Bureau of Local Government Finance Opinion

January 7, 1998 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 2nd Indorsement Respectfully returned, thru the Municipal Treasurer, to the Sangguniang Bayan, both of Labason, Zamboanga del Norte. This refers to Resolution No. 143, s. 1997 enacted by that Body, inquiring whether the Concha Construction (CC) Company whose principal office is located in Dipolog City, can be compelled to secure and pay the Mayor's permit fee to that municipality where it is regularly undertaking construction projects. On July 15, 1997, the Office of the Municipal Mayor thereat, through its Licensing and Permit Division, sent a demand to the CC for the company to secure a permit from that municipality. However, CC argued that it had already secured and paid its permit and license fees in Dipolog City where its principal office is located and, thus, it would be tantamount to double taxation. In this connection, it is informed that under Section 147 of the Local Government Code of 1991 (LGC), it is mandatory for the operator of any business or calling to secure a Mayor's permit for him to operate a business or pursue a calling within the territorial jurisdiction of a local government. The non-issuance or absence of such a permit may constitute sufficient ground for closure and stoppage of the operation of a business or establishment. Moreover, permit fees are exacted in the exercise of the police power of a municipality to provide for the health, safety and general welfare of the citizenry and promote favorable peace and order conditions in the locality. Accordingly, CC is obliged to secure a Mayor's permit and pay the corresponding fee for undertaking construction projects in that municipality. In addition, said contractor is liable to pay the regulatory fees and service charges imposed under a duly enacted tax ordinance of Labason. For information and guidance of that Office, it may be worth mentioning that pursuant to Section 150 of the LGC, CC is subject to the payment of business taxes and fees, as follows: 1. 30% of all receipts recorded in Dipolog City shall be taxable by said city where the principal office is located; CAIHaE 2. 70% of all receipts recorded in Dipolog City shall be taxable by the Municipality of Labason, Zamboanga del Norte where the construction project is actually undertaken; and 3. Both the City of Dipolog and the Municipality of Labason may collect Mayor's permit and other regulatory fees and service charges imposable under their respective duly enacted tax ordinances. (SGD.) LORINDA M. CARLOS Executive Director