Re: Clarification on Securing Business Permit

March 13, 2017 BLGF OPINION NO. 003-2017 CO-LFPS-PPPSD Ms. Maribeth A. Cruz Branch Head ,MSC Taytay Office Unit 101 Manila East Arcade (MEA II) Bldg. Don Hilario Ave.,San Juan Taytay, Rizal SUBJECT : Re: Clarification on Securing Business Permit Dear Ms. Cruz : This refers to your letter dated 10 March 2017 requesting for an opinion as to whether or not Maximum Solutions Corporation (MSC) needs to secure a business permit in the local government unit, where it is not maintaining any branch, sales office or warehouse. cTDaEH Representations were made as follows: 1. MSC is an outsourcing company that provides temporary and outsourced services to various clients from different industries, with its Head Office located in Makati City and has branches in Sta. Rosa City, Laguna, Cavite; Taytay, Rizal and satellite offices in Cebu City and Davao City; 2. Local business taxes accrue to Makati City, which are based on 100% gross receipts; 3. One of MSC's clients, Wyeth Philippines, which maintains a warehouse in Cabuyao City, entered into a service contract with MSC for office operations and warehousing service, and MSC deployed four (4) employees for the purpose; 4. MSC does not maintain an Office in Cabuyao City and all transactions with Wyeth Philippines are being done directly at its head office in Makati City with HR support from MSC Taytay, Rizal branch; and 5. Wyeth Philippines is requiring MSC to secure a business permit from the local government of Cabuyao City. In this connection, attached for your guidance is our letter dated 27 January 2015, in the case of STERIX, Inc.,which is similarly situated as the instant case, wherein this Bureau expressed the following views: "With regard to the required business permit, this Bureau, based on the information submitted, believes that there is no need for STERIX to secure business permit from local government units concerned as the presence of its personnel to said localities is merely to fulfill its contractual obligation to its clientele and their presence to carry out this obligation contracted by the business from their clients is only temporary." "This opinion is expressed in view of the tenets embodied in Section 147 which provides that the imposition and collection of such regulatory fee (business permit fee) shall be 'commensurate with the cost of regulation, inspection and licensing before any person may engage in such business." "To elucidate and affirm our stand on the issue and as viewed from a different perspective, the absence of any branch office, sales outlet or warehouse of STERIX repudiate the requirement of securing business permit as, in the first place, there is no fixed business establishment to regulate, inspect, and issue license to justify the imposition. For after all how can a regulating authority impose its authority to regulate when the very subject of the regulation is non-existent." ITAaHc The City of Cabuyao may, however, impose an occupation fee on the four (4) workers pursuant to Section 147 1 of the Local Government Code of 1991, in relation to Section 151 2 thereof, as may be authorized under a duly enacted ordinance of said City. This Opinion, however, is issued based on the information provided. If upon subsequent verification or submission of information proves the contrary, this Opinion will be deemed null and void, and without effect. We hope we have provided clarity on the matter. Very truly yours, (SGD.) NIO RAYMOND B. ALVINA OIC Executive Director Footnotes 1. Sec. 147. Fees and Charges. The municipality may impose and collect such reasonable fees and charges on business and occupation and, except as reserved to the province in Section 139 of this Code, on the practice of any profession or calling, commensurate with the cost of regulation, inspection and licensing before any person may engage in such business or occupation, or practice such profession or calling. 2. Sec. 151. Scope of Taxing Powers. Except as otherwise provided in this Code, the city, may levy the taxes, fees, and charges which the province or municipality may impose: Provided, however, That the taxes, fees and charges levied and collected by highly urbanized and independent component cities shall accrue to them and distributed in accordance with the provisions of this Code. The rates of taxes that the city may levy may exceed the maximum rates allowed for the province or municipality by not more than fifty percent (50%) except the rates of professional and amusement taxes.