How to Verify If a Company is Legit in the Philippines?

Imagine this: You’re considering investing in a new tech startup in the Philippines, or maybe you're about to purchase a substantial product or service from an unfamiliar company. However, the question looms large: How do you know if the company is legitimate? This is not just a concern for investors or customers but also for employees seeking a stable and secure work environment. In the bustling landscape of Filipino businesses, which include a diverse range of small to medium enterprises (SMEs) and large corporations, separating the authentic from the fraudulent is essential. Here, we dive deep into actionable steps and practical strategies to verify if a company in the Philippines is legitimate.

Why Verify? The Risks of Ignoring Due Diligence

In today's interconnected world, fraudulent schemes and scams have become increasingly sophisticated. Falling prey to such scams can lead to financial losses, legal troubles, and damaged reputations. In the Philippines, like in many countries, numerous cases have emerged where unsuspecting investors, customers, and even employees have faced severe consequences for not doing their homework. The risks include:

• Financial Losses: Scams can cause substantial monetary losses.
• Legal Issues: Getting involved with illegitimate businesses might bring unexpected legal complications.
• Reputational Damage: Associating with a fraudulent entity can harm your reputation, especially for businesses and influencers.

1. Check the Company’s Registration with the Securities and Exchange Commission (SEC)

The Securities and Exchange Commission (SEC) in the Philippines is the primary government agency tasked with overseeing corporate entities. All legitimate businesses in the Philippines are required to register with the SEC. Here's how you can verify a company’s legitimacy:

• Visit the SEC website: Go to the official SEC website at www.sec.gov.ph and use their search tool to find the company by its name.
• Use the SEC Express System: This is an online verification service where you can check the registration status of a company. It provides immediate access to certain public documents.
• Request for Documents: You can also visit the SEC office in person and request a copy of the company's Articles of Incorporation and latest General Information Sheet (GIS). These documents will provide you with a lot of details about the company’s ownership, structure, and business activities.

2. Verify the Company’s Business Permits and Licenses

Apart from the SEC registration, every company operating in the Philippines must have a valid business permit from the local government unit (LGU) where it is located. Here’s how to do it:

• Contact the Local Government Unit (LGU): Get in touch with the LGU where the company’s office is situated. Most LGUs in the Philippines maintain a public directory or a database of businesses that have been issued permits.
• Ask for a Copy of the Mayor’s Permit: The Mayor’s Permit, also known as the Business Permit, is a primary requirement for a company to operate legally in a specific locality. You can directly ask the company to provide you with a copy of their permit. A legitimate company will always be willing to comply.
• Check the Bureau of Internal Revenue (BIR) Registration: All legitimate businesses must be registered with the BIR and have a valid Tax Identification Number (TIN). You can request the company’s TIN and verify it with the BIR.

3. Review the Company’s Digital Footprint

In the digital age, an authentic business usually maintains a robust online presence. Analyzing a company's digital footprint can provide essential clues about its legitimacy.

• Examine the Website: A legitimate company will typically have a professional-looking website with clear contact details, physical addresses, privacy policies, and terms and conditions. Look for signs like a secure domain (HTTPS), professionally written content, and proper branding.
• Check for Social Proof: Authentic businesses will have profiles on social media platforms like LinkedIn, Facebook, or Instagram. Look for consistent postings, reviews, follower engagement, and responses to customer queries.
• Read Reviews and Testimonials: Browse reviews on sites like Glassdoor, Indeed, Google Reviews, and Yelp. Be wary of companies with no reviews or only perfect scores, as these could be fabricated.

4. Investigate the Company’s Physical Presence

A legitimate company should have a verifiable physical office or headquarters.

• Visit the Office: If possible, make a personal visit to the company’s office. This will give you an opportunity to meet employees, check for authentic operations, and observe the working environment.
• Look for a Landline Number: A legitimate company usually has a landline number, not just a mobile number. Call the landline and inquire about their services to gauge professionalism.
• Check the Office Lease: If you are making a significant investment or entering into a large contract, it might be worth checking the lease agreement of the company’s office space. This can be verified through the property management or the owner of the building.

5. Research the People Behind the Company

The people managing a company can offer significant insight into its credibility.

• Check the Founders and Key Officers: Use professional networks like LinkedIn to research the founders and key officers of the company. Verify their backgrounds, previous employment, and professional reputations.
• Verify Their Credentials: Look for certifications, memberships in professional organizations, and references in reputable publications.
• Look for Red Flags: Be cautious of executives with little professional history or those who have been associated with numerous failed companies or scandals.

6. Analyze the Company’s Financial Health

Reviewing the company’s financial standing can reveal a lot about its credibility and sustainability.

• Request Financial Statements: Ask for audited financial statements. Legitimate companies should be able to provide these documents upon request.
• Check for Financial Red Flags: Look for unusual patterns such as inconsistent revenue, sudden spikes in debt, or lack of profitability over time.
• Consider Credit Reports: Obtain credit reports from credit rating agencies to determine the company’s creditworthiness.

7. Look Into Third-Party Verifications and Certifications

Many legitimate companies undergo third-party audits or obtain certifications that validate their operations.

• Check for ISO Certifications: The International Organization for Standardization (ISO) certifies companies that meet international standards for quality management. Companies that possess ISO certifications are more likely to be credible.
• Verify with Industry Associations: Many industries have associations that certify or verify member companies. Check if the company is a member of a reputable industry association.

8. Consult Online Business Directories and Government Databases

There are several online platforms and government databases where you can verify the legitimacy of a company.

• Use Online Business Directories: Sites like DTI’s Business Name Registration System (BNRS), PhilGEPS (Philippine Government Electronic Procurement System), and other online directories can provide vital information about a company’s legitimacy.
• Cross-Check with Government Databases: Verify information with other government databases such as the Department of Trade and Industry (DTI) or the Department of Labor and Employment (DOLE).

9. Engage a Third-Party Investigation or Legal Firm

For high-value transactions or investments, consider hiring a due diligence investigation service or a legal firm.

• Due Diligence Firms: These firms specialize in background checks, legal verifications, and financial assessments.
• Legal Firms: Lawyers can perform in-depth legal checks, verify contracts, and provide advice on the risks involved in dealing with a particular company.

Conclusion: Trust but Verify

While doing business in the Philippines offers many opportunities, it also requires careful consideration and due diligence. By taking these steps, you protect yourself from potential scams, frauds, and pitfalls. Remember, in the world of business, it's always better to be safe than sorry. Be thorough, be cautious, and always trust but verify.