Imposition and Collection by a Barangay of Business Permit Fee on Persons who are Engaged in Business Therein

April 13, 1993 DILG LEGAL OPINION NO. 131-93 LEGAL SERVICE Mr. Horacio N. Balistoy Barangay Secretary Halapitan, San Fernando Bukidnon Dear Mr. Balistoy : This refers to your letter dated February 19, 1993, requesting for opinion on whether or not your barangay can impose and collect business permit fee in the amount of P50.00 on persons who are engaged in business in your locality. Relative thereto, the powers of the barangay to impose and collect taxes, fees and charges are found in Section 391 of the Local Government Code of 1991 (Rep. Act No. 7160), paragraph (a), which states that: "The sangguniang barangay, as the legislative body of the barangay, shall: xxx xxx xxx (2) Enact tax and revenue ordinances, subject to the limitations imposed in this Code ;..." (Emphasis supplied) Moreover, the Code emphasizes that the tax and other revenue measures to be adopted by the barangay should not be beyond the scope of the taxing powers as enumerated in Section 152 of the same Code. In other words, the sangguniang barangay can only pass a tax ordinance bearing on the four (4) taxable items given in said section. If such tax measures do not fall under the items enumerated therein, the ordinances will be considered as ultra vires . Nevertheless, the power to impose and collect business permit fee is exclusively given to the municipality to be exercised by its sanggunian. This power is expressly stated in Section 447, No. 3, which reads that: "Subject to the provisions of Book II of this Code, grant franchises, enact ordinances authorizing the issuance of permits or licenses, or enact ordinances levying taxes, fees, and charges upon such conditions and for such proposes intended to promote the general welfare of the inhabitants of the municipality, and pursuant to this legislative authority shall: xxx xxx xxx (ii) Regulate any business, occupation, or practice of profession, or calling which does not require government examination within the municipality and the conditions under which the license for said business or practice of profession may be issued or revoked. ..." Judging from the foregoing, the ordinance in question enacted by the sangguniang barangay which requires persons engaged in business in your barangay to apply for a business permit and to pay a fee for the issuance thereof is, to our mind, not sanctioned by the said Code. It could readily be seen that the sangguniang barangay is bereft of any authority to impose and collect such business permit fee as the same is within the province of the municipality to do so. Premises considered, we so hold the view that the barangay cannot legally impose and collect business permit fee under the existing law on the matter. Please be guided accordingly. Very truly yours, DIR. JACOB F. MONTESA Department Legal Counsel Department of Interior and Local Government