The Enhanced Business Name Registration System

As part of our new government's effort to facilitate faster and easier registration of single-owned businesses in the country, the Department of Trade and Industry has recently amended the revised implementing rules and regulations of the Business Name Law and came out with a department administrative order (DAO) that gave birth to the Enhanced Business Name Registration System (E-BNRS). The agency issued DAO 10-08 Series of 2010 last September 30, 2010 and had the E-BNRS online registration facility upped last October 6, 2010. The system will handle the registration of the business name (BN) of a person who is at least eighteen (18) years old, doing business or proposing to do business in the Philippines under a BN and who is not disqualified by any existing law or regulation to engage in business.

CD/DVD Writer's Registration With Optical Media Board

An i-café that offers CD-Burning service to its customers is required to register the optical media writer (CD/DVD writer) being used for the purpose with the Optical Media Board (OMB). According to the Optical Media Act of 2003, CD-burning service falls under the definition of replication and hence the owner of an establishment offering the service must register the equipment with OMB.

Regarding this regulation, a question often asked is "After an i-café registered its CD/DVD writer with OMB, can it now, for a fee, legally copy songs, movies, etc. that customers request them to do?". The answer to this question is NO, the registration of the CD/DVD writer with OMB is NOT a license for the i-café to go on and produce copies of copyrighted materials. The permissions of the copyright owners are still needed before anyone can legally reproduce their intellectual properties.

The Use Of Licensed And/Or Legal Software In I-Cafés

The use of licensed and/or legal software in i-cafés is not an issue under our laws. Our Republic Act No. 8293, otherwise known as the Intellectual Property Code of the Philippines, recognizes the intellectual property rights of software developers, provides for the protection of such property and enforcement of the law if necessary. However, contrary to the intention of the law, sixty-nine (69%) percent of personal computers in the country including those in i-cafés are running illegally on pirated or cracked software.

The owner of an i-café business has the option to install proprietary software like Microsoft (MS) Windows operating system (OS) or the free and open source software like Ubuntu Linux OS on his computers. By proprietary software, we refer to those that an i-café owner has to buy the licenses before he can legally use them in his business. Free and open source software (FOSS), on the other hand, are legally free to use, copy, modify and redistribute. In common parlance, MS Windows mean additional investment while Linux OS practically cost nothing to install and use though there are also some free applications software in Windows platform.

Surfing Of Pornographic Sites At I-Cafés

Surfing or viewing of pornographic sites inside i-cafés should not be allowed. Many cities and municipalities around the country already have local ordinances prohibiting the act with appropriate penalties to boot. Most local ordinances provide penalties for both the customer and the i-café owner caught violating the prohibition. Penalties or fines range from a few thousand pesos for first and second time offenders to shop closure on third violation. As decent members of society, i-café owners should not allow surfing of pornographic sites in their shops even if there are no existing ordinance in their areas.

Worldwide statistics show that around forty-two (42%) percent of those surfing the web daily visit pornographic sites. It can be presumed that majority of pornographic site visitors do their surfing in the privacy of their homes. It is hard to imagine doing it in a public place like an i-café. Not even the low revenues of some i-cafés could justify allowing such misdeeds to happen inside the establishments.

The Distance Provision For I-Cafés

The distance of i-cafés from schools (distance provision) is an issue that has been bugging the industry since the start. Video arcades which came earlier than the gaming cafés were for the right reason not allowed to be established near schools. Distance provision for video arcades as provided for by local ordinances varies from as near as thirty (30) meters up to as far as two hundred (200) meters from the gates (sometimes perimeters) of schools. Currently, some local government units (LGUs) have specific ordinances with similar distance provision between a school to the nearest i-café as a means to minimize truancy among students of minor age.

Regulations On Entry Of Children To I-Cafés

The issue of truancy among school children is the concern of everyone and preventing it from happening should be a collective effort of the community. The existence of Internet cafés in many localities where truancy exist are getting cited to be the major cause of the problem. Playing online games instead of attending classes are observed to be prevalent in areas where i-cafés are present; hence, the need to pass ordinances that would regulate the entry of school children to these business establishments.

In the absence of a national law regulating the registration and operation of Internet cafés, many local government units (LGUs such as towns, cities and provinces) enact their own ordinances with provisions mostly based on the Local Government Code of the Philippines. Below is the  summary of the different rules being applied by LGUs in their effort to regulate entries of students of minor age (we will call them 'children' in this article) to i-cafés and avoid truancy.

