Republic of the Philippines

PALAWAN STATE UNIVERSITY

Puerto Princesa City

PSU-PCAT CUYO

BACHELOR OF SCIENCE IN HOSPITALITY MANAGEMENT

First Semester, A.Y. 2022-2023
MODULE II: Tourism and Hospitality as a Trade

OVERVIEW
Goal
To produce internationally
competent graduates who This module aims to help you comply with the various requirements of the law related to
are morally upright, business organization. There are many forms of organizational structures that can be
humane, productive and used to structure a business organization. They can be as simple as a sole
prime movers of proprietorship, or they can be more complex and have various tax advantages. Some of
development in the field of
these include the functional, divisional, network, and modular structures. While some of
Hospitality Management
these structures are based on the legal and internal structures, others are hybrid.
and Tourism.
The students are given one (1) week to finish this module and must be submitted on or
before October 3, 2022.

Program LEARNING OUTCOMES

Objectives
The BSHM aims to achieve 1. Demonstrate the three types of business ownership
the following objectives: 2. Distinguish the advantages and disadvantages of sole proprietorship, partnership and
o To train the future corporation
hospitality industry 3. Identify the classification and types of partnership and corporation
professionals to be
multifaceted and industry
ready as they contribute to LET US EXPLORE
the improvement of the
hospitality industry.
o To equip the future
Let’s try this activity!
hospitality industry
professionals with the spirit Exercise 1. Explain (5 pts.)
of service in their field of
specialization; Directions: Explain your answer briefly.
o To produce hospitality
industry professionals who
are both competent and If you are given a chance to
imbued with a humanistic start a business what form
vision, serving as would it be and why?
ambassador of goodwill in
the performance of their role
in society.

1|Page Legal Aspects in Tourism & Hospitality

BSHM III A & B
 Republic of the Philippines
PALAWAN STATE UNIVERSITY
Puerto Princesa City

PSU-PCAT CUYO

BACHELOR OF SCIENCE IN HOSPITALITY MANAGEMENT

First Semester, A.Y. 2022-2023
Different Forms of Business
Organization:

1. Sole Proprietorship
Goal 2. Partnership
To produce internationally 3. Corporation
competent graduates who
are morally upright,
humane, productive and
prime movers of SOLE PROPRIETORSHIP
development in the field of
Hospitality Management - the owner is in command of his whole business and
and Tourism. stands to lose as much as he puts in and even more to
the extent of all his personal holdings.

In addition to that, the establishment, operations and

management of this form of business organization is
Program not governed by special law as compared to
Objectives partnership and corporation.
The BSHM aims to achieve
the following objectives: -Registration of the sole proprietorship business in the Philippines involves a very simple
o To train the future procedure wherein the Department of Trade and Industry through the Bureau of Trade
hospitality industry Regulation and Consumer Protection will just have to issue the registration to the
professionals to be
applicant.
multifaceted and industry
ready as they contribute to
the improvement of the
Advantages of Sole Proprietorship
hospitality industry.
o To equip the future
• Ease of filing incorporation and tax documents as well as having
hospitality industry
uninterrupted control of the business. Does not need to formally file
professionals with the spirit
articles of incorporation, hold regular meetings, or elect an advising
of service in their field of
or directing board.
specialization;
• Files taxes as personal income.
o To produce hospitality
• Have control over the aspects of their business without the
industry professionals who
involvement of elected board members.
are both competent and
imbued with a humanistic
vision, serving as
ambassador of goodwill in
the performance of their role Disadvantages of Sole Proprietorship
in society.
• There is no separation between the entrepreneur and the business.
As a result, if the proprietor dies, the business ceases to exist.
• Often has difficulty raising long-term capital.

2|Page Legal Aspects in Tourism & Hospitality

BSHM III A & B
 Republic of the Philippines
PALAWAN STATE UNIVERSITY
Puerto Princesa City

PSU-PCAT CUYO

BACHELOR OF SCIENCE IN HOSPITALITY MANAGEMENT

First Semester, A.Y. 2022-2023
PARTNERSHIP

-is two or more persons bind themselves to

Goal contribute money, property, or industry to a
To produce internationally common fund, with the intention of dividing
competent graduates who the profits among themselves.
are morally upright,
humane, productive and
prime movers of
development in the field of
Hospitality Management
Advantages of Forming a Partnership
and Tourism.
• Easy to form
• Ease in filing and tax treatment
• Improved growth possibilities
Program • Freedom from bureaucracy

