First off, if you're a foreigner fresh off the boat, you really shouldn't start a business until you've been here for a few years. The beaches of commerce in Cebu are strewn with the empty husks of foreigners' bank accounts who went broke trying to make a quick buck.
Oh sure, it may be tempting to open a restaurant for less than a tenth it may cost in your home country, especially since most Cebuanos will complain that the main impediment to starting a business is capital - which you've probably got plenty of. However, the market, the staff, and the suppliers react in a completely different way from what you are used to - and you may find that getting good advice is impossible. Take it from me: you're not ready until you speak at least a smattering of Cebuano.
If you do think you're ready, you'll be pleased to discover that the process of getting a business off the ground isn't as hard as in some other countries in this part of the world. A lot of paperwork is required, it is tedious, and it does take time, but sooner or later you will get your permit. The system does work.
Corporation
The specific requirements for getting permits varies from city to city, but in dealing with the authorities there are some things that you are often asked for.
TIN Tax Identification Number. Some people, especially those in the lower income brackets, don't have one. You may put "pending application" in most instances. Note that corporations have TIN's just as individuals.
CTC Number Community Tax Certificate or Cedula. This is a strange little receipt you get when you pay a small annual tax at the barangay level. Go to the Barangay Hall, and tell them you want a cedula. It costs almost nothing - only about 15 pesos. Although technically an "additional community tax" is added to the basic community tax based on your income, all the way up to PhP 5,000, in practice nobody ever pays this. Some barangay halls make you attach your thumb print; others let you send a lackey. The procedure takes just a few minutes. Keep your Cedula safe at all times or write the number down somewhere safe. The CTC number, place of issuance, and date of issuance is written down in contracts, deeds of sale, and so on. Foreigners, if lacking a cedula, may use their passport number instead, but some Filipinos are not aware of this and cause a fuss. My advice would be to drop by the barangay hall and get a CTC right away.
Barangay Clearance This is essentially testimony by the barangay captain that you are not a crook and of fairly good moral character, whatever that means. It helps to have lived in the barangay for a few years.
NBI Clearance This is issued by the National Bureau of Investigation to attest that the person cleared is not in their Most Wanted list. If there is a felon out on the loose with the same name as the person applying for clearance, the clearance can be delayed. Usually it's processed fairly quickly.
Determining the Format
Of course, as a foreigner, you aren't technically allowed to own a business. This means that you basically have two options, either forming a corporation which you will control, or opening up a sole proprietorship in the name of your friend or spouse. Unless you're doing it just for fun, or for the sole benefit of your friend or spouse, you definitely should go for the former. Forming a corporation takes more time and money, but is the surer bet in the long run.
Why is a corporation much better than a proprietorship? Well, let's just say that things don't always work out as planned, and if the business is a corporation, you are best able to deal with negative consequences.
Forming a Corporation
The first step is registering the name. In the case of a corporation, the place to go to is the SEC (Securities and Exchange Commission); the folks in Manila can now reserve their corporation's name online at the SEC website's iRegister service. The best you can do in Cebu is check the availability of the name you want. One disadvantage with a corporation is that you ought to get a lawyer. Have your attorney draft your corporation's by-laws - most law offices already have these saved on their hard disks - and prepare the documents for filing with the SEC. You will need to deposit the paid-up capital in a bank, have the bank issue a certificate of deposit, and the funds will be released to your corporation once it is established, as is standard operating procedure in most countries.
The documents needed are, in order of importance:
Proprietorship
In case of a proprietorship, the Department of Trade and Industry takes care of the name registration. Just drop by the DTI located across Plaza Independencia, and submit your application for business name registeration; I believe you get to put down three options.
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