Clarification on Securing Business Permit

March 23, 2017 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Ms. Marinette Y. Aglipay President Emirate Security Specialist, Inc. 8th Floor, State Financing Center II Ortigas Avenue, Mandaluyong City SUBJECT : Clarification on Securing Business Permit Dear Ms. Aglipay : This refers to your letter dated 20 March 2017, seeking for the Bureau's opinion on whether or not your company, Emirate Security Specialists, Inc. (ESSI),which does not maintain a branch office in certain jurisdictions, like in Naga City, with negligible security personnel deployed thereat, is still required to secure business permit in such locality. Representations are made that ESSI is a registered contractor providing security services in various industries in the National Capital Region and South Luzon. On 02 July 2016, ESSI entered into a Security Service Agreement with Nestle Philippines, Inc. (NPI),wherein the former will provide security services to NPI in Naga City. It is informed that NPI requires its contractors to secure a business permit for every city or municipality where its facilities are located and where ESSI provides security personnel in accordance with the said Agreement. Consequently, ESSI applied for a business permit with the Naga City Government, but was not able to secure it by reason of the facts that it has no branch office in Naga City and that it has only three (3) security guards detailed at NPI of the said locality. Hence, the instant request for this Bureau's opinion. 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 ESSI is no longer required to secure a business permit on the ground that it does not maintain a branch office in Naga City and in any other jurisdictions wherein said company may engage in. ESSI, however, shall pay an occupational fee for its three (3) workers employed by NPI in Naga City, 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 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, without effect. We hope we have provided clarity on the matter. Very truly yours, (SGD.) NIO RAYMOND B. ALVINA OIC Executive Director 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.