Objectives
The BSHM aims to achieve
the following objectives: Disadvantages of Forming a Partnership
o To train the future
hospitality industry • Instability
professionals to be • Personally liable for business losses (personal assets are not
multifaceted and industry protected against the claims of creditors)
ready as they contribute to • Difficulty in obtaining large sums of capital
the improvement of the • Firm is tied to the acts and judgement one of partner as agent
hospitality industry.
o To equip the future
hospitality industry
professionals with the spirit CLASSIFICATION OF PARTNERSHIP
of service in their field of
1. According to subject matter:
specialization;
o To produce hospitality a) Universal partnership- where all of the partners contribute all of their properties to
industry professionals who the common fund and speaks of no particular purpose or subject matter, as long
are both competent and as the purpose of forming a partnership is to obtain profits and is not contrary to
imbued with a humanistic law, morals, public order and public policy.
vision, serving as b) Particular partnership- has for its object determinate things, their use of fruits, or a
ambassador of goodwill in specific undertaking, or the exercise of a profession or vocation.
the performance of their role
in society. 2. According to liability:
a) General partnership- composed of general partners where liabilities extend to their
personal properties.

3|Page Legal Aspects in Tourism & Hospitality

BSHM III A & B
 Republic of the Philippines
PALAWAN STATE UNIVERSITY
Puerto Princesa City

PSU-PCAT CUYO

BACHELOR OF SCIENCE IN HOSPITALITY MANAGEMENT

First Semester, A.Y. 2022-2023
b) Limited partnership- (usually attaches the word “Ltd” at the end of the company
name) one formed by two or more persons having as members one or more
general partners and one or more limited partners, where liability of the latter to the
third persons is limited to their capital contribution.
Goal 3. According to duration:
To produce internationally
competent graduates who a) Partnership for a fixed term- one in which the term of existence has been agreed
are morally upright, upon expressly (as when there is a definite period) or impliedly (as when a
humane, productive and particular enterprise or transaction is undertaken). The expiration of the term thus
prime movers of fixed or the accomplishment of the particular undertaking specified will cause the
development in the field of automatic dissolution of the partnership.
Hospitality Management b) Partnership at will- or one in which no time is specified and is not formed for a
and Tourism. particular undertaking or venture and which may be terminated anytime by mutual
agreement of the partners or by the will of any one partner alone or one for a fixed
term or particular undertaking which is continue by the partners after the
termination of such term or particular undertaking without express agreement.

Program 4. As to legality of its existence:

Objectives a) De Jure Partnership- or one which has complied with all the legal requirements for
The BSHM aims to achieve its establishment.
the following objectives: b) De Facto Partnership- or one which has failed to comply with all the legal
o To train the future requirements for its establishment.
hospitality industry
professionals to be 5. As to representation to others:
multifaceted and industry
ready as they contribute to a) Ordinary or real partnership- or one which actually exist among the partners and
the improvement of the also as to third persons;
hospitality industry. b) Ostensible partnership or partnership by estoppels- one which in reality is not a
o To equip the future partnership, but is considered a partnership only in relation to those who, by their
hospitality industry conduct or admission, are precluded to deny or disprove its existence.
professionals with the spirit
of service in their field of 6. As to publicity
specialization;
o To produce hospitality a) Secret Partnership- one wherein the existence of certain persons as partners is
industry professionals who
not a vowed or made know to the public by the members of the firm.
are both competent and b) Open or notorious partnership- one whose existence is a vowed or made know to
imbued with a humanistic the public by the members of the firm.
vision, serving as
ambassador of goodwill in
the performance of their role
in society.

4|Page Legal Aspects in Tourism & Hospitality

BSHM III A & B
 Republic of the Philippines
PALAWAN STATE UNIVERSITY
Puerto Princesa City