Securing Business Permit Of An I-Café From An LGU

Unless the process being followed by the local government unit (LGU) allows a business to be registered with other government agencies later, the Business Permit (sometimes called Mayor's Permit) is the last to be secured by an i-café owner before he can operate his shop legally. The procedure in securing the business permit of an i-café from an LGU is more or less similar in most cities and municipalities in the country. The requirements, fees and taxes being imposed on the business may also vary depending on how the LGUs implement the provisions of The Local Government Code of the Philippines in their respective areas.

The Business or Mayor's Permit is issued by the city or town where the i-café business is located after its owner has paid the fees being imposed by the different departments of the LGU aside from the local tax based on paid-up capital by the first-time business registrants and on annual gross revenues for those renewing their business permits. The usual fees, clearances and/or certificates that an LGU may require before a Business Permit is issued to an i-café are as follows:

Registering An I-Café With Other Government Agencies

Aside from the BIR, the local government unit (LGU) where a new i-café will be located may require its owner to have it registered with the Social Security System (SSS), Pag-IBIG and PhilHealth. Even though you may not be asked to register your business with the said government agencies, it is advisable that you do so because their clearances may be required when you renew your business license in the succeeding year and every year thereafter. After all, the insurance services that these government agencies offer to its members are really beneficial to everyone.

The mandate of Social Security System to implement the compulsory social insurance coverage of workers and employees of existing businesses in the country is contained in Republic Act No. 8282 or Social Security Act of 1997. Section 9 of the said law says  coverage in the SSS shall be compulsory upon all employees not over sixty (60) years of age while Section 9-A on Compulsory Coverage of the Self-Employed provides that coverage in the SSS shall also be compulsory upon self-employed persons including partners and single proprietors of businesses.

Registering An I-Café With BIR

This is one step in the registration and legal operation of a business that many forget to do or intentionally do not do because they want to evade paying taxes. It is not only the i-café owners who are guilty of non-registration with the Bureau of Internal Revenue (BIR) but mostly those in businesses who believe they can escape paying taxes or pay their way out when caught. The guilt in the commission of the crime of tax evasion is not one-way. Many times, the BIR people are themselves to be blamed for not doing their jobs of running after the tax evaders, big or small.

An i-café or any business for that matter must be registered with the BIR within thirty (30) days after its registration with the Department of Trade and Industry (DTI) for single-owned enterprise or Securities and Exchange Commission (SEC) for a corporation. A one thousand (PhP1,000.00) peso penalty will be charged to the business who fails to register his business with BIR within the 30-day prescribed period. The same amount of penalty (PhP1,000.00) will have to be paid by a business owner if he fails to pay and/or file the appropriate BIR Forms for the various taxes that will be specified in his certificate of registration (COR).

Securing A Barangay Clearance For An I-Café

After getting a name for an i-café business, securing a barangay clearance is the next step for it to be allowed to operate in the address specified in the DTI business name registration certificate. This is provided for in Section 152 (c) of the Local Government Code of the Philippines. Some cities and municipalities also require an i-café owner to get clearance to operate from homeowners association if the business will be located in a residential area.

The clearances are aimed to ensure the owner's compliance to some rules with regards to peace and order in the community where the business is located. The barangay and/or homeowners clearance is not only required in the opening of

an i-café business. The clearances must be secured every year as a requirement in its renewal of business permit with the local government unit.

Getting A Name For An I-Café Business

Getting a name or registering its business name is the first step in establishing and legally operating an i-café. Normally, a business name is decided on by its owner(s) way before the actual start of setting-up the enterprise such that it sometimes causes frustration when if does not get to be named as desired come its registration with the proper government agencies. To avoid this situation and to save time come registration time, the owner(s) of the business must have at least three (3) names of choice although having such is not a guarantee that the business will get the name that they want because the choices may have been already registered by some other people.

Depending on the type of ownership, an i-café business must be registered with the appropriate government as follows:

1. Partnership and Corporation - Securities and Exchange Commission
2. Single Proprietorship - Department of Trade and Industry

Steps In Registering An I-Café Business

This is the first in a series of articles about the steps in the registration of an i-café business with the proper government agencies. It has been echoed many times in different forums and there is truth to the reports that there are many i-cafés operating without the proper permits and licenses. Reasons cited by owners of unregistered i-cafés range from being on trial stage to not knowing how to register their business. Our series of articles on the registration of an i-café business are aimed to  give proper guidelines on how to be legally operating the business right from the start. These guidelines would also be useful to those already operating an i-café but may have missed some legal requirements of the business.