Re: Exemption from Securing Business Permit

August 23, 2017 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Mr. Riley P. Libatique President Technology Builders and Management Corporation Unit 202, Parc House II, 21 EDSA Guadalupe Nuevo, Makati City SUBJECT : Re: Exemption from Securing Business Permit Dear Mr. Libatique : This refers to your letter dated 26 July 2017, seeking for an exemption from securing a business permit outside the jurisdiction of Makati City, where the Technology Builders and Management Corporation (TMBC)'s principal office is located. Representations were made that the TMBC is a Filipino corporation duly established under Philippine Laws, and registered with the Securities and Exchange Commission, with principal office and business address at Unit 202, Parc House II 21 EDSA, Guadalupe Nuevo, Makati City. Here, they have secured a business permit and pays the corresponding fee required thereof, as well as other fees relative thereto. Further, the TMBC is a job-contracting firm, providing temporary and outsourced services to various clients from different industries within the Philippines. Moreover, the TMBC has no branch office, sales outlet, warehouse, detachment or project elsewhere, aside from its principal office. It is informed that TMBC denies the validity of the requirement by any LGU to require it to secure a business permit before it could operate its business elsewhere, for the reason that their services are merely in conjunction with the performance and fulfillment of its contractual obligation and duty to its clients, and that there is no fixed business establishment to regulate, inspect and issue license with in the first place. Following this, TMBC strongly claims that they should be exempted from securing a business permit by any Local Government for its project/s outside the territorial jurisdiction of Makati City. In this connection, attached for your guidance and reference is our letter dated 27 January 2015 to STERIX, Inc., treating on a similar case, wherein this Bureau opined, to wit: "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 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." Therefore, this Bureau reiterates the above Opinion, and considers that TMBC is no longer required to secure a business permit on the ground that it does not maintain any branch office in other jurisdictions wherein said company may engage in. TMBC, however, shall pay an occupational fee for any of its workers employed in other jurisdictions 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 the said City. This Opinion 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. We hope we have provided clarity on the matter. Very truly yours, (SGD.) NIO RAYMOND B. ALVINA OIC Executive Director ATTACHMENT Technology Builders and Management Corporation Ref. TBMC-ADMN-LTR-17-011 July 26, 2017 MR. NIO RAYMOND B. ALVINA Executive Director Bureau of Local Government Finance Department of Finance 8th Flr., EDPC Building Bangko Sentral ng Pilipinas Complex Roxas Boulevard, 1004 Manila Dear Mr. Alvina, The Technology Builders and Management Corporation, a Filipino corporation duly established under Philippine Laws, and registered with the Securities and Exchange Commission, with principal office and business address at Unit 202, Parc House II 21 EDSA, Guadalupe Nuevo, Makati City (formerly 3rd Flr., Alecon Building, 2014-I R. Magsaysay Avenue, Guadalupe, Makati City), is respectfully seeking for an exemption from securing a business permit for its project/s outside of the territorial jurisdiction of Makati City, under the following factual and legal backdrop, to wit: 1. As mentioned above, its principal office is at the City of Makati, with no other branch elsewhere in the country; 2. It is duly registered with the City of Makati, where it secures a Business Permit, and pays the corresponding fee required thereof, as well as other fees relative thereto; 3. As a corporation, and in line with its business, it is a job-contracting firm, providing temporary and outsourced services to various clients from different industries within the Philippines; 4. The Local Business Taxes it pays accrue to the City of Makati where it maintains its principal office and business address; and 5. It does not maintain any permanent or temporary office in any of the places where it is engaged in the operation of its business, and all transactions with any particular client is done solely and directly in Makati City. Simply put, the presence of any of the personnel of Technology Builders and Management Corporation elsewhere outside of the City of Makati, is merely in conjunction with the performance and fulfilment of its contractual obligation and duty to its clients, which is dependent upon the duration of the project. Clearly, the fact that Technology Builders and Management Corporation does not maintain any branch office, sales outlet, warehouse, detachment or project office elsewhere, aside from its principal office at Makati City, repudiates the requirement by any Local Government Unit heretofore involved, to require it to secure a business permit before it could operate its business, for the obvious reason that there is not fixed business establishment to regulate, inspect and issue license with in the first place. While it may appear that the herein company's deployment of personnel/s outside of the territorial jurisdiction of Makati City is tantamount to setting up a business operation, the requirement to secure a business permit under the conditions mentioned above will not serve any purpose as contemplated by law, vis--vis Section 147 of Rep. Act No. 7160, otherwise known as the Local Government Code of 1991. It is therefore humbly, yet strongly reiterated that Technology Builders and Management Corporation be exempted from securing a business permit by any Local Government Unit for its project/s outside of the territorial jurisdiction of Makati City, where it has its project/s outside of the territorial jurisdiction of Makati City, where it has its domicile under existing laws, rules and regulations. Thank you and more power. Respectfully yours, (SGD.) RILEY P. LIBATIQUE President Footnotes 1. Section 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. Section 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.