PSU-PCAT CUYO

BACHELOR OF SCIENCE IN HOSPITALITY MANAGEMENT

First Semester, A.Y. 2022-2023
Forms of Partnership

Limited Liability
General Partnership Limited Partnership
Partnership
Goal
To produce internationally a basic form of certain limited partners all partners have some
competent graduates who partnership in which all relinquish their ability to degree of limited liability.
are morally upright, other partners manage manage the business in
humane, productive and the business and are exchange for limited
personally liable for its liability for the
prime movers of
debts. partnership’s debts.
development in the field of
Hospitality Management
and Tourism.
Types of Partners

they have an obligation of strict liability to third

parties injured by the partnership. Joint liability
General Partners
Program or joint and several liability may be imposed
depending upon circumstances.
Objectives
The BSHM aims to achieve
the following objectives:
o To train the future the liability of limited partners is limited to their
Limited Partners investment in the partnership.
hospitality industry
professionals to be
multifaceted and industry
ready as they contribute to
partners who usually provide capital to the
the improvement of the
business. They still share in the profits and
hospitality industry. losses of the business, but they are uninvolved
Silent Partners
o To equip the future in the management, and/or whose association
hospitality industry with the business is not publicly known.
professionals with the spirit
of service in their field of
specialization; Delectus Personae- a person has the right to choose the person or persons he wants to
o To produce hospitality become his partner/s, taking into consideration such sterling qualities as honesty,
industry professionals who integrity, and more importantly are trust and confidence.
are both competent and
imbued with a humanistic CORPORATION
vision, serving as
ambassador of goodwill in
the performance of their role
-an artificial being created by operation of law,
in society.
having the right of succession and powers,
attributes and properties expressly authorized by
law or incident to its existence. Section 2 of the
Batas Pambansa 68, otherwise known as the
Corporation Code of the Philippines.

5|Page Legal Aspects in Tourism & Hospitality

BSHM III A & B
 Republic of the Philippines
PALAWAN STATE UNIVERSITY
Puerto Princesa City

PSU-PCAT CUYO

BACHELOR OF SCIENCE IN HOSPITALITY MANAGEMENT

First Semester, A.Y. 2022-2023
Right of Succession- means that a corporation has the capacity to exist regardless of the
death, withdrawal, insolvency, or incapacity of the individual stockholders and regardless
of the transfer of interest of shares of stock.

Advantages of Forming a Corporate Organization

Goal
To produce internationally • Strong separate juridical personality
competent graduates who • Limited liability to investors
are morally upright, • Free transferability of units of ownership
humane, productive and • Centralized management through the Board of Directors
prime movers of • Professionalism
development in the field of
• Easier to sell small amounts of stock to raise capital
Hospitality Management
and Tourism.

Disadvantages of Forming a Corporate Organization

Program
Objectives • Extensive government regulation
• Double taxation
The BSHM aims to achieve
the following objectives:
• Activities are limited by charter and various laws
o To train the future
• Maintenance of at least annual reporting
hospitality industry
professionals to be
multifaceted and industry
ready as they contribute to CLASSIFICATION OF CORPORATION
the improvement of the
hospitality industry. 1. In Relation to the State:
o To equip the future
a) Public corporation- those formed or organized for the government of a portion of
hospitality industry
the State.
professionals with the spirit
of service in their field of
Example: Municipality for government functions
specialization; b) Private corporations- are those formed for some private purpose, benefit or end.
o To produce hospitality Example: ABS CBN Corporation, San Miguel Corporation
industry professionals who
c) Quasi public corporation- is a cross between private corporations and public
are both competent and
corporation.
imbued with a humanistic Example: Water districts, PLDT
vision, serving as
ambassador of goodwill in 2. As to the Place of Incorporation:
the performance of their role a) Domestic corporation- a corporation formed, organized, and existing under
in society. Philippine laws.
b) Foreign corporation- a corporation formed, organized, and existing under any laws
than those of the Philippines and whose laws allows Filipino citizens and
corporations to do business in their own country or state. It is licensed by SEC to
do business in Philippines under the principle of RECIPROCITY.

6|Page Legal Aspects in Tourism & Hospitality

BSHM III A & B
 Republic of the Philippines
PALAWAN STATE UNIVERSITY
Puerto Princesa City

