this still effective? Kindly check if
Trade and Industry issued DTI A.O. No. 08, series of 2002, which defines and what is applicable is this law, or consumer act or SRC
prohibit the act of pyramid sales scheme. Commented [ML5]: This implements the Consumer Act.
The Act is only applicable to consumers providing them
A 2002 SEC Advisory clarifies that “multi-level marketing plans are legitimate remedies in case they are victimized by pyramiding scam.
types of pyramid operations whose primary purpose is to sell a product and not
mainly to sell the distributorship itself.” Income is earned from the sale of the
products being sold. Thus, the focus of an MLM network is the sale of tangible
products.

In addition to SEC, BIR and the Local Government Units permits, the MLM
Company must register its product with the Food and Drug Administration if its Commented [ML6]: citation
product will involve cosmetics, food supplements, wellness and others (A.O. No.
2016-003) Commented [ML7]: Inserted citation

If the Company will use a certain brand, it must also register with the Intellectual
Property Office of the Philippines. (IPOPHIL M.C. 17-010) Commented [ML8]: citation
Commented [ML9]: Inserted citation
Should you need our assistance with the above, let us know so that we will send
you a proposal. Thank you

Very truly yours:

MICHELLE U. PACO

JULIANNE S. ALBERTO
For the Firm

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