Barangay Clearance for a Business Permit: What the Law Says

Section 152(c) of the Local Government Code of 1991 starts with this rule: "No city or municipality may issue any license or permit for any business or activity unless a clearance is first obtained from the barangay where such business or activity is located or conducted."

The same section lets the sangguniang barangay (the barangay council) "impose a reasonable fee" for the clearance.

The power to issue the permit itself belongs to the mayor. Sections 444(b)(3)(iv) and 455(b)(3)(iv) say the municipal mayor and the city mayor issue licenses and permits, and may suspend or revoke them for any violation of the conditions on which they were issued, pursuant to law or ordinance. Section 147 lets the municipality impose reasonable fees on businesses, "commensurate with the cost of regulation, inspection and licensing".

RA 11032 (2018) inserted a new Section 11 into Republic Act No. 9485 on business permits. Item (f) says:

• barangay clearances and permits related to doing business "shall be applied, issued, and collected at the city/municipality", within the processing time set by the Act; and
• the barangay's share in the collections is remitted to it.

The same inserted section ends by saying that Section 152(c) of the Local Government Code "is hereby amended accordingly".

So the clearance is still required, but you deal with the city or municipal hall instead of going separately to the barangay. The same inserted section also provides for:

• a single or unified business application form for new applications and renewals (item (a));
• a business one stop shop, or BOSS (item (b)); and
• other local clearances, such as sanitary permits and environmental and agricultural clearances, issued together with the business permit (item (d)).

The 1991 text of Section 152(c) also said the barangay must act on the clearance within seven working days, and that the city could issue the permit if the barangay did not. Because RA 11032 amended Section 152(c) and moved the clearance to the city or municipality, this page does not present that 1991 rule as current.

RA 11032 sets maximum processing times in Section 9 of RA 9485 as amended: not longer than three working days for simple transactions and seven working days for complex transactions. Applications that are dangerous or highly technical may in no case take longer than twenty working days.

These are not absolute limits. The maximum time may be extended once, for the same number of days, as stated in the office's Citizen's Charter. When the approval of the sanggunian is required, the sanggunian has 45 working days to act, extendible by another 20 working days.

Section 10 of RA 9485, as amended by RA 11032, says that if the office fails to approve or disapprove an original application within the prescribed processing time, the application "shall be deemed approved", provided that all required documents have been submitted and all required fees and charges have been paid.

Item (e) of the inserted Section 11 says business permits "shall be valid for a period of one (l) year" (as printed). The city or municipality may choose to renew business permits within the first month of the year or on the anniversary date of the permit's issuance.

The law does not give an amount. The barangay may impose "a reasonable fee" (Section 152(c)), and the municipality may impose reasonable fees on businesses (Section 147). The actual amounts are in local ordinances and in your city or municipality's Citizen's Charter, which were not read for this page.

For the steps of getting a barangay clearance in general, see our barangay clearance guide.

These are made-up examples to show how the rules work. They are not advice for any real case.

Nena opens a sari-sari store in Barangay Poblacion of her city. She needs the barangay clearance for her business (Section 152(c), as amended). Under RA 11032, she applies for it at the city, through the one stop shop, using the unified application form.

Her permit is valid for one year. Her city has chosen to renew permits in January, so she renews in the first month of the year.

Nena submitted complete documents and paid the fees, but the city did not act within the processing time in its Citizen's Charter. Under Section 10, her application is deemed approved.

Most business permit applications do not need a lawyer. Talk to one if your permit was refused, suspended or revoked, if you were charged fees you believe have no basis in an ordinance, or if you want to rely on the deemed-approval rule and the city disagrees.

If you cannot afford a lawyer, see Free legal help in the Philippines.