PSU-PCAT CUYO

BACHELOR OF SCIENCE IN HOSPITALITY MANAGEMENT

First Semester, A.Y. 2022-2023

3. As a Stock:
a) Stock corporation- private corporations which have capital stock divided into
shares and the stockholders are entitled to their shares of dividends or allotment of
Goal the corporate surplus profits based on their stockholdings of subscriptions. A stock
To produce internationally corporation is organized for profit and governed by the Board of Directors.
competent graduates who b) Non-stock corporation- corporations which do not issue stocks and are composed
are morally upright, of members, not stockholders. This may be civic, charitable, religious or
humane, productive and professional organizations. This is not organized for profit and is governed by
prime movers of Board of Trustees.
development in the field of
Hospitality Management 4. Other corporations:
and Tourism.
a) De Jure corporation- a corporation which complied with the requirements of the
law.
b) De Facto corporation- those who failed to comply with one or two legal
requirements of the law.
Program c) Eleemosynary corporation- one organized for a charitable purpose.
d) Ecclesiastical corporation- established for religious purposes.
Objectives e) Lay corporation- established for any purpose other than religion.
The BSHM aims to achieve f) Close corporation- usually owned and managed by a family, stocks are not open
the following objectives: for public.
o To train the future g) Open corporation- all members exercise their right to vote to elect the directors
hospitality industry and other officers of the corporation, stocks are open for public subscription.
professionals to be h) Corporation sole- composed of one member or corporator and generally applies to
multifaceted and industry religious denominations.
ready as they contribute to i) Corporation aggregate- composed of one member or corporator.
the improvement of the j) Corporation by Estoppel- wherein members assume to act as corporation despite
hospitality industry. the knowledge of the non-existence of corporate personality.
o To equip the future k) Multi-national corporation- organized in one state or country but extends its
hospitality industry corporate business in other territories or countries.
professionals with the spirit
of service in their field of
specialization;
o To produce hospitality
industry professionals who
are both competent and
imbued with a humanistic
vision, serving as
ambassador of goodwill in
the performance of their role
in society.

7|Page Legal Aspects in Tourism & Hospitality

BSHM III A & B
 Republic of the Philippines
PALAWAN STATE UNIVERSITY
Puerto Princesa City

PSU-PCAT CUYO

BACHELOR OF SCIENCE IN HOSPITALITY MANAGEMENT

First Semester, A.Y. 2022-2023

Doctrine of Piercing the Veil of Corporate Existence

Doctrine of Business Opportunity
-refers to a situation in
Goal which courts put aside Trust Fund Doctrine
To produce internationally limited liability and hold a -refers to the case when a
competent graduates who corporation's shareholders director or officer of the
are morally upright, or directors personally corporation is presented - when the directors of the
liable for the corporation’s with a business venture solvent or insolvent
humane, productive and
actions or debts. Veil which can be profitably corporation distribute all
prime movers of handled by the corporate assets to the
piercing is most common
development in the field of in close corporations. corporation. stockholders without
Hospitality Management reserving any assets for
and Tourism. payment of corporate
debts and liabilities.

Program Distinction between Corporators and Incorporators

Objectives
The BSHM aims to achieve Corporators- are the total number or persons who compose the corporation after its
the following objectives: formation which include the incorporators, the stockholders and/or members.
o To train the future
hospitality industry Incorporators, stock or non-stock- they must be natural persons. A juridical person
professionals to be cannot be an incorporator. The law provides that the incorporators must be at least five
multifaceted and industry but not more than fifteen.
ready as they contribute to
the improvement of the REGISTRATION REQUIREMENTS IN ESTABLISHING BUSINESS PERTINENT TO
hospitality industry. THE HOSPITALITY INDUSTRY
o To equip the future
hospitality industry For Partnership and Corporation
professionals with the spirit
 Register with Security and Exchange Commission (SEC)
of service in their field of
specialization;
o To produce hospitality
For Sole Proprietorship
 Registration through Department of Trade and Industry (DTI)
industry professionals who
are both competent and
Need to secure before business operation:
imbued with a humanistic
vision, serving as  Location clearance/business permit for firms
ambassador of goodwill in  Employer’s TIN, SSS, Philhealth
the performance of their role  Electric services through PALECO (Palawan)
in society.  Water Services
 Telephone services connection

8|Page Legal Aspects in Tourism & Hospitality

BSHM III A & B
 Republic of the Philippines
PALAWAN STATE UNIVERSITY
Puerto Princesa City

PSU-PCAT CUYO

BACHELOR OF SCIENCE IN HOSPITALITY MANAGEMENT

First Semester, A.Y. 2022-2023

LET US WRAP UP

Goal Creating a business is not an easy process.

To produce internationally
Before it can happen, one must first establish a
competent graduates who
definite business objective and plan for its
are morally upright, development. From a legal point of view, there
humane, productive and are three common types of business:Sole
prime movers of Prprietorship, Partnership and Corporation.
development in the field of
Hospitality Management
and Tourism.
LET US ASSESS

Exercise 2. Fill in the Blank (10 pts.)

Program
Directions: Fill in the blank(s) with the correct answer from the box given below.
Objectives 1) ___________ in the Philippines are governed by and covered under Articles 1767
The BSHM aims to achieve to 1867 of the CivilCode of the Philippines [circa 1950].
the following objectives: 2) ___________ is the nature of partnership.
o To train the future 3) ___________ mean legal tender.
hospitality industry 4) ___________ must be dissolved upon the death of one of its partners.
professionals to be 5) ___________ 15 composition of a corporation.
multifaceted and industry 6) ___________ are profits distributed by a corporation to its stockholders.
ready as they contribute to 7) ___________ are considered to be a franchiser and franchisee.
the improvement of the 8) ___________ period occurs first when a partnership is dissolved.
hospitality industry. 9) ___________ is the least formal type of business organization.
o To equip the future 10) ___________ has the capacity to exist regardless of the death.
hospitality industry
professionals with the spirit
of service in their field of Partnership Money
specialization; Fiduciary in character Dividends
o To produce hospitality Two or more persons, but not more than 15 Winding-up
industry professionals who Independent contractors Sole proprietorship
are both competent and Right of Succession Partnerships
imbued with a humanistic
vision, serving as
ambassador of goodwill in
the performance of their role
in society.

9|Page Legal Aspects in Tourism & Hospitality

BSHM III A & B
 Republic of the Philippines
PALAWAN STATE UNIVERSITY
Puerto Princesa City

PSU-PCAT CUYO

BACHELOR OF SCIENCE IN HOSPITALITY MANAGEMENT

First Semester, A.Y. 2022-2023

Exercise 3: True or False (5 pts.)

Directions: Write TRUE if the statement is true and write FALSE if the statement is
Goal false.
To produce internationally
competent graduates who ________ 1) De jure corporation cannot legitimately perform its function as corporation
are morally upright, due to its failure to comply with the requirements of the law.
humane, productive and ________ 2) The powers of corporation can either be expressed or implied.
prime movers of ________ 3)Securities and Exchange Commission is the government agency
development in the field of responsible for the issuance of registration certificate.
Hospitality Management ________ 4) Corporation has no right of succession.
and Tourism. ________ 5) Delectus personae means based on trust and confidence.

Program REFERENCES

Objectives
The BSHM aims to achieve  Maranan, Mario et al., © 2019, Legal Aspects in Tourism & Hospitality,
the following objectives: Mindshapers Co., Inc.
o To train the future
hospitality industry  Maranan, Mario et al., © 2019, Pertinent Laws on Hospitality Management
professionals to be (Tourism Laws), Mindshapers Co., Inc.
multifaceted and industry
ready as they contribute to REMINDER:
the improvement of the
hospitality industry.  Modules can be submitted thru assessment box or online via google
o To equip the future classroom and corporate email zmdelatorre@[Link].
hospitality industry
professionals with the spirit  Outputs submitted late will receive deductions. Only students with valid
of service in their field of reason will be accepted for late submission of modules.
specialization;
o To produce hospitality
 Questions and clarifications shall be accommodated online thru messenger
industry professionals who group chat of this subject.
are both competent and
imbued with a humanistic
vision, serving as
ambassador of goodwill in
the performance of their role
in society.

Prepared by:

______________________________

10 | P a g e Legal Aspects in Tourism & Hospitality

BSHM III A & B
 Republic of the Philippines
PALAWAN STATE UNIVERSITY
Puerto Princesa City

PSU-PCAT CUYO

BACHELOR OF SCIENCE IN HOSPITALITY MANAGEMENT

First Semester, A.Y. 2022-2023
ZAYRA MAY G. DELA TORRE
Instructor

Goal
To produce internationally
competent graduates who
are morally upright,
humane, productive and
prime movers of
development in the field of
Hospitality Management
and Tourism.

Program
Objectives
The BSHM aims to achieve
the following objectives:
o To train the future
hospitality industry
professionals to be
multifaceted and industry
ready as they contribute to
the improvement of the
hospitality industry.
o To equip the future
hospitality industry
professionals with the spirit
of service in their field of
specialization;
o To produce hospitality
industry professionals who
are both competent and
imbued with a humanistic
vision, serving as
ambassador of goodwill in
the performance of their role
in society.

11 | P a g e Legal Aspects in Tourism & Hospitality

BSHM III